Save the Date: Fourth Annual “Shifting Media Economics: Impact on Strategy, Finance, and Technology” at NAB 2015

broadcast technology market research | Posted by Joe Zaller
Mar 02 2015

Whether you are a supplier, buyer, or financier of media technology; if you’re interested in the business of the media business, you won’t want to miss the fourth annual NAB Show event co-produced by Devoncroft Partners and the organizers of the NAB Show.

NAB Devoncroft 2015 Shifting Media Economics Session Announcement.png


Part of the NAB 2015 Media Finance and Investor Conference, it is called “Shifting Media Economics: Impact on Strategy, Finance, and Technology,” and will be held on Sunday April 12, 2015 in the Las Vegas Convention Center.

This half-day event includes panel discussions featuring C-level executives from leading broadcasters, service providers, technology vendors, and private equity investors.  Each group will offer a candid assessment of how their respective business models, operational practices, and strategic decision making have been impacted by the dramatic shift in media industry economics.

It will also include presentations of the latest market research on industry trends and financial performance.  This includes preliminary excerpts from the Devoncroft Big Broadcast Survey, the industry’s definitive demand-side study of the broadcast and digital media industry; and the 2015 IABM DC Global Market Valuation Report, the industry’s definitive supply-side market sizing report.

A preliminary agenda is available here, but is subject to change.  The agenda will be updated as speakers are confirmed.

This conference is intended for senior executives from technology vendors, end-users, and investment firms in the media technology sector; and conference registration is required.

Approximately 400 executives attended this standing-room only event in 2014. We hope to see you there in April 2015.




© Devoncroft Partners 2009 – 2015. All Rights Reserved.






ChyronHego Makes Revealing Disclosures About “Going-Private” Transaction

Analysis, Annual Results, Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Feb 27 2015


In November 2014 broadcast graphics specialist ChyronHego entered into a definitive agreement to be taken private by Vector Capital in an all-cash deal that valued ChyronHego at an equity value of approximately $114m, or $2.82 per share.

Shortly thereafter, six lawsuits challenging the proposed acquisition of the company were filed in the Supreme Court of the State of New York, which were subsequently consolidated into a single case.

The consolidated case alleges that the company’s directors “breached their fiduciary obligations in connection with their approval of the Merger Agreement by entering into a transaction that is coercive and constitutes an unfair and inequitable subversion of shareholders’ rights, and that the entity defendants aided and abetted those breaches.”

ChyronHego and Vector Capital recently entered into a memorandum of understanding (MOU) with respect to a proposed settlement of case, and agreed to provide more information relating to the proposed deal to take ChyronHego private.

According to a recent filing with securities regulators, ChyronHego has now disclosed additional information regarding the proposed deal, including the following:

  • Beginning in November 2013, ChyronHego’s board authorized ChyronHego’s President and Chief Executive Officer Johan Apel to explore ChyronHego’s strategic alternatives


  • ChyronHego and Vector Capital entered into a confidentiality agreement in February 2014


  • Discussions on the potential of ChryonHego’s management rolling over equity as part of the transaction did not occur with certain other interested parties.


  • During a Special Committee (consisting of Independent ChyronHego Directors) meeting in July 2014, the Company’s bankers were informed “Mr. Apel was not happy being the Chief Executive Officer of a publicly traded company.”


  • During the “go-shop period,” ChyronHego executives met with two interested parties, neither of which decided to make an offer


  • Additional information was provided on the valuation metrics used in the Company’s analysis of the purchase price offered by Vector.



Excerpts from ChyronHego Definitive Proxy Statement

The broader proxy statement is a lengthy read covering the historical events leading to the proposed transaction, ChyronHego’s rationale for entering the transaction, and additional information on the perspective of the board and management.

Several excerpts are worth highlighting:

  • Since November 2014, ChyronHego’s investment bankers contacted 85 potential buyers: 20 strategic buyers and 65 private equity buyers. Only nine potential buyers entered into confidentiality agreements to review more detailed materials.  None submitted bids for ChyronHego


  • In considering the merger, ChyronHego’s board noted the “significant increase in competition in competition in the broadcast graphics creation, playout and real-time data visualization industry over the past two years, which had led in some instances to pricing pressure and discounting on ChyronHego’s products and services, and consistent competition for clients and customers with other companies, such as Vizrt, that were increasingly well-capitalized.”


  • The board had concerns on ChyronHego’s access to capital as a small, public company. “Members of the Board believed, based on their experience with the capital markets, that issuers with small market capitalizations and insignificant levels of coverage by investment analysts generally have a more difficult time raising meaningful amounts capital on terms that are not punitively dilutive to their shareholders.”


  • ChyronHego provided the following financial projections to Vector Capital:


ChyronHego Projections to Vector


  • Financing for the transaction will include a rollover of existing management shares in an aggregate value of $23.3 million, an equity contribution by Vector Capital of $49.3 million, a $50 million senior secured loan, and an up to $7 million of senior secured revolving credit loan.



Thoughts on Transaction

Taken together the disclosures outline a lengthy and thorough process run by ChyronHego’s board and management to seek a buyer or other strategic alternative for the company.

On the question of valuation, the market has spoken.  As a reference, the transaction values ChyronHego at 19.2X LTM (last twelve months) EBITDA and 1.8x LTM revenue. A review of the public disclosures referenced above offers sensible statements by the board and management on concerns of access to greater resources, competitive positioning, and disadvantages of remaining public.

