Research Solutions Inc/CA revenue increased on 7.9% and EBITDA Margin increased slightly on 1.4 pp from -3.7% to -2.3%
09/24/2020 • About Research Solutions Inc/CA (
$RSSS) • By InTwits
Research Solutions Inc/CA reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -2.3%
- Research Solutions Inc/CA motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 was 0.0% while average EBITDA Margin was -4.5% for the sames years
- Research Solutions Inc/CA has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.1%.
- The company has unprofitable business model: ROIC is -20.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 7.9%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 4.9 pp from -6.2% to -1.2% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2017 at -11.3% and was growing since that time.
Gross Margin increased on 2.1 pp from 29.0% to 31.0% in FY2020. Gross Margin grew at 2.9 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in FY2020.
Net Income margin increased slightly on 1.2 pp from -3.3% to -2.1% in FY2020. During FY2016-FY2020 Net Income margin bottomed in FY2017 at -8.9% and was growing since that time.
Return on investment
The company operates at negative ROIC (-20.4%) and ROE (-16.8%). ROIC jumped on 14.3 pp from -34.7% to -20.4% in FY2020. ROE surged on 13.6 pp from -30.4% to -16.8% in FY2020. During FY2016-FY2020 ROIC bottomed in FY2017 at -56.1% and was growing since that time. During FY2016-FY2020 ROE bottomed in FY2017 at -44.2% and was growing since that time.
Leverage (Debt)
Debt level is -3.3x Net Debt / EBITDA and Debt / EBITDA. Debt dropped on 62.0% while cash surged on 73.9%.
Research Solutions Inc/CA has no short term refinancing risk: cash is higher than short term debt (11,738.3%).
Financial and operational results
FY ended 06/30/2020
Research Solutions Inc/CA ($RSSS) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 34.364 | 25.747 | 28.018 | 28.794 | 31.059 | 7.9% |
| Gross Profit | 6.501 | 6.104 | 7.349 | 8.343 | 9.638 | 15.5% |
| SG&A | 6.831 | 9.055 | 9.147 | 9.560 | 10.466 | 9.5% |
| EBITDA | -0.330 | -2.906 | -1.687 | -1.071 | -0.716 | |
| Net Income | -0.498 | -2.294 | -1.679 | -0.960 | -0.662 | |
Balance Sheet
|
|---|
| Cash | 6.077 | 5.774 | 4.908 | 5.353 | 9.312 | 73.9% |
| Short Term Debt | 0.000 | 0.111 | 0.120 | 0.129 | 0.079 | -38.6% |
| Long Term Debt | 0.000 | 0.328 | 0.209 | 0.079 | 0.000 | -100.0% |
Cash flow
|
|---|
| Capex | 0.058 | 0.060 | 0.029 | 0.016 | 0.000 | -100.0% |
Ratios
|
|---|
| Revenue growth | 7.7% | -25.1% | 8.8% | 2.8% | 7.9% | |
| EBITDA growth | 3.2% | 780.9% | -41.9% | -36.5% | -33.1% | |
|
|---|
| Gross Margin | 18.9% | 23.7% | 26.2% | 29.0% | 31.0% | 2.1% |
| EBITDA Margin | -1.0% | -11.3% | -6.0% | -3.7% | -2.3% | 1.4% |
| SG&A, % of revenue | 19.9% | 35.2% | 32.6% | 33.2% | 33.7% | 0.5% |
| Net Income Margin | -1.4% | -8.9% | -6.0% | -3.3% | -2.1% | 1.2% |
| CAPEX, % of revenue | 0.2% | 0.2% | 0.1% | 0.1% | 0.0% | |
|
|---|
| ROIC | -11.6% | -56.1% | -45.2% | -34.7% | -20.4% | 14.3% |
| ROE | -14.0% | -44.2% | -44.0% | -30.4% | -16.8% | 13.6% |
Research Solutions Inc/CA ($RSSS) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 8 | 8 | 8 | | - | - | - | - |
| EBITDA | -0 | -1 | 0 | 0 | | - | - | - | - |
| Net Income | -0 | -1 | 0 | -0 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 6 | 7 | 8 | 9 | | - | - | - | - |
| Short Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
