The Audinate Group Ltd (ASX: AD8) share price is pushing higher in early trade.
At the time of writing, the media networking solutions provider's shares are up almost 1% to $8.33.
Why is the Audinate share price pushing higher?
The catalyst for the rise in the Audinate share price this morning has been the release of its half year results. Those results revealed that the company has seen its revenue levels return to pre-COVID levels.
According to the release, Audinate reported revenue of US$11.1 million. This was flat on the prior corresponding (and COVID-free) period and up 19.5% on the second half of FY 2020.
Management advised that this was driven by a 48% increase in Software revenue. It notes that the company experienced significant growth in royalties, which was supported by growth in retail software sales and Dante Domain Manager sales.
The company's Chips, cards & modules revenue benefitted from strong growth in Dante AVIO adaptors and good growth in Broadway and Ultimo chips. This partially offset a material decline in Brooklyn revenue. Management advised that its Brooklyn product is often sold into mixing consoles and is consequently most impacted by the decline in live sound and live events due to COVID-19.
Another positive was that Audinate's gross margin remained steady at 77% despite a material shift toward software revenue. This led to gross profit of US$8.6 million, which was up slightly over the prior corresponding period from US$8.5 million.
However, due to currency headwinds, the company's earnings before interest, tax, depreciation and amortisation (EBITDA) softened slightly to A$1.8 million. And while the company received A$0.8 million in JobKeeper payments, this was excluded from its EBITDA result.
And on the bottom line, Audinate reported a net loss after tax of A$1.2 million. This compares to a A$0.3 million profit in the same period last year.
Finally, the company recorded an operating cashflow of A$3.2 million, up from A$2.9 million a year earlier. This was primarily a result of cash from the aforementioned COVID related grants.
This left Audinate with cash (including term deposits) of A$66.3 million at the end of the period.
Management commentary
Audinate's CEO and Co-Founder, Aidan Williams, was very pleased with the company's performance during a difficult period.
He said: "We were very pleased with the FY21 first half revenue result and the overall financial performance of the business. It is encouraging to see business confidence returning to the AV industry, reflected in good demand for Dante products heading into the second half."
Dante-enabled products continue to increase in numbers
The company notes that number of Dante enabled products manufactured by Audinate's Original Equipment Manufacturer (OEM) customers is a key measure of its technology proliferation. It is also traditionally a leading indicator of future revenue growth.
Positively, at the end of the period there were 3,008 Dante-enabled products on the market, up 27% year on year. This is materially more than its nearest competitor.
In addition, the number of OEM customers with Dante-enabled products also grew 23% to 360 over the same period.
Outlook
Management advised that it is seeing confidence return amongst OEMs, system integrators, and end-users. This has resulted in an overall improved industry outlook for calendar year 2021.
Whilst COVID related risks remain (including to global supply chains), they are abating as vaccines are rolled out.
It notes that good trading conditions have continued into the beginning of the second half. However, it continues to expect Brooklyn revenue to be impacted by the downturn in live events and live sound.
Audinate also advised that it is accelerating its investment in growth, with a target headcount of >140 staff by the end of FY 2021. This is expected to result in an increase in operating costs of between A$2 million to A$3 million in the second half. This news could be holding back the Audinate share price a touch today.
Mr Williams said: "Whilst we remain wary of the potential near-term impacts of COVID, we are cautiously optimistic that the pandemic may serve as a catalyst for an acceleration of the transition from old school analogue cabling to networked audio and video. This bodes well for Audinate's long term growth opportunities, and we are excited by the path we see ahead for our business."
