Net 1 UEPS Technologies, Inc. reports 886% Net Income decline in 2019 and 36.5 pp EBITDA Margin decline from 15.4% to -21.1%
09/26/2019 • About Net 1 UEPS Technologies, Inc. (
$UEPS) • By InTwits
Net 1 UEPS Technologies, Inc. reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Net 1 UEPS Technologies, Inc. is a company in decline: FY2019 revenue growth was -41.1%, 5 years revenue CAGR was -9.1%
- EBITDA Margin is declining: -21.1% in FY2019 vs. 15.4% in FY2018 vs. 27.0% in FY2015
- EBITDA Margin is quite volatile: -21.1% in FY2019, 15.4% in FY2018, 22.7% in FY2017, 26.2% in FY2016, 27.0% in FY2015
- Net 1 UEPS Technologies, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's in pair with industry average of 3.5%
- CAPEX is quite volatile: $9m in FY2019, $10m in FY2018, $11m in FY2017, $36m in FY2016, $36m in FY2015
- The company has unprofitable business model: ROIC is -15.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Net 1 UEPS Technologies, Inc.'s Revenue dropped on 41.1%. Revenue decline showed acceleration in FY19Q4 - it was 65.8% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 36.5 pp from 15.4% to -21.1% in FY2019. EBITDA Margin followed a declining trend in FY2015-FY2019.
Gross Margin decreased on 10.0 pp from 50.3% to 40.3% in FY2019. SG&A as a % of Revenue surged on 24.5 pp from 31.5% to 56.0% in FY2019. During the last 5 years SG&A as a % of Revenue bottomed in FY2016 at 24.3% and was growing since that time.
Net Income margin dropped on 91.6 pp from 6.4% to -85.2% in FY2019. Net Income margin followed a declining trend in FY2015-FY2019.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.6% in FY2019. Net 1 UEPS Technologies, Inc. showed decline in CAPEX/Revenue of 3.5 pp from 6.1% in FY2016 to 2.6% in FY2019. For the last three years the average CAPEX/Revenue was 2.0%.
Return on investment
The company operates at negative ROIC (-15.4%) and ROE (-52.3%). ROIC dropped on 22.4 pp from 7.0% to -15.4% in FY2019. ROE dropped on 57.7 pp from 5.4% to -52.3% in FY2019. ROIC followed a declining trend at -9.0 pp per annum in the last 5 years. ROE followed a declining trend in the last 5 years.
Leverage (Debt)
Debt level is -5.0x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA jumped on 0.4x from -0.4x to in FY2019. Debt surged on 69.4% while cash dropped on 48.8%.
Net 1 UEPS Technologies, Inc. has short term refinancing risk: cash is only 54.2% of short term debt.
Financial and operational results
FY ended 06/30/2019
Net 1 UEPS Technologies, Inc. ($UEPS) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 626.0 | 590.7 | 610.1 | 612.9 | 361.0 | -41.1% |
| Gross Profit | 328.1 | 300.6 | 317.7 | 308.4 | 145.6 | -52.8% |
| SG&A | 156.5 | 143.6 | 179.3 | 193.0 | 202.1 | 4.7% |
| EBITDA | 169.2 | 154.8 | 138.4 | 94.4 | -76.2 | -180.6% |
| Net Income | 94.7 | 82.5 | 73.0 | 39.2 | -307.6 | -885.7% |
Balance Sheet
|
|---|
| Cash | 117.6 | 223.6 | 258.5 | 90.1 | 46.1 | -48.8% |
| Short Term Debt | 8.9 | 8.7 | 8.7 | 44.7 | 85.0 | 90.2% |
| Long Term Debt | 50.8 | 43.1 | 7.5 | 5.5 | 0.0 | -100.0% |
Cash flow
|
|---|
| Capex | 36.4 | 35.8 | 11.2 | 9.6 | 9.4 | -2.4% |
Ratios
|
|---|
| Revenue growth | 7.6% | -5.6% | 3.3% | 0.5% | -41.1% | |
| EBITDA growth | 19.1% | -8.5% | -10.6% | -31.8% | -180.6% | |
|
|---|
| Gross Margin | 52.4% | 50.9% | 52.1% | 50.3% | 40.3% | -10.0% |
| EBITDA Margin | 27.0% | 26.2% | 22.7% | 15.4% | -21.1% | -36.5% |
| SG&A, % of revenue | 25.0% | 24.3% | 29.4% | 31.5% | 56.0% | 24.5% |
| Net Income Margin | 15.1% | 14.0% | 12.0% | 6.4% | -85.2% | -91.6% |
| CAPEX, % of revenue | 5.8% | 6.1% | 1.8% | 1.6% | 2.6% | 1.0% |
|
|---|
| ROIC | 23.6% | 18.7% | 13.8% | 7.0% | -15.4% | -22.4% |
| ROE | 20.6% | 15.1% | 11.3% | 5.4% | -52.3% | -57.7% |
| Net Debt/EBITDA | -0.3x | -1.1x | -1.7x | -0.4x | |
Net 1 UEPS Technologies, Inc. ($UEPS) key quoterly financial indicators
