Crexendo Inc reports 597% Net Income growth in 2020 while 2.8 pp EBITDA Margin decline from 10.6% to 7.8%
03/09/2021 • About Crexendo Inc (
$CXDO) • By InTwits
Crexendo Inc reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- Crexendo Inc is a fast growth stock: 2020 revenue growth was 13.5%, 5 year revenue CAGR was 15.9% at 2020 ROIC 7.3%
- Crexendo Inc motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 was 0.0% while average EBITDA Margin was -0.9% for the sames years
- Crexendo Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%. At the same time it's a lot of higher than industry average of 3.0%.
- CAPEX is quite volatile: $1m in 2020, $0m in 2019, $0m in 2018, $0m in 2017, $0m in 2016
- The company has business model with low profitability: ROIC is 7.3%
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 surged on 13.5%. Revenue growth showed acceleration in 20Q4 - it increased 16.0% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.8 pp from 10.6% to 7.8% in 2020. EBITDA Margin followed a growing trend at 9.0 pp per annum in 2016-2020.
Gross Margin showed almost no change in 2020. SG&A as a % of Revenue showed almost no change in 2020. SG&A as a % of Revenue followed a declining trend at -6.2 pp per annum in 2016-2020.
Net Income margin jumped on 40.6 pp from 7.9% to 48.5% in 2020. Net Income margin grew at 17.5 pp per annum in 2016-2020.
Investments (CAPEX, working capital and M&A)
Crexendo Inc's CAPEX/Revenue was 4.5% in 2020. CAPEX/Revenue increased on 4.5 pp from 0% in 2017 to 4.5% in 2020. Average CAPEX/Revenue for the last three years was 1.7%. To deliver its fast growth Crexendo Inc invested a large share of EBITDA (58.5%) to CAPEX.
Return on investment
The company operates at good ROE (52.7%) while ROIC is low (7.3%). ROIC dropped on 28.1 pp from 35.4% to 7.3% in 2020. ROE jumped on 17.0 pp from 35.7% to 52.7% in 2020. ROIC grew at 32.2 pp per annum in the last 5 years. ROE stuck to a growing trend at 63.8 pp per annum in 2016-2020.
Leverage (Debt)
Debt level is -12.2x Net Debt / EBITDA and 1.6x Debt / EBITDA. Debt surged on 1,115% while cash surged on 321%.
Crexendo Inc has no short term refinancing risk: cash is higher than short term debt (17,405.0%).
Valuation and dividends
The company's trades at EV/EBITDA 83.9x and P/E 15.4x.
Management team
Crexendo Inc's CEO Steven G Mihaylo has spent 12 years with the company. Ronald Vincent "Ron" is a the company's CFO. Ronald Vincent "Ron" has spent 8 years at the company.
