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."

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

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

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 »

Happy work colleagues give each other a fist pump.
Technology Shares

Guess which ASX 200 technology stock has outperformed Nvidia over the past 5 years?

This company has been nothing short of impressive.

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 »

Two smiling work colleagues discuss an investment or business plan at their office.
Technology Shares

Why Goldman Sachs rates this ASX tech share as a top buy

Let's see why the broker rates this stock highly right now.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

WiseTech shares have surged 34% since April. Is it too late to buy?

Can WiseTech shares keep charging higher? Here’s what this investing expert expects.

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Technology Shares

Up 87% in 12 months: Why this ASX tech share is still a top buy

This technology business still has loads of potential, according to a fund manager.

Read more »

a group of three cybersecurity experts stand with satisfied looks on their faces with one holding a laptop computer while he group stands in front of a large bank of computers and electronic equipment.
Technology Shares

2 ASX 200 tech stocks Morgans rates as buys

The leading broker has named a couple of shares to buy right now.

Read more »