However, shareholder frustration is understandable given the proposed take-private price per share is lower than the 52-week high stock price.

Moreover, the company had previously communicated growth levels and market sizing estimates inconsistent with observable data points in the broadcast technology sector.

For example, the chart below is from ChyronHego’s March 2014 investor presentation, which was still on the company’s website at the time of writing, implies that company believes its addressable market is more than $1 billion.


ChyronHego TAM Estimate from 3-14 Investor Presentation


On ChyronHego’s Q2 2014 earnings call, CEO John Apel confirmed management’s view that the total addressable market was approximately $1 billion, comprised of $250m of broadcast graphics products, and $750m of services. This reiterated estimates made by previous management about the company’s addressable market on its Q2 2008, Q4 2011, and Q2 2012 earnings calls.

However, it is reasonable to conclude ChyronHego was in the process of communicating updated expectations of growth and market sizing.  To their credit, management had already reversed ground and communicated the need to seek other approaches to generate increased in shareholder value.  This led to a series of M&A transactions responsible for substantial all of ChyronHego’s recent growth.

Shareholders will vote on the proposed take-private deal at a special meeting of the company, which is scheduled to be held on March 6, 2015.

In the third quarter of 2014, ChyronHego posted a net loss of $2.6m on revenue of $14m. During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.  For the trailing twelve months (TTM) ended September 30, 2014, ChyronHego had revenue of $58m, comprised of $27.2m of product revenue and $30.8m of service revenue

Assuming the transaction closes, it will be interesting to track developments of ChyronHego with its new owners Vector Capital.



Related Content:

Broadcast Vendor M&A: ChyronHego to be Taken Private by Vector Capital in $114 Million Deal

ChyronHego 8-K: Additional Disclosures Regarding Vector Transactions

ChyronHego: Definitive Proxy Statement on Vector Take-Private Transaction

ChyronHego Investor Presentation March 2014

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal



© Devoncroft Partners 2009 – 2015. All Rights Reserved.



Autodesk FY 2015 Media & Entertainment Revenue Declines 13.9 Percent

Analysis, Annual Results, Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Feb 27 2015


Autodesk reported that its Q4 FY 2015 revenue from its Media and Entertainment (M&E) business segment was $43m, an increase of 5% compared to the same period last year, and flat with the previous quarter.

M&E gross margins for the fourth quarter were 79.1% ($34m), down from 81% during the same period a year ago, and up from 74.4% last quarter


Full Year M&E Revenue Declines 13.9 Percent

Media & Entertainment revenue for the full FY 2015 was $167m, down 13.9% versus the full FY 2013.

M&E gross margins for the full year 2015 were 76%, down from 81% in both 2013 and 2012.


Decline in M&E Revenue Continues

As shown below, the latest year-on-year decline in M&E revenue continues the trend that began more than five years ago.

Autodesk M&E Revenue 2008-15


Between fiscal 2008 and fiscal 2015, the company’s M&E business has a CAGR of -6%.  During this same time, M&E sales as a percentage of total Autodesk revenue has declined from 12% to 6%.

This is perhaps not surprising, given that company has been talking for some time about the anticipated decline in M&E revenue.  Last year, Autodesk CEO Carl Bass said the company expects its M&E revenue to decline over time as Autodesk incorporates greater functionality into its design suites.


Autodesk M&E: A Tale of Two Product Lines

Another reason for the ongoing decline is likely the changing mix of products sold by Autodesk into the M&E sector, including the sale of hardware versus software.

Autodesk breaks out products sold media and entertainment customers into two separate categories:

  • Animation (including design visualization): includes products, such as Autodesk Maya, Autodesk 3ds Max, and the Autodesk Entertainment Creation Suites. These products provide tools for digital sculpting, modeling, animation, effects, rendering and compositing, for design visualization, visual effects and games production.


  • Creative Finishing: include Autodesk Flame, Autodesk Smoke, Autodesk Lustre, and Autodesk Flare. These products provide editing, finishing and visual effects design and color grading.


In a filing with securities regulators last year, the company said that for the year ended January 31, 2014, revenue from Creative Finishing products declined by 17% due to “a general decrease in M&E industry end-market demand.”  In the same filing, the company said that Animation products had declined 7% during the fiscal year ended January 31, 2014.

On last night’s Q4 and full year fiscal 2015 earnings call, the company did not discuss its M&E product in either the prepared remarks or the Q&A session with equity analysts.

Indeed, the company has not discussed M&E on an earnings call since August 2014, when an analyst from JP Morgan asked Autodesk CEO Carl Bass: “How should we think about where the media and entertainment revenue line goes from here, is it something that actually could start to fade away?”

Bass replied: “No. I think, as we always try to distinguish, media and entertainment they are two different parts of the business. There is the creative finishing. Creative finishing has been diminishing, some of it is just nature of the market and some of it has to do with the hardware component in there which we no longer sell. And then there’s the other part which is the software part of the business. The software part of the business is good and healthy and we like all the dynamics in that part of the business. What we see in the other part less happy with it. That’s been going on for the last half dozen years in the creative finishing part.”



