The Audinate Group Ltd (ASX: AD8) share price is having a strong start to the week.
In morning trade, the media networking solutions provider's shares are up 13% to $8.10.
This follows the release of the ASX tech share's half year results this morning.
Audinate share price jumps on record half
- Revenue up 39.3% to a record of US$20.6 million (A$30.8 million)
- Gross profit up 30% to US$14.5 million
- Net loss after tax of A$0.4 million
- Positive operating cashflow of A$1.8 million
- Cash and equivalents balance of A$37.9 million
- Sales backlog remains at record levels
What happened during the half?
For the six months ended 31 December, Audinate reported a 39.3% increase in revenue to US$20.6 million and a 30% lift in gross profit to US$14.5 million. This was underpinned by 44.9% growth in sales of chips, cards & modules (CCM) and 22.4% growth in software sales.
The successful launch of its next-generation Brooklyn 3 product was a key driver of its CCM growth during the period. This launch was made in response to sudden and ongoing chip shortages affecting the old Brooklyn 2 module.
Management notes that this product was launched with a higher average selling price (18% increase) and a slightly lower gross margin percentage resulting in an improved average revenue per unit compared to the old Brooklyn module. The good news is that from FY 2024 onwards, the company has a pathway to cost down to improve its gross margin.
Audinate's software revenue grew 22.4% to US$4.7 million. This was thanks to OEM software product sales, including Dante Embedded Platform, IP Core, and Other Software Royalties.
On the bottom line, while the company recorded a small loss after tax of A$0.4 million, this was an improvement from a A$2.1 million loss a year earlier.
And with Audinate recording a 231% improvement in operating cashflow from a small base to $1.8 million, the company finished with a cash and equivalents balance of $37.9 million.
Management commentary
Audinate co-founder and CEO, Aidan Williams, commented:
We are very pleased that Audinate has again been able to deliver record growth in revenue and EBITDA, as well as improved operating cashflow. Our ability to manage chip supplies, the record demand for Dante products and our ability to successfully pass through price increases have offset the effects of supply chain pressures we first flagged two years ago.
Outlook
Audinate continues to have a significant lead over its rivals, which bodes well for the future.
At the end of the period, the total number of Dante-enabled products grew to a record high of 3,688 products. This represents a 12x lead on the next alternate technology.
Thanks to a combination of this leadership position, strong demand for Dante, a buoyant industry outlook, and an improving (but still constrained) chip supply, management believes it is well-placed for the second half and beyond.
Particularly given that it enters the half with a record backlog and a software revenue run-rate to support USD revenue growth in the historical range. The company also expects its fledgling video business to contribute revenue of at least US$3 million in FY 2023.
Mr Williams added:
Our first half results have been excellent in an environment that remains challenging for both Audinate and our customers. I am optimistic about the second half, in particular the prospects of meaningful further traction in video and ongoing revenue growth as supply chain pressures ease.
