Audinate: Result 2019
Recommendation
- {{x.value}}
{{ twilioFailed ? 'SMS Code Failed to Send…' : 'Enter verification code' }}
{{ completedStep1 ? 'Authentication & Security' : content.trialHeading.replace('{0}', user.FirstName) }}
{{ content.upgradeHeading.replace('{0}', user.FirstName) }}
The email address you entered is registered with InvestSMART
Please login to continue
We have sent you an email with the details of your registration.
Looks you are already a member. Please enter your password to proceed
{{ upgradeCTAText }}
Updating information
Please wait ...
Your membership to InvestSMART Group recently failed to renew.
Please make sure your payment details are up to date to continue your membership.
Having trouble renewing?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
You've recently updated your payment details.
It may take a few minutes to update your subscription details, during this time you will not be able to view locked content.
If you are still having trouble viewing content after 10 minutes, try logging out of your account and logging back in.
Still having trouble viewing content?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
Please click on the ACTIVATE button to activate your Intelligent Investor 15-day free trial
Please click on the ACTIVATE button to finalise your membership
Unsuccessful registration
Registration for this event is available only to Eureka Report members. View our membership page for more information.
Registration for this event is available only to Intelligent Investor members. View our membership page for more information.
- You are already registered for this event.
- This event is already full.
- Please select a quantity for at least one ticket.
- {{ i }}
Forgotten password
Please enter your email address below to request a new password
- Indepth analysis of ASX listed shares
- BUY, Hold and Sell Recommendations
- Ideas Lab
- Special Reports
- Alan Kohler’s Weekend Briefing
- Interviews with CEO’s & top influencers
- Money Cafe and Talking Finance
- Super Advice and Q&A with Ask Alan
There can be little doubt that Audinate, the owner of the Dante protocol, a hardware and software combination that allows analogue audio and video streams to be digitised, dominates the industry.
Dante now has six times as many products using is protocol as Cobranet, its closest competitor. That lead should widen as market share of new products expands and expands even faster.
The dominance of the protocol has been swift. Five years ago, just 223 products shipped enabled with the Dante protocol; about 10 times that number are now being shipped and the business is attracting new customers, with 170 suppliers about to launch their first Dante enabled device.
| Year to June | 2019 | 2018 | /(-) (%) |
|---|---|---|---|
| OEMs shipping Dante products | 270 | 228 | 18 |
| Dante enabled products | 2,134 | 1,751 | 22 |
| Dante units shipped (000's) | 515 | 398 | 29 |
| Revenue ($m) | 28.3 | 19.6 | 44 |
| NPAT ($m) | 0.6 | (0.7) | n/a |
| Operating cash flow ($m) | 3.6 | 1 | 260 |
Industry dominance is starting to translate into financial strength. Revenue for the full year grew by 44% and, despite higher costs, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by almost 400% to $2.8m.
That's still a small figure against a market capitalisation of $460m but the trajectory is clear; Audinate dominates its market and is set to gobble most of the industry profits on offer.
An estimated market size of $1bn is on offer when we combine audio, video and software revenue. Assuming an 80% market share would deliver $800m in revenue and 50% EBITDA margins - this business should scale nicely - and could generate about $400m a year in operating profit.
Today's market capitalisation, while generous, could yet understate the ultimate size of the business.
If the opportunity is clear, then so are the risks. Dante came from nowhere to disrupt former leaders. That could happen again.
With operational dominance now clear, the share price has grown to anticipate a lot of success - it has risen 160% since our first upgrade - but that dominance will take time to deliver. It's hard to estimate whether we are getting an underpriced future monopolist or just another hot stock in a hot tech market. A closer, more detailed look beckons. We'll aim to have that done over the next few weeks. HOLD.
Disclosure: the author owns shares in Audinate.
Note: The Intelligent Investor Model Growth Portfolio owns shares in Audinate, as does the Intelligent Investor Equity Growth Fund and Intelligent Investor Ethical Fund.
Recommendation
Call 1300 880 160
Start a chat
Schedule a call
