Network effects are a beautiful thing:

I thought the result was quite solid -- you can read all the detail here

Pro-rata, Audinate is on almost 10x sales. I mean, it's growing like the clappers, has a lot of market to win, and we're seeing some good operating leverage emerge -- so you don't want to be too clever with valuations.

Looking at consensus analysts estimates (for whatever they are worth) it seems the market is expecting 10c in per share earnings in FY25. So shares are presently on almost 80x that now.

Not too concerned with the cash burn -- they have a rock-solid balance sheet. And they are conservative with capitalising costs.

But, probably a tad expensive for my tastes at this stage. Will be keen to see what CFO Rob Goss says to us next week -- i could well be missing something.

Audinate has posted another year of impressive growth.

It really does seem to be on the path to world domination.

With a $1b addressable market, it should be possible to sustain a high pace of growth for many year. And with 14x the market penetration of its nearest rival, network effects should only continue to compound in the company's favour. Management have said they are hoping to double revenue in the medium term, and with the investments they are making, the traction they already have, and the fact the industry itself is expanding, that certainly seems doable.

The business is, however, loss making and free cash flow negative. Added depreciation costs, increased inventory, higher headcount and added investment all contribute here. Although the business has $44 in cash and term deposits, with zero debt.

I think the business is probably right in pressing its advantage, and spending up for growth. Provided, of course, they spend the money wisely.

I really like the company. Just not the price. It may well be justified in the fullness of time, but the current valuation just leaves little room for error.

The current share price of $8.72 gives a market capitalisation of $673m. Which is 14x sales.

The EV/EBITDA is 146.

I think there's a danger in being too value oriented towards high quality, fast growing companies that have attractive economics (at scale) and a long runway for growth. But, for better or worse, it's just a bit too expensive for me at present.

ASX announcement here

Audinate is raising $28 million via an underwritten placement to 'sophisticated' investors (i hate that term) at $5.15 per share. About a 9.5% discount to the last trading price.

They will also look to raise a further $12m via a placement to existing shareholders at the same price.

The company will have at least $56m in cash following the raise. 

Given they already had $28m and no debt, and had positive operating cash flow, this was a real surprise for me. 

Audinate say they will use the proceeds to:

• Increase R&D and investment in engineering and infrastructure
• further bolster the balance sheet
• Accelerate investment in additional video and software products
• Give flexibility for M&A opportunities

I suspect they may have their eye on something already --- why else raise now when your shares are 40%-odd from their January high, and you have ample cash to ride out any covid-induced impact?

Those that don't particpiate in the share purchase plan wil be diluted by about 8%, so they really need to justify this raise.

The key question for shareholers is -- as always -- what kind of Return On Investment (ROI) will they get from this newly raised capital?

To be fair, AD8 has a sizeable market lead, and looks like it has every chance of becoming a global standard in a huge and growing market (valued at around $1b, or 33 times their current annual revenue).

Now could be the ideal time to double down on strengthening and expanding their 'moat'. Network effects in this space appear potent, so this could be a very savvy strategic move longer term.

Still, the company has warned that due to the ongoing virus, revenue for FY21 could be below that of the year just ended (which itself saw no growth).

And shares are on 12x sales..

I really do like the business. But would prefer a cheaper price.

ASX anouncement here

Not ideal for a company priced for growth.

Revenue essentially flat at US$20.4m, though the gross margin improved slightly to 77%.

unaudited EBITDA is expected to be around $2m, compared with $2.765m last year.

Sales in the 4th quarter were pretty week due to customer exposure to lock down (venues, theatre, live sound), although Audinate said things had picked up in June -- albeit not to previous levels.

The company may also have to writedown the carrying value of previous tax losses, which would take around $2.5m off the balance sheet.

Shares are presenty priced at approx 12x sales, or on an EV/EBITDA multiple of >150 or so.

Really a question of whether this is a one-off hiccup, or a lasting slowdown in sales growth. I tend towards the former view and note that the value always relied mostly on expected cash flows several years down the line.

Still, i'd like to see it drop further before I bought in.

Read ASX announcement here

Audinate provides professional digital audio networking technologies. Audinate's Dante platform "distributes digital audio signals over computer networks, and is designed to bring the benefits of IT networking to the professional AV industry."

A great video overview here. Prospectus here.

It is the gloabl leader in what he estimates to be a $400m global market, is achieving strong sales growth and is on track to hit prospectus guidance. Audinate expects to be EBITDA positive in FY19. 

It has no debt and, following the recent cap raise, should have around ~$35m in the bank. 

Looks very promising, although some concern on valuation.