Xunlei Limited reports 21.7% revenue decline in 2019 and 11.1 pp EBITDA Margin decline from -16.3% to -27.3%
03/12/2020 • About Xunlei Limited (
$XNET) • By InTwits
Xunlei Limited reported 2019 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -27.3%
- Xunlei Limited spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2015-2019 is 0.6%. Average EBITDA Margin for the same period was -20.8%. In 2019 SBC/Revenue was even higher: 3.0%
- Xunlei Limited has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's in pair with industry average of 7.8%
- CAPEX is quite volatile: $3m in 2019, $1m in 2018, $5m in 2017, $14m in 2016, $5m in 2015
- The company has unprofitable business model: ROIC is -16.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Xunlei Limited's Revenue dropped on 21.7%. Annual revenue decline showed slowdown in 19Q4 - revenue surged on 14.3%. During 2015-2019 Revenue growth topped in 2017 at 43.1% and was decelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 11.1 pp from -16.3% to -27.3% in 2019.
Gross Margin decreased on 5.1 pp from 49.8% to 44.7% in 2019. SG&A as a % of Revenue increased on 6.1 pp from 33.0% to 39.2% in 2019. During the last 5 years SG&A as a % of Revenue bottomed in 2017 at 28.1% and was growing since that time.
Net Income margin dropped on 12.4 pp from -17.0% to -29.4% in 2019.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.7% in 2019. CAPEX/Revenue decreased on 8.1 pp from 9.8% in 2016 to 1.7% in 2019. Average CAPEX/Revenue for the last three years was 1.7%.
Return on investment
The company operates at negative ROIC (-16.9%) and ROE (-16.6%). ROIC decreased on 4.8 pp from -12.1% to -16.9% in 2019. ROE decreased on 5.8 pp from -10.8% to -16.6% in 2019. ROIC declined at -2.2 pp per annum in 2015-2019. ROE declined at -3.2 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.5x and Debt / EBITDA is . Debt surged while cash surged on 32.2%.
Xunlei Limited has no short term refinancing risk: cash is higher than short term debt (3,461.9%).
Management team
The company has 1,070 employees. Average revenue per employee in 2019 was
$168,846.
Financial and operational results
FY ended 12/31/2019
Xunlei Limited ($XNET) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 104.5 | 140.2 | 200.6 | 230.6 | 180.7 | -21.7% |
| Gross Profit | 45.3 | 60.3 | 82.7 | 114.9 | 80.8 | -29.7% |
| SG&A | 41.0 | 40.6 | 56.4 | 76.2 | 70.8 | -7.1% |
| EBITDA | -13.7 | -33.1 | -44.2 | -37.5 | -49.4 | |
| EBIT | | | | | -56.4 | |
| Net Income | -13.2 | -24.1 | -37.8 | -39.3 | -53.2 | |
| Stock Based Compensation | | | | | 5.4 | |
Balance Sheet
|
|---|
| Cash | 361.8 | 199.5 | 233.5 | 122.9 | 162.5 | 32.2% |
| Accounts Receivable | | | | | 27.5 | |
| Inventory | | | | | 5.5 | |
| Accounts Payable | | | | | 24.2 | |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 4.7 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 4.1 | |
Cash flow
|
|---|
| Capex | 4.9 | 13.8 | 5.3 | 1.4 | 3.1 | 117.3% |
Ratios
|
|---|
| Revenue growth | -22.0% | 34.1% | 43.1% | 15.0% | -21.7% | |
| EBITDA growth | -125.6% | 141.3% | 33.3% | -15.1% | 31.7% | |
|
|---|
| Gross Margin | 43.3% | 43.0% | 41.2% | 49.8% | 44.7% | -5.1% |
| EBITDA Margin | -13.1% | -23.6% | -22.0% | -16.3% | -27.3% | -11.1% |
| EBIT Margin | | | | | -31.2% |
| SG&A, % of revenue | 39.3% | 29.0% | 28.1% | 33.0% | 39.2% | 6.1% |
| SBC, % of revenue | | | | | 3.0% |
| Net Income Margin | -12.6% | -17.2% | -18.9% | -17.0% | -29.4% | -12.4% |
| CAPEX, % of revenue | 4.7% | 9.8% | 2.7% | 0.6% | 1.7% | 1.1% |
|
|---|
| ROIC | -7.0% | -9.8% | -13.8% | -12.1% | -16.9% | -4.8% |
| ROE | -2.9% | -5.6% | -9.5% | -10.8% | -16.6% | -5.8% |
People
|
|---|
| Employees | | | | | 1,070 | |
| Revenue/Employee, th. $ | | | | | 169 | |
