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Inphi Corporation reports 153% CAPEX growth in 2020 and 86.8% Revenue growth

02/02/2021 • About Inphi Corporation ($IPHI) • By InTwits

Inphi Corporation reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Inphi Corporation is a fast growth stock: 2020 revenue growth was 86.8%, 5 year revenue CAGR was 28.8% at 2020 ROIC -1.8%
  • EBITDA Margin is quite volatile: 17.5% in 2020, 14.3% in 2019, 2.9% in 2018, 2.2% in 2017, 21.1% in 2016
  • Inphi Corporation has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.8%. At the same time it's a lot of higher than industry average of 7.3%.
  • CAPEX is quite volatile: $75m in 2020, $30m in 2019, $32m in 2018, $37m in 2017, $22m in 2016
  • The company has unprofitable business model: ROIC is -1.8%
  • It operates with high leverage: Net Debt/EBITDA is 3.4x while industry average is 0.3x
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 surged on 86.8%. Revenue growth showed small slowdown in 20Q4 - it was 82.3% YoY. During the last 5 years Revenue growth bottomed in 2018 at -15.4% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.1 pp from -6.2% to 0.91% in 2020. During the last 5 years EBITDA Margin bottomed in 2017 at 2.2% and was growing since that time.

Gross Margin decreased on 3.9 pp from 58.2% to 54.3% in 2020. SG&A as a % of Revenue decreased on 4.0 pp from 21.4% to 17.4% in 2020. During the last 5 years SG&A as a % of Revenue topped in 2018 at 24.2% and was declining since that time.

Net Income margin surged on 11.2 pp from -19.9% to -8.7% in 2020. During the last 5 years Net Income margin bottomed in 2018 at -32.5% and was growing since that time.

Investments (CAPEX, working capital and M&A)


The company's CAPEX/Revenue was 11.0% in 2020. The company showed almost no change in CAPEX/Revenue from 2017 to 2020. Average CAPEX/Revenue for the last three years was 9.9%. The company invested a big chunk of EBITDA (62.7%) to CAPEX to fuel its growth.

Return on investment


The company operates at negative ROIC (-1.8%) and ROE (-17.1%). ROIC increased on 3.9 pp from -5.7% to -1.8% in 2020. ROE increased on 3.4 pp from -20.4% to -17.1% in 2020. During 2016-2020 ROIC bottomed in 2018 at -9.0% and was growing since that time. During 2016-2020 ROE bottomed in 2018 at -24.6% and was growing since that time.

Leverage (Debt)


Company's Net Debt / EBITDA is 3.4x and Debt / EBITDA is 4.2x. Net Debt / EBITDA dropped on 1.1x from 4.5x to 3.4x in 2020. Debt decreased on 2.5% while cash dropped on 63.4%. During the last 5 years Net Debt/EBITDA topped in 2017 at 33.7x and was declining since that time.

Inphi Corporation has no short term refinancing risk: cash is higher than short term debt (166.1%).

Management team


Inphi Corporation's CEO Ford G Tamer has spent 9 years with the company. The company's CFO John S Edmunds has spent 13 years with the company.

Financial and operational results


FY ended 12/31/2020

Inphi Corporation ($IPHI) key annual financial indicators

mln. $201620172018201920202020/2019
P&L
Revenue266.3348.2294.5365.6683.086.8%
Gross Profit180.7196.5165.1212.8371.174.4%
SG&A47.766.271.478.4118.851.6%
EBITDA56.27.78.652.3119.3128.0%
Net Income99.5-74.9-95.8-72.9-59.7
Balance Sheet
Cash144.9163.5172.0282.7103.5-63.4%
Short Term Debt0.00.00.0220.062.3-71.7%
Long Term Debt396.9421.4447.8299.8444.648.3%
Cash flow
Capex22.337.431.729.574.8153.5%
Ratios
Revenue growth38.2%30.8%-15.4%24.2%86.8%
EBITDA growth223.9%-86.4%11.8%511.6%128.0%

Gross Margin67.9%56.4%56.1%58.2%54.3%-3.9%
EBITDA Margin21.1%2.2%2.9%14.3%17.5%3.2%
SG&A, % of revenue17.9%19.0%24.2%21.4%17.4%-4.0%
Net Income Margin37.4%-21.5%-32.5%-19.9%-8.7%11.2%
CAPEX, % of revenue8.4%10.8%10.8%8.1%11.0%2.9%

ROIC3.7%-8.1%-9.0%-5.7%-1.8%3.9%
ROE26.4%-17.1%-24.6%-20.4%-17.1%3.4%
Net Debt/EBITDA4.5x33.7x32.2x4.5x3.4x-1.1x