Related Content:

Press Release: Autodesk Reports Strong Fourth Quarter Results

Previous Year: Autodesk Media & Entertainment Revenue Down 16% in Q4 FY 2013, Down 10% for Full Fiscal Year

2012: Autodesk Media & Entertainment Revenue Rises Nine Percent in Fiscal 2012



© Devoncroft Partners 2009 – 2015. All Rights Reserved.




Vitec Group Broadcast Revenue Up 6.3 Percent in 2014; Changes Reporting Structure to Focus on Core Businesses

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Feb 26 2015

The Vitec Group, which owns more than a dozen brands in the broadcast industry as well as technical services company Bexel, announced that its total for the full year 2014 was £309.6m, a decline of 1.8% versus 2013.

Operating profit was £38.8m, a decline of 1.8% versus last year.  On a constant currency basis, however revenue increased 3.3% and operating profit increased 7.4%.


Changes to Financial Reporting Structure Reflects Focus on Core Businesses

Vitec has about a dozen brands that serve various parts of the broadcast industry, including Anton/Bauer, Autocue, Autoscript, Bexel, Camera Corps, The Camera Store, Litepanels, OConnor, Petrol Bags, Sachtler, Teradek, SmallHD, Vinten and Vinten Radamec.

During 2014, Vitec divested its IMT wireless communications and microwave business, which included the IMT, Nucomm, and RF Central brands.

Historically, Vitec reported its broadcast-centric activities through its Videocom and Services divisions, but following the sale of IMT, the company has changed its financial reporting structure, starting with the release of its full year 2014 results. Vitec now reports its broadcast revenue through its newly named “Broadcast Division,” which it further breaks out as “Broadcast Equipment” and “Broadcast Services.”

According to the company this new reporting structure more appropriately describes its core operating businesses. “Following our exit from the loss-making IMT business we are focused on our core Broadcast and Photographic markets supplemented with selective value-adding acquisitions,” said Vitec CEO Stephen Bird.


Vitec Broadcast Division

As shown in the chart below, Vitec’s Broadcast Division had revenue of £171.1m in 2014, an increase of 6.3% versus 2013 (up 11.9% on constant currency basis).

Vitec Broadcast Division Revenue FY 2014



2014 Broadcast Division Operating profit for 2014 was £21.1m, an increase of 9.3% versus 2013’s results (16.6% on constant currency basis).  Operating profit for 2014 would have been negatively impacted by £1.8m had IMT’s results been included.

“Our Broadcast Division performed well in a variable market including a strong performance from Teradek, acquired in the second half of 2013,” said Bird. “We also benefited in 2014 from contracts to support the Sochi Winter Olympics and the FIFA World Cup. Our premium product and service offering was further strengthened through the acquisitions of Autocue, the specialty camera assets of SIS, and more recently SmallHD.”



Broadcast Equipment

The Broadcast Equipment business (excluding IMT) had 2014 revenues of £131.9m, an increase of 1.6% (7.0% on constant currency) versus 2013.

Vitec Broadcast Wquipment and Broadcast Services Revenue FY 2014


Vitec made three acquisitions during 2014, which are now reported in the Broadcast Equipment business:

  • The specialty camera assets of SIS Outside Broadcasts Limited (integrated into Vitec’s Camera Corps business)


  • Autocue, a well-known provider of teleprompters (now combined with Vitec’s Autoscript business)


  • SmallHD, a provider of high definition on-camera field monitors


The combination of currency fluctuations, and the inorganic contributions from these acquisitions accounted for all the growth in the Broadcast Equipment business.  On an organic constant currency basis, Broadcast Equipment revenue in 2014 was declined by 2.2% versus the previous year.

Broadcast Equipment operating profit was £18.8m in 2014, an increase of 5.0% (12.3% on a constant currency basis) over 2013.

Operating margin for Broadcast Equipment was 14.3% a slight improvement from the 2013 margin of 13.8%.

The company said that a lower level of investment by studios in larger camera supports had impacted its business, but that this was offset by smaller camera support products performing in line with expectations.

The Anton-Bauer battery business had lower revenue, but is expected to benefit from new ranges of products launched in 2014.

Although Vitec did not specifically break out the performance of Teradek, it did disclose that “contingent consideration of £4.2 million ($7.0 million) was accrued during the year to be paid to the previous owners of Teradek in 2015 in relation to the business’s performance in 2014 and is subject to final agreement. The business has delivered strong growth in the year and has performed ahead of our pre-acquisition expectations.”

Vitec offered Broadcast Division results excluding the performance of the IMT business.  IMT had recorded an operating loss of £1.3m in 2014 on revenue of £7.9 million.  IMT had breakeven results in 2013 on revenue of £14.0m.


Broadcast Services

The Broadcast Services generated revenue of £39.2m in 2014, an increase of 26.0% (32.9% on a constant currency basis) versus 2013.  2014 operating profit for Broadcast Services was £2.4m, equating to an operating margin of 6.1%.  This compares favorably to the operating profit of £1.5m in 2013 (4.8% operating margin).

Management attributed the strong performance of the Broadcast Services segment to major events in 2014 including the Sochi Winter Olympics and the FIFA World Cup, along with a rise in the underlying rentals business for other major events. The company also cited participation in a number of improvements in the infrastructure of NFL stadiums including player positioning systems.

It is interesting to review the capital expenditure requirements of the Broadcast Services business.

