Atomos Upgrades FY19 Revenue And EBITDA Expectations; Stock Surges Up 14.6%

Atomos Limited (ASX: AMS) is a global video technology company that enhances video content creation with products that connect the imaging and computer world. It allows the video content creators to improve recording quality, save time and maintain greater flexibility and control over the content creation process.

The company today, on May 22, 2019, announced that it has upgraded its expectations for both revenue and EBITDA for FY19 (12 months to June 30). On February 28, 2019, the company reported an increase in its first half FY19 revenues of 32% to $24.2 million. The pro forma EBITDA was up by 194% to $0.7 million.

The upgraded expectations for FY19 revenue and pro forma EBITDA were driven by several factors, which include, firstly, stronger than forecast sales from the Ninja V, which was introduced to the market in September 2018. Ninja V is a highly leverageable new technology platform incorporating a redesigned operating system that will reinforce a suite of new products over the coming years. It was the first product to come on to the Ninja platform. Secondly, stronger than forecast sales from the two Shinobi devices, 5-inch HDMI and SDI monitors targeting the rapidly growing ‘Social’ segment of the video market, launched in February and March 2019. Thirdly, this was in part offset by continued investment in market development and product innovation.

On the financial performance front, the company reported 1H19 sales of $24.2 million, up by 32% on prior corresponding period was driven by strong sales of Ninja V, which was released in September 2018 and product bundling with major camera manufacturers. The company reported a gross profit of $10.5 million, up by 26% on the prior corresponding period. The gross profit margin was lower due to higher than anticipated component costs associated with the Ninja V, which was on the back of strong sales of Ninja V.

The company has a strong balance sheet with $5.2 million in cash and no debt. Moreover, access to a $1.5 million EFIC working capital facility along with increased inventory levels, supports the stronger balance sheet.

The company has extensive growth prospects on the back of the developed platform and the ability to leverage future products without major investments along with plans to expand further into adjacent high growth market segments, including social and entertainment content markets.

AMS has a strong sales network and global operations with a trusted network of electronic equipment distributors globally who sell to resellers and retailers. It has 77 employees across 10 offices in seven countries, each servicing a key part of the global market.

On the price-performance front, at market close on May 22, 2019, the stock of Atomos Limited was trading at $1.200, up by 14.6% as compared to its previous closing price, with a market capitalisation of $159.1 million. The stock has yielded a  YTD return of 19.71% and exhibited returns of 35.16% and 13.86% over the past three months and one-month period, respectively. Its 52-week high price stands at $1.350 and 52-week low stands at $0.450, with an average trading volume of 136,682.


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