Audinate's FY24 Preliminary Results and FY25 Outlook
AD8 (AD8) Share Update August 2024 Monday 5th
Audinate Reports Strong FY24 Results with Positive EBITDA Growth
Audinate Group Limited (ASX: AD8) has released its preliminary unaudited results for FY24, showing significant growth in revenue and EBITDA. The company also provided insights into its expectations for FY25.
Instant Summary:
- Unaudited revenue of approximately US$60.0 million, up 28.4%.
- Expected EBITDA of A$19.5 – A$20.5 million, compared to A$11 million in FY23.
- Unaudited gross profit of approximately US$44.5 million, up 33.2%.
- Gross margin increased to 74.3% from 72.1% in FY23.
FY24 Results Overview
Audinate Group Limited has reported a strong set of preliminary unaudited results for FY24. The company achieved an unaudited revenue of approximately US$60.0 million, representing a 28.4% increase from the previous year. This growth was driven by a favorable product mix shift towards software implementations and cost savings in its Brooklyn product. The company's gross profit also saw a significant rise, reaching approximately US$44.5 million, up 33.2% from FY23.
Audinate's gross margin improved to 74.3%, compared to 72.1% in FY23. The second half of FY24 saw an even higher gross margin of 76.8%. This improvement is attributed to the increased use of Dante software over hardware solutions like chips, cards, and modules. The company expects this trend to continue, leading to further long-term margin improvements.
FY25 Outlook
Looking ahead to FY25, Audinate anticipates several challenges. The preference for software-based Dante implementations is expected to increase, driving the overall business margin towards 80%. However, this shift may result in lower per-unit revenue. Additionally, the company faces headwinds such as shortening order lead times, re-balancing of inventory holdings, and the end-of-life of certain products like Viper and MY16.
Despite these challenges, Audinate has several initiatives in place to drive revenue. These include event-based pricing for Dante Connect, the launch of a new AVIO adapter, a variant of Dante Virtual Soundcard, and increased marketing efforts to strengthen brand recognition and lead generation. These initiatives aim to partially offset the expected decline in revenue from certain products and customer over-ordering.
Long-Term Strategy
Audinate remains optimistic about its long-term prospects. The company has over 6 million Dante devices in the field, with more than a million being added each year. The recent launch of Dante Director and the continued growth in the installed base support the company's long-term plans to generate revenue from the management and monitoring of audio-visual installations.
To manage costs and support ongoing investment in new products, Audinate has completed several actions in marketing, sales, and product development. The company expects cost growth to be in the range of 7% - 9% in FY25, compared to historical annual cost growth of 28.5% over the last three years. This disciplined approach aims to balance costs with continued investment to capitalize on long-term opportunities.
The strong FY24 results are likely to positively impact Audinate's stock price in the short term, as investors react to the significant revenue and EBITDA growth. However, the anticipated challenges in FY25, including potential revenue declines and product end-of-life, may temper investor enthusiasm. The company's strategic initiatives and long-term growth prospects will be crucial in maintaining investor confidence.
Investor Reaction:
Analysts are likely to view Audinate's FY24 results favorably, given the strong revenue and EBITDA growth. However, the outlook for FY25 may raise concerns due to expected revenue headwinds and product transitions. Investors will be closely monitoring the company's ability to execute its strategic initiatives and manage costs effectively.
Conclusion:
Investors should stay informed about Audinate's progress and strategic initiatives as the company navigates the challenges of FY25. The strong FY24 results demonstrate the company's ability to grow profitably, but the upcoming year will be critical in maintaining momentum and achieving long-term goals.