Audinate Ltd flags more "strong growth" in next 12 months

Audinate Ltd (ASX:AD8) is widely tipped by small cap investors as having a bright future.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This morning professional audio system business Audinate Ltd (ASX: AD8) reported a statutory net profit of $2.5 million on revenue of $19.7 million for the half year ending June 30, 2018. The profit result was a huge improvement on the $20.4 million loss in the prior year, with revenue also up 30%, or 35% in constant currency US dollar terms.

It should be noted that the big swing from loss to profit is due to a one-off non-cash charge incurred in FY 2017 that was related to a "change in fair value of convertible preference shares" over the 2017 financial year. The FY 2018 profit result also benefited from a $2.4 million one-off tax related gain as a result of Audinate entering a new "tax consolidated group in Australia".

The group beat its IPO prospectus forecasts with positive EBITDA (operating income) of $0.6 million, with gross margins flat at an albeit impressive 75%.

On an operational basis the group reported that: "Dante enabled original equipment manufacturers (OEMs) products available for sale increased to 1,639 products at 30 June 2018, up 39% from 1,182 at 30 June, 2017. Sales of modules, chips and cards shipped in FY18 was (sic) up 38% to approximately 238,000 units. The Group continues to grow the number of OEMs adopting Dante to 438 manufacturer brands as at 30 June 2018, up from 369 at 30 June 2017".

Management flagged that this remains a growth business with planned investments in sales and marketing resources over FY 2019, while investing in the tech development behind current and new products.

As a result revenue growth is expected to be in a range consistent with historic performance, although it seems the company declined to provide a forecast for earnings given the plans for rising investments.

However, the CEO noted he believes the group has "strong growth prospects" over the next 12 months.

The stock closed flat at $3.89.

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares finished the trading week on a high this Friday.

Read more »

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »

Broker looking at the share price.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Gainers

Why ARB, Block, Mayne Pharma, and Paladin Energy shares are charging higher today

These shares are having a strong finish to the week. But why?

Read more »

A woman puts her hands up as she smashes and breaks through a glass ceiling.
Share Gainers

How these 5 ASX 200 stocks are smashing the benchmark this week

These fives ASX 200 stocks have made some very happy shareholders this week. Here’s how.

Read more »

Bored man sitting at his desk with his laptop.
Share Fallers

Why Catalyst Metals, Duratec, Nufarm, and Rio Tinto shares are dropping today

These shares are ending the week in the red. But why?

Read more »

A smiling woman at a hardware shop selects paint colours from a wall display.
Broker Notes

After its strategy day, what does Macquarie think Wesfarmers shares are worth?

Let's see what the broker is saying about this blue chip.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Technology Shares

After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie?

Valuations matter when investing, and Macquarie feels no different.

Read more »