RealNetworks, Inc. revenue started to decline in 2020: dropped 60.5% vs. 148% growth a year earliner
02/10/2021 • About RealNetworks, Inc. (
$RNWK) • By InTwits
RealNetworks, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- RealNetworks, Inc. is a company in decline: 2020 revenue growth was -60.5%, 5 years revenue CAGR was -11.5%
- The company operates at negative EBITDA Margin: -1.9%
- RealNetworks, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 is 0.0%. Average EBITDA Margin for the same period was -20.0%
- RealNetworks, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $0m in 2020, $1m in 2019, $1m in 2018, $1m in 2017, $2m in 2016
- The company has unprofitable business model: ROIC is -7.0%
- It operates with high leverage: Net Debt/EBITDA is 5.0x while industry average is 18.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
RealNetworks, Inc.'s Revenue dropped on 60.5%. Annual revenue decline showed slowdown in 20Q4 - revenue dropped on 59.4%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 11.5 pp from -13.4% to -1.9% in 2020. EBITDA Margin grew at 8.3 pp per annum in the last 5 years.
Gross Margin jumped on 35.7 pp from 40.1% to 75.8% in 2020. SG&A as a % of Revenue surged on 19.1 pp from 37.2% to 56.4% in 2020.
Net Income margin increased on 4.5 pp from -11.6% to -7.1% in 2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.60% in 2020. The company's CAPEX/Revenue showed almost no change from 2017 to 2020. It's average level of CAPEX/Revenue for the last three years was 0.80%.
Return on investment
The company operates at negative ROIC (-7.0%) and ROE (-11.4%). ROIC jumped on 43.9 pp from -50.9% to -7.0% in 2020. ROE jumped on 30.4 pp from -41.8% to -11.4% in 2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 5.0x and Debt / EBITDA is . Debt dropped on 46.5% while cash surged on 42.5%.
RealNetworks, Inc. has no short term refinancing risk: cash is higher than short term debt (709.8%).
Management team
Robert D Glaser "Rob" is a RealNetworks, Inc.'s CEO. Robert D Glaser "Rob" has spent 9 years with the company.
Financial and operational results
FY ended 12/31/2020
RealNetworks, Inc. ($RNWK) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 81.5 | 78.7 | 69.5 | 172.1 | 68.1 | -60.5% |
| Gross Profit | 53.9 | 55.6 | 51.8 | 69.0 | 51.6 | -25.2% |
| SG&A | 59.0 | 43.9 | 41.8 | 64.1 | 38.4 | -40.1% |
| EBITDA | -31.7 | -17.7 | -20.1 | -23.0 | -1.3 | |
| Net Income | -36.6 | -16.3 | -25.0 | -20.0 | -4.9 | |
Balance Sheet
|
|---|
| Cash | 33.7 | 51.2 | 35.6 | 16.8 | 23.9 | 42.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 12.1 | 3.4 | -72.2% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 12.4 | 9.7 | -21.3% |
Cash flow
|
|---|
| Capex | 2.4 | 0.7 | 0.8 | 1.2 | 0.4 | -65.8% |
Ratios
|
|---|
| Revenue growth | -35.0% | -3.4% | -11.7% | 147.6% | -60.5% | |
| EBITDA growth | -46.1% | -44.2% | 13.8% | 14.4% | -94.4% | |
|
|---|
| Gross Margin | 66.2% | 70.6% | 74.5% | 40.1% | 75.8% | 35.7% |
| EBITDA Margin | -38.9% | -22.5% | -29.0% | -13.4% | -1.9% | 11.5% |
| SG&A, % of revenue | 72.4% | 55.8% | 60.2% | 37.2% | 56.4% | 19.1% |
| Net Income Margin | -44.9% | -20.7% | -36.0% | -11.6% | -7.1% | 4.5% |
| CAPEX, % of revenue | 3.0% | 0.9% | 1.1% | 0.7% | 0.6% | -0.1% |
|
|---|
| ROIC | -36.1% | -24.1% | -32.0% | -50.9% | -7.0% | 43.9% |
| ROE | -34.9% | -19.4% | -36.7% | -41.8% | -11.4% | 30.4% |
RealNetworks, Inc. ($RNWK) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 43 | 40 | 17 | 18 | | 9.3% | -8.6% | -63.2% | -59.4% |
| Net Income | -5 | -5 | -3 | 8 | | -402.8% | - | - | - |
Balance Sheet
|
|---|
| Cash | 19 | 20 | 13 | 24 | | -48.4% | -25.3% | -26.8% | 42.5% |
| Short Term Debt | 10 | 9 | 7 | 3 | | -44.4% | -16.3% | 47.2% | -72.2% |
| Long Term Debt | 12 | 16 | 10 | 10 | | 6.8% | 50.1% | -28.6% | -21.3% |
Ratios
|
|---|
| Gross Margin | 44.0% | 43.0% | 75.5% | 77.1% | | 7.0% | 4.7% | 33.9% | 34.0% |
| Net Income Margin | -10.8% | -12.6% | -19.6% | 46.2% | | -14.6% | 8.2% | -6.3% | 60.9% |
Peers in Application Software
Below we provide RealNetworks, 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. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 15.7% | 15.2% | 19.4% | 14.7% |
|---|
| RealNetworks, Inc. ($RNWK) | - | -3.4% | -11.7% | 147.6% | -60.5% |
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. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 68.4% | 69.4% |
|---|
| RealNetworks, Inc. ($RNWK) | 66.2% | 70.6% | 74.5% | 40.1% | 75.8% |
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. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -4.7% | -3.3% | -3.3% | 4.5% | 7.7% |
|---|
| RealNetworks, Inc. ($RNWK) | -38.9% | -22.5% | -29.0% | -13.4% | -1.9% |
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. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 3.0% | 2.6% |
|---|
| RealNetworks, Inc. ($RNWK) | 3.0% | 0.9% | 1.1% | 0.7% | 0.6% |
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. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -10.2% | -9.8% | -4.2% | -1.8% |
|---|
| RealNetworks, Inc. ($RNWK) | -36.1% | -24.1% | -32.0% | -50.9% | -7.0% |
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 (54 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.2x |
|---|
