Production and playout video server specialist EVS announced that its revenue for 2012 was €137.9m, a record for the company. The company also posted an impressive EBIT margin of 44.4% for the full year.
Major sporting events such as the European football championships and the London Olympics were major drivers of the company’s business in 2012. Following a roaring start to the year, which saw EVS exceed the entire previous year’s revenue by the end of the third quarter of 2012, the company’s revenue slowed in Q4 in accordance with the guidance it provided earlier in the year.
Revenue for the fourth quarter of 2012 was €25.6m, down 17.5% versus the same period a year ago, and down 35% versus the previous quarter. Excluding currency fluctuations and big event rentals, which are a major revenue driver for EVS, the company said its revenue declined 17.3% versus the fourth quarter of 2011.
Net profit in the quarter was €4.4m, down 42% versus the same period a year ago, and down 65% versus the previous quarter.
EBIT (earnings before interest and tax) in the quarter was €5.2m, down 60.1% compared to the same period last year, and down 73% versus last quarter. The corresponding operating margin for the quarter was 20.3%, down from 41.9% last year, and 48.8% last quarter. The company called the lower EBIT margin “temporary,” and attributed it to “seasonally lower sales with growing costs.”
Consolidated gross margins for the quarter were 67.3%, versus 78% last year, and 79.4% last quarter. The company attributed the lower margins to “the deleveraging effect of lower sales on growing fixed operations costs but also due to the set-up of a new provision of €1m for 2-years standard technical warranty.” The company said that if this prevision were excluded that gross margins for the quarter would have been 71.2%.
SG&A expenses in the quarter were €3.9m, down from €5.5m last year. R&D expenses in the fourth quarter were €6.4m, up 21% versus the same period a year ago.
Full Year Results
Revenue for the full year was 137.9m, an increase of 29% versus 2011. Excluding currency fluctuations and big event rentals, which are a major revenue driver for EVS, the company said its revenue increased 18% in 2012 versus 2011.
Net profit for 2012 was €41.7m up 30.2% versus the previous year.
Consolidated gross margin were 77.3%, down slightly from 2011.
Operating expenses increased by 15.3% in 2012 versus 2011. The company said its 2012 OpEx included “one-off repositioning costs of €1.4m, that was partly offset by the release of a past litigation provision of €1. EVS said its underlying 14.3% increase in OpEx during the year was due to an “increased number of employees as well as investments in a new group ERP and lower R&D tax credits.”
Company CFO Jacques Galloy said: “After some years of sales stagnating at €110m, we closed 2012 with a record level, with sales growing by 29.0% and topping €137.9 million. We benefited from big sporting events rentals this year for about €10m million but our overall business grew strongly, especially in studios (+30.9%) and in the Americas (+32.7% at constant currency). The operating result (EBIT) grew by 39.0% compared to last year. As anticipated, 4Q12 delivered a weaker performance following a very strong sporting summer. The order book as of February 15, even though lower than at the beginning of 2012, is record for starting an uneven year, highlighting our strong competitive position and the successful investments in the past. We remain optimistic about the long term growth drivers of EVS while our short to medium term visibility remains limited as usual. 2013 shall not benefit from such big sporting events but our continued investments in innovation and expansion pave the way for positioning the company for the future”
Segment Results for 2012:
- Studio revenue in 2012 was €63.3m, up 30.9% versus 2011 (up 17.3% on a constant currency basis and excluding big events). The studio segment accounted for 46% of revenue in 2012, with outside broadcast (OB) making up the remainder.
- OB revenue in 2012 was €74.6.m million up 27.4% versus 2011 (up 18% on a constant currency basis and excluding big events). OB sales represented 54% of total sales in 2012.
Regional Results for 2012:
- 2012 revenue from the EMEA region was €74.6m (54.1% of total revenue), up 29% versus last year, and down 17% versus last quarter. EMEA revenue was driven by the 2012 summer Olympics, and increasing business in Eastern Europe and the Middle East.
- 2012 revenue from the Americas was €36.7m, up 32.7% versus last year on a constant currency basis. EVS said sales in in the Americas were driven by a 67% increase in its studio segment 67% compared to 2011, and new OB vans and upgrades to HD.
- APAC revenue for the year was €26.6m, an increase of 13% over 2011. The company attributed its improved performance in Asia to increased demand in South Korea, Australia and China. EVS said that the continued high demand for European sports content in APAC is a long term driver for the region.
The company ended the year with 463 employees, up 11.6% (or 48 employees) since the end of 2011. The company says it recruited 25 full-time employees during the fourth quarter of 2012 in order to “accelerate some strategic R&D developments.” EVS says that on average, it had 439 full-time employees in 2012, versus and 386 full-time employees in 2011, a 13.7% increase. One third of the company’s employees are based in one of its 20 global sale offices or development business units.
New Corporate Strategy
EVS also unveiled a new corporate strategy whereby it will focus on four key markets: Sports, Entertainment, News and Media. EVS CEO Joop Janssen said the new strategy will “enable us to better deliver our investments in R&D and product innovation, help drive the expansion of our sales network, and continue to improve our user training and customer support and bring even better products to the market faster.”
The company says that this new strategy, along with a new corporate brand identity will be unveiled at the 2013 NAB show.
The company also announced a new management structure.
Outlook for the full year 2012
EVS said that while it is optimistic about its long term prospects, it reiterated its low visibility in the current state of the economy, and cautioned that the €10m of event rental revenue achieved in 2012 is not repeatable in 2013, which is a “non-big event year.”
The company also said its operating expenses should grow by “a low double digit rate” in 2013, which could translate in lower margins.
EVS says that the second half of 2013 should be better than first half since spending for big sporting events to be held in 2014 will start to be committed at that time.
Press Release: EVS Reports Record Revenue for 2012
Press Release: EVS announces a new market-focused strategy and vision
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