I have finally had a good look at the reporting/outlook. I still stand by that the high-level figures are impressive enough, but as has been well covered here already, the issue is the outlook and the investment required over the next few years. It might well be that Audinate is an absolute cash cow in a few years’ time post-investment, but as others have said, there isn’t enough safety in the current share price for any slip up. @mikebrisy, I think your analysis this morning is pretty consistent with where I stand.

I do think a revenue multiple of 4-6x is attractive enough – provided you are paying for their audio business (market leading) and that only. That business will now prop up (and then some) their pushes into both video and control, which might turn out to be an excellent decision by management. The issue is, what if it isn't? I might lose some returns in the process, but I can always jump back in to a business that is growing 10-15% annually in various segments and no longer requires heavy investment in the future. Audinate has demonstrated that a good portion of revenue drops straight to the bottom line, and it will scale well as it continues to grow. But I don’t have the insight into what happens with both video AND control. If it starts to generate more traction in video, and continues its absolute domination in audio, I will be more interested. But the price needs to be right too, consistent with the investment being made. At the moment, this doesn't add up for me.

@mikebrisy I did run a quick DCF and it wasn’t pretty. With current shares outstanding of 82m, I played with a combination of future cash flows. Depreciation is not a heavy expense for Audinate, but amortization/capitalized development annually continues to grow (9m, 11m and 14m over the last three years. If we assume Audinate sits at around 6-7m CapEx a year (could well be more than this!) and FCF is forecasted for 1m next year, subsequently increasing to 5m, 8m and 11m in the years after, I get fair value of $2.10 (gulp). Make it more aggressive at 3m next year and then 4m, 14m, and 18m in subsequent years and I get fair value of $3.70. Am I confident either way? Nope. But a lot needs to go right to justify today’s valuation.

I am out. Sold a position of 10% this morning just above $5.00. Sigh. Investing is hard. This is yet another example where management seek greener pastures / expansion elsewhere and risk diluting the golden egg in their lap. EVS and 8C0 are both good examples of this. The lesson here is more isn’t always better – I am hoping to be more alert of such occurrences in the future.