Innodata Inc. reports 43.5% EBITDA growth in 2020 and 4.3% Revenue growth
03/11/2021 • About Innodata Inc. (
$INOD) • By InTwits
Innodata Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 8.8% in 2020, 6.4% in 2019, 9.1% in 2018, -2.3% in 2017, -2.4% in 2016
- Innodata Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $1m in 2020, $2m in 2019, $2m in 2018, $3m in 2017, $3m in 2016
- The company has potentially unprofitable business model: ROIC is 5.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 4.3%. During 2016-2020 Revenue growth bottomed in 2018 at -5.8% and was accelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.6 pp from 2.7% to -1.8% in 2020.
Gross Margin increased slightly on 0.89 pp from 33.2% to 34.1% in 2020. Gross Margin grew at 2.6 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 2.6 pp from 32.5% to 29.8% in 2020.
Net Income margin increased on 4.9 pp from -3.8% to 1.1% in 2020.
Investments (CAPEX, working capital and M&A)
In 2020 Innodata Inc. had CAPEX/Revenue of 2.4%. The company showed decline in CAPEX/Revenue of 3.2 pp from 5.6% in 2017 to 2.4% in 2020. It's average level of CAPEX/Revenue for the last three years was 3.0%. During the last 5 years CAPEX as a % of Revenue topped in 2017 at 5.6% and was declining since that time.
Return on investment
The company operates at low ROIC (5.0%) and ROE (2.2%). ROIC increased on 5.7 pp from -0.74% to 5.0% in 2020. ROE increased on 10.0 pp from -7.7% to 2.2% in 2020.
Leverage (Debt)
Debt level is -1.7x Net Debt / EBITDA and 1.8x Debt / EBITDA. Debt decreased on 2.6% while cash jumped on 61.6%.
Innodata Inc. has no short term refinancing risk: cash is higher than short term debt (650.4%).
Valuation and dividends
The company's trades at EV/EBITDA 34.6x and P/E 300.2x.
Management team
The company's CEO is Jack S Abuhoff. Jack S Abuhoff has 17 years tenure with the company.
Financial and operational results
FY ended 12/31/2020
Innodata Inc. ($INOD) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 63.074 | 60.929 | 57.418 | 55.858 | 58.240 | 4.3% |
| Gross Profit | 15.855 | 15.103 | 18.373 | 18.533 | 19.842 | 7.1% |
| SG&A | 19.539 | 20.200 | 15.846 | 18.134 | 17.383 | -4.1% |
| EBITDA | -1.527 | -1.423 | 5.226 | 3.562 | 5.113 | 43.5% |
| Net Income | -5.524 | -5.055 | 0.004 | -2.142 | 0.617 | |
Balance Sheet
|
|---|
| Cash | 14.172 | 11.407 | 10.869 | 10.874 | 17.573 | 61.6% |
| Short Term Debt | 1.120 | 2.133 | 1.529 | 2.547 | 2.702 | 6.1% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 6.731 | 6.332 | -5.9% |
Cash flow
|
|---|
| Capex | 2.740 | 3.410 | 2.033 | 1.667 | 1.414 | -15.2% |
Ratios
|
|---|
| Revenue growth | 7.8% | -3.4% | -5.8% | -2.7% | 4.3% | |
| EBITDA growth | -372.2% | -6.8% | -467.3% | -31.8% | 43.5% | |
|
|---|
| Gross Margin | 25.1% | 24.8% | 32.0% | 33.2% | 34.1% | 0.9% |
| EBITDA Margin | -2.4% | -2.3% | 9.1% | 6.4% | 8.8% | 2.4% |
| SG&A, % of revenue | 31.0% | 33.2% | 27.6% | 32.5% | 29.8% | -2.6% |
| Net Income Margin | -8.8% | -8.3% | 0.0% | -3.8% | 1.1% | 4.9% |
| CAPEX, % of revenue | 4.3% | 5.6% | 3.5% | 3.0% | 2.4% | -0.6% |
|
|---|
| ROIC | -13.5% | -16.4% | 6.1% | -0.7% | 5.0% | 5.7% |
| ROE | -15.3% | -15.6% | 0.0% | -7.7% | 2.2% | 10.0% |
| Net Debt/EBITDA | | | -1.8x | -0.4x | -1.7x | -1.2x |
Innodata Inc. ($INOD) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 15 | 14 | 15 | 15 | | 6.1% | 1.6% | 5.1% | - |
| EBITDA | 1 | 1 | 1 | 2 | | 60.2% | 0.9% | 18.4% | - |
| Net Income | -0 | -1 | 0 | 1 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 11 | 13 | 15 | 18 | | -11.6% | 10.0% | 16.3% | - |
| Short Term Debt | 2 | 3 | 3 | 3 | | -18.4% | 31.7% | 58.3% | - |
| Long Term Debt | 11 | 11 | 7 | 6 | | 44.1% | 56.5% | -3.7% | - |
Ratios
|
|---|
| Gross Margin | 32.9% | 30.2% | 32.8% | 39.9% | | 2.8% | 0.4% | -2.1% | - |
| EBITDA Margin | 8.3% | 4.8% | 7.2% | 13.4% | | 2.8% | -0.0% | 0.8% | - |
| Net Income Margin | -2.5% | -4.0% | 1.4% | 7.8% | | 0.8% | 0.8% | 5.5% | - |
Peers in Data Processing & Outsourced Services
Below we provide Innodata Inc. benchmarking against other companies in Data Processing & Outsourced 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 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 11.8% | 7.5% | 11.5% | -3.3% |
|---|
| Innodata Inc. ($INOD) | - | -3.4% | -5.8% | -2.7% | 4.3% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (31 companies) | 39.5% | 39.5% | 41.0% | 41.7% | 36.7% |
|---|
| Innodata Inc. ($INOD) | 25.1% | 24.8% | 32.0% | 33.2% | 34.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.3% | 21.1% | 19.4% | 22.2% | 19.1% |
|---|
| Innodata Inc. ($INOD) | -2.4% | -2.3% | 9.1% | 6.4% | 8.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.0% | 3.3% | 3.1% |
|---|
| Innodata Inc. ($INOD) | 4.3% | 5.6% | 3.5% | 3.0% | 2.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| |
|---|
| Median (39 companies) | 11.7% | 10.7% | 12.1% | 8.3% | 6.4% |
|---|
| Innodata Inc. ($INOD) | -13.5% | -16.4% | 6.1% | -0.7% | 5.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.4x | 2.3x | 2.2x | 2.3x | 2.1x |
|---|
| Innodata Inc. ($INOD) | - | - | -1.8x | -0.4x | -1.7x |
