Audinate’s Stock Continues To Decline After The Release Of Second Quarter’s Result 

Audinate Group Limited (ASX: AD8) today released its quarterly report for the second quarter of the financial year ending 30 June 2019. The company reported cash collections of $7.2 million for the quarter, up 49% from the previous corresponding period of $4.8 million.

The audio technology company said cash collection continues to be driven by ongoing growth in the core business along with the strong demand for AVIO adapters. If compared with the previous quarter’s cash collection balance of $6.8 million, 2Q FY19 cash collection has shown decent improvement of 7% or $0.4 million. This also reflects the favorable impact of the stronger US Dollar.

CEO Lee Ellison commented that the company is pleased to see the strong performance during the first half of FY19 and remain optimistic to see the same momentum throughout FY19. 

Audinate’s Year to Date operating cash flow was $0.6 million compared to the previous corresponding period of $0.3 million. But Year to date total cash flow was negative $1.5 million compared to negative $1.3 million for the prior corresponding period. The balance of the previous corresponding period is excluding of IPO payments and Research & Development grant.

During the last quarter of Fiscal 2018, Audinate began shipping its new Dante AVIO family of adapters. The management told that these adapters are problem solvers which enable customers to add Dante to their existing brown-field legacy installations, which are typically analog. Strategically, it represents an essential tactic for the company as these adapters enable the broader proliferation of Dante technology which is said to be cost-effective in the legacy installed systems.

Audinate grew revenues 30% to AUD$19.7 million in Fiscal 2018, and in US dollars, revenues increased to USD$15.2 million while maintaining a 75% gross profit margin. Company’s strong revenue growth outlines the proliferation of its Dante® networking solution that enables high-quality, low latency media signals to be distributed over existing computer data networks.

The Company expects to release its first-half results for the period ending 31 December 2018 on 20 February 2019. And its R&D grant is expected to be received in the second half of FY19, whereas in FY18 the grant was received in the first half of the financial year.

As at 31 December 2018, Audinate’s cash and cash equivalents stood at $12.17 million compared to the $12.79 million at the beginning of the second quarter of Fiscal 2019.

Despite the release of strong cash collection growth, Audinate shares continue to swing on the way down. The stock price has declined by 1.295% or $0.050 to trade at $3.810 on 25 January 2019 (1:05 PM AEST). AD8 is currently trading at 91.900 x with a market capitalization of $235.9 million. Over the past 12 months, the stock has witnessed a positive performance of 34.49%.


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