Well "the market" obviously liked the announced results (currently up ~19% so far today) - FWIW what did the brokers say today ...

I'm aware of three Investments Banks which cover AD8:

UBS: Buy, 12m PT $21.05

Strong growth momentum ahead of UBSe and consensus

An impressive 1H24 result, with rev and EBITDA both strongly ahead of UBSe and cons. Momentum in both audio & video is strong, with healthy design wins (+54 norm. post CV), ecosystem build and strong initial uptake from video cust. (hit FY24 target by 1H24). In our view, g/dance appears conservative given 1H mom. (1H24 GP +53% y/y vs g/dance implied 2H24 +7-18%). While mgmt prev commented on a higher portion of 1H rev vs normal 45/55% split given sales backlog, we highlight upside risk given 50/50 split implies +33% y/y growth already. While the sales backlog is normalising, we expect: 1) ongoing strength in audio; 2) video expansion; and 3) penetration of low channel count devices via software delivery, to underpin LT growth, although we recognise macro uncertainty remains a risk near-term. FY25E EV/Sales of 10.8x, looks expensive h/ line, but AD8 offers strong 5yr (FY25-30E) GP CAGR of +22%, maintain Buy

1H24 result highlights

1) Material beat at both rev & EBITDA - Rev US$30m (+48% y/y) / A$47m (+51% y/y) +13% beat vs UBSe / +11% vs Cons; EBITDA $10.1m (+137% y/y) +37% vs UBSe / +20% vs Cons. 2) GM 71.8% (72.8% 2H23 / 71.2% 1H23), impacted by lower mgn pent-up Ultimo demand (3x 1H22 vol). 3) CCM rev +46% y/y driven by Brooklyn & Ultimo, Software +56% (IP Core, DEP, retail software). 4) Very strong growth in audio ecosystem - 430 OEMs +153 developing (total 583) vs 400+138 at 2H23 (538), 4.0k products, 12x the closest comp vs 3.9k at 2H23. 5) Strong video mom., reached FY24 tgt for >30k units in-field/shipped already (6mth earlier), indicates early traction for customer uptake. 6) 2nd consecutive period of FCF +ive ($3.4m), OpCF conv. >100%. 7) Outlook: US$ GP$ growth consistent w/ historical for FY24 (UBSe 26-32%), ongoing +ive OpCF, additional h/count of up to 15%, transition to software by OEMs expected to recommence, sales order backlog reducing to reflect shorter lead times post CV, actively exploring M&A ops ($118m cash & term dep, no debt)

Changes to forecasts

We have increased our ST forecasts for FY24-25E (Net impact FY24/25/26/27E - EBITDA +8/3/3/4%, EPS +82/17/8/7%). We also upgraded MT/LT growth expectations for both audio/video given larger mkt sizing (FY30 EBITDA +20%). Our LT assumptions incorp FY34E penetration of 20% for audio, 14% for software and only 3% for video

Valuation: $21.05 PT (vs prev $13.55) – maintain Buy

We have rolled fwd vals, extended to FY34E (prev FY32E) and increased LT f/casts (FY30 EBITDA +20%). We derive our PT using a $19.03 base (blended 2yr fwd EV/Sales to sales CAGR / DCF) + $2.01 to reflect +2% share of potential digital video networking opp

Macquarie: Neutral, 12m PT $15.80

What's new

• CCM revenue (+45.6% on pcp). Driven by Brooklyn volumes (+50% on pcp) and Ultimo volumes (>200% on PCP, 3x 1H22 volumes). Ultimo volumes driven by fulfilment of pent-up demand
• Software revenue (+56.2% on pcp) driven by IP Core (+100% on pcp), Dante Embedded Platform (+60% on pcp) and retail software sales (+75%)
• Gross Margin (+60bps on pcp to 71.8%) driven by mix. Brooklyn 3 COGS improvements still to come in the 2H FY24.
• Strong reported EPS beat (+49% to Macquarie and +263% to VA cons)

Why it matters

• Strong adoption of Dante Video, with 66 products in market. FY24 of 30k units shipped achieved early
• Dante Pro S1 and Dante Director launches. Next gen low channel count Audio solution and broadcast software solutions

What now

• No Guidance upgrade despite strong 1H FY24 numbers and assumed AUDUSD of US$0.70. We are looking for more detail here on the call

Morgan Stanley: Overweight, PT $13.30

AD8 1H24 delivered another strong beat across the board today

• Rev US$30.4m, +4% beat MSe / +10% VA cons
• GP US$21.8m, +6% beat VA cons
• 71.8% GM lower than historical c.75%, headwind from backlog release of lower-margin Ultimo chips
• GM expected to improve in 2H
• EBITDA A$10.1m vs A$8.4m cons - opex right in line with MSe
• Self funding - positive A$3.4m 1H24 FCF, improving on A$2.5m 2H23 despite annual bonus payments in 1H

Video adoption provides further conviction on medium-term growth

• Video OEM adoption at 50, from 34 at FY23
• Initial objective to double video ecosystem over FY24 achieved 6mths earlier in 1H.

