# AD8 - Audinate Group



## System (20 June 2017)

Audinate is the leading provider of professional digital audio networking technologies globally.
Audinate has grown its customer base to over 350 original equipment manufacturer (OEM) brands, including many of the world’s leading professional Audio Visual (AV) equipment brands such as Bosch, Bose, Harman, Roland, Shure, Sony, Symetrix and Yamaha. Audinate's primary customers are OEM brands who design Audinate’s technology platform, Dante, into their professional audio products.

It is anticipated that AD8 will list on the ASX on 30 June 2017.

https://www.audinate.com


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## rnr (4 May 2019)

For a security with a listing date of June 30, 2017 and an opening price of $1.50, AD8 has performed well to make an ATH yesterday of $6.89. Where to from here?


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## galumay (4 May 2019)

rnr said:


> Where to from here?




Its price reflects the reality that its become a sustainably profitable company with a significant runway of growth.

I have not calculated a range of value for AD8 as I have never understood the business well enough to be inclined to do the deep analysis on it. A quick and dirty extrapolation of FCF suggests the current price has a lot of that potential growth well and truly baked in.


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## rnr (4 May 2019)

galumay said:


> Its price reflects the reality that its become a sustainably profitable company with a significant runway of growth.
> 
> I have not calculated a range of value for AD8 as I have never understood the business well enough to be inclined to do the deep analysis on it. A quick and dirty extrapolation of FCF suggests the current price has a lot of that potential growth well and truly baked in.




That's interesting that you responded to my post as I was going to add after "Where to from here?" *perhaps @galumay might like to comment.*
 I refrained, however, as I didn't know whether you would find that a bit cheeky.

Thanks for posting.


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## galumay (4 May 2019)

rnr said:


> I refrained, however, as I didn't know whether you would find that a bit cheeky.




Not at all!

 I wish I had been able to understand the technology and business better - I had a look at it when it was around $4 and asked a couple of friends in the music industry about the tech, but they were very lukewarm on it, and couldn't explain it to me in a way that made me understand it any better so I lost interest. 

I know a couple of investors who are high conviction holders of AD8, but they also believe its probably got a bit ahead of itself at current levels - not that that means much in such a frothy market for anything tech related!


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## Dona Ferentes (1 January 2020)

a fund manager put the case for AD8 as follows
_Audinate (ASX: AD8), a digital media networking provider, raised $20 million from institutional investors this week in order to accelerate its global sales’ efforts and product initiatives. AD8's proprietary technology is embedded into a range of media devices, improving the speed and range of audio connections, while making it easy to set-up for network technicians. As a result, its digital solution is rapidly outpacing traditional analogue media technologies.

AD8 has more than four times the total number of networked audio products than its closest competitor. This provides a powerful *network effect*, as new media devices require synchronisation with AD8's proprietary software. As a result of this leading position, we believe AD8 will continue to see accelerated adoption within its customer base.

Furthermore, the company’s constant focus on developing new features and mechanics continues to open new market opportunities to leverage its intellectual property. This focus has already expanded its reach into video and overall media management solutions.
_
The company has got where it is on audio; with video likely to incorporated in the Dante product offering, it should consolidate it's hold on the market.

More on the "Network Effect" : https://www.firstlinks.com.au/joe-magyer-pricing-power-loyalty-networks/


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## Dona Ferentes (20 January 2020)

just put my AD8 holding up for SELL. Might be forming a 'double top". Bought it a year and a week ago at 3.63 so $9 will do nicely.


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## galumay (20 January 2020)

One I missed, a couple of fellow investors got in fairly early, I did my research and just couldn't get any conviction about the business. Had a couple of mates in the industry I talked to, they couldn't see the value either, no one I talked to saw an actual need for what they do. I also found very few investors could actually explain in a few simple sentences what Dante was and why it had any utility.

Good luck to those like you that have made money!


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## Dona Ferentes (24 February 2020)

Dona Ferentes said:


> just put my AD8 holding up for SELL. Might be forming a 'double top". Bought it a year and a week ago at 3.63 so $9 will do nicely.



When hovering over the <Market Sensitive> Announcement, and the summary states
*Audinate remains well positioned to deliver long term growth*​then a chill can pass over the reader. And so it came to pass; down $1.09 or 15% to $6.50 after dipping below $6 during early trade. Well positioned maybe, but not enough  for a growth stock. Revenue up, profit doing even better, cashflow doing well, market awareness of the ecosystem growing. But not quickly enough, and a few 'transient' headwinds. And all that guff.