Broadcast Services spent £12.7m on rental assets in 2014.  This constitutes the majority Vitec’s capital expenditures as a company, which totaled £17.5 million excluding capitalization of software development costs.  Broadcast Services capital expenditures are partially financed by proceeds from the sale of certain rental assets.  These sales amounted to £5m in 2014.  Thus, total net capital expenditures were £6.7m for Broadcast Services.  This £6.7m cash outflow is in the context of a £3.8m operating cash inflow generated by the segment.

There is additional strategic rationale in Broadcast Services, which was noted in the Company’s release. Management stated the Broadcast Services business “enables Vitec to closely monitor changes in technology and to showcase our products.”




Related Content:

Press Release: The Vitec Group plc, 2014 Full Year Results

Vitec Group 1H 2014 Results: Videocom Down 1%, Bexel up 39.9%

Broadcast Vendor M&A: Vitec Group Buys SmallHD for up to $30 Million in Cash

Vitec Group Announces Intention to Divest IMT Wireless Communications and Microwave Business

Broadcast Vendor M&A: Vitec Buys Teradek for $15 Million



© Devoncroft Partners 2009 – 2015. All Rights Reserved.



Vizrt Posts 16% Revenue Growth in 2014, Provides Update on Pending $374 Million “Going Private” Deal

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Feb 26 2015

Broadcast graphics MAM specialist Vizrt reported strong results for the fourth quarter and full year 2014.

The company also provided an update on the pending $374 million all-cash deal with Nordic Capital to take the company private.

For the fourth quarter of 2014 revenue was $36.2 million, an increase of 9% versus the fourth quarter in 2013, and an increase of 2.8% versus the preceding quarter, Q3 2014.

Gross margins for Q4 2014 were 71%, which compares favorably to the 69% margins recorded during Q4 2013 and is consistent with the 71% gross margins from the preceding quarter.

Operating expenses for the quarter were $17.9 million.  This represents a 9% increase when compared to the fourth quarter of 2013 and is flat versus the preceding quarter.

  • R&D expenses in the quarter were $5.5m (15.1% of revenue), down 1% versus the same period ago, and down 4% versus the previous quarter


  • Sales and marketing expenses in the quarter were $8.5m (23.6% of revenue), up 7% against the year earlier period and down 5% versus the Q3 2014


  • General and administrative expenses in the quarter were $3.8m (10.7% of revenue), up 31% versus the same period a year ago, and up 18% versus the preceding quarter


EBITDA was $7.8 million for the quarter, up 357% from $1.7 million during the fourth quarter of 2013, and up 9% from $7.2 million in the previous quarter.  The EBITDA margin for the quarter was 22% versus an EBITDA margin of 5% during the comparable quarter last year and 21% during the third quarter of 2014.

Net profit for the quarter was $4.5 million, compared to a net loss of $3.4 million last year, and down slightly versus last quarter’s net profit of $5.2 million.


Product line results for the Quarter:

  • Broadcast Graphics (BG) accounted for $30.8 million during the quarter (85% of total revenue versus 86.7% last quarter), an increase of 6% versus the same period ago, and an increase of 1% versus the previous quarter. The BG order backlog was $35.6 million, comparable to the size observed at the same time last year, and down 3.6% versus the previous quarter.


  • Media Asset Management (MAM) revenue in the quarter was $5.66 million (18% of total revenue versus 16% last quarter), up 5% versus the same period a year ago, and up 35% versus last quarter.   The MAM order backlog was $14.6 million, up 37% versus last year, and up 5% versus last quarter


Geographic Performance for the Quarter:

  • Revenue from EMEA was $17.1 million (47.2% of total revenue versus 47.5% last quarter), up 25% versus the same period last year and up 2% versus last quarter


  • Americas revenue was $8.9 million (24.8% of total revenue versus 27.6% last quarter), down 14% versus last year, and down 13% versus last quarter.


  • APAC revenue was $10.1 million (27.9% of total revenue versus 23.2% last quarter), up 9% versus last year, and up 3% versus last quarter


Results for full year 2014:

The full year results were headlined by growth of 31% in EBITDA and 80% in cash flow from operations.

Vizrt’s 2014 revenue was $141.5 million, an increase of 16% versus the $122.4 million recorded during 2013.

Net profit for the 2014 was $15.5 million ($0.23 per share), which is considerably higher than the $3.6 million ($0.06 per share) net profit from 2013.  The attributed its improved profitability to a change in product mix, consistent financial prudence, and the acquisition of Mosart MediaLabs

Gross margins for 2014 were 70%, which was a slight improvement from the 68% margins from 2013.    EBITDA was $27.7m (20% operating margin) for the full year 2014, a significant year-over-year increase from the $15.5 million (13% operating margin) recorded during 2013.

Operating expenses for 2014 were $71.1 million, a 14% increase over the operating expense level of 2013.

  • R&D expenses for the full year were $22.5 million (31.6% of revenue), an increase of 18% versus 2013


  • Sales and marketing expenses for 2014 were $35.2 million (49.6% of revenue), up 9% against the sales and marketing expense from 2013


  • General and administrative expenses were $13.3 million (18.8% of revenue), up 23% versus the 2013 calendar year


The geographic breakdown of 2014 sales consisted of 26% from Americas, 48% from EMEA, and 26% from APAC.

Vizrt ended 2014 with 584 employees compared to 542 at the end of Q4 2013. 24 employees were added following the Mosart acquisition in Q1 2014.



