The Audinate Group Ltd (ASX: AD8) share price is climbing today following the company's release of its trading update.
At the time of writing, the media networking solutions provider's shares are swapping hands at $6.17, up 9.40%.
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What did Audinate announce?
Investors appear pleased with the company's latest performance, driving up the Audinate share price this morning.
According to its release, Audinate reported robust growth for the March quarter, achieving unaudited revenues of US$6.5 million. While the result reflected a 7.1% decrease over the prior corresponding period (Q3 FY21), management noted it had successfully navigated around the tight chip supply.
As such, supplies of a key chip used in Brooklyn and Broadway products were replenished in March, leading to strong trading conditions in April.
Gross margin stood at 75.8%, although spot inventory purchases are yet to fully flow through to the cost of goods sold.
Audinate stated that while chip supplies continue to be constrained, it has been building its inventory of key chips. Since the end of last year, the company's raw materials inventory balance has increased by $3.7 million.
Supply of Ultimo chips continues to be modest, constraining the number of units shipped but not significantly impacting FY22 revenue.
Furthermore, Audinate advised demand for Dante products remains strong with sales orders to be fulfilled throughout FY22 and FY23.
Its total backlog of sales orders has increased with the addition of video product orders acquired from Silex.
Management pointed out that its ability to fulfil orders has improved due to improved supply of key chips. However, manufacturing risks associated with an uncertain COVID-19 situation in mainland China remain.
Audinate CEO, Aidan Williams commented:
We have navigated what was expected to be the weakest quarter of FY22 and whilst some supply chain risks remain, we are making good progress in filling demand for Dante by replenishing our inventory of chips.
I am also thrilled to have achieved two major product milestones with the release of IFE and our first video software – both are strategically important achievements for the ongoing growth of Audinate.
Audinate share price snapshot
Over the past 12 months, the Audinate share price has lost more than 70%.
When looking at year to date, the company's shares have fared worse, down 36%.
Based on today's price, Audinate presides a market capitalisation of around $434.78 million.