Luckily I sold my entire holding at $8.99. (wasn't greedy; didn't hang out for 9 handle)


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## rnr (11 April 2020)

A handy "V" reversal forming however, will the gap which formed on the path down cause a problem on the way back up.
I'm anticipating a reversal or a slowing of the upward price thrust which may result in price gathering enough momentum to push through the gap. [DNH]


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## Dona Ferentes (22 July 2020)

Audinate is headquartered in Australia but has offices in the United States, UK and Hong Kong. Its flagship product is a digital audio platform called Dante which can transmit audio signals across large distances to multiple locations at once and has applications in things like public broadcasting.

Audinate had $29.3 million cash on hand at June 30, 2020. The company posted unaudited revenue of $30.3 million for fiscal 2020 and EBITDA of $2 million.

*Capital Raise of $28million *priced at $5.15 a share, which represented a 9.5 per cent discount to Audinate's $5.69 last close, according to terms sent out. The placement would be followed by a $12 million share purchase plan.

The money raised would go towards R&D, balance sheet strengthening, investment in additional video and software products and flexibility to pursue M&A.

( _used to hold; sold at start of year_ )


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## tinhat (23 July 2020)

Dona Ferentes said:


> When hovering over the <Market Sensitive> Announcement, and the summary states
> *Audinate remains well positioned to deliver long term growth*​then a chill can pass over the reader. And so it came to pass; down $1.09 or 15% to $6.50 after dipping below $6 during early trade. Well positioned maybe, but not enough  for a growth stock. Revenue up, profit doing even better, cashflow doing well, market awareness of the ecosystem growing. But not quickly enough, and a few 'transient' headwinds. And all that guff.
> 
> Luckily I sold my entire holding at $8.99. (wasn't greedy; didn't hang out for 9 handle)




Well done. Are you targeting a re-entry? Price?


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## Dona Ferentes (23 July 2020)

I was .... But their business is public sound systems (Sort of). There would have to be some hesitation in uptake, these days?


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## Clansman (23 July 2020)

Dona Ferentes said:


> I was .... But their business is public sound systems (Sort of). There would have to be some hesitation in uptake, these days?




If they have raised at a lower level than the previous raise, which I understand they have, there is only 1 place this is going and that is down, particularly in this environment.


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## Dona Ferentes (23 July 2020)

tinhat said:


> a re-entry? Price?



from the press:

..._Restrictions around public gatherings, which Audinate's sound technology tends to serve, have caused demand and take-up to suffer just like airlines, hotels and events businesses._


> "_It's a high-quality company. It's a leader in digital audio networking, clear market leadership," said Sam Twidale, a portfolio manager at DNR Capital. "They've got market share eight times the next competitor in terms of the number of devices enabled with their Dante protocol." __"It becomes this common standard. It's a really strong industry position," said Mr Twidale. "It just continues to grow and the competition isn't. That moat around the business expands every year and it generates very high returns, so the gross margin's over 70 per cent."_



_Despite the sales slowdown, Mr Twidale said Audinate was a rare small cap as its adoption rate was soaring in an emerging technology with a long growth runway. "It's a protocol you can put into speakers, into microphones, into audio equipment so they all speak to each other as you transition from analogue to digital audio, replacing all these old legacy cables with networking cables."_

_The group's Dante hardware chips enable professional audio equipment (speakers, mixers, microphones) to carry audio signals over a computer network, rather than physical analog cables._

_As the original audio equipment makers such as Yamaha or Bose manufacture Dante-enabled products, it has become hard for competitors to disrupt its market position. __According to Bloomberg, audio hardware giant Yamaha is the second-largest holder of Audinate shares with a stake of around 9 per cent._

_On Thursday,  Credit Suisse stayed "neutral" with a $5.40 valuation, and cautioned the need to raise cash despite an already strong balance sheet suggests management might be worried around risks to end-demand given its products' exposure to group events such as concerts and corporate meetings.

"The near-term valuation looks high, but you need to look at the long-term cashflows the business will generate," said Mr Twidale. "That's really the opportunity. It's a business with an addressable market over $1 billion. "There's the potential to capture a fairly large share of that at pretty decent margins given the very high gross margins they generate. So valuation is high near term, but is the near term a true reflection of the earnings capability given the market leadership it's building?"

He suggested Audinate's dominance of professional audio networking is backed by a growing network effect as equipment manufacturers embrace its technology to leave competitors out in the cold._

After the raising it could have a net cash position around $68 million, with a pro forma 72.7 million shares on issue to equal a market value around $404 million. Audinate's chief executive told investors the funds raised will be used for further investment in new products including digital video networking and software that helps controllers manage sound networks at sports stadiums.
https://www.afr.com/markets/equity-...redentials-boosted-by-raising-20200723-p55epj


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## galumay (23 July 2020)

Still all narrative and no meaningful business IMO! Stonk on.


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## Fury (23 July 2020)

It’s an interesting industry (I’m in it and utilise Dante). 
I have seen some large organisations use this as a time to fit out their venues while not under normal operating conditions. I have also seen many caution unnecessary spending. 

I currently hold and will look to early next month to see if i’ll participate. I got in at the same price looking toward the long term.


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## Clansman (23 July 2020)

galumay said:


> Still all narrative and no meaningful business IMO! Stonk on.




Whilst the SP is likely to tank in the short to medium term, that's not necessarily a complete negative if one is patiently waiting to invest for the long term. It's still much more effective technology than the rear vision mirror you snaffled from the old Camry... that's a given.


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## Dona Ferentes (20 August 2020)

AD8 reported today. I wonder if the news was good?
(hint; professionals sell at close?)





Key FY20 highlights: 
• Revenue of A$30.3million, up 7.1% (US$20.4 million) 
• Gross profit (GP) of A$23.2 million, up 10.1% – improved GP margin of 76.6% 
• EBITDA of A$2.0 million 
• Net loss after tax of A$4.1 million, includes A$3.6 million tax losses written off 
• Operating cashflow of A$4.8 million, up from A$3.6 million in FY19 
• Cash on hand at 30 June of A$29.3 million, plus A$40 million gross proceeds from equity raised since year end 
• Dante enabled products up 31% to 2,804 – a key leading indicator of future growth


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## tinhat (20 August 2020)

I owned this stock for a little while some time ago. It's been on my watch list for a while. The *volume *today is *interesting*. Damn, I'm totally fully invested. I actually had to sell down some NCM today because I had used up all the cash in my bank account.


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## tinhat (21 August 2020)

Just to follow up. I'm thinking today's volume to be a "trigger" but not necessarily a signal to buy. It is worth watching what happens from here and to watch where the price is when volume dries up.


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## Dona Ferentes (4 January 2021)

I haven't revisited AD8 much since selling at start of year. Sometime it's hard to return.

From the chart and also AGM outlook, the company is doing better than I thought. If ever a newcomer was going to get hammered, it was one with a business around digital audio (and now video) going out over networks. From $9 to sub $3, it has now mostly retraced.

Slide 8 of AGM presentation shows awareness and uptake of Dante forging ahead while competitors languish; it does seem to be the industry standard.

While they talk of a tripling of networked Audio units by 2024, the 2020 slump means that future growth is only going to be double that of 2019. Meantime, R&D and upgrades comprise a cost that must erode margins (though gross margins still 75%+)


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## Dona Ferentes (22 February 2021)

Audinate returns to pre-COVID revenue levels 

*Key 1H21 highlights: *
• Revenue of US$11.1 million (1H20: US$11.1 million; 2H20: US$9.3 million)  
• Gross margin of US$8.6 million (1H20: US$8.5 million; 2H20: US$7.0 million)  
• EBITDA of A$1.8 million (1H20: A$1.9 million)  
• Net loss after tax of A$1.2 million (1H20: $0.3 million net profit)  
• Operating cashflow of A$3.2 million (1H20: A$2.9 million) 
• Cash including term deposits of A$66.3 million  
• Dante enabled products up 27% to 3,008 – a key leading indicator of future growth                                                

*Outlook *
Audinate is seeing confidence return amongst OEMs, system integrators and end-users resulting in an overall improved industry outlook for CY21.  Whilst COVID related risks remain (including to global supply chains), they are abating as vaccines roll-out.  Good trading conditions have continued into the beginning of 2H21, albeit we expect Brooklyn revenue to continue to be impacted by the downturn in live events and live sound. 

The Group has accelerated investing for growth, with a target headcount of >140 staff (inclusive of Cambridge) by the end of FY21 and a resulting increase in operating costs of between $2 - $3 million in the second half.   

Commenting on the outlook for Audinate, Mr Williams said:


> “_Whilst we remain wary of the potential nearterm impacts of COVID, we are cautiously optimistic that the pandemic may serve as a catalyst for an acceleration of the transition from old school analogue cabling to networked audio and video.  This bodes well for Audinate’s long term growth opportunities, and we are excited by the path we see ahead for our business_.”


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## Dona Ferentes (23 August 2021)

Key FY21 financial highlights: 
• _Revenue of US$25.0 million, up 22.5% (A$33.4 million) 
• Gross profit (GP) of US$19.2 million, up 23.1% ... steady GP margin of 76% 
• EBITDA of A$3.0 million, up 50.1% on FY20 
• Net loss after tax of A$3.4 million, 17% better than FY20 
• Operating cashflow of A$6.7 million, up from A$4.8 million in FY20 
• Cash and term deposits of A$65.4 million at year end_



> As customers adopt new _software based_ Dante implementations, Audinate expects to see further long term margin improvement.  As the mix of hardware and software products shifts, growth in gross profit dollars becomes a more appropriate measure of performance than revenue growth alone.




Outlook    
Having successfully navigated a challenging operating environment over the last twelve months, we continue to take a long-term perspective on running and growing the business to deliver shareholder value. To support ongoing growth and drive development of video and cloud services we are targeting headcount of over 170 staff over the course of FY22 (up from 135 staff at 30 June 2021).

The key focus areas for the year ahead are:
• _Driving further design wins for Dante video and next generation software products 
• Launching new Dante video software and cloud services products 
• Pursuing initiatives to reduce adoption friction, including in-field activation 
• Improving adoption of Dante by non-English speakers 
• Strengthening our products, services, and systems against cyber-risk 
• Implementing business scalability initiatives 
_


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## peter2 (31 October 2021)

*AD8* is one for the reversal watch list. Business is going well and investors have been loving this one, until now. The price weakness is all to do with the chip shortages. *AD8* can't get the chip that's required for it's equipment. They've got plenty of demand for their product but can't supply it. 

_"The company is focusing its resources an accelerating product transitions to platforms with improved supply outlook and alternate part availability".   _Ref Q1 Trading Update. 18/10/2021

As usual this will take time and the chip shortages will impact their financial numbers. 

IMO this sort of problem is temporary and it's why *AD8* is in my reversal list.


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## Dona Ferentes (28 January 2022)

*Ally Selby ( Livewire Markets ) :  *Last but certainly not least we have Audinate. Its share price rose around 7% in 2021. Josh, I'll stay with you. Is it a buy, hold or sell?

*Josh Clark ( QVG Capital ) (HOLD) : *I really like this business. It's a hold for me, though I've admired it from afar for a long time, I've always struggled to get my head around the valuation for this one. I remember a while ago, back when you could travel, going to an audio-visual conference in Las Vegas, where all of the OEMs like Yamaha, Bose, and the like were advertising that they were using Audinate's technology. So it really gave a bit of insight into how much they dominate that niche within audio. And they also have the potential over a longer period of time to do something similar in video. But I think just to earn a reasonable return out of the stock, you need to buy it at a low valuation or you need video to be much more progressed than where it is at the moment. So that one's a hold.

*Ally Selby: *Last one for you, John. Audinate obviously suffered during COVID lockdowns. But now with re-openings happening around the world, could this be a winner? Is it a buy, hold or sell?

*John Deniz ( Paragon Funds Mgmt. ) (SELL) : *Ally, it's a sell for us on valuation. We actually owned this from the IPO when the easy money was made and like Josh, we also really like the business. However, the market's already priced in excessive amounts of growth, and we see continued supply chain issues around chip shortages, which we think will impact the business. So it's a sell for us.


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## finicky (15 February 2022)

Would you buy the chart? Not me - at this time anyway
James Gerrish whom I tend to listen to, is backing it strongly at this price.
Not a business that I understand at all but interested by its global market, revenue growth, apparent dominance and 'network' thingo; plus it is founder led. Another one for the crash list 

All Data Monthly


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## finicky (15 February 2022)

A beaten-down stock with 60% upside
					

Having been caught up in the recent tech sell-off, a global market leader is now looking alluringly cheap. That's according to Market Matters' James Gerrish, who on the back of Audinate's (ASX: AD8) half-year results on Monday says the stock is a definite buy. Find out why by clicking the...




					www.livewiremarkets.com


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## qldfrog (15 February 2022)

finicky said:


> A beaten-down stock with 60% upside
> 
> 
> Having been caught up in the recent tech sell-off, a global market leader is now looking alluringly cheap. That's according to Market Matters' James Gerrish, who on the back of Audinate's (ASX: AD8) half-year results on Monday says the stock is a definite buy. Find out why by clicking the...
> ...



was reading the article this morning;; these businesses can be cloned (aka started from scratch), and are valued in my opinion when money is so plentiful than big boys just go and buy the set of players in a field .
I know how hard it is to start tech in Oz for a global world market..and they plan to grow locally hum..
But will keep the name handy too


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## finicky (15 February 2022)

I can't value profitless start-ups but the revenue and ebitda aren't accelerating that I can see - just arithmetically creeping upwards. How long would you have to wait for NPAT earnings to reach a level to justify this price? And there's not going to be a crash or depression in the next 5 years to make it ridiculous?
FY22 sems to be continuing the trend so looking at FY21 actual :
EBITDA: $3.29
REVENUE: $33.4
M.C. $573M 
M.C / EBITDA =  174 x
M.C / REVENUE = 17 x


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## Dona Ferentes (22 August 2022)

record revenue of $US33.4 million for the 2022 financial year, up 33.4 per cent on FY21. 
record EBITDA of $4.3 million, up 41 per cent on the prior year.
gross profit increased 29.7 per cent to $US24.9 million. 
gross margin at 74.7 per cent.
Audinate reported a net loss after tax of $4.5 million.






used to hold,  prior to 2020. I am somewhat surprised they are making a go of it. (still with losses, though)


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