Atomos (ASX:AMS) share price soars 16% on FY21 earnings

Shares in the manufacturer and seller of video equipment have lifted this morning.

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The Atomos Ltd (ASX: AMS) share price has jumped 16% into the green as the manufacturer and seller of video equipment reported its FY21 earnings.

Let's investigate further.

Atomos share price lifts on record revenue and strong cash flow

Atomos detailed several investment highlights it achieved this quarter, including:

  • Record revenue of $78.6m, a 77% year on year growth schedule
  • EBITDA of $8.2m on a margin of 10.4%, (10.4% of sales), compared to a loss of $7.1 million in FY20
  • EBITDA margin trending towards 12-15%
  • Strong cash flow of $7.1m, an 87% conversion rate

What happened in FY21 for Atomos?

In a positive for the Atomos share price, it recognised record revenue of $78.6 million in FY21. This signifies a 77% growth from the year prior.

Consequently, the company "flagged a return" to pre-pandemic sales volumes, underscored by "rapid adoption of Apple and AMS's ProRes Raw video standard", amid other product launches.

In fact, Atomos describes ProRes Raw as its "key revenue driver" in FY21, where "ten major camera partners" have now integrated "RAW enabled cameras".

As a result, the company has seen monthly activations on ProRes Raw "increase sevenfold in 18 months".

Furthermore, Atomos recognised this revenue on higher gross margins of 47.6%, up from 39.8% last year, largely driven by "improved pricing across the entire product range".

Moreover, the company completed a raft of new product launches across the year. This includes "software applications" for the first time, as per the release.

For instance, Ninja V+, the "world's first 8K and high frame rate monitor recorder" was released in coincide with AtomX Cast. When paired together, the duo creates a "broadcast studio quality solution" for users.

What did management say?

Speaking on the results, Atomos executive chair Chris Tait said:

I am delighted to be reporting these outstanding results. It seems a long time ago when at the start of FY21 we were unsure of the extent and pace of the Atomos recovery from the pandemic. The speed and strength of that recovery and the ongoing momentum is a testament to the skill and hard work of the entire Atomos team.

Regarding the ProRes Raw and new product launches, Tait added:

In particular we are pleased to see the establishment of the ProRes RAW ecosystem with Atomos playing an integral part in its global adoption. With six new products coming to market in the last few months of FY21, including our first two software offerings and with the new Series 2 platform well under development, we are excited about what FY22 will bring.

What's next for Atomos?

The company estimates EBITDA margins to "trend towards" 12–15% over the coming periods.

Moreover, Atomos will "carefully consider" acquisitions in the three core areas. These include technology standards, complimentary tech and new complementary markets.

It anticipates the effect of product launches in FY21 to continue building sales momentum. As such, Atomos has "new products and services in the pipeline already".

The Atomos share price has posted a year to date return of 34%, extending the previous 12 month's climb of 148%.

These gains have outpaced the S&P/ASX 200 Index (ASX: XJO)'s return of around 25% over the past year.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Atomos Ltd. The Motley Fool Australia has recommended Atomos Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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