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Highlights
- Audinate (ASX:AD8) reports stronger performance in Q2 with improved profits.
- Despite revenue decline, gross profit showed promising growth in December quarter.
- Long-term outlook remains positive with over six million Dante devices in use.
In the latest financial update, audiovisual technology company Audinate (ASX:AD8) posted a noticeable improvement in its second-quarter performance, signaling a promising outlook for the future. The company, renowned for its Audio over Ethernet (AoE) system, Dante, experienced a swing in its financials but demonstrated resilience in navigating challenging market conditions.
For the six months ending in December, Audinate reported a net loss of $2.2 million, compared to a profit of $4.7 million during the same period last year. While this marked a negative shift, it is important to note that the company’s revenue declined by 38%, coming in at $28.72 million. Despite these hurdles, Audinate made strides in key areas of its financial performance.
One of the most significant developments came in the gross profit category. While overall gross profit for the half-year was down 29% compared to the previous year, the December quarter saw a remarkable improvement. The company reported a gross profit of $12.9 million for the quarter, up from $10.8 million in the first quarter, showing a steady recovery.
Shares of Audinate surged by 16% to $8.80 early in ASX trading, reflecting positive investor sentiment following the improved Q2 results. The market appears to be optimistic about the company's ability to rebound, particularly in the second half of the fiscal year.
In its update, Audinate explained that its performance in the first half of the fiscal year was influenced by an excess inventory in the OEM channel, which had led to reduced order placements by customers. The company is optimistic about the second half, expecting moderate strengthening in its performance, though it anticipates that these trading conditions will likely persist through FY25. It projects a return to more typical order patterns in FY26, indicating long-term growth potential.
A key highlight for Audinate was the significant improvement in its gross margin, which rose to 82.2%, up from 71.5% a year ago. This shift was driven by a favorable trend towards software-based solutions, which have higher margins than hardware. The company’s long-term outlook remains strong, buoyed by a growing installed base of over six million Dante devices deployed across various industries.
Audinate's focus on technological innovation, particularly through its Dante system, positions it well for future success. Despite short-term challenges, the company’s strategic initiatives and market presence support a bright outlook in the years ahead.
