ServiceSource International, Inc. revenue decreased on 10.0% and EBITDA Margin showed almost no change
02/24/2021 • About ServiceSource International, Inc. (
$SREV) • By InTwits
ServiceSource International, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- ServiceSource International, Inc. is a company in decline: 2020 revenue growth was -10.0%, 5 years revenue CAGR was -5.1%
- EBITDA Margin is quite volatile: 3.1% in 2020, 2.9% in 2019, 0.3% in 2018, -0.5% in 2017, 0.2% in 2016
- ServiceSource International, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.6%. At the same time it's a lot of higher than industry average of 3.5%.
- CAPEX is quite volatile: $8m in 2020, $10m in 2019, $16m in 2018, $17m in 2017, $26m in 2016
- The company has unprofitable business model: ROIC is -14.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.6x while industry average is 0.6x
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 decreased on 10.0%. Annual revenue decline showed slowdown in 20Q4 - revenue decreased on 6.9%. EBITDA Margin showed almost no change in 2020. During 2016-2020 EBITDA Margin bottomed in 2017 at -0.47% and was growing since that time.
Gross Margin showed almost no change in 2020. Gross Margin declined at -1.3 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 0.54 pp from 33.9% to 34.4% in 2020. SG&A as a % of Revenue followed a declining trend at -0.84 pp per annum in the last 5 years.
Net Income margin decreased slightly on 0.88 pp from -8.6% to -9.5% in 2020. Net Income margin grew at 1.0 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In 2020 ServiceSource International, Inc. had CAPEX/Revenue of 4.0%. ServiceSource International, Inc.'s CAPEX/Revenue decreased on 3.1 pp from 7.2% in 2017 to 4.0% in 2020. It's average level of CAPEX/Revenue for the last three years was 5.1%. The company has spent a lot to CAPEX (130% of EBITDA) which didn't stop revenue from falling. CAPEX as a % of Revenue declined at -1.5 pp per annum in 2016-2020.
Return on investment
The company operates at negative ROIC (-14.4%) and ROE (-22.7%). ROIC showed almost no change in 2020. ROE decreased on 3.0 pp from -19.6% to -22.7% in 2020. ROIC declined at -2.2 pp per annum in 2016-2020.
Leverage (Debt)
Debt level is 0.6x Net Debt / EBITDA and 6.2x Debt / EBITDA. Net Debt / EBITDA dropped on 2.3x from 2.9x to 0.6x in 2020. Debt dropped on 17.2% while cash surged on 25.5%.
ServiceSource International, Inc. has no short term refinancing risk: cash is higher than short term debt (298.2%).
Management team
The company's CEO is Gary B Moore. Gary B Moore has 2 years tenure with the company. The company's CFO Chad W Lyne has spent 4 months years with the company.
Financial and operational results
FY ended 12/31/2020
ServiceSource International, Inc. ($SREV) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 252.9 | 239.1 | 238.3 | 216.1 | 194.6 | -10.0% |
| Gross Profit | 87.8 | 75.4 | 73.6 | 63.0 | 57.6 | -8.6% |
| SG&A | 95.0 | 86.1 | 82.9 | 73.2 | 67.0 | -8.5% |
| EBITDA | 0.6 | -1.1 | 0.6 | 6.3 | 6.0 | -3.7% |
| Net Income | -32.1 | -29.8 | -24.9 | -18.7 | -18.5 | |
Balance Sheet
|
|---|
| Cash | 47.7 | 51.4 | 26.5 | 27.1 | 34.0 | 25.5% |
| Short Term Debt | 0.0 | 144.2 | 4.9 | 10.8 | 11.4 | 5.2% |
| Long Term Debt | 134.9 | 0.0 | 0.0 | 34.4 | 26.0 | -24.3% |
Cash flow
|
|---|
| Capex | 26.3 | 17.1 | 15.6 | 10.1 | 7.9 | -22.3% |
Ratios
|
|---|
| Revenue growth | 0.3% | -5.4% | -0.3% | -9.3% | -10.0% | |
| EBITDA growth | -103.5% | -300.2% | -154.4% | 929.4% | -3.7% | |
|
|---|
| Gross Margin | 34.7% | 31.5% | 30.9% | 29.1% | 29.6% | 0.4% |
| EBITDA Margin | 0.2% | -0.5% | 0.3% | 2.9% | 3.1% | 0.2% |
| SG&A, % of revenue | 37.6% | 36.0% | 34.8% | 33.9% | 34.4% | 0.5% |
| Net Income Margin | -12.7% | -12.5% | -10.4% | -8.6% | -9.5% | -0.9% |
| CAPEX, % of revenue | 10.4% | 7.2% | 6.5% | 4.7% | 4.0% | -0.6% |
|
|---|
| ROIC | -5.8% | -9.1% | -8.7% | -14.1% | -14.4% | -0.3% |
| ROE | -23.4% | -25.0% | -23.3% | -19.6% | -22.7% | -3.0% |
| Net Debt/EBITDA | 156.0x | | -35.5x | 2.9x | 0.6x | -2.3x |
