Get Acquainted with a Leading Supplier of Digital Media Networking - Audinate

  • Jul 27, 2020 AEST
  • Team Kalkine
Get Acquainted with a Leading Supplier of Digital Media Networking - Audinate

Summary

  • Lately, the opportunity for media networking solutions offered by Audinate Group Limited has enhanced, with rising work from home trend.
  • AD8 has recently completed Placement worth AU$28 million and is all set to roll out Share Purchase Plan. The proceeds would be utilised to boost its balance sheet, flexibility to undertake potential M&A, etc.
  • In mid-July, AD8 unveiled bolstered business performance for FY20 ended 30 June, recording unaudited revenue of ~AU$30.3 million; EBITDA of AU$2.0 million and retainment of gross profit margins of ~77%.
  • Additionally, AD8’s capex and cash operating costs in FY21 are expected to be in accordance with FY20.

COVID-19 turbulent wave has led to the disruption of businesses across geographies. Organisations have dealt with the pandemic by either resorting to remote working, adapting cost reduction measures to manage financial slumps or through refurbishment of new strategies and business models.

Amid pandemic, numerous organisations have juggled many balls at once to withstand the period.

Also, Read; COVID-19 Striking Again: 5 Reasons Shares May Witness a Rise

During the unprecedented time, businesses came to a standstill, and liquidity crisis emerged as one of the major concerns for companies to fund their fixed and capital expenditures.

With an aim to boost liquidity and fortify the balance sheet, numerous businesses are resorting to capital raising.

In a nutshell, entities are preparing their war chest to stay afloat in the crisis and grab opportunities to thrive in the ever-changing business environment.

A look at few ASX-listed companies, which recently raised capital:

  • On 8 July 2020, Afterpay Limited (ASX:APT) revealed that it successfully raised ~AU$650 million via fully underwritten Institutional Placement to prioritise global expansion and fast-track investment in its swelling underlying sales.
  • On 2 July 2020, Temple & Webster Group Ltd (ASX:TPW) declared successful completion of its fully underwritten AU$40 million Institutional Placement to boost its financial flexibility for investing in its development strategy.
  • On 23 July 2020, Audinate Group Limited (ASX:AD8) unveiled that it successfully raised AU$28 million via an oversubscribed Institutional Placement at an issue price of AU$5.15, showcasing solid ratification for AD8’s growth strategy for speeding up investment and undertaking growth opportunities.

Did you read; Stocks redefining Growth/ Value: SOM, MSB, BBN, AD8, DTC, SDF

Let us now acquaint ourselves with AD8, a global digital audio networking technology provider:

An ASX-listed digital media company, Audinate Group Limited (ASX:AD8) is engaged in the business of distributing digital audio signals through its Dante platform across computer networks. AD8’s Dante technology has completely transformed the professional audio, ranging from installed systems to live sound to even recordings done in a studio.  

As per its latest update, AD8 shareholders would soon be able to participate in a Share Purchase Plan (SPP) to raise up to AU$12 million.

Under the non-underwritten SPP, AD8 would roll out an offer to acquire up to 30k in New Shares to eligible stakeholders.

Request of a trading halt

On 22 July 2020, the Company requested for its securities to be placed under trading halt pending the release of an announcement concerning the completion of its proposed capital raising.

Financial performance

By mid-July, the developer of the professional AV-industry leading Dante® media networking solutions, AD8 unveiled a robust business performance with unaudited revenue standing at ~AU$30.3 million and EBITDA of AU$2.0 million for the twelve months ending 30 June 2020.

Other key highlights for the last twelve months to 30 June includes of the following:

  • The Company noted gross profit margin of ~77%.
  • AD8’s cash on hand was recorded at AU$29.3 million, as on 30 June 2020.
  • The Company also disclosed that its important US tradeshow for the pro-AV industry (InfoComm), which occurred virtually was followed by a surge in the number of Dante enabled products by 31% to 2,804 over FY19.

Source: ASX announcement

Source: ASX announcement

  • During 2H FY20, the Company organised 77 webinars, with 120k people attending or joining in online training.
  • ~40k AV proficient individuals undertook Dante certification.

Furthermore, the Company expects that its capex and cash operating costs in FY21 would be in line with FY20, with an assumption of AUD-USD exchange rate to be 0.72.

A sneak-peek at other activities of AD8:

  • AD8 has expanded its Dante AVIO® adapters range, with the launch of new Bluetooth and USB-C adapters. With numerous AV professionals working from home, a massive opportunity has emerged for the Company to step up webinars and its Dante Certification training program. 
  • The Company during InfoComm (in June), notified about the Dante video Authorised Implementors Program with two initial partners; authorised implementors empowering manufacturers to rapidly get to market swiftly, with complete white-label Dante video products, and proffer specialised design and manufacturing services.

Did you read; Winning Streak for ASX Tech Stocks: PPH, SZL, XRO, DTC

Stock performance

On 27 July 2020, AD8 was trading at AU$5.380, indicating a rise of 3.661% (at AEST 3:42 PM). The Company has a market capitalisation of AU$352.61 million and total outstanding shares of ~ 67.94 million. AD8’s 52-week low and high was noted at AU$2.510 and AU$9.300, respectively. The Company has generated a total return of 13.32% and -38.58% in the period of three months and six months, respectively.

 


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