AUS
NZ
UK
CA
USA
IND
Audinate Group Ltd (ASX:AD8) has seen its share price plunge by 35% following the release of its preliminary, unaudited FY24 results. The company, an ASX technology stock known for its Dante networking solution widely used across various industries including professional live sound, commercial installations, broadcast, public address, and recording, has been significantly impacted by recent market developments.
For the year ending June 30, 2024, Audinate reported the following key figures:
- Revenue: Approximately US$60 million, marking a 28.4% increase from the previous year.
- Expected EBITDA: Between A$19.5 million and A$20.5 million, up from A$11 million in FY23.
- Unaudited Gross Profit: US$44.5 million, up 33.2% year-over-year.
- Unaudited Gross Margin: 74.3%, compared to 72.1% in FY23.
The company noted a positive shift in its profit mix towards software implementations and achieved cost savings in its Brooklyn product. The gross profit margin reached 76.8% in the second half of FY24, reflecting a favorable profit mix and cost efficiencies.
Drivers of FY24 Revenue
Several factors contributed to Audinate’s strong performance in FY24:
- Over-Ordering: Manufacturing customers had conservatively over-ordered chips and modules, which led to a record sales backlog.
- Chip Supply Recovery: An improvement in chip supply allowed for the fulfillment of customer orders.
- Sales Backlog Unwinding: The backlog was gradually cleared throughout the year, along with shorter lead times.
- Promotions: Recent promotions for AVIO adapters boosted sales.
Challenges and Outlook for FY25
Looking ahead to FY25, Audinate anticipates several changes that may impact its performance:
- Software Implementations: An increase in software-based Dante implementations is expected, with margins potentially reaching 80%. However, the revenue per unit is anticipated to be lower.
- Order Lead Times and Inventory: Shortening lead times and a re-balancing of inventory holdings across the industry will affect results. The pace at which manufacturing customers clear raw material inventory will be a key factor.
- Product Lifecycle: The company is preparing for the end-of-life of its Viper and MY16 products.
- Gross Profit and Revenue: Audinate expects a decline in gross profit and revenue in FY25, with a return to growth and more predictable order patterns anticipated by FY26.
Despite the short-term challenges, Audinate maintains a positive long-term outlook. The company has over 6 million Dante devices deployed, with more than 1 million units added annually. Cost growth in FY25 is projected to be between 7% and 9%.
While Audinate Group Ltd has faced a sharp decline in its share price due to expectations of lower growth in FY25, the company’s strong product offering and long-term prospects may present potential opportunities for investors. The anticipated rise in gross profit margins and the overall growth of the Dante network could support future recovery.
