Audinate Group (ASX:AD8) CEO Lee Ellison talks 1H19 results, increased adoption by original equipment manufacturers (OEMs) new products and outlook for 2H19.
Jessica Amir: Thanks for tuning into the Finance News Network, I’m Jessica Amir. Joining me now from Portland in the United States is Audinate Group Limited (ASX:AD8) CEO, Lee Ellison. Hi Lee and welcome back.
Lee Ellison: Hi Jessica. It’s nice to be here.
Jessica Amir: First up, for those who don’t know, Audinate Group supplies hardware and software to the audio-visual market. How is the company progressing?
Lee Ellison: Everything has been going very well. Thank you for asking. At Audinate we have been pioneering the future of AV and by that,we mean the audio-visual industry. And we make a technology, which we call Dante, which has become the global de facto standard for the professional AV industry. What it does it allows you to send signals using a standard computer network that are high quality, low latency and perfectly synchronised eliminating the need that you might have for analogue connectivity. At the end of the day this makes the systems a much more flexible system with higher quality.
Jessica Amir: Thanks Lee. Now to the first half 2019 results. A good set of numbers, congratulations. Just take us through the highlights.
Lee Ellison: The core audio business continues to grow and we’ve seen strong historic growth in revenue and unit shift. In the first half of this fiscal year we had 59 per cent growth in terms of the units of chips, modules and cards. And our software shipments increased by 22 per cent. The benefit of having our technology inside a manufacturer’s products is it creates this ecosystem of interoperable products. And so it really creates this network effect and the result is now that there are over 1,751 products from various manufacturers that all talk Dante with our networking technology inside.
In terms of financial results during the first half of FY19 revenues grew to $AUD14.2 million and in terms of US dollars revenues grew to $10.3 million. That’s a 51 per cent growth year over year in comparable period. The earnings before income taxes and depreciation grew to $1.7 million, and the net profit after tax was $800,000.
Jessica Amir: Thanks Lee. Now to your product. What’s been the market response, starting with Dante Domain Manager?
Lee Ellison: Audinate began shipping our Dante Domain Manager software, in the second half of FY18. Dante Domain Manager is a complete network management tool that provides grouping of devices, network security and role based security that gives better scalability and management for a Dante system. As part of our growth initiatives we have been expanding our sales and marketing channel to solve both the Dante Domain Manager and Dante AVIO products. And so during the past fiscal period we have expanded sales and marketing support in multiple countries including the United States, Germany and China.
Jessica Amir: What can you tell us about Dante AVIO?
Lee Ellison: So as part of our prospectus, we talked about three growth initiatives. One of those was extending Dante to be incorporated into legacy installations. And so to do that we developed a family of adaptors which we call Dante AVIO. And Dante AVIO are cost effective adaptors that allow you to get in and off a system and connect Dante to it without a complete retrofit. So this is an example of our Dante AVIO adaptors that allows you to connect Dante on this end and analogue on this end. So if you have existing brownfield installations of amplifiers or powered speakers you can easily add them to the Dante network. Sales from the Dante AVIO started in May and have been much better than we expected.
Jessica Amir: Can you give us an update on Dante AV module?
Lee Ellison: We are very excited about the Dante AV system solution. So we launched two products recently at a tradeshow in Amsterdam at Integrated Systems Europe. Integrated Systems Europe is attended by about 70,000 people and at the show we launched our Dante AV module which allows for HDMI signals to be transported over a data network in the same way that we do audio. So if you look back we have when we talk about the AV industry there’s both an audio and video component to it. And with Dante AV, you will be able to connect up video system the same way as you do audio.
Some of the examples of use cases for that will be things like sports bars, or casinos or shopping centres, or video display walls or education presentation, courtrooms or conference rooms. So the model that we are going forth with is very similar to what we have done in the audio networking space and selling this solution to the original equipment manufacturers.
Jessica Amir: Now to the growth in the audio networking industry. Can you share your insights into what the drivers of growth are for the industry?
Lee Ellison: If you look at the way things have changed with communications; one of the things that has really grown the overall market is similar to what we’re doing today. We’re talking via Skype. But things like Skype, or Webex, or Zoom have really changed the way that people communicate. The one thing about that though is the quality of the experience has become worse. And so one of the drivers to our industry is improving the conferencing facilities and ensuring that everyone’s voice is heard. And so we’ve been adding Dante to a lot of facilities for conferencing applications to give a much better more productive meeting.
Jessica Amir: Just lastly Lee. Is there anything else that you wanted to add?
Lee Ellison: Over the next 12 months we will broaden our suite of Dante naval products and that will help our OEM customers, deploy Dante in more and more products. We are very excited about what’s happening with Dante AVIO and Dante Domain Manager. And we will continue to invest to make sure that those products are successful. But Dante AV really changed the landscape and it really doubles our addressable market going now from a $400 million addressable market to over $1 billion addressable market.
We are very proud that we developed this technology that’s become an industry leader and a technology that’s been spun out of Australia. And so we are very optimistic about the future and appreciate the opportunity to share that with you today.
Jessica Amir: Lee Ellison, thank you so much for your time and congratulations on another great half.
Lee Ellison: Thanks Jessica.