Nxt-ID, Inc. reports financial results for the quarter ended June 30, 2017.
- Summary numbers: Revenues of USD 7.66 million, Net Earnings of USD -1.20 million.
- Gross margins widened from -66.30% to 46.03% compared to the same period last year, operating (EBITDA) margins now 12.84% from -5,832.16%.
- Change in operating cash flow of 29.67% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
- Earnings growth from operating margin improvements as well as one-time items.
The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:
|Relevant Numbers (Quarterly)|
|Revenue Growth (%YOY)||19789.8||15694.28||5375.15||639.81||-65.97|
|Earnings Growth (%YOY)||52.21||86.51||40.94||30.92||27.26|
|Net Margin (%)||-15.66||-10.93||-52.26||-79.13||-6519.56|
|Return on Equity (%)||-28.76||-36.49||-89.81||-109.88||-227.78|
|Return on Assets (%)||-11.52||-8.2||-27.84||-51.25||-234.52|
Access our Ratings and Scores for Nxt-ID, Inc.
Market Share Versus Profits
Compared to the same period last year, NXTD-US’s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if NXTD-US’s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 14.59% and earnings by -64.24% compared to the previous period.
Earnings Growth Analysis
The company’s earnings growth was influenced by year-on-year improvement in gross margins from -66.30% to 46.03% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from -5,832.16% to 12.84% compared to the same period last year. For comparison, gross margins were 52.52% and EBITDA margins were 19.44% in the last reporting period.
Gross Margin Trend
Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.
NXTD-US’s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days are now -53.70 days compared to 955.88 days for the same period last year.
Cash Versus Earnings – Sustainable Performance?
It is important to examine a companyï¿½s cash versus earnings numbers to gauge whether its performance is sustainable.
NXTD-US’s year-on-year change in operating cash flow of 29.67% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.
The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -5,992.61% to 8.70% and (2) one-time items. The company’s pretax margins are now -14.45% compared to -6,519.56% for the same period last year.
Access our Ratings and Scores for Nxt-ID, Inc.
Nxt-ID, Inc. is a technology company, which provides security solutions to mobile devices. Its MobileBio biometric solutions mitigate consumer risks associated with mobile computing, m-commerce and smart OS-enabled devices. The company’s product, Wocket, is a next generation smart wallet designed to replace all the cards. Its subsidiary, 3D-ID LLC engages in biometric identification in the field of 3D facial recognition. Nxt-ID was founded by Gino Miguel Pereira and David Charles Tunnell on February 8, 2012 and is headquartered Melbourne, FL.
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