Update on Pending Acquisition by Nordic Capital

Company management provided an update on its previously announced acquisition by Nordic Capital.  Final closing of the transaction remains subject to certain conditions including the decision of Israeli tax authorities regarding a tax withholding ruling. Vizrt believes the process will come to a positive conclusion in the next several weeks.  The acquisition was first announced on November 10, 2014 and approved by a majority of shareholders on December 18, 2014.




Business Outlook:

Martin Burkhalter, Vizrt’s CEO, stated: “Our strong performance continued in Q4, despite the fact that we did not see the discretional spending towards the year-end that we normally have witnessed in previous years. Our strong performance is also reflected in our solid backlog going forward. I am particular pleased with the improvement of MAM results and the MAM backlog which increased by 37% compared to the same time last year.”



Related Content:

Press Release: Vizrt Reports Q4 and 2014 Results

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal



© Devoncroft Partners 2009 – 2015. All Rights Reserved.



EVS Revenue Up 1.8 Percent in 2014, Appoints New CEO

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Feb 25 2015

Production and playout video server specialist EVS reported Q4 2014 and full year 2014 results.
EVS_Logo (2013)

Revenues for the full year 2014 were €131.4 million, an increase of 1.8% over 2013 results.

Net profit for full year 2014 was €35.5 million (€2.63 per share), an increase 4.4% versus 2013.

Gross margins for the full year were 74.5%, which is a slight reduction versus the 75.5% achieved in 2013.  Management attributed the impact to gross margins to product and project mix, along with reclassification of certain expenses.

EBIT margin for the full year was 35.1%, which compares to 37.5% during the full year 2013.

R&D expenses for the full year 2014 were €25.2 million, or 19.1% of total revenue, an increase of 11% versus the R&D expense recorded in 2013.

Selling and administrative expenses for the full year 2014 were €25.1 million, or 19.1% of total revenue, representing a 2.9% increase over the full year 2013.

The company ended 2014 with 512 employees, down from 514 at the end of the third quarter of 2014, and up 5.3% from the 486 employees at the end of 2013.  Average headcount in 2014 represented a 6.8% increase over 2013.

The order book stood at €29.8 million as of February 15, 2015.  This represents a 38.3% decrease versus the order book on February 15, 2014 and an increase of 53.0% versus October 31, 2014.


Q4 2014 Results:

EVS had Q4 2014 revenue of €30.5 million, a decrease of 20.8% versus the same period last year, and a decrease of 15.3% versus the previous quarter.

Excluding the effect of exchange rate movements and event rentals, the Company’s Q4 2014 revenue decreased 22.4% versus the year earlier period.

Net profit for Q4 2014 amounted to €8.3 million (€0.61 per share), compared to €10.7 million (€0.80 per share) in the year earlier period and €11.3 million (€0.84 per share) in the preceding quarter.

Gross margins for the fourth quarter were 73%, equivalent to the gross margins recorded in Q4 2013, and a slight decrease from the 74.9% gross margins recorded in Q3 2014.

EBIT (Earnings before Interest and Tax) for the fourth quarter 2014 was €8.9 million, down 44.1% compared to the fourth quarter of 2013 and down 21.2% versus Q3 2014.

Operating margin for the quarter was 29.1%, substantially lower than 41.3% from the same period last year and the 39.8% operating margin achieved during the third quarter of 2014.

The drop in profitability for the quarter was attributable to a rise in operating expenses related to increases in headcount, one-time costs associated the departure of former CEO Joop Janssen, and various IS/IT investments.

Operating expense for the quarter grew by 11.7% versus the same period a year ago.

R&D expenses in the quarter were €6.6 million, or 21.6% of revenue, up 10% from the same period last year, and up 8.1% versus last quarter.

Selling and administrative expenses in the fourth quarter were €6.6 million, or 21.6% of revenue, up 13.8% versus the same period a year ago, and up 4.7% versus the previous quarter.


Revenue by Vertical Segment:

  • Revenues from sports-related applications during the fourth quarter of 2014 were €19.8 million, or 65.1% of total revenue, a decrease of 8.5% versus the fourth quarter of 2013. For the full year 2014, this segment contributed 65.1% of the total revenue, a decrease of 6.6% versus 2013.


  • Revenues from Entertainment, News & Media (ENM)during the quarter were €10.6 million, or 34.9% of total group sales, down 36.8% compared to year earlier period.  For the full year, this segment contributed 34.7% of total revenue, a decrease of 14% versus 2013.



Product and Service Revenue:

  • Systems revenue in the quarter was €28.2 million, or 92.4% of total revenue, down 22.3% versus Q4 2013. During the full year 2014, Systems revenue was €122.4m representing 92.5% of total revenue and was up slightly (0.9%) versus 2013.


  • Services revenue was €2.3 million for Q4 2014, or 7.6% of total revenue, up 5.4% versus the year ago period. Contribution to full year 2014 results was €8.9 million for this segment, representing 7.5% of total revenue, which was an increase of 15.3% when compared to 2013.



Geographic Revenue:

  • Revenue from EMEA (excluding events) in the fourth quarter of 2014 was €16.9 million, up 3.8% against last year’s quarter. Sales in EMEA accounted for 55.4% of group revenue during the fourth quarter.  This compares to 42.2% of total revenue during the fourth quarter of 2013.  For the entire year of 2014, EMEA revenue (excluding events) was €62.8 million or 47.7% of total revenue and was flat when compared to 2013.


