Archive for the ‘Broadcast technology vendor financials’ Category

Evertz Q1 FY 2016 Revenue Down 16 Percent, Management Remains “Cautiously Optimistic on Spending Environment”

Analysis, Broadcast technology vendor financials | Posted by Joe Zaller
Sep 10 2015

evertz-logoEvertz announced revenue for the first quarter of its 2016 fiscal year, which ended on July 31, 2015.  Revenue for the quarter was C$84.9m, down 16% versus the same period a year ago, and down 7.7% versus the previous quarter.

Net earnings for the quarter were C$18.6m ($0.26 earnings per share), an increase of 5.5% versus the first fiscal quarter of 2015, and an increase of 66% versus the preceding quarter. Excluding a significant foreign currency translation gain