| mln. $ | FY19Q1 | FY19Q2 | FY19Q3 | FY19Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 126 | 97 | 86 | 51 | | -17.4% | -34.6% | -47.1% | -65.8% |
| EBITDA | 12 | -33 | -12 | -43 | | -64.7% | -231.8% | -171.0% | -332.1% |
| Net Income | -5 | -64 | -55 | -184 | | -125.7% | -765.1% | -269.9% | -2,715.1% |
Balance Sheet
|
|---|
| Cash | 99 | 70 | 123 | 46 | | -28.4% | 7.9% | 41.1% | -48.9% |
| Short Term Debt | 119 | 88 | 90 | 85 | | 100.4% | 74.2% | 59.4% | 90.2% |
| Long Term Debt | 12 | 10 | 0 | 0 | | -65.6% | -49.7% | -100.0% | -100.0% |
Ratios
|
|---|
| Gross Margin | 43.0% | 47.0% | 42.0% | 19.0% | | -8.1% | -3.1% | -10.2% | -28.7% |
| EBITDA Margin | 9.5% | -34.0% | -14.0% | -84.3% | | -12.7% | -50.9% | -24.3% | -96.7% |
| Net Income Margin | -4.0% | -66.0% | -64.0% | -360.8% | | -16.7% | -72.5% | -83.8% | -365.5% |
Peers in Data Processing & Outsourced Services
Below we provide Net 1 UEPS Technologies, Inc. benchmarking against other companies in Data Processing & Outsourced Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 167.8% | |
| StoneCo Ltd ($STNE) | | | 74.3% | 106.0% | |
| PagSeguro Digital Ltd. ($PAGS) | 107.1% | 68.7% | 121.7% | 71.8% | |
| Payment Data Systems, Inc. ($PYDS) | 7.4% | -16.0% | 20.7% | 71.7% | |
| StarTek, Inc. ($SRT) | 12.8% | 8.9% | -4.8% | 66.4% | |
| |
|---|
| Median (55 companies) | 7.0% | 7.7% | 11.8% | 7.5% | |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | | | 3.3% | 0.5% | -41.1% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Verra Mobility Corp ($VRRM) | | | 97.4% | 97.5% | |
| Everi Holdings Inc. ($EVRI) | 38.3% | 36.1% | 34.5% | 79.9% | |
| StoneCo Ltd ($STNE) | | 69.7% | 70.8% | 79.5% | |
| Paychex, Inc. ($PAYX) | 70.5% | 71.0% | 70.8% | 69.9% | |
| Global Payments Inc. ($GPN) | 63.2% | 60.4% | 51.5% | 67.5% | |
| |
|---|
| Median (44 companies) | 39.5% | 39.2% | 38.9% | 40.9% | |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | | 50.9% | 52.1% | 50.3% | 40.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Visa Inc. ($V) | 68.9% | 55.6% | 69.2% | 65.8% | |
| FleetCor Technologies, Inc. ($FLT) | 50.4% | 52.0% | 50.8% | 55.9% | |
| StoneCo Ltd ($STNE) | | 31.4% | 26.0% | 53.0% | |
| Mastercard Incorporated ($MA) | 56.3% | 56.9% | 56.5% | 51.8% | |
| Everi Holdings Inc. ($EVRI) | 14.7% | 3.0% | 20.4% | 45.2% | |
| |
|---|
| Median (56 companies) | 21.0% | 21.2% | 20.6% | 19.4% | |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | | 26.2% | 22.7% | 15.4% | -21.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | | 1,216.6% | 853.5% | |
| Steel Connect, Inc. ($STCN) | 1.5% | 1.7% | 1.1% | 75.6% | |
| Everi Holdings Inc. ($EVRI) | 9.3% | 9.4% | 9.9% | 21.9% | |
| StoneCo Ltd ($STNE) | | 7.2% | 18.4% | 8.9% | |
| Cardtronics plc ($CATM) | 11.9% | 9.9% | 9.6% | 8.0% | |
| |
|---|
| Median (56 companies) | 3.0% | 3.2% | 2.9% | 3.2% | |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | | 6.1% | 1.8% | 1.6% | 2.6% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| GreenSky, Inc. ($GSKY) | | | 156.4% | 93.7% | |
| Mastercard Incorporated ($MA) | 57.5% | 57.5% | 60.6% | 64.7% | |
| Paychex, Inc. ($PAYX) | 58.7% | 61.9% | 63.9% | 64.5% | |
| NIC Inc. ($EGOV) | 61.2% | 63.1% | 52.1% | 39.3% | |
| Automatic Data Processing, Inc. ($ADP) | 28.9% | 37.9% | 36.6% | 37.5% | |
| |
|---|
| Median (62 companies) | 12.8% | 11.1% | 10.6% | 12.1% | |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | | 18.7% | 13.8% | 7.0% | -15.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| StarTek, Inc. ($SRT) | | 2.2x | 2.3x | 18.4x | |
| Square, Inc. ($SQ) | | | | 13.3x | |
| Steel Connect, Inc. ($STCN) | | | | 12.6x | |
| Exela Technologies Inc ($XELAU) | | 8.1x | | 9.7x | |
| Alliance Data Systems Corporation ($ADS) | 9.1x | 10.7x | 10.1x | 9.0x | |
| |
|---|
| Median (54 companies) | 0.7x | 1.6x | 2.3x | 2.2x | |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | | -1.1x | -1.7x | -0.4x | |