Financial and operational results
FY ended 12/31/2020
Crexendo Inc ($CXDO) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 9.119 | 10.187 | 11.908 | 14.436 | 16.387 | 13.5% |
| Gross Profit | 5.494 | 6.921 | 8.089 | 10.085 | 11.440 | 13.4% |
| SG&A | 7.431 | 6.905 | 7.494 | 8.097 | 9.260 | 14.4% |
| EBITDA | -2.617 | -0.628 | -0.114 | 1.529 | 1.274 | -16.7% |
| Net Income | -2.792 | -0.929 | -0.223 | 1.139 | 7.940 | 597.1% |
Balance Sheet
|
|---|
| Cash | 0.619 | 1.282 | 1.849 | 4.180 | 17.579 | 320.6% |
| Short Term Debt | 0.066 | 0.069 | 0.084 | 0.080 | 0.101 | 26.3% |
| Long Term Debt | 0.966 | 0.010 | 0.116 | 0.087 | 1.928 | 2,116.1% |
Cash flow
|
|---|
| Capex | 0.000 | 0.000 | 0.007 | 0.072 | 0.745 | 934.7% |
Ratios
|
|---|
| Revenue growth | 16.6% | 11.7% | 16.9% | 21.2% | 13.5% | |
| EBITDA growth | -42.7% | -76.0% | -81.8% | -1,441.2% | -16.7% | |
|
|---|
| Gross Margin | 60.2% | 67.9% | 67.9% | 69.9% | 69.8% | -0.0% |
| EBITDA Margin | -28.7% | -6.2% | -1.0% | 10.6% | 7.8% | -2.8% |
| SG&A, % of revenue | 81.5% | 67.8% | 62.9% | 56.1% | 56.5% | 0.4% |
| Net Income Margin | -30.6% | -9.1% | -1.9% | 7.9% | 48.5% | 40.6% |
| CAPEX, % of revenue | 0.0% | 0.0% | 0.1% | 0.5% | 4.5% | 4.0% |
|
|---|
| ROIC | -114.0% | -44.3% | -10.5% | 35.4% | 7.3% | -28.1% |
| ROE | -205.4% | -86.6% | -12.3% | 35.7% | 52.7% | 17.0% |
| Net Debt/EBITDA | | | | -2.6x | -12.2x | -9.6x |
Crexendo Inc ($CXDO) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4 | 4 | 4 | 4 | | 10.7% | 12.2% | 15.0% | 16.0% |
| EBITDA | 0 | 1 | 0 | 0 | | 7.3% | 35.7% | -51.4% | -49.7% |
| Net Income | 0 | 1 | 0 | 7 | | -41.4% | 50.3% | -60.8% | 3,040.8% |
Balance Sheet
|
|---|
| Cash | 3 | 5 | 15 | 18 | | 64.0% | 98.9% | 364.1% | 320.6% |
| Short Term Debt | 0 | 1 | 1 | 0 | | -64.6% | 300.4% | 293.6% | 26.3% |
| Long Term Debt | 2 | 2 | 2 | 2 | | 122.3% | 137.8% | 156.6% | 2,116.1% |
Ratios
|
|---|
| Gross Margin | 69.2% | 71.1% | 69.6% | 69.3% | | 1.5% | 2.0% | -2.4% | -1.2% |
| EBITDA Margin | 8.0% | 14.6% | 5.1% | 4.3% | | -0.3% | 2.5% | -7.0% | -5.6% |
| Net Income Margin | 3.6% | 12.5% | 3.2% | 165.6% | | -3.2% | 3.2% | -6.1% | 159.5% |
Peers in Internet Services & Infrastructure
Below we provide Crexendo Inc benchmarking against other companies in Internet Services & Infrastructure 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 |
|---|
| MongoDB, Inc. ($MDB) | - | 55.3% | 63.8% | 60.8% | 57.9% |
| Twilio Inc. ($TWLO) | - | 43.9% | 62.9% | 74.5% | 55.3% |
| Okta, Inc. ($OKTA) | - | 86.6% | 60.0% | 55.6% | 46.8% |
| Wix.com Ltd. ($WIX) | - | 46.7% | 41.8% | 26.1% | 29.9% |
| Limelight Networks, Inc. ($LLNW) | - | 9.6% | 6.1% | 2.5% | 14.7% |
| |
|---|
| Median (9 companies) | 20.7% | 12.6% | 19.2% | 12.3% | 14.7% |
