The Atomos Ltd (ASX: AMS) share price is gaining ground today following the release of a positive trading update.
Shares in the video technology company surged up 8.7% to 68.5 cents in mid-morning trade before retreating to 67 cents at the time of writing. In comparison, the All Ordinaries Index (ASX: XAO) has plummeted 0.8% to 6,214 points.
Trading update
For the month of October, Atomos reported solid growth as sales begin to recover to pre-COVID-19 levels. An uplift in demand saw its customers uptake its existing product lines. This was backed by the recent integration of ProRes RAW by major global camera manufacturers.
The company experienced monthly sales improvements greater than 50% in July, 60% in August, and 100% in September. The increase was compared to the sales run-rate during the second half of FY20, which it achieved $2 million per month.
In October, however, run-rate performance marked an acceleration of over 200% over H2 FY20. The strong momentum showed a return to pre-COVID sales, which is three months earlier than the previous guidance.
Atomos advised that while the product range was holding up, it remained cautious given the economic uncertainly. The company is aware that potential further lockdowns in the northern hemisphere could impact in its largest market.
Furthermore, Atomos noted that all costs thus far are in line with previous forecasts.
Atomos is seeking to launch a new steaming and live video product in the second quarter of FY21. Further details and trading updates will be announced at its AGM on 30 November.
What did the management say?
Commenting on the trading update, Atomos chair Chris Tait said:
We have been pleased with the continuing positive recovery momentum post the COVID-19 lockdown and the resulting improvement in the top line, which is off a lower cost base, and are seeing the benefits of the operational changes we made following the initial COVID outbreak.
Adding to Mr Tait's comments, Atomos CEO Jeromy Young addressed the ProRes RAW accomplishment, saying:
Our decision to partner with Apple on ProRes RAW many years ago and to build out an ecosystem is starting to really bear fruit. The ProRes RAW format is now being embraced by all major camera companies globally and is having a strong positive impact on our revenue.
The bounce back has been significant in both ProVideo and Entertainment due to affordable 4KHDR and RAW workflows, in which our products are leaders.
About the Atomos share price
The Atomos share price is down almost 50% since the beginning of the year, reflecting weak investor sentiment from COVID-19. The company, however has slowly been on the mend, recuperating from its all-time low of 24 cents in March.
Atomos has a market capitalisation of $165.4 million and a negative earnings per share of 0.12.