Guidance reiterated

• 26-31% FY24e US$ GP growth implies US$42m GP at low end or 52/48 1H/2H skew vs historical 2H skew
• US$42m low end implies c.3% lift to US$40.9m cons
• While 1H24 GP growth was helped by backlog release, we continue to see elevated 2H growth driven by a stronger video trajectory + new product releases / revenue streams + overall robust 2024 industry outlook

We are OW AD8

DISC: Held in RL & SM

Quick research note updates for AD8 from both Morgan Stanley and Macquarie - basically talking about the TAM expansion ($1B -> $2B) mentioned in Audinate's AGM presentation

Morgan Stanley:

FY24e guidance reiteration of growth in US$ gross profit dollars consistent with historical, which we take to mean c.26-31% revenue growth (VA cons c.28-29%)

TAM materially upgraded to US$2bn, from A$1bn previously

• Audio valued at US$330m, implying 9% AD8 share
• Video and Software materially upgraded to US$780m and US$890m
• respectively (vs. c.$400m each previously)
• Video TAM upgrade likely driven by higher prices and volume - we note TAM
• is estimated at the revenue line, but again flag the shift to software implementations for Audio and Video (same GP$ per unit, but lower ARPU and higher GM%). This could imply greater endpoint proliferation and a larger GP$ opportunity.
• Software - least appreciated in our view. Our questions:
• 1. How much of TAM is SaaS vs upfront (e.g. DDM historically);
• 2. What does software product look like at maturity (e.g. modules, functionality);
• 3. Buy vs build 

Macquarie:

What's new

Audinate's AGM presentation was released. It does not include a trading update. It includes an expansion of the Total Addressable Market (TAM) from ~USD1b to ~USD2b. Post the recent equity raise, additional data was provided on the rationale for M&A to accelerate AD8's growth strategy

Why it matters

TAM expansion is driven by the Video and Software segments. Underpinning this is previously unavailable data, reflecting the larger Dante product set and post-Covid trends. This estimate is based on the existing product set using current prices and excludes adjacent market opportunities. These factors reinforce key focus areas for M&A

to accelerate the existing strategy: Video & Software. The additional opportunity to address Dante software strategy is not included in the TAM expansion

AD8's outline of opportunities in Video & Software markets highlights desired capabilities for M&A. AD8 outlined the opportunities in Video as cameras, displays, projectors, signal routing and switching products. In Software, the opportunities are in management control software (Dante Domain Manager) and Dante PC/Mac software

Market growth is estimated to be higher than the long-term historical average of ~7-8%

What now

Validation and expansion of the market opportunity provides confidence in longer-term outlook, although execution risk is heightened with an M&A- centric strategy. Silex acquisition and integration provides some evidence of a disciplined approach to M&A. With the recent A$70m equity raise, Audinate has dry powder in a market that is offering more attractive multiples for M&A opportunities. We expect acquisitions in FY24 in line with management commentary 

DISC: Held in RL & SM

A short piece in Livewire today by Donny Buchanan from Lakehouse Capital includes some commentary on AD8

https://www.livewiremarkets.com/wires/3-small-caps-with-significant-runway-for-growth

Following on from @harryd's Analyst View straw...

At least three major Investment Banks cover AD8 and have published updated research reports in the past day so here's some snippets for what it's worth ...

Morgan Stanley: Overweight, Price Target: $13.30 (upgraded from $11 previously)

FY23 beat across the board, positive 2H FCF with strong outlook + FY24e guide. The stock price reflects this, so where's the opportunity + what are the debates? 1. 100% LTI vesting implies FY25e revenue 20% above cons, 2. Superior mature margins, and 3. Winning in video as AD8 has in audio

UBS: Buy, 12M Price Target: $13.55 (upgraded from $10.35 previously)

