PNI Digital Media reported Q409 Earnings today after the market close. And like most earnings reports, it was filled with both positives and negatives. The conference call was very short with only 2 analysts asking questions, perhaps because the press release didn’t hit the wires until after the call had started!
The main negative to me was that average orders per day came in at only 38,000, compared to the 42,000 I had been expecting. However, counteracting this decline was an increase in transactional revenue per order, from $1.26 last year and $1.27 last quarter to $1.43. As a result, transactional revenue was up 26.6% to $4.95m and represented 72.6% of total revenue.
Other revenues also increased nicely, as installation, membership, archive, and professional fees all came in higher than I expected.
Gross margin (after deducting network delivery costs) increased to 80.1% from 77.7% last quarter and 62.9% last year. The company started to leverage other costs as well, as sales and marketing declined, however G&A and R&D increased more than I had expected.
The end result was a profitable quarter, with EPS of $0.02 (taking everything, including foreign currency, into account) and EBITDA of just over $2m or $0.06 per share. EBITDA margin came in at 30.4%, a record high quarterly level.
For the full year the company saw $6.1m in EBITDA on $24.8m in revenue, an 24.7% margin. This is about $0.18 in EBITDA per share, which means the company is trading at about 10x EBITDA, while I expect EBITDA to grow at a faster rate.
For the current quarter, while the company didn’t give any guidance, they did say that on the peak day they processed 150k orders, with over 2m prints, 5m photo uploads, and 2.5m greeting cards. As a comparison, the peak day last quarter saw 150k orders.
They did warn that that recent decline in the US Dollar could hurt future results as revenue would have been only $23m had the exchange rate been where it is today for the full year. Expenses, however, are in Canadian dollars so margins could suffer.
Doing some quick numbers, for Q1 I expect 65k orders per day on average leading to $7m in transactional revenue. I expect total revenue to come in just shy of $9m, expenses just over $7.65m, for $1.3m in earnings, or $0.04 per share. EBITDA should be around $3.2m, which comes out to about $0.094 per share, so we’ll see if they manage to round that up to $0.10. My estimates could be high with the currency issue, but this is about 50% higher than last year on a 24% increase in revenue, the beauty of operational leverage.
That’s it for now, I’ll likely have more after reviewing the results more. This quarter seemed much “cleaner” than the last quarter, however, as there wasn’t the strange marketing expense hurting revenue growth. We’ll see how the market responds tomorrow.
Disclosure: long pndmf.ob.Please see full disclaimer.
Tags: PNI Digital Media
