Audinate Group (ASX:AD8) CFO, Rob Goss discusses FY17 full year results and outlook.
Jessica Amir: Hello. I’m Jessica Amir for the Finance News Network. Joining me from Audinate Group Limited (ASX:AD8) is CFO Rob Goss. Rob, welcome to the Finance News Network.
Rob Goss: Thanks, Jessica. Happy to be here.
Jessica Amir: Thanks for coming. So, we’ve never had the opportunity to sit down before. So for those not familiar with Audinate Group, can you tell us about the business?
Rob Goss: Audinate was formed about 10 years ago. It was a spin-out from Data61 and developed Dante digital audio networking technology. What the technology does is distribute digital audio signals over computer networks. So, what it does is bring the benefits of IT networking to the professional AV industry. We do this by replacing standard analogue cabling using nothing more than an existing computer network and standard Ethernet cabling that’s already in place. As an organisation, we listed on the Stock Exchange on June 30th, and we now have a market cap of around about $120 million.
Jessica Amir: Now to your products and services in a little bit more detail, can you tell us about your products and how they differ to your competitors?
Rob Goss: Dante is now embedded within almost 1,200 professional AV products, which are made by the likes of Yamaha, Bose, Bosch and Shaw. These OEM manufacturers make professional AV equipment, which includes things like speakers, microphones and mixers. And so now there are more than five times as many products with Dante embedded within them than the next nearest solution.
What that means for a manufacturer is they know that if they choose Dante that their product is going to be compatible with a wide range of other products which are available in the market. For consumers, what that means is they’ve got the broadest possible choice of products, and they know that when they choose a product with Dante inside it’ll talk to everything else that they’ve got.
The other things that we’ve focused upon in terms of trying to get benefits for both our end users and our customers. So, for manufacturers, it’s providing a turnkey solution, making is easy for them to embed our technology within their products. For end users, we’ve focused on ease of use, plug-and-play sort of principles in terms of using Dante, and then we’ve also provided them with a broad suite of software and management configuration tools. And in the last year alone, we’ve conducted more than 40,000 training sessions for end users of Dante technology.
Jessica Amir: That's great. So, I used to work at the ABC and I know that your systems are in use there. Where else are your systems in use, perhaps in Australia or around the world?
Rob Goss: Yeah, sure. So, Dante is in literally thousands of installations around the world. So they will range from things like the ABC. It’s included within commercial AV installations like the Melbourne Convention Centre. To platform announcement systems with Sydney trains. Or the PA systems at large sporting stadiums around the world, such as the Lord’s Cricket Ground.
Jessica Amir: A more general question now, Rob. Can you tell us about the future of AV. Where’s it headed and how are you positioned to capture that?
Rob Goss: Similar to what we saw about 10 years ago, where there was convergence of data and telecom systems with the advent of voice over IP, we’re seeing that same transition happen within the AV industry. More and more what we’re seeing is that control of AV is shifting to the IT department and the IT department budget, who are looking for network solutions. At a more macro level, this transition means that more of the management control and process of audio signals is shifting from hardware to software.
Jessica Amir: Now to financials, Rob. You’ve just announced your FY17 results. Can you tell us about some of the highlights?
Rob Goss: So, the business again delivered 30% revenue growth, and operating costs grew at a little under 18%. So what this meant was that on a normalised basis we generated positive EBITDA of about $800,000. That compares to a $100,000 EBITDA loss for FY16, so a significant improvement. Compared to forecast, we’re $500,000 ahead on the revenue line and about $300,000 better than expectations for EBITDA.
Jessica Amir: So, specifically to what you’re forecasting for FY18, what can you tell us?
Rob Goss: In releasing the FY17 results, we reaffirmed the FY18 forecast, which was set out in the prospectus. So that’s for $18.5 million in revenue and an EBITDA loss of $1.2 million. The purpose of the IPO was always to raise growth capital. So there is a one-time step up in costs next year as we look to more than double the addressable market through initiatives with Dante Domain Manager adapter products and video.
Jessica Amir: Last question now. What’s your focus for the next 12 months and longer-term?
Rob Goss: So, the goal for the next 12 months is really around four things. So, continued revenue growth in our core business, the successful launch of the Dante Domain Manager product in January ‘18, an expanded suite of adapter products to market, and the showcase of a video prototype product by the end of FY18. On a longer-term basis, we continue to work at developing the technology platform to support the AV industry as the transition from hardware to software increases in momentum.
Jessica Amir: Well, Rob Goss, CFO, Audinate Group, thanks so much for the update.
Rob Goss: Thanks very much for having me, Jessica. It’s been a pleasure.