  • Americas’ revenue for the fourth quarter of 2014 was €7.6 million, down 30.5% versus last year. Americas accounted for 25.0% of total revenue during the quarter, down from 28.5% of total revenue during the fourth quarter of 2013. For the entire year of 2014, Americas’ revenue was €32.9 million or 25.0% of total revenue and was up 12.3% when compared to Americas’ revenue during 2013.


  • Q4 2014 revenue from the APAC region was €5.9m, down 47.1% versus last year’s quarter. APAC accounted for 19.4% of total revenue in the fourth quarter, down from a contribution of 29.1% during Q4 2013. For the full year 2014, APAC’s revenue was €21.3 million or 16.2% of total revenue and was down 41.5% when compared to APAC’s revenue in 2013.



New CEO Appointed:

The Company also announced the appointment of Muriel De Lathouwer as the Managing Director & CEO of the Company.  Ms. De Lathouwer had been serving as interim president of the Executive Committee since the departure of Joop Janssen in October 2014.  She has been a member of the board of EVS since November 2013.




The Company’s full year 2014 results were in line with management’s guidance of low single digit growth over the performance in 2013.  Management cited a continued challenging market situation in the broadcast industry and specifically the live production server market segment.  This gives EVS limited visibility on expectations for 2015, though EVS did expanded on the discussion of the market by noting macro-economic headwinds and longer investment cycles.  In fact, the headline of the press release noted “2015 will be a transition year.”

The company provided additional commentary on the market environment in its Q4 2014 earnings presentation.  Management cited market data confirming its strong market share in outside broadcast vans and the opportunity for future upgrades of this existing installed base.  EVS also referenced a slide from Devoncroft’s pre-IBC 2014 analysis illustrating the ongoing “Trend Spend Disconnect” in the broadcast technology sector (included below as a reference).  The slide was supportive of management’s view that product investments by EVS are aligned with long-term trends in the sector.


.Devoncroft BBS Trend-Spend Disconnect

Related Content:

Press Release: EVS Reports 2014

Results:Press Release: EVS Broadcast Equipment Appoints Muriel De Lathouwer as Managing Director & CEO

EVS Q4 and FY 2014 Earnings Presentation  

Broadcast Vendor M&A: EVS Acquires All Shares of SVS GmbH and Dyvi Live SA

EVS Parts Ways with CEO Joop Janssen Over Differing Opinions on Strategic Implementation




© Devoncroft Partners 2009 – 2015. All Rights Reserved.



ATEME Posts 24 Percent Revenue Gain in 2014, Provides Upbeat Outlook for 2015

Annual Results, Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Feb 16 2015

Video compression specialist ATEME announced that its revenue for 2014 was €25.4m, an increase of 24% versus the same period a year ago.

The company, which raised €13.3m through Initial Public Offering last year, said 2014 was its third consecutive year of revenue growth.

The company’s full performance appears to indicate that its growth accelerated during the second half of 2014, following on from revenue of €12m during the first six months of the year.

ATEME attributed its continued growth to both new business from existing customers such as the European Broadcasting Union (EBU), the acquisition of new customers including the BBC, leading Hollywood studios, tier-1 service providers and post-production studios; and the use of its technology at major events including the FIFA World Cup.

“We have a well-established, worldwide footprint and 2014 allowed us to solidify our base for growth,” said ATEME CEO Michel Artieres. “We are now the trusted technology partner in video compression for 200 customers from around the world. We will continue with investment strategies to provide full, flexible software solutions and to become a more agile solutions provider.”

The company said it believes it is “positioned to profit from soaring worldwide video consumption,” pointing to “the launch of new ultra high-definition/4K channels in Japan, Russia and the United Kingdom in 2015” as evidence of its future potential growth prospects.



Related Content:

Press Release: ATEME Posts Significant Growth in 2014

Ateme raises €13.3 Million through Initial Public Offering

HD World Cup Drives 22 Percent Growth for ATEME During First Six Months of 2014



© Devoncroft Partners 2009 – 2015. All Rights Reserved.



Dalet 2014 Revenue up 15 Percent, Driven by Strong Sales in MAM and Radio Solutions

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Feb 10 2015

Dalet, a provider of broadcast newsroom computer systems, asset management, and radio automation solutions, reported that its revenue for 2013 was 2012 revenue was €42.1m, an increase of 15% versus 2013.

Fourth quarter revenue was €13.1m, up 6% versus the same period a year ago.

The above figures include approximately 9 months revenue from AmberFin, which was acquired by Dalet in April 2014.

Excluding AmberFin, the company’s revenue was up 7% versus the previous year.

Gross margin for the full year 2014 were 85%, down from 87% in 2013, and 86% in 2012


On a geographic basis:

  • Revenue in Europe was €21.1m in 2014, up by 19% versus the full year 2013.  Europe represented 50.1% of total revenue for the year, versus 48.5% in 2013.


  •  Revenues grew 7% in the Americas to €13.9m, or 33% of total revenue for the year, down from 35.4% in 2013


  • 2014 revenue from MEA was €2.8m, up 4% versus 2013. The MEA region represented 6.7% of revenue in 2014, down from 6.7% in 2013.


