Sonic Foundry, Inc. reports 12.9 pp EBITDA Margin growth from -3.5% to 9.3% in 2020 in 2020 and almost no change in Revenue of 34.8
12/22/2020 • About Sonic Foundry, Inc. (
$SOFO) • By InTwits
Sonic Foundry, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Sonic Foundry, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 was 0.0% while average EBITDA Margin was -8.4% for the sames years
- Sonic Foundry, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's a lot of higher than industry average of 3.7%.
- CAPEX is quite volatile: $2m in FY2020, $0m in FY2019, $1m in FY2018, $1m in FY2017, $0m in FY2016
- The company has highly profitable business model: ROIC is 31.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue showed almost no change in FY2020. Annual revenue decline showed slowdown in FY20Q4 - revenue jumped on 10.2%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 12.9 pp from -3.5% to 9.3% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2018 at -41.4% and was growing since that time.
Gross Margin decreased slightly on 1.0 pp from 73.3% to 72.3% in FY2020. SG&A as a % of Revenue decreased on 7.4 pp from 59.4% to 52.0% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue topped in FY2018 at 63.6% and was declining since that time.
Net Income margin increased on 9.9 pp from -10.4% to -0.52% in FY2020. During the last 5 years Net Income margin bottomed in FY2018 at -35.2% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 5.0%. The company's CAPEX/Revenue increased on 2.7 pp from 2.3% in FY2017 to 5.0% in FY2020. It's average CAPEX/Revenue for the last three years was 2.9%. Battling declining revenue Sonic Foundry, Inc. invested a large share of EBITDA (53.6%) to CAPEX but that didn't help at least in this year.
Leverage (Debt)
Debt level is -0.5x Net Debt / EBITDA and 1.9x Debt / EBITDA. Debt dropped on 10.3% while cash jumped on 77.4%.
Sonic Foundry, Inc. has no short term refinancing risk: cash is higher than short term debt (287.7%).
Management team
Sonic Foundry, Inc.'s CEO is Joe P Mozden Jr. Joe P Mozden Jr has 6 months tenure with the company. Sonic Foundry, Inc.'s CFO Kelsy L Boyd has spent 9 months years with the company.
Financial and operational results
FY ended 09/30/2020
Sonic Foundry, Inc. ($SOFO) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 37.975 | 36.000 | 34.544 | 34.781 | 34.753 | -0.1% |
| Gross Profit | 27.990 | 26.133 | 24.888 | 25.501 | 25.119 | -1.5% |
| SG&A | 23.429 | 22.853 | 21.976 | 20.656 | 18.080 | -12.5% |
| EBITDA | -0.071 | -2.581 | -14.300 | -1.231 | 3.239 | |
| Net Income | -3.317 | -5.039 | -12.166 | -3.612 | -0.179 | |
Balance Sheet
|
|---|
| Cash | 1.794 | 1.211 | 1.189 | 4.295 | 7.619 | 77.4% |
| Short Term Debt | 3.639 | 3.058 | 1.726 | 1.162 | 2.648 | 127.9% |
| Long Term Debt | 1.102 | 0.367 | 1.544 | 5.608 | 3.427 | -38.9% |
Cash flow
|
|---|
| Capex | 0.339 | 0.839 | 0.840 | 0.433 | 1.736 | 300.9% |
Ratios
|
|---|
| Revenue growth | 4.2% | -5.2% | -4.0% | 0.7% | -0.1% | |
| EBITDA growth | -96.4% | 3,535.2% | 454.0% | -91.4% | -363.1% | |
|
|---|
| Gross Margin | 73.7% | 72.6% | 72.0% | 73.3% | 72.3% | -1.0% |
| EBITDA Margin | -0.2% | -7.2% | -41.4% | -3.5% | 9.3% | 12.9% |
| SG&A, % of revenue | 61.7% | 63.5% | 63.6% | 59.4% | 52.0% | -7.4% |
| Net Income Margin | -8.7% | -14.0% | -35.2% | -10.4% | -0.5% | 9.9% |
| CAPEX, % of revenue | 0.9% | 2.3% | 2.4% | 1.2% | 5.0% | 3.8% |
|
|---|
| ROIC | -18.1% | -50.6% | -786.4% | | 31.3% | |
| ROE | -46.3% | -120.6% | | | | |
| Net Debt/EBITDA | | | | | -0.5x |
Sonic Foundry, Inc. ($SOFO) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 9 | 8 | 10 | | 6.8% | 8.4% | -21.4% | 10.2% |
| EBITDA | -0 | 1 | 1 | 1 | | - | - | 82.4% | 155.4% |
| Net Income | -1 | 0 | 0 | 0 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 4 | 5 | 6 | 8 | | 83.6% | 288.0% | 90.2% | 77.4% |
| Short Term Debt | 3 | 3 | 3 | 3 | | 18.2% | 126.5% | 96.9% | 127.9% |
| Long Term Debt | 6 | 6 | 4 | 3 | | 287.2% | 20.1% | -35.8% | -38.9% |
Ratios
|
|---|
| Gross Margin | 72.8% | 72.2% | 72.6% | 71.6% | | -2.6% | -2.7% | -0.8% | 1.5% |
| EBITDA Margin | -3.4% | 13.0% | 10.3% | 12.2% | | 14.4% | 23.3% | 5.9% | 6.9% |
| Net Income Margin | -10.2% | 1.1% | 1.4% | 4.3% | | 13.6% | 19.7% | 2.9% | 6.3% |
Peers in Application Software
Below we provide Sonic Foundry, Inc. 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 15.7% | 15.2% | 19.5% | 14.7% |
|---|
| Sonic Foundry, Inc. ($SOFO) | - | -5.2% | -4.0% | 0.7% | -0.1% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| Sonic Foundry, Inc. ($SOFO) | 73.7% | 72.6% | 72.0% | 73.3% | 72.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -5.3% | -3.3% | -3.3% | 4.5% | 6.8% |
|---|
| Sonic Foundry, Inc. ($SOFO) | -0.2% | -7.2% | -41.4% | -3.5% | 9.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 3.0% | 2.3% | 2.4% | 3.0% | 2.5% |
|---|
| Sonic Foundry, Inc. ($SOFO) | 0.9% | 2.3% | 2.4% | 1.2% | 5.0% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| Adobe Inc. ($ADBE) | 15.9% | 21.3% | 23.3% | 22.9% | 26.9% |
| |
|---|
| Median (92 companies) | -9.2% | -10.2% | -9.8% | -4.3% | -2.2% |
|---|
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.3x |
|---|
| Sonic Foundry, Inc. ($SOFO) | - | - | - | - | -0.5x |
