• Atomos’s ability to introduce recurring revenue streams via cloud services & device software subscription and drive uptake of this is yet to be proven
• Atomos is yet to quantify its total addressable markets and use this as a basis for articulating opportunities and measuring success, this seems odd to me and the cynic in me worries the TAM may be lower than would be expected (thus the non-disclosure)
• Hardware platforms in this space will evolve fast and may incur significant ongoing investment to remain current. The fast-moving nature of the industry may allow a high level of competition
• Could eCommerce channel revenue cannibalise existing revenue channels?
• Current gaps in the ELT and Ex-CEO Claims: Chief Commercial Officer, and Chief Product Officer roles unfilled. Further, the saga, as reported in the AFR, regarding the Ex-CEO and reports of fraudulent sales reporting.
• This is very entertaining though which suggests claims are well overblown: 
• “The “evidence” of the alleged fraud that she pointed to, was from a US website, Simply Wall Street, which referred to Atomos’s underlying earnings power. There was and remains no basis for such a fraud allegation. Ms McGechie also requested an audit to which she was then reminded that the company is audited, by a big four firm, Deloitte” ????
• Ongoing supply chain/logistics challenges
• FY23e skew to 2nd half: not normally a good sign when management gives this guidance, although there may be some inherent seasonality
• Extremely poor Q3 results recently (significant drop in sales YoY)
• Regal Funds Management (9% SOI) on the register concerns me because they have a reputation as indiscriminate sellers and if they decide to exit (I believe they have begun to), it will likely be done with little regard to the share price

It is possible that the market is currently overlooking the market opportunity and the rapid growth of the content creators space and viewing Atomos as a low-quality, poor-reputation company with irregular (lumpy) revenue (evidenced by a 0.5x PSR). 

There are two main catalysts that may change this perception and dramatically increase the multiple that Atmos trades at, in addition to ongoing top-line growth. 

• Increase in revenue quality: Atomos currently generates almost all its revenue via one-off product sales which are deemed a “low quality” form of income.
• However, FY23 will see the addition of software and cloud services in addition to its traditional products being sold directly to customers.
• Increasing revenue quality may change the market’s perception of Atomos from a product-led company to a software-led company in time, which will increase the revenue/earnings multiple that is being ascribed.
• Margin expansion: Direct-to-consumer sales should increase product margins.
• In addition, the recurring revenue products are likely to be materially higher margins, which will result in improved overall margins.

1. Downward pressure on sales prices per unit suggests a very competitive industry and a lack of proprietary IP
2. For a business in the space (empowering content creators), my thesis is that the only moat is ongoing innovation, as the frontier of hardware (and software) capabilities is changing rapidly – this is not favourable for AMS in my view