  • APAC revenue in 2014 was €4.2m, up 32% versus the previous year. APAC revenue was 10% of total revenue in 2014, up from 8.7% in 2013



On a product basis:

  • Asset management revenue was €18.5m, up 36.2% versus the previous year.  Asset management revenue represented 44% of total revenue in 2014, compared to 37.1% in 2013, and 44.9% in 2012


  • TV Newsroom systems was €12.2m, down 5.4% versus the previous year. TV newsroom systems represented 29% of total revenue in 2014, compared to 35.1% in 2013, and 25.2% in 2012


  • Sport solutions revenue was €2.9m, up 5.3% versus the previous year. Sports solutions revenue was 7% of total revenue in 2014, versus 10% in both 2013 and 2012


  • Radio solutions revenue was €7.6m, up 51.6% versus 2013. Radio solutions represented 18% of total revenue in 2014, versus 13.6% in 2013 and 14.6% in 2012


  • Integration revenue was €0.84m, down 39.9% versus the previous year.  Integration revenue represented 2% of total revenue in 2014, versus 3.8% in 2013 and 5.5% in 2012



Dalet CEO David Lasry said the company “experienced growth in 2014 despite the depressed economic conditions in Europe and the uncertainty in Eastern Europe. Even with negative market factors and the restructuring costs associated with the acquisition of AmberFin, the company’s operating profit for the year should remain positive. The Q4 order intake is strong, particularly in North and South America. Our ongoing investments in Asia Pacific are now gaining traction and we expect to see revenue growth in this region as well. These positive factors should further enhance our position in the Media Asset Management and broadcast space as we continue to expand our roster of premier media customers.”

The company said that its Dalet’s backlog of orders to be executed in 2015 stands currently at €30m, similar to its level at the same period last year.

Dalet finished the year with approximately €5.2m in cash (including 0.3 M€ of restricted cash), down from €7.7m on December 31, 2013. Short term and long term bank debt on December 31, 2014 totaled €5.4m, up from €2m on December 31, 2013, following the €3.4m loan taken to finance AmberFin’s acquisition.



Related Content:

Press Release: Dalet Revenues 2014 – €42.1 million, +15%

Previous Year: Dalet Revenue Grows 7 Percent in 2013 on Strong Sales of Newsroom Solutions

2012 Results: Dalet Reports 10 Percent Revenue Growth in 2012 Thanks to Strong MAM Sales

Broadcast Vendor M&A: Dalet Acquires AmberFin



© Devoncroft Partners 2009-2015. All Rights Reserved.



Quantum Media & Entertainment Revenue up 150 Percent through First Nine Months of FY 2015

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Jan 30 2015

Quantum_LogoQuantum announced  that revenue for the third quarter of its 2015 fiscal year, which ended December 31, 2014, was $142.1m, down 3% versus the same period last year, and up 5% versus the previous quarter.

GAAP net income for the quarter was $6.9m, or $0.03 per diluted share, versus a net loss of $2.5m million (or $0.01 per diluted share) last year, and net income of $1.2m last quarter.

The results were below the low-end of previously issued guidance ($145 million to $150 million).  The company attributed the sales decline to a 31% year-over-year drop in the revenue from its OEM tape automation partners.

Despite the drop in OEM revenue, Quantum’s scale-out storage business, which includes its StorNext product line, continued to experience significant growth.

During the earnings conference call with equity analysts, Quantum president and CEO Jon Gacek said that “since StorNext 5 became generally available early last year, StorNext and Lattus combined solutions have been adopted in some of the largest most demanding workflows around the world, and was one of the key contributors to our overall media and entertainment product revenue growing more than 150% year-over-year in Q3 and our mid-market media and entertainment product sales nearly tripling.”

Highlighting the success of the StorNext and Lattus product lines, Gacek said Quantum closed a $4m deal during the quarter for managing video in one of the world’s largest consumer electronics companies. Other significant M&E wins in the quarter include a sale of nearly $300,000 to a large media production company, and StorNext sales of more than $300,000 each to two of the top U.S. broadcast networks and a major international radio broadcaster.

On an overall basis, Quantum’s scale-out storage and related service revenue was $27m in the third quarter, up 55% from the year-earlier period and up 6% from the preceding quarter.  Year-todate, the company’s scale-out storage products have seen growth of nearly 60% versus the first three quarters of fiscal 2014 year.

In a November 2014 press release, Quantum said its scale-out storage revenue had increased by nearly 60% during the first six months of its fiscal 2015, and with an annualized run-rate of more than $100m. At that time, the company attributed this growth to demand for its StorNext 5 high-performance shared storage and Lattus extended online storage solutions, from M&E customers including BBC Sport, MLB Network and UFC, who have deployed a suite of scale-out storage systems managed by StorNext 5. Quantum SVP Geoff Stedman, called StorNext a ‘hidden gem’ in Quantum’s portfolio, and said “an increasingly broad range of customers is recognizing the unique benefits it provides, including in conjunction with Lattus.  To a great extent, this represents the triumph of specialized workflow-intelligent storage over general-purpose storage that simply can’t handle the complexities of effectively managing and protecting modern digital assets.”

The company ended the quarter with cash and cash equivalents of approximately $110m.



Quantum says it expects to post a GAAP net loss of $0.8m to $1.8m in its fiscal Q4, with revenue in the range of $130m to $135m, and GAAP and non-GAAP gross margin of approximately 43-45 percent.