Xunlei Limited ($XNET) key quoterly financial indicators
| mln. $ | 19Q1 | 19Q2 | 19Q3 | 19Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 41 | 48 | 44 | 48 | | -47.6% | -26.6% | -2.3% | 14.3% |
| Net Income | -9 | -2 | -25 | -18 | | -212.1% | -387.4% | | |
Balance Sheet
|
|---|
| Cash | 156 | 183 | 162 | 162 | | -22.1% | 10.0% | 39.8% | 31.8% |
| Short Term Debt | 5 | 4 | 5 | 5 | | | | | |
| Long Term Debt | 5 | 3 | 5 | 4 | | | | | |
Ratios
|
|---|
| Gross Margin | 52.0% | 47.0% | 44.0% | 37.0% | | 3.8% | -6.0% | -9.0% | -7.6% |
| Net Income Margin | -22.0% | -4.2% | -56.8% | -37.5% | | -32.2% | -5.2% | -21.7% | 39.1% |
Peers in Application Software
Below we provide Xunlei Limited benchmarking against other companies in Application Software 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 |
|---|
| nFusz Inc ($FUSZ) | | | | 433.3% | |
| CloudCommerce Inc ($CLWD) | -38.1% | 247.6% | 40.9% | 301.1% | |
| Seven Stars Cloud Group, Inc. ($SSC) | 134.7% | 663.8% | 310.3% | 161.7% | |
| Aurora Mobile Limited ($JG) | | | 304.9% | 150.8% | |
| Intelligent Systems Corporation ($INS) | 14.2% | 71.0% | 12.2% | 119.0% | |
| |
|---|
| Median (152 companies) | 13.9% | 14.3% | 14.8% | 15.2% | 10.5% |
|---|
| Xunlei Limited ($XNET) | | 34.1% | 43.1% | 15.0% | -21.7% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 97.4% | 98.0% | 97.6% | 96.5% | |
| hopTo Inc ($HPTO) | 87.8% | 95.9% | 98.2% | 95.4% | |
| Aware, Inc. ($AWRE) | 87.2% | 90.3% | 94.6% | 92.3% | |
| Alteryx, Inc. ($AYX) | 80.5% | 81.3% | 83.4% | 91.0% | |
| Aspen Technology, Inc. ($AZPN) | 88.7% | 89.7% | 90.2% | 89.9% | |
| |
|---|
| Median (151 companies) | 63.0% | 64.2% | 64.6% | 66.0% | 52.9% |
|---|
| Xunlei Limited ($XNET) | 43.3% | 43.0% | 41.2% | 49.8% | 44.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aspen Technology, Inc. ($AZPN) | 42.2% | 46.0% | 45.2% | 43.3% | |
| ANSYS, Inc. ($ANSS) | 45.8% | 45.1% | 41.9% | 41.4% | |
| Paycom Software, Inc. ($PAYC) | 19.5% | 35.1% | 34.4% | 35.9% | |
| j2 Global, Inc. ($JCOM) | 40.6% | 41.7% | 36.5% | 35.7% | |
| Adobe Inc. ($ADBE) | 25.9% | 31.2% | 34.2% | 35.3% | |
| |
|---|
| Median (153 companies) | -10.7% | -4.7% | -3.3% | -3.3% | 15.6% |
|---|
| Xunlei Limited ($XNET) | -13.1% | -23.6% | -22.0% | -16.3% | -27.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| TimefireVR Inc ($TFVR) | 350.5% | 4.3% | | 1,021.9% | |
| MGT Capital Investments Inc ($MGTI) | 36.5% | 221.4% | 129.8% | 344.5% | |
| Integrated Ventures Inc ($INTV) | | | | 199.9% | 15.2% |
| ShotSpotter, Inc. ($SSTI) | 18.3% | 28.9% | 27.1% | 24.3% | |
| Ellie Mae, Inc. ($ELLI) | 20.6% | 16.7% | 21.1% | 19.4% | |
| |
|---|
| Median (154 companies) | 2.7% | 2.9% | 2.3% | 2.4% | 3.3% |
|---|
| Xunlei Limited ($XNET) | 4.7% | 9.8% | 2.7% | 0.6% | 1.7% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| InsPro Technologies Corp ($ITCC) | | | | 127.4% | |
| Manhattan Associates, Inc. ($MANH) | 78.7% | 99.3% | 102.5% | 80.9% | |
| Intuit Inc. ($INTU) | 23.7% | 52.1% | 72.6% | 66.8% | |
| Aspen Technology, Inc. ($AZPN) | | | | 58.1% | |
| Paycom Software, Inc. ($PAYC) | 30.5% | 75.4% | 51.1% | 47.5% | |
| |
|---|
| Median (180 companies) | -13.1% | -9.2% | -10.2% | -9.8% | 10.4% |
|---|
| Xunlei Limited ($XNET) | -7.0% | -9.8% | -13.8% | -12.1% | -16.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Upland Software, Inc. ($UPLD) | | 16.4x | 115.6x | 16.7x | |
| Nuance Communications, Inc. ($NUAN) | 5.7x | 5.3x | 7.1x | 15.2x | |
| Asure Software Inc ($ASUR) | 4.5x | 3.6x | 9.5x | 14.5x | |
| SS&C Technologies Holdings, Inc. ($SSNC) | 7.3x | 4.6x | 3.1x | 8.5x | |
| Avaya Holdings Corp. ($AVYA) | | | | 7.4x | |
| |
|---|
| Median (70 companies) | -0.8x | -0.9x | -0.8x | -0.7x | -0.1x |
|---|