| Long Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 30.5% | 30.2% | 31.6% | 31.8% | | - | - | - | - |
| EBITDA Margin | -1.1% | -8.7% | 0.7% | 0.9% | | - | - | - | - |
| Net Income Margin | -1.1% | -7.9% | 0.1% | -0.0% | | - | - | - | - |
Peers in IT Consulting & Other Services
Below we provide Research Solutions Inc/CA benchmarking against other companies in IT Consulting & Other 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Endava plc ($DAVA) | - | 38.1% | 36.5% | 32.3% | 21.9% |
| EPAM Systems, Inc. ($EPAM) | - | 25.0% | 27.1% | 24.5% | 15.9% |
| Switch, Inc. ($SWCH) | - | 18.8% | 7.3% | 13.9% | 10.7% |
| Perficient, Inc. ($PRFT) | - | -0.4% | 2.7% | 13.5% | 8.2% |
| Accenture plc ($ACN) | - | 5.7% | 13.2% | 3.9% | 2.6% |
| |
|---|
| Median (13 companies) | 8.3% | 4.8% | 3.6% | 7.6% | -0.8% |
|---|
| Research Solutions Inc/CA ($RSSS) | - | -25.1% | 8.8% | 2.8% | 7.9% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gartner, Inc. ($IT) | 61.3% | 60.1% | 63.1% | 63.5% | 67.2% |
| Teradata Corporation ($TDC) | 51.2% | 47.5% | 47.4% | 50.3% | 55.5% |
| Switch, Inc. ($SWCH) | 47.0% | 47.6% | 44.7% | 47.5% | 45.4% |
| Perficient, Inc. ($PRFT) | 31.1% | 33.3% | 35.8% | 37.4% | 37.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 39.9% | 38.2% | 39.0% | 36.6% | 35.9% |
| |
|---|
| Median (13 companies) | 29.5% | 30.2% | 30.4% | 35.9% | 33.9% |
|---|
| Research Solutions Inc/CA ($RSSS) | 18.9% | 23.7% | 26.2% | 29.0% | 31.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 37.0% | 28.5% | 39.8% | 44.1% | 47.8% |
| Amdocs Limited ($DOX) | 18.7% | 18.9% | 16.1% | 19.0% | 21.2% |
| Gartner, Inc. ($IT) | 15.0% | 7.1% | 13.0% | 16.2% | 19.8% |
| EPAM Systems, Inc. ($EPAM) | 13.5% | 13.9% | 15.3% | 17.9% | 19.4% |
| Accenture plc ($ACN) | 15.9% | 14.8% | 16.3% | 16.7% | 18.7% |
| |
|---|
| Median (13 companies) | 6.8% | 7.1% | 8.0% | 14.6% | 15.4% |
|---|
| Research Solutions Inc/CA ($RSSS) | -1.0% | -11.3% | -6.0% | -3.7% | -2.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 90.2% | 106.4% | 67.9% | 66.6% | 67.8% |
| Amdocs Limited ($DOX) | 3.5% | 3.4% | 5.8% | 3.1% | 4.9% |
| ServiceSource International, Inc. ($SREV) | 10.4% | 7.2% | 6.5% | 4.7% | 4.0% |
| Endava plc ($DAVA) | 2.4% | 4.1% | 2.5% | 2.6% | 2.8% |
| EPAM Systems, Inc. ($EPAM) | 2.5% | 2.1% | 2.0% | 4.3% | 2.6% |
| |
|---|
| Median (13 companies) | 1.2% | 1.4% | 1.5% | 2.4% | 2.4% |
|---|
| Research Solutions Inc/CA ($RSSS) | 0.2% | 0.2% | 0.1% | 0.1% | 0.0% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Accenture plc ($ACN) | 81.3% | 61.7% | 66.1% | 62.1% | 40.7% |
| EPAM Systems, Inc. ($EPAM) | 18.2% | 18.9% | 21.2% | 20.2% | 19.4% |
| Cognizant Technology Solutions Corporation ($CTSH) | 21.3% | 21.9% | 23.8% | 20.4% | 17.5% |
| Amdocs Limited ($DOX) | 13.0% | 14.4% | 11.9% | 15.9% | 14.5% |
| Gartner, Inc. ($IT) | 41.0% | -0.2% | 6.9% | 10.8% | 12.7% |
| |
|---|
| Median (13 companies) | 7.7% | 6.4% | 7.0% | 11.0% | 9.8% |
|---|
| Research Solutions Inc/CA ($RSSS) | -11.6% | -56.1% | -45.2% | -34.7% | -20.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 4.0x | 3.2x | 3.3x | 4.0x | 4.0x |
| Gartner, Inc. ($IT) | 0.6x | 11.7x | 4.1x | 4.1x | 2.6x |
| Perficient, Inc. ($PRFT) | 0.4x | 1.0x | 1.3x | 1.0x | 1.5x |
| ServiceSource International, Inc. ($SREV) | 156.0x | - | -35.5x | 2.9x | 0.6x |
| Teradata Corporation ($TDC) | -1.1x | -1.5x | -1.3x | 0.9x | 0.5x |
| |
|---|
| Median (12 companies) | 0.1x | 0.4x | 0.5x | -0.3x | -0.1x |
|---|
