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VirnetX Holding Corp revenue jumped on 355,942% and EBITDA Margin surged on 23,179 pp from -23,127% to 52.2%

03/16/2021 • About VirnetX Holding Corp ($VHC) • By InTwits

VirnetX Holding Corp reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • VirnetX Holding Corp is a fast growth stock: 2020 revenue growth was 355,942%, 5 year revenue CAGR was 187% at 2020 ROIC 137%
  • VirnetX Holding Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's a lot of higher than industry average of 3.0%.
  • CAPEX is quite volatile: $0m in 2020, $0m in 2019, $0m in 2018, $0m in 2017, $0m in 2016
  • The company has highly profitable business model: ROIC is 137.3%
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 355,942%. Revenue growth showed slowdown in 20Q4 - it was -54.3% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 23,179 pp from -23,127% to 52.2% in 2020.

SG&A as a % of Revenue dropped on 18,697 pp from 18,712% to 15.1% in 2020.

Net Income margin surged on 22,657 pp from -22,565% to 92.7% in 2020.

Return on investment

The company operates at high and attractive ROIC (137.3%) and ROE (243.8%). ROIC jumped on 384 pp from -247% to 137% in 2020. ROE jumped on 491 pp from -247% to 244% in 2020. During 2016-2020 ROIC bottomed in 2018 at -416% and was growing since that time. During the last 5 years ROE bottomed in 2018 at -444% and was growing since that time.

Leverage (Debt)

The company has no debt. Cash surged on 6,053%.

Valuation and dividends

The company's trades at EV/EBITDA 1.5x and P/E 1.5x.

Management team

VirnetX Holding Corp's CEO Kendall S Larsen has spent 13 years with the company. VirnetX Holding Corp's CFO Richard H Nance has spent 8 years with the company.

Financial and operational results

FY ended 12/31/2020

VirnetX Holding Corp ($VHC) key annual financial indicators

mln. $201620172018201920202020/2019
Gross Profit0.7
Net Income-28.6-17.3-25.4-19.2280.4
Balance Sheet
Short Term Debt0.
Long Term Debt0.
Cash flow
Revenue growth-0.3%-0.2%-95.9%34.9%355,942.4%
EBITDA growth-2.3%-39.3%47.1%-22.7%-903.2%

Gross Margin43.0%
EBITDA Margin-1,837.2%-1,118.0%-40,379.4%-23,127.1%52.2%23,179.2%
SG&A, % of revenue1,720.8%1,046.8%32,865.1%18,711.8%15.1%-18,696.6%
Net Income Margin-1,843.2%-1,116.9%-40,327.0%-22,564.7%92.7%22,657.4%
CAPEX, % of revenue0.8%0.0%0.0%16.5%0.0%

Net Debt/EBITDA-1.2x

VirnetX Holding Corp ($VHC) key quoterly financial indicators

mln. $20Q120Q220Q320Q4 YoY change
Revenue303000 3,782,100.0%-52.6%550.0%-54.3%
EBITDA183-10-5-9 ----
Net Income300-8-4-7 ----
Balance Sheet
Cash436270226193 8,237.7%6,402.6%8,683.5%6,053.4%
Short Term Debt0000 ----
Long Term Debt0000 ----
EBITDA Margin 60.5% -58,250.0% -20,511.5% -59,243.8% 70,460.5%-46,276.3%103,888.5%-46,386.6%
Net Income Margin 99.1% -44,666.7% -15,480.8% -46,568.8% 70,199.1%-33,798.2%108,419.2%-33,751.6%

Peers in Application Software

Below you can find VirnetX Holding Corp benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
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%
Coupa Software Incorporated ($COUP)-59.9%39.6%39.4%49.7%
Median (92 companies)12.0%15.7%15.2%19.4%14.5%
VirnetX Holding Corp ($VHC)--0.2%-95.9%34.9%355,942.4%

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 (90 companies)64.2%64.4%65.7%68.2%70.0%

Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
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%
ANSYS, Inc. ($ANSS)45.1%41.9%41.4%39.5%36.1%
Median (89 companies)-4.7%-3.3%-3.3%4.5%6.8%
VirnetX Holding Corp ($VHC)-1,837.2%-1,118.0%-40,379.4%-23,127.1%52.2%

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. ($PRO)4.7%0.8%0.7%2.1%11.3%
Median (87 companies)3.0%2.3%2.4%2.9%2.6%
VirnetX Holding Corp ($VHC)0.8%0.0%0.0%16.5%0.0%

Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
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%
Adobe Inc. ($ADBE)15.9%21.3%23.3%22.9%26.9%
Median (92 companies)-9.2%-10.2%-9.8%-4.2%-2.2%
VirnetX Holding Corp ($VHC)-210.9%-256.8%-416.3%-247.2%137.3%

Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Dropbox, Inc. ($DBX)--3.8x-2.4x1,341.0x
Avaya Holdings Corp. ($AVYA)--7.4x-77.9x
Alteryx, Inc. ($AYX)--2.5x6.1x32.2x
Five9, Inc. ($FIVN)-6.7x-8.6x7.3x5.3x17.6x
Synchronoss Technologies, Inc. ($SNCR)----11.6x
Median (53 companies)-0.9x-0.8x-0.7x0.4x0.3x
VirnetX Holding Corp ($VHC)-----1.2x