ServiceSource International, Inc. ($SREV) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 50 | 48 | 46 | 51 | | -9.7% | -9.0% | -14.2% | -6.9% |
| EBITDA | 3 | 2 | 1 | -2 | | 497.5% | 373.2% | -60.7% | -153.3% |
| Net Income | -6 | -5 | -6 | -2 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 47 | 41 | 39 | 34 | | 90.2% | 59.5% | 69.3% | 25.5% |
| Short Term Debt | 10 | 11 | 26 | 11 | | -25.2% | -20.7% | 160.0% | 5.2% |
| Long Term Debt | 32 | 30 | 29 | 26 | | 0.0% | -0.4% | -20.0% | -24.3% |
Ratios
|
|---|
| Gross Margin | 29.0% | 27.3% | 27.5% | 34.1% | | 0.2% | 0.5% | -1.6% | 2.4% |
| EBITDA Margin | 5.7% | 4.8% | 1.3% | -3.9% | | 4.9% | 3.9% | -1.6% | -10.7% |
| Net Income Margin | -11.9% | -11.2% | -12.2% | -3.3% | | -1.6% | 0.3% | -3.9% | 1.3% |
Peers in IT Consulting & Other Services
Below we provide ServiceSource International, Inc. benchmarking against other companies in IT Consulting & Other 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.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CLPS Incorporation ($CLPS) | - | 8.1% | 56.0% | 32.7% | 37.7% |
| Endava plc ($DAVA) | - | 38.1% | 36.5% | 32.3% | 21.9% |
| EPAM Systems, Inc. ($EPAM) | - | 25.0% | 27.1% | 24.5% | 15.9% |
| Switch, Inc. ($SWCH) | - | 18.8% | 7.3% | 13.9% | 10.7% |
| Perficient, Inc. ($PRFT) | - | -0.4% | 2.7% | 13.5% | 8.2% |
| |
|---|
| Median (14 companies) | 8.3% | 4.8% | 4.3% | 7.6% | 2.3% |
|---|
| ServiceSource International, Inc. ($SREV) | - | -5.4% | -0.3% | -9.3% | -10.0% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gartner, Inc. ($IT) | 61.3% | 60.1% | 63.1% | 63.5% | 67.2% |
| Teradata Corporation ($TDC) | 51.2% | 47.5% | 47.4% | 50.3% | 55.5% |
| Switch, Inc. ($SWCH) | 47.0% | 47.6% | 44.7% | 47.5% | 45.4% |
| Perficient, Inc. ($PRFT) | 31.1% | 33.3% | 35.8% | 37.4% | 37.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 39.9% | 38.2% | 39.0% | 36.6% | 35.9% |
| |
|---|
| Median (14 companies) | 28.8% | 28.8% | 29.4% | 35.9% | 34.4% |
|---|
| ServiceSource International, Inc. ($SREV) | 34.7% | 31.5% | 30.9% | 29.1% | 29.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 37.0% | 28.5% | 39.8% | 44.1% | 47.8% |
| Amdocs Limited ($DOX) | 18.7% | 18.9% | 16.1% | 19.0% | 21.2% |
| Gartner, Inc. ($IT) | 15.0% | 7.1% | 13.0% | 16.2% | 19.8% |
| EPAM Systems, Inc. ($EPAM) | 13.5% | 13.9% | 15.3% | 17.9% | 19.4% |
| Accenture plc ($ACN) | 15.9% | 14.8% | 16.3% | 16.7% | 18.7% |
| |
|---|
| Median (14 companies) | 6.8% | 7.1% | 8.0% | 14.6% | 13.6% |
|---|
| ServiceSource International, Inc. ($SREV) | 0.2% | -0.5% | 0.3% | 2.9% | 3.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 90.2% | 106.4% | 67.9% | 66.6% | 67.8% |
| Amdocs Limited ($DOX) | 3.5% | 3.4% | 5.8% | 3.1% | 4.9% |
| Endava plc ($DAVA) | 2.4% | 4.1% | 2.5% | 2.6% | 2.8% |
| EPAM Systems, Inc. ($EPAM) | 2.5% | 2.1% | 2.0% | 4.3% | 2.6% |
| Teradata Corporation ($TDC) | 2.3% | 3.6% | 7.1% | 2.8% | 2.4% |
| |
|---|
| Median (14 companies) | 1.1% | 1.4% | 1.5% | 2.0% | 1.7% |
|---|
| ServiceSource International, Inc. ($SREV) | 10.4% | 7.2% | 6.5% | 4.7% | 4.0% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Accenture plc ($ACN) | 81.3% | 61.7% | 66.1% | 62.1% | 40.7% |
| EPAM Systems, Inc. ($EPAM) | 18.2% | 18.9% | 21.2% | 20.2% | 19.4% |
| Cognizant Technology Solutions Corporation ($CTSH) | 21.3% | 21.9% | 23.8% | 20.4% | 17.5% |
| Amdocs Limited ($DOX) | 13.0% | 14.4% | 11.9% | 15.9% | 14.5% |
| Gartner, Inc. ($IT) | 41.0% | -0.2% | 6.9% | 10.8% | 12.7% |
| |
|---|
| Median (14 companies) | 7.7% | 6.4% | 7.0% | 11.0% | 9.6% |
|---|
| ServiceSource International, Inc. ($SREV) | -5.8% | -9.1% | -8.7% | -14.1% | -14.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 4.0x | 3.2x | 3.3x | 4.0x | 4.0x |
| Gartner, Inc. ($IT) | 0.6x | 11.7x | 4.1x | 4.1x | 2.6x |
| Perficient, Inc. ($PRFT) | 0.4x | 1.0x | 1.3x | 1.0x | 1.5x |
| Teradata Corporation ($TDC) | -1.1x | -1.5x | -1.3x | 0.9x | 0.5x |
| Amdocs Limited ($DOX) | -0.8x | -0.9x | -0.7x | -0.6x | 0.1x |
| |
|---|
| Median (12 companies) | 0.1x | 0.4x | 0.8x | -0.4x | -0.4x |
|---|
| ServiceSource International, Inc. ($SREV) | 156.0x | - | -35.5x | 2.9x | 0.6x |
