Audinate (ASX:AD8) share price lower despite stellar sales growth

Supply chain issues couldn't stop Audinate growing its revenue strongly…

| More on:
Man listening to spotify on headphones.

Image source: Getty Images

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

Key points

  • Audinate has been battling supply chain issues and chip shortages
  • Despite this, it delivered strong sales growth during the first half
  • Growth is expected in the second half but at slower than normal rates

The Audinate Group Ltd (ASX: AD8) share price is trading lower today following the release of its half year results.

In afternoon trade, the audio-visual media networking solution provider's shares are down 2.5% to $7.54.

Audinate share price lower despite delivering strong revenue growth

  • Revenue increased 31.6% over the prior corresponding period to $20.2 million (US$14.8 million)
  • Gross margin of 75.6%
  • EBITDA up 11% to $2 million
  • Net loss after tax of $2.1 million
  • Strong cash and term deposits balance of $60.3 million prior to completion of Silex acquisition in January

What happened during the half?

For the six months ended 31 December, Audinate overcame supply chain disruptions and chip shortages to deliver a 31.6% increase in revenue to $20.2 million or 33.3% in US dollars terms to US$14.8 million.

Management advised that this growth was driven primarily from its chips, cards and modules, which was supported by robust demand for software products. This helped offset a decline in revenue from design wins as it moved away from up-front license fees and adopted a subscription model to successfully drive more design wins.

Nevertheless, Audinate still secured 57 designs wins with OEMs during the period, with 16 of these design wins related to next generation Dante software products. The company also revealed that it has grown the number of OEM customers shipping Dante enabled products to 403 OEMs. This represents an increase of 12% over the prior corresponding period.

Management commentary

Audinate's Co-Founder and CEO, Aidan Williams, was pleased with the half, particularly given the challenging operating conditions.

He commented: "The business performed strongly during the first half in a very challenging operating environment and delivered revenue growth exceeding 30%. Further supply chain tightness is expected in 2H22 but we are pleased to have received indicative additional commitments from chip suppliers. Consequently we now anticipate satisfying demand for our Brooklyn and Broadway products in the second half."

Outlook

Management advised that second half revenue will be driven by chip availability for both Audinate and its OEM customers. At this stage, it expects USD revenue growth for FY 2022 overall, but not at historical growth rates.

Audinate advised that it is proactively managing the challenging operating environment through product redesign, sourcing of alternative parts, and passing through price increases. Positively, it expects to be able to continue to meet demand for most flagship products.

Once again, Audinate's committed sales orders continue to grow to all-time highs, which it believes positions the business strongly for a future supply chain easing, fulfilment of orders, and associated revenue.

Though, it is also expecting its costs to increase in the near future as it grows its headcount. This reflects the Silex acquisition and the desire to support ongoing growth and drive development of video and cloud services. Audinate is targeting a headcount of 185 staff at the end of June, which will be up 37% from 135% at the end of FY 2021.

Mr Williams concluded: "The acquisition of the Silex video business is another exciting chapter for Audinate. With the establishment of the Cambridge (UK) video software team, the acquisition completes a significant transformation of our video capabilities over the last twelve months. Whilst supply chain disruption is likely to linger through CY22, we look to fulfilling increasing demand for our products and services. We also look forward to the release of future video and cloud products that complement our existing revenue streams."

Should you invest $1,000 in Affirm right now?

Before you buy Affirm shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Affirm wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended AUDINATEGL FPO. The Motley Fool Australia owns and has recommended AUDINATEGL FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Technology Shares

Guess which ASX 200 tech stock is crashing 25% following an update

This tech stock is being sold off on Wednesday. But why?

Read more »

A young man goes over his finances and investment portfolio at home.
Technology Shares

Why are WiseTech shares sinking 6% today?

What's going on? Let's find out what is happening with this tech stock today.

Read more »

Two IT professionals walk along a wall of mainframes in a data centre discussing various things
AI Stocks

NextDC share price lifts off on record quarterly contract wins

AI-fuelled data centre demand is lifting investor interest in the ASX 200 tech stock today.

Read more »

group of traders cheering at stock market
Technology Shares

What drove a 10% surge in ASX 200 tech shares last week?

The ASX 200 roared to a 2-month high on Friday, with tech shares leading the 11 market sectors last week.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Technology Shares

Why is the Block share price crashing 33%?

This payment giant's shares are being hammered today. But why?

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Technology Shares

These ASX 200 tech stocks could rise 20% to 35%

Goldman Sachs is tipping these shares to rise strongly from current levels.

Read more »

A corporate team or board stands together and looks out the window.
Technology Shares

WiseTech shares charge higher on $3.5b acquisition news

This tech stock is ending the week positively. But why?

Read more »

A man leans forward over his phone in his hands with a satisfied smirk on his face although he has just learned something pleasing or received some satisfying news.
Technology Shares

3 reasons to buy this $25 billion ASX 200 tech stock today

A top expert forecasts more outperformance from this fast-growing ASX 200 tech stock.

Read more »