Trending stocks

BSQUARE Corporation reports 20.5% revenue decline in 2020 and 11.3 pp EBITDA Margin growth from -12.5% to -1.2%

03/18/2021 • About BSQUARE Corporation ($BSQR) • By InTwits

BSQUARE Corporation reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • BSQUARE Corporation is a company in decline: 2020 revenue growth was -20.5%, 5 years revenue CAGR was -15.1%
  • The company operates at negative EBITDA Margin: -1.2%
  • BSQUARE Corporation motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 was 0.0% while average EBITDA Margin was -8.6% for the sames years
  • BSQUARE Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
  • The company has unprofitable business model: ROIC is -14.1%
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 dropped on 20.5%. Revenue decline showed acceleration in 20Q4 - it was 28.0% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 11.3 pp from -12.5% to -1.2% in 2020. During 2016-2020 EBITDA Margin bottomed in 2018 at -18.1% and was growing since that time.

Gross Margin decreased slightly on 0.64 pp from 17.0% to 16.4% in 2020. During the last 5 years Gross Margin topped in 2017 at 22.4% and was declining since that time. SG&A as a % of Revenue increased slightly on 0.67 pp from 19.1% to 19.8% in 2020.

Net Income margin jumped on 11.5 pp from -15.5% to -4.0% in 2020. During 2016-2020 Net Income margin bottomed in 2018 at -18.7% and was growing since that time.

Investments (CAPEX, working capital and M&A)

In 2020 the company had CAPEX/Revenue of 0.58%. BSQUARE Corporation's CAPEX/Revenue showed almost no change from 2017 to 2020. For the last three years the average CAPEX/Revenue was 0.64%. During the last 5 years CAPEX as a % of Revenue topped in 2019 at 0.71%.

Return on investment

The company operates at negative ROIC (-14.1%) and ROE (-20.6%). ROIC surged on 46.8 pp from -60.9% to -14.1% in 2020. ROE jumped on 44.9 pp from -65.5% to -20.6% in 2020. During the last 5 years ROIC bottomed in 2019 at -60.9%. During the last 5 years ROE bottomed in 2019 at -65.5%.

Leverage (Debt)

Debt level is -0.9x Net Debt / EBITDA and Debt / EBITDA. Debt jumped on 81.7% while cash jumped on 63.7%.

BSQUARE Corporation has no short term refinancing risk: cash is higher than short term debt (975.5%).

Management team

BSQUARE Corporation's CEO Ralph C Derrickson has spent 2 years with the company. Chris Wheaton is a BSQUARE Corporation's CFO. Chris Wheaton has spent 1 year at the company.

Financial and operational results

FY ended 12/31/2020

BSQUARE Corporation ($BSQR) key annual financial indicators

mln. $201620172018201920202020/2019
Gross Profit15.82018.12215.51010.0967.726-23.5%
Net Income-1.052-9.058-13.737-9.181-1.889
Balance Sheet
Short Term Debt0.0000.0000.0000.7021.29484.3%
Long Term Debt0.0000.0000.0001.2562.26480.3%
Cash flow
Revenue growth-8.6%-17.1%-9.2%-19.2%-20.5%
EBITDA growth-108.0%1,469.1%51.3%-44.1%-92.5%

Gross Margin16.2%22.4%21.1%17.0%16.4%-0.6%
EBITDA Margin-0.6%-10.9%-18.1%-12.5%-1.2%11.3%
SG&A, % of revenue14.5%26.0%23.3%19.1%19.8%0.7%
Net Income Margin-1.1%-11.2%-18.7%-15.5%-4.0%11.5%
CAPEX, % of revenue0.4%0.5%0.6%0.7%0.6%-0.1%


BSQUARE Corporation ($BSQR) key quoterly financial indicators

mln. $20Q120Q220Q320Q4 YoY change
Revenue1791011 10.8%-37.1%-28.8%-28.0%
EBITDA0-100 ----
Net Income-0-1-0-0 ----
Balance Sheet
Cash10121213 34.1%89.2%80.5%63.7%
Short Term Debt0111 -62.8%-7.8%53.2%84.3%
Long Term Debt1222 212.3%1,192.3%1,663.6%80.3%
Gross Margin15.5%11.7%18.1%19.9% -0.4%-5.4%0.2%2.7%
EBITDA Margin 0.1% -7.9% 1.0% 0.1% 15.6%13.4%2.0%6.3%
Net Income Margin -2.8% -12.0% -1.3% -1.9% 16.0%15.3%6.3%7.0%

Peers in Application Software

Below we provide BSQUARE Corporation benchmarking against other companies in Application Software 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
VirnetX Holding Corp ($VHC)--0.2%-95.9%34.9%355,942.4%
AudioEye, Inc. ($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. ($SMAR)-64.3%66.1%59.7%52.4%
Median (92 companies)12.0%15.7%15.2%19.5%14.7%
BSQUARE Corporation ($BSQR)--17.1%-9.2%-19.2%-20.5%

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. ($CDNS)85.9%87.8%87.9%88.6%88.6%
Median (89 companies)64.2%64.6%66.0%68.4%70.6%
BSQUARE Corporation ($BSQR)16.2%22.4%21.1%17.0%16.4%

Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
VirnetX Holding Corp ($VHC)-1,837.2%-1,118.0%-40,379.4%-23,127.1%52.2%
j2 Global, Inc. ($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. ($SSNC)34.9%37.9%27.7%38.2%38.3%
Median (89 companies)-5.3%-3.3%-3.3%4.5%7.7%
BSQUARE Corporation ($BSQR)-0.6%-10.9%-18.1%-12.5%-1.2%

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. ($PRO)4.7%0.8%0.7%2.1%11.3%
Median (87 companies)3.0%2.3%2.4%3.0%2.6%
BSQUARE Corporation ($BSQR)0.4%0.5%0.6%0.7%0.6%

Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
VirnetX Holding Corp ($VHC)-210.9%-256.8%-416.3%-247.2%137.3%
Manhattan Associates, Inc. ($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. ($PAYC)75.4%51.1%47.5%47.5%28.7%
Median (92 companies)-9.8%-10.2%-9.8%-4.2%-1.8%
BSQUARE Corporation ($BSQR)-3.1%-27.0%-55.9%-60.9%-14.1%

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 (54 companies)-0.9x-0.8x-0.7x0.4x0.2x