Inphi Corporation ($IPHI) key quoterly financial indicators

mln. $20Q120Q220Q320Q4 YoY change
P&L
Revenue139175181188 69.6%103.2%91.8%82.3%
EBITDA15313933 56.9%178.8%161.0%105.3%
Net Income-20-24-3-12 ----
Balance Sheet
Cash98134148104 -55.1%-16.1%-2.1%-63.4%
Short Term Debt2245111062 11,418.2%3,011.7%3,778.0%-71.7%
Long Term Debt304496441445 -34.6%5.5%-8.0%48.3%
Ratios
Gross Margin52.9%53.0%56.2%54.9% -5.1%-3.9%-1.6%-5.0%
EBITDA Margin 11.0% 17.7% 21.8% 17.9% -0.9%4.8%5.8%2.0%
Net Income Margin -14.5% -13.7% -1.9% -6.4% 13.1%10.1%15.3%6.6%

Peers in Semiconductors


Below you can find Inphi Corporation benchmarking vs. other companies in Semiconductors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Sequans Communications S.A. ($SQNS)-5.9%-16.6%-23.3%65.0%
MaxLinear, Inc ($MXL)-8.4%-8.4%-17.6%50.9%
Advanced Micro Devices, Inc. ($AMD)-21.6%23.3%4.0%45.0%
Kopin Corporation ($KOPN)-23.0%-12.1%20.7%35.9%
Monolithic Power Systems, Inc. ($MPWR)-21.2%23.7%7.8%34.5%
 
Median (43 companies)1.2%10.9%4.9%-3.2%1.0%
Inphi Corporation ($IPHI)-30.8%-15.4%24.2%86.8%


Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
CEVA, Inc. ($CEVA)91.6%92.1%89.8%88.4%89.3%
Universal Display Corporation ($OLED)83.9%80.8%75.5%78.5%80.1%
Rambus, Inc. ($RMBS)80.1%79.9%76.8%77.1%75.0%
Analog Devices, Inc. ($ADI)65.1%59.9%68.3%67.0%65.9%
MoSys, Inc. ($MOSY)49.0%46.9%61.8%61.0%65.7%
 
Median (43 companies)47.2%48.6%50.2%50.4%49.2%
Inphi Corporation ($IPHI)67.9%56.4%56.1%58.2%54.3%


Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Texas Instruments Incorporated ($TXN)43.5%46.7%48.6%47.5%47.6%
Intel Corp ($INTC)35.2%41.7%45.7%45.9%46.7%
Broadcom Inc. ($AVGO)19.9%40.4%44.2%40.9%46.2%
Universal Display Corporation ($OLED)44.8%51.6%35.3%48.0%45.9%
Analog Devices, Inc. ($ADI)36.2%32.1%43.2%42.1%42.0%
 
Median (41 companies)9.2%10.7%9.8%12.9%17.3%
Inphi Corporation ($IPHI)21.1%2.2%2.9%14.3%17.5%


Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Micron Technology, Inc. ($MU)46.9%23.3%29.2%41.8%38.4%
Sequans Communications S.A. ($SQNS)11.8%13.3%22.9%29.6%27.1%
Intel Corp ($INTC)16.2%18.8%21.4%22.5%18.6%
First Solar, Inc. ($FSLR)7.9%17.5%33.0%21.8%15.4%
Power Integrations, Inc. ($POWI)3.1%7.5%5.9%5.7%14.5%
 
Median (40 companies)3.6%4.7%4.2%3.7%3.6%
Inphi Corporation ($IPHI)8.4%10.8%10.8%8.1%11.0%


Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Texas Instruments Incorporated ($TXN)34.9%43.1%47.5%39.7%38.2%
Applied Materials Inc ($AMAT)19.0%31.2%36.4%27.7%32.1%
Advanced Micro Devices, Inc. ($AMD)-21.7%7.3%21.6%21.5%31.8%
QUALCOMM Incorporated ($QCOM)15.8%5.7%2.2%38.0%28.1%
NVIDIA Corporation ($NVDA)13.1%27.3%35.3%36.9%22.7%
 
Median (45 companies)1.4%3.2%3.0%3.8%5.5%
Inphi Corporation ($IPHI)3.7%-8.1%-9.0%-5.7%-1.8%


Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
SunPower Corporation ($SPWR)----8.2x
MACOM Technology Solutions Holdings, Inc. ($MTSI)3.0x7.2x98.6x-6.6x
Rambus, Inc. ($RMBS)-0.1x-0.1x--5.9x
Canadian Solar Inc. ($CSIQ)11.3x6.8x2.7x3.4x3.3x
Broadcom Inc. ($AVGO)4.0x0.9x1.4x3.0x3.1x
 
Median (31 companies)-0.0x0.4x0.3x0.5x0.1x
Inphi Corporation ($IPHI)4.5x33.7x32.2x4.5x3.4x