Related Content:

Press Release: Quantum Corporation Reports Fiscal Third Quarter 2015 Results

Press Release: Quantum Scale-Out Storage Revenue Grows 50 Percent In First Half Of Fiscal Year



© Devoncroft Partners 2009 – 2015. All Rights Reserved.



Broadcast Vendor M&A: Telestream Acquired by Genstar Capital

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Jan 07 2015

Telestream_Logo (new in 2014)

Transcoding and workflow vendor Telestream announced that it has entered into a definitive agreement to be acquired by Genstar Capital, a San Francisco-based private equity firm that manages funds with total capital commitments of over $3 billion and targets investments focused on selected sectors within the financial services, software, industrial technology, and healthcare industries.

The seller was Thoma Bravo, the private equity firm that purchased Telestream in 2011 for an undisclosed amount.

Terms were not disclosed, but Telestream said that “the transaction recognizes the company’s significant growth and positions it well for the next phase of expansion.”

The deal comes just four months after Telestream issued a statement saying that its transcoding and workflow revenue increased by 40 percent in 2013 versus 2012, and had achieved profitable growth for the last 14 years. At that time, company CEO Dan Castles attributed the company’s impressive track-record of growth to both innovation and management stability.

Telestream will continue to operate as an independent entity, and its existing management team will continue with the company in their current roles.

Thoma Bravo said in a statement that since it bought the company, Telestream saw “incredible growth on several fronts,” thanks to new product launches, strategic M&A, and expanding its executive and sales team to drive further growth. “Thoma Bravo worked in partnership with management over our three year ownership period to invest in the business, make acquisitions and accelerate the company’s growth,” said Holden Spaht, a managing partner at Thoma Bravo. “The company today is a clear leader in the digital video space with the deepest set of products and services in the market.”

Castles issued an upbeat statement about the deal, and telegraphed he believes that under Genstar, Telestream might continue to use strategic M&A and become an industry consolidator.

“Genstar’s mid-market focus and deep expertise in the software industry will enable Telestream to further accelerate our growth,” said Castles. “Over the past several years, Telestream has experienced its most significant growth. We look forward to our new partnership with Genstar as we increase our investment in existing products, accelerate our reach into new customer verticals and fuel our next phase of development through additional M&A activity. Our product portfolio and business models are well suited for the Genstar environment.”

“Genstar has been following Telestream closely and this acquisition is consistent with our strategy of investing in vertical market software companies,” said Eli Weiss, a Managing Director of Genstar. Telestream is a leader in its market and has posted profitable growth since its founding. As even more content is generated and viewed on more devices, we believe the company will continue its demonstrated growth trajectory, and we will support Telestream’s experienced and successful management team to expand organic growth via new product releases and pursue add-on acquisitions.”

The deal is expected to close in mid-January 2015.


Genstar’s acquisition of Telestream is the latest in a series of deals related to online video and transcoding.

As broadcasters and media companies scramble to deploy multi-screen services, transcoding is seen by many as a key technology.  As a result, transcoding has also attracted its fair share of financing and M&A activity.  Here’s a quick run-down of some of the recent transcoding deals and related-financial news:




  • In April 2014, Imagine Communications acquired Digital Rapids for an undisclosed amount


  • In April 2014, Dalet acquired Amberfin for an undisclosed amount


  • In January 2013, Amazon unveiled its “Amazon Elastic Transcoder.” Based on the company’s Amazon Web Services (AWS) cloud computing platform, the Elastic Transcoder the service provides “a highly scalable, easy to use and a cost-effective way for developers and businesses to transcode video files from their source format into versions that will playback on devices like smartphones, tablets and PCs.”


  • In August 2012 Brightcove bought Zencoder, a 2-year old start-up with $2m in revenue for $30m, and subsequently launched a cloud based transcoding service at IBC 2012











  • RGB Networks bought transcoding vendor Ripcode in 2010




Related Content:

Telestream Says Transcoding and Workflow Revenue Increased by 40 Percent Last Year

Broadcast Vendor M&A: Telestream Buys Captioning Provider CPC

More Broadcast Vendor M&A: Private Equity Firm Acquires Telestream

More Broadcast Vendor M&A — Telestream Purchase of Anystream Now Official

Elemental Technologies Says Revenue Increased by 50 Percent in 2013

Elemental Technologies Says Revenue Doubled in 2012 to $21 Million as Transcoding Technology Continues to Grow

Elemental Closes $13 Million Funding Round, Latest in Series of Transcoding Deals

Harmonic Moves Transcoding Technology to the Cloud, Launches AWS-Based Service

Amazon Launches Scalable Cloud-Based “Elastic Transcoder” Service – A Potential Disruptor in a “Hot” Technology Space

More Broadcast Vendor M&A: Brightcove Buys Zencoder for $30 Million in Latest Video Transcoding Deal

More Broadcast vendor M&A: Wohler Buys RadiantGrid, Latest in Series of Transcoding Deals

Envivio Files for $85 Million Goldman Sachs Led IPO

Envivio Closes $16.5 Million Fundraising Round

More Broadcast Vendor M&A: Cisco to Buy Inlet Technologies for $95m



© Devoncroft Partners 2009 – 2015. All Rights Reserved.



%d bloggers like this: