Audinate Group Limited (ASX:AD8) CEO Lee Ellison talks 1H18 results including new product development and OEM adoption.
Rachel Jones: Hello I’m Rachel Jones for the Finance News Network. Joining me today from Audinate Group (ASX:AD8) is CEO, Lee Ellison. Welcome Lee.
Lee Ellison: Thank you Rachel.
Rachel Jones: Firstly could you start by giving us an introduction to your company?
Lee Ellison: Audinate is a company based here in Sydney that was formed 10 years ago, with a vision to revolutionise the way that audio-visual systems are connected, by bringing the IT revolution to AV systems. So traditionally audio-visual systems are connected through analog cabling, and those cables need to be routed through a building, from a point-to-point basis. What Audinate does with our Dante technology is distributes audio, using a standard computer network. So rather than cable something through walls from each and every room, as long as you can get on the data network, you can route signals from anywhere to anywhere.
The end result is it’s a lower cost of installation and much more flexible for the system integrator, who installs these systems. Audinate is a company that recently listed on the Australian Stock Exchange, on June 30th of this past year. And today we have a market capitalisation of approximately $175 million.
Rachel Jones: So now to your first half results. What were the highlights?
Lee Ellison: Audinate continued to deliver with strong performance for the first half of this fiscal year. Revenues were $8.8 million, which was above what the prospectus forecast was. In addition, we invoice our customers in US dollars, so really the relative currency is USD. And we recognise revenues at $6.8 million for the period, compared to $4.9 million for the previous comparable period. And our EBITDA was $100K during the period.
Rachel Jones: Can you give us a little bit more detail about your products, what can you tell us about your hardware?
Lee Ellison: Audinate delivers our software really in the form of chips, modules and cards. Today there’s been 392 manufacturers who have adopted our technology, and designing it into their products. And we have 1,292 products available on the market. So every time one of those products goes to market, we get a repeat revenue when they go to manufacturing. They would either buy our chips, modules or cards and during this past period, we grew our shipments of those particular products 42 per cent, to 114,000 units.
Rachel Jones: And what can you tell me about your software?
Lee Ellison: We make software that makes it easy for end-users to manage and configure these systems. And we also recently introduced a new software platform called, Dante Domain Manager and Dante Domain Manager is an application platform, sold directly to system integrators. And what it does is it allows them to better manage, control and add security levels to the existing Dante systems in place.
Rachel Jones: Can you tell us a little bit about your new product development?
Lee Ellison: We recently had two new products that we launched; one was the Dante Domain Manager, which I just spoke to. The other was Dante AVIO, which is a family of adapter products that enable you to get signals on and off, of an existing legacy installation. And that’s a very strategic milestone for the company, because it helps us really address systems that have been installed for some time.
Rachel Jones: Now for a more general question. What is the average replacement cycle for audio-visual systems?
Lee Ellison: When a system is installed it may last for five years to 10 years, but in reality, companies don’t necessarily uplift their entire AV system in one go. It’s a continual process and they’ll budget for that each and every year. To give you an example in a university, they’re constantly upgrading the classrooms and improving the AV systems, in those particular spaces. Overall, the audio-visual market is a $140 billion a year market, so these things continue to be enhanced each and every year.
Rachel Jones: Last question Lee. What is the priority for the next six months and for the longer term?
Lee Ellison: We’ll be focused on launching and rolling out the Dante Domain Manager software, and building the reseller channel for that to get that deployed. In addition the Dante AVIO adapter family, we’ll be expanding the reseller channel for that through online retailers, as well as distribution channel throughout the globe. In addition to that though, Audinate wants to be able to deliver the V or video in AV systems. And we’re currently working in our labs on development of a video solution that will be demonstrated, towards the latter part of this year.
Rachel Jones: Lee Ellison, thanks for the update.
Lee Ellison: My pleasure.