The Audinate Group Ltd (ASX: AD8) share price could be on the move today after releasing its half year results for FY 2020.
What happened in the first half?
For the six months ended December 31, the leading audio-visual networking technologies provider delivered a 14% increase in revenue to $16.1 million. In U.S. dollar terms, revenue increased 7.7% to US$11.1 million.
Management advised that this was driven by growth in chips, cards & modules revenue from solid Brooklyn and Broadway product sales. This was supported by growth in software revenue thanks to royalties, retail software, and Dante Domain Manager.
It is also worth noting that the prior corresponding period benefited from the launch of AVIO adapters and US$0.5 million of orders pulled forward due to the threat of tariffs. These tariffs and other macro-economic conditions had an impact on sales in China during the first half. This led to overall sales in Asia (ex-Japan) falling 33% during the half.
Other factors impacting its short term revenue growth included OEM delays in launching key products and the launch of Dante AV moving into the third quarter to accommodate key customer requirements.
Positively, thanks to a 3.8 percentage point increase in its gross margin to 77.1%, Audinate's gross profit increased by 20% on the prior corresponding period to $12.5 million. In U.S. dollar terms, gross profit increased 13.3% to US$8.5 million.
EBITDA came in 11% higher than the same period last year at $1.9 million, but net profit after tax dropped 60% to $341,000. The latter was due largely to a 63% jump in depreciation and amortisation to $1.9 million.
Operating cashflow increased 425% to $2.9 million. Audinate finished the period with a cash balance of $34.3 million.
Outlook.
Management warned that macro-economic conditions, US tariffs, and the coronavirus outbreak could impact its second half results.
However, despite these temporary headwinds, the company currently expects to deliver further revenue growth in the second half. Though, it acknowledges that it is likely to be below its historical range.
