Zedge, Inc. reports 49.1% CAPEX decline in 2020 while 7.4% Revenue growth
10/22/2020 • About Zedge, Inc. (
$ZDGE) • By InTwits
Zedge, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 12.3% in FY2020, -16.6% in FY2019, -2.5% in FY2018, -0.4% in FY2017, 16.0% in FY2016
- Zedge, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.9%. At the same time it's a lot of higher than industry average of 8.0%.
- CAPEX is quite volatile: $4m in 2020, $90m in 2019, $33m in 2018, $14m in 2017, $6m in 2016
- The company has unprofitable business model: ROIC is -4.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Zedge, Inc.'s Revenue increased on 7.4%. Revenue growth showed acceleration in FY20Q4 - it increased 39.2% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 28.9 pp from -16.6% to 12.3% in FY2020. During the last 5 years EBITDA Margin bottomed in FY2019 at -16.6%.
Gross Margin increased on 3.0 pp from 84.4% to 87.4% in FY2020. SG&A as a % of Revenue dropped on 25.8 pp from 101% to 75.1% in FY2020. During the last 5 years SG&A as a % of Revenue topped in FY2019 at 101%.
Net Income margin surged on 32.0 pp from -37.9% to -5.9% in FY2020. During the last 5 years Net Income margin bottomed in FY2019 at -37.9%.
Investments (CAPEX, working capital and M&A)
In FY2020 Zedge, Inc. had CAPEX/Revenue of 8.0%. CAPEX/Revenue decreased on 7.0 pp from 15.0% in FY2017 to 8.0% in FY2020. It's average level of CAPEX/Revenue for the last three years was 13.5%. The company maintained rich investment policy and has spent a big chunk of EBITDA (65.2%) to CAPEX. During the last 5 years CAPEX as a % of Revenue topped in FY2019 at 16.9%.
Return on investment
The company operates at negative ROIC (-4.9%) and ROE (-7.1%). ROIC jumped on 29.1 pp from -34.0% to -4.9% in FY2020. ROE surged on 32.4 pp from -39.4% to -7.1% in FY2020. During FY2016-FY2020 ROIC bottomed in FY2019 at -34.0%.
Leverage (Debt)
Company's Net Debt / EBITDA is -3.9x and Debt / EBITDA is 0.4x. Debt surged while cash jumped on 218%.
Zedge, Inc. has no short term refinancing risk: cash is higher than short term debt (2,203.0%).
Financial and operational results
FY ended 07/31/2020
Zedge, Inc. ($ZDGE) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 11.113 | 10.031 | 10.833 | 8.816 | 9.470 | 7.4% |
| Gross Profit | 9.814 | 8.464 | 9.315 | 7.437 | 8.275 | 11.3% |
| SG&A | 7.755 | 8.468 | 9.581 | 8.897 | 7.110 | -20.1% |
| EBITDA | 1.778 | -0.040 | -0.266 | -1.460 | 1.165 | |
| Net Income | 0.983 | -0.611 | -1.563 | -3.344 | -0.559 | |
Balance Sheet
|
|---|
| Cash | 5.978 | 4.580 | 3.408 | 1.609 | 5.111 | 217.7% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.232 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.282 | |
Cash flow
|
|---|
| Capex | 1.006 | 1.506 | 1.702 | 1.490 | 0.759 | -49.1% |
Ratios
|
|---|
| Revenue growth | 22.8% | -9.7% | 8.0% | -18.6% | 7.4% | |
| EBITDA growth | -20.9% | -102.2% | 565.0% | 448.9% | -179.8% | |
|
|---|
| Gross Margin | 88.3% | 84.4% | 86.0% | 84.4% | 87.4% | 3.0% |
| EBITDA Margin | 16.0% | -0.4% | -2.5% | -16.6% | 12.3% | 28.9% |
| SG&A, % of revenue | 69.8% | 84.4% | 88.4% | 100.9% | 75.1% | -25.8% |
| Net Income Margin | 8.8% | -6.1% | -14.4% | -37.9% | -5.9% | 32.0% |
| CAPEX, % of revenue | 9.1% | 15.0% | 15.7% | 16.9% | 8.0% | -8.9% |
|
|---|
| ROIC | 13.7% | -6.4% | -12.6% | -34.0% | -4.9% | 29.1% |
| ROE | | -5.8% | -15.2% | -39.4% | -7.1% | 32.4% |
| Net Debt/EBITDA | -3.4x | | | | -3.9x |
Zedge, Inc. ($ZDGE) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 2 | 3 | 2 | 3 | | -14.6% | 2.8% | 8.7% | 39.2% |
| EBITDA | -0 | 1 | 0 | 1 | | - | 503.6% | - | - |
| Net Income | -1 | 0 | -0 | 0 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 2 | 2 | 5 | 5 | | -53.4% | -16.7% | 106.0% | 217.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
| Long Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 83.9% | 88.4% | 86.1% | 90.1% | | -1.4% | 1.1% | 4.6% | 7.9% |
| EBITDA Margin | -9.0% | 18.9% | 13.2% | 27.3% | | 2.7% | 15.7% | 51.4% | 54.7% |
| Net Income Margin | -39.4% | 3.8% | -15.6% | 17.2% | | -9.7% | 13.1% | 46.9% | 78.9% |
Peers in Interactive Media & Services
Below we provide Zedge, Inc. benchmarking against other companies in Interactive Media & 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.
