Shares in audiovisual specialist Audinate Group Ltd (ASX: AD8) are 20% down today after an earnings report card troubled by inventory overhang and softening industry growth.
The AV company says 2025 was a transitional year, but it still achieved market guidance and included revenue growth in the second half.
The new financial year looks brighter now that inventory rebalancing is in the rear-view mirror.
Audinate plans to use its new acquisition, US-based leader in AI-powered cloud-first camera control company Iris Studios, and has several new product initiatives planned.
The company still expanded gross margins, maintained a strong cash position and launched multiple new software and cloud products. It also managed to chalk up double-digit growth embedded in software revenue.
Audinate believes it's ready for the industry's shift from proprietary hardware to IP-based, software-driven solutions.
It enters the new financial year with its sights set on execution, growth and long-term value creation.
Image source: Getty Images
Mixed results prompt dip
Audinate pulled in revenue of US$40 million, down on the previous year (US$60 million), with a gross profit of US$32.9 million (US$44.5 million for 2024).
Also down was underlying EBITDA, which was A$0.7 million, compared to A$20.3 million the year before.
Positive operating cash flow was also weakened year-on-year, down from A$25.4 million to A$7.5 million.
On a positive note, gross margins were up, 82.1%, up from 74.2% last year, due to a product mix shift toward higher-margin software solutions.
Software growth occurred, with embedded software revenue rising 15%, underpinned by sustained demand for Dante solutions.
The company had some design wins during the year. It secured 129 new designs, up 12% from 2024, which gives it a solid pipeline for future revenue growth.
New product initiatives
As the name might suggest, Audinate continued to lead in audio.
Dante audio adoption stayed robust during the financial year. Over the year, there were 14 times more Dante-enabled products on the market than the nearest competitor, up from the still-strong 12-fold increase in 2024.
During the year, Audinate snapped up Iris Studio Inc., which will bolster its video and control capabilities and accelerate strategy execution.
The company grew its AVIO adaptor range with the first 'Dante AVIOs for Installation' product tailored for the professional AV market.
The year saw the launch of Dante Virtual Sound Card Pro (DVS Pro) with a new subscription model to support software-based workflows.
A major user interface upgrade to Dante Controller also enhanced usability and efficiency.
Dante Director, Audinate's first SaaS AV system management product, and Dante Device Link, a unified audio, video and control platform strategy, also launched commercially during the year.
All of these initiatives could see Audinate shares rebound in the near future.
"In a year of transition, we shipped one million Dante devices, established our first cloud-based management platform and completed the strategic acquisition of Iris," Audinate co-founder and CEO Aidan Williams said.
"We have an exciting combination of talent, products and commercial opportunity that will advance our long-term vision to provide the dominant interoperable audio, video and control platform for the AV industry."