|---|
| Crexendo Inc ($CXDO) | - | 11.7% | 16.9% | 21.2% | 13.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VeriSign, Inc. ($VRSN) | 82.6% | 83.4% | 84.2% | 85.3% | 85.8% |
| Okta, Inc. ($OKTA) | 58.1% | 65.1% | 68.5% | 71.6% | 72.8% |
| MongoDB, Inc. ($MDB) | 68.0% | 70.5% | 74.2% | 72.4% | 70.3% |
| Wix.com Ltd. ($WIX) | 84.4% | 83.7% | 79.0% | 74.1% | 68.1% |
| GoDaddy Inc. ($GDDY) | 64.4% | 65.3% | 66.4% | 65.6% | 65.1% |
| |
|---|
| Median (9 companies) | 60.5% | 61.7% | 64.9% | 65.9% | 65.1% |
|---|
| Crexendo Inc ($CXDO) | 60.2% | 67.9% | 67.9% | 69.9% | 69.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VeriSign, Inc. ($VRSN) | 65.2% | 65.0% | 67.1% | 69.2% | 68.8% |
| Akamai Technologies, Inc. ($AKAM) | 33.9% | 27.6% | 29.4% | 39.5% | 41.0% |
| GoDaddy Inc. ($GDDY) | 11.4% | 12.2% | 14.4% | 15.6% | 15.8% |
| Brightcove Inc. ($BCOV) | -0.8% | -8.0% | -3.8% | -2.6% | 5.5% |
| Limelight Networks, Inc. ($LLNW) | -30.9% | 6.7% | 7.0% | 3.8% | 5.2% |
| |
|---|
| Median (9 companies) | -2.8% | -2.0% | 16.8% | -2.6% | 5.2% |
|---|
| Crexendo Inc ($CXDO) | -28.7% | -6.2% | -1.0% | 10.6% | 7.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Akamai Technologies, Inc. ($AKAM) | 13.5% | 16.7% | 14.9% | 19.4% | 22.9% |
| Limelight Networks, Inc. ($LLNW) | 5.7% | 11.2% | 8.2% | 17.3% | 10.9% |
| VeriSign, Inc. ($VRSN) | 2.3% | 4.2% | 3.0% | 3.3% | 3.4% |
| Okta, Inc. ($OKTA) | 4.8% | 3.9% | 2.6% | 5.0% | 2.6% |
| GoDaddy Inc. ($GDDY) | 2.9% | 3.7% | 3.3% | 2.9% | 2.0% |
| |
|---|
| Median (9 companies) | 4.0% | 4.1% | 3.3% | 3.3% | 2.0% |
|---|
| Crexendo Inc ($CXDO) | 0.0% | 0.0% | 0.1% | 0.5% | 4.5% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VeriSign, Inc. ($VRSN) | 65.2% | 54.3% | 81.9% | 228.3% | 221.3% |
| Akamai Technologies, Inc. ($AKAM) | 11.9% | 7.9% | 8.2% | 10.8% | 10.9% |
| GoDaddy Inc. ($GDDY) | 2.9% | 2.7% | 4.6% | 6.0% | 8.1% |
| Brightcove Inc. ($BCOV) | -11.3% | -26.9% | -19.0% | -24.8% | -5.2% |
| Limelight Networks, Inc. ($LLNW) | -42.9% | -5.7% | -3.1% | -8.6% | -5.8% |
| |
|---|
| Median (9 companies) | -11.3% | -13.2% | 1.4% | -12.4% | -5.8% |
|---|
| Crexendo Inc ($CXDO) | -114.0% | -44.3% | -10.5% | 35.4% | 7.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Limelight Networks, Inc. ($LLNW) | - | -1.7x | -1.8x | -0.4x | 5.7x |
| GoDaddy Inc. ($GDDY) | 2.3x | 6.8x | 3.9x | 3.4x | 4.9x |
| Akamai Technologies, Inc. ($AKAM) | 0.4x | 0.5x | 0.7x | 2.0x | 1.8x |
| VeriSign, Inc. ($VRSN) | 2.2x | 2.6x | 1.8x | 1.5x | 1.6x |
| Brightcove Inc. ($BCOV) | - | - | - | - | -2.6x |
| |
|---|
| Median (5 companies) | 2.2x | 4.5x | 1.4x | 1.8x | 1.8x |
|---|
| Crexendo Inc ($CXDO) | - | - | - | -2.6x | -12.2x |