Strong result on all fronts, outlook +ive with supply overhang largely resolved

A strong result all round, delivering a 10% rev beat vs consensus and +39% at EBITDA. Supply chain impacts are largely resolved, through a combination of easing chip supply and redesigns - removing a constraint on already high rev growth (FY23 +40% vs +32% FY17-22 CAGR, exc. COVID impacted FY20). The sales backlog remains close to record levels (despite the dissipation of supply constraints), providing good rev visibility in 1H24, although the order window should narrow over time. Video is also gaining good traction, with 48 products launched (vs 20 at 1H23 / 7 in pcp) and we expect product releases to translate to units shipped in FY24E. Margins in FY24E should also be supported by COGs reduction (vol benefits from new B3 model + easing supply) and transition to software (flat GP$ but higher mgn). Design wins are at all-time highs (142 vs 126 FY22) and AD8's total product ecosystem is still much larger than the nearest competitor (12x more). FCF turned +ive in 2H23 and mgmt expects a marginally +ive outcome for FY24E. We remain positive on the structural story and video op. Trading on FY24E EV/Sales of 9.8x, offering 3yr (FY24-27E) GP CAGR of +26%, maintain Buy 

Macquarie: Buy, 12M Price Target: $13.50

Key Points

• Backlog is at near record levels & supply chains have normalised
• Guidance for gross profit dollar growth in the historical range. Gross margin is broadly an outcome of mix, but there are tailwinds in FY24
• FY24 headcount growth (15%) is focused in the Philippines. Coupled with efficiency initiatives, there is strong scope for operating leverage in FY24

We think AD8 is at an inflection point in earnings, driven by delivery on their strategy of growing the Dante-enabled network. The FY23 result is evidence of operating momentum accelerating, which should support strong double-digit FCF growth over the forecast period. We reiterate Outperform. 

DISC: Held in RL & SM

Very few brokers and investment banks cover Audinate but at least two have come out with updated reports today

Morgan Stanley - Overweight with a Price Target of $10

UBS - Buy with a 12m Price Target of $10.20

Some snippets from their respective update reports

UBS:

ONE LINER

Solid - strong beat vs UBSe at both rev and EBITDA, but noting UBSe more conservative vs VA cons. US rev +3% / A$ EBITDA +19% vs VA cons. Good progress on video

VALUATION

$10.20 PT; Buy (2yr fwd EV/Sales / DCF / 10% share dig. net. opp.)

GUIDANCE

Maintaining FY23 guidance: US$ rev in-line with hist. range (26%-31%) vs UBSe +26%, VA cons. +29%, continue to target >200 employees (+12% y/y), video rev >US$3m

UBS COMMENT

We were more conservative on potential 1Q impact from prev. strong 4Q rev.. A strong result given sales still being impacted by supply constraint issues, core beat at opex line (stronger op leverage) - also had FX tailwind. Already made US$2m vs >US$3m video rev target - strong momentum. Less OEMs shipping, but this is long tail - shouldn’t have material impact on rev. FCF the key miss - but mkt should be willing to overlook this

Morgan Stanley:

Base case - average of SOTP and DCF: A$10.00

SOTP (EV/sales):

Audio (core business) - 10x FY24e: Structural penetration story tempered by near-term headwinds

Video - 20x FY24e: nascent large opportunity with long runway

Software - 7x FY24e: early-stage penetration and synergies with Audio and Video support multiple above Software peer average but below group

DCF: WACC 10.8%, terminal growth rate 3.5%

Risks to Upside

• Meaningful acceleration in Audio
• Initial sales in Video
• Expansion of Software opportunity
• Adjacencies that further expand TAM
• Shift to FCF generation

Risks to Downside

• Macro weakness causes quicker deceleration in growth and cash losses
• Execution missteps in Video mean slow ramp-up
• Potential increase in competition
• Key management churn 

DISC: Held in SM & RL

In an article in todays AFR on Inflation hedges

https://www.afr.com/wealth/personal-finance/how-to-stop-inflation-getting-away-with-your-wealth-20220410-p5acdf

Nathan Bell from Intelligent Investor takes a slightly contrarian view on the traditional hedges (large cap commodities & defensives)

"familiar inflationary champions are now mostly priced for low returns, if not losses”. These include companies with pricing power, cyclical stocks and resource shares

“Beating inflation and higher interest rates means buying value, and there’s a lot more value in small caps after recent share-price falls than there is among the big names, which are generally very expensive,” says Bell

He nominates RPMGlobal, a mining-software company, as an example of small-cap value. “RPM trades at a fraction of typical software companies,” says Bell. Another preference is 360 Capital, a listed property group. “It trades on a 6 per cent fully franked yield and at around its net tangible assets, which means you get its funds-management business for free”

Audinate, a digital audio company, is another preferred small-cap. “Audinate should produce very high margins as the business matures over the next decade,” says Bell

DISC: RUL & AD8 held in SM & RL