Pinned straw:
mushroompanda
I didn’t notice much new information in the latest update from Audinate compared to what was disclosed two weeks ago. The company has kept its commentary and guidance quite consistent since then.
However, there were two points that stood out to me:
One, the units shipped numbers provides a good picture on the overstocking situation among OEM customers. 1H FY24 clearly shows a big overshoot customers. It’s also interesting seeing the hardware/software unit mix. In FY19, the mix was 66/34 and now it’s getting close to 50/50.
During the call, I sought clarification on how revenue for software units is recognised. It turns out that revenue is only recognised when an OEM produces a finished good. This means there’s no stockpiling or pre-ordering of software licenses, making it more reflective of actual end-user demand. This approach avoids the current issues with hardware, where customers are overstocking Ultimo and Brooklyn components. However, the potential problem of channels (OEMs, distributors, retailers, etc.) overstocking finished goods still exists.
Two, Video Unit Growth. Management chose not to disclose specific growth metrics for Video units but did mention that they “massively over-achieved” internal expectations. The OEM licensees and products launched numbers are all marching in the right direction. This was probably the most encouraging news in today’s release.
mushroompanda
EDIT: looks like my GIF won't post. I was trying to post this one: https://tenor.com/view/creepy-guy-behind-plant-hide-gif-11543382
mikebrisy
EDITED: To incorporate @mushroompanda's correction - doesn't effect the extrapolation.
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@mushroompanda I agree - the video result is very encouraging.
On your units shipped analysis, I've fitted the "Actuals" data with an exponential function on Excel. I've then added "extrapolations" outside of the fitted data series to see what would units look like in FY25 if we smoothed out the "bullwhip" effect, and had undisturbed supply chains.
Now my extrapolations don't quite hit the curve, because the Excel plotting function places these bars offset slightly to the right. So, I've eyeballed where they would lie to intersect the trend curve.
What you get is the following:
FY24 CCM = 875 FY25 CCM "Extrapolated" = 873
FY24 SW = 552 FY25 SW "Extrapolated" = 710
Using this you can see what a distortion 1H FY24 was to the underlying growth trend. And even though software units were not disturbed to the same extent and may see growth in FY25, the revenue contribution is lower.
It will be interesting to see how FY25 pans out against these kinds fo projections. In any event the analysis demonstrates the following:
- 1H FY24 was a very significant departure form the underling long-term growth trend
- Even if FY25 CCM volumes are flat with FY24, they could be bang on the long term growth trend
- There is significant variation from one half to the other, in any event, so we should have tolerance for noice either up or down.
Everything management has said has been consistent, and I haven't seen any evidence to question the long-term growth thesis.
Disc: Held in RL and SM
Strawman
ha, not exactly what I was thinking @mushroompanda -- but that works too :)
btw, embedding a gif isnt straightforward. You need to right click on it, save as a .gif file and then hit the attach image icon in the text editor, select the .gif file, and voila!
