Infinera Corporation revenue growth decelerated to 4.4% in FY2020 vs. 37.7% a year earliner
02/23/2021 • About Infinera Corporation (
$INFN) • By InTwits
Infinera Corporation reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -1.6%
- Infinera Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.0%. Average EBITDA Margin for the same period was -7.2%
- Infinera Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.4%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $18m in 2020, $23m in 2019, $18m in 2018, $26m in 2017, $41m in 2016
- The company has unprofitable business model: ROIC is -15.9%
- It operates with high leverage: Net Debt/EBITDA is 3.4x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 4.4%. Revenue growth showed slowdown in FY20Q4 - it was -8.1% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 13.0 pp from -14.5% to -1.6% in FY2020.
Gross Margin increased on 5.1 pp from 25.1% to 30.2% in FY2020. SG&A as a % of Revenue decreased on 3.5 pp from 21.4% to 17.8% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue topped in FY2017 at 25.2% and was declining since that time.
Net Income margin surged on 14.5 pp from -29.8% to -15.2% in FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.9% in FY2020. Infinera Corporation showed decline in CAPEX/Revenue of 5.0 pp from 7.8% in FY2017 to 2.9% in FY2020. It's average level of CAPEX/Revenue for the last three years was 3.1%.
Return on investment
The company operates at negative ROIC (-15.9%) and ROE (-50.9%). ROIC jumped on 19.3 pp from -35.1% to -15.9% in FY2020. ROE jumped on 20.1 pp from -70.9% to -50.9% in FY2020. During FY2016-FY2020 ROE bottomed in FY2019 at -70.9%.
Leverage (Debt)
Debt level is 3.4x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2020. Debt jumped on 45.8% while cash jumped on 173%.
Infinera Corporation has no short term refinancing risk: cash is higher than short term debt (252.5%).
Management team
The company's CEO David W Heard has spent 4 months with the company. Nancy Erba is a Infinera Corporation's CFO. Nancy Erba has spent 1 year at the company.
Financial and operational results
FY ended 12/26/2020
Infinera Corporation ($INFN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 870 | 741 | 943 | 1,299 | 1,356 | 4.4% |
| Gross Profit | 394 | 244 | 321 | 326 | 409 | 25.4% |
| SG&A | 187 | 187 | 205 | 278 | 242 | -12.9% |
| EBITDA | 36 | -117 | -85 | -189 | -21 | |
| Net Income | -24 | -195 | -214 | -387 | -207 | |
Balance Sheet
|
|---|
| Cash | 163 | 116 | 203 | 109 | 298 | 172.9% |
| Short Term Debt | 0 | 145 | 0 | 50 | 118 | 137.1% |
| Long Term Debt | 134 | 0 | 460 | 390 | 524 | 34.1% |
Cash flow
|
|---|
| Capex | 43 | 58 | 38 | 30 | 39 | 29.2% |
Ratios
|
|---|
| Revenue growth | -1.9% | -14.9% | 27.4% | 37.7% | 4.4% | |
| EBITDA growth | -62.6% | -427.8% | -27.2% | 121.8% | -88.9% | |
|
|---|
| Gross Margin | 45.2% | 32.9% | 34.0% | 25.1% | 30.2% | 5.1% |
| EBITDA Margin | 4.1% | -15.8% | -9.0% | -14.5% | -1.6% | 13.0% |
| SG&A, % of revenue | 21.5% | 25.2% | 21.8% | 21.4% | 17.8% | -3.5% |
| Net Income Margin | -2.7% | -26.3% | -22.7% | -29.8% | -15.2% | 14.5% |
| CAPEX, % of revenue | 5.0% | 7.8% | 4.0% | 2.3% | 2.9% | 0.6% |
|
|---|
| ROIC | -2.9% | -21.7% | -19.1% | -35.1% | -15.9% | 19.3% |
| ROE | -3.1% | -27.2% | -31.3% | -70.9% | -50.9% | 20.1% |
| Net Debt/EBITDA | -0.8x | | | | |
Infinera Corporation ($INFN) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 330 | 332 | 340 | 354 | | 12.8% | 11.9% | 4.6% | -8.1% |
| EBITDA | -43 | -12 | 2 | 32 | | - | - | - | - |
| Net Income | -99 | -62 | -36 | -10 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 262 | 203 | 197 | 298 | | 56.4% | 86.0% | 107.3% | 172.9% |
| Short Term Debt | 51 | 46 | 41 | 118 | | 181.9% | 131.9% | 64.5% | 137.1% |
| Long Term Debt | 572 | 574 | 588 | 524 | | 68.4% | 66.8% | 52.7% | 34.1% |
Ratios
|
|---|
| Gross Margin | 23.3% | 29.4% | 31.8% | 35.7% | | 0.6% | 8.7% | 5.1% | 6.7% |
| EBITDA Margin | -13.0% | -3.7% | 0.7% | 8.9% | | 9.1% | 20.1% | 10.6% | 14.6% |
| Net Income Margin | -30.1% | -18.6% | -10.6% | -2.8% | | 11.5% | 19.8% | 15.5% | 14.5% |
Peers in Communications Equipment
Below we provide Infinera Corporation benchmarking against other companies in Communications Equipment 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 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 2.8% | 3.7% | 2.1% |
|---|
| Infinera Corporation ($INFN) | - | -14.9% | 27.4% | 37.7% | 4.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.7% | 41.7% | 41.2% | 44.3% | 46.8% |
|---|
| Infinera Corporation ($INFN) | 45.2% | 32.9% | 34.0% | 25.1% | 30.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.9% | 6.5% | 5.4% | 5.0% | 9.3% |
|---|
| Infinera Corporation ($INFN) | 4.1% | -15.8% | -9.0% | -14.5% | -1.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.6% | 2.5% | 2.0% |
|---|
| Infinera Corporation ($INFN) | 5.0% | 7.8% | 4.0% | 2.3% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.4% | 2.2% | 0.7% | 1.2% | 2.3% |
|---|
| Infinera Corporation ($INFN) | -2.9% | -21.7% | -19.1% | -35.1% | -15.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (25 companies) | -0.9x | -0.7x | -0.1x | -0.3x | -0.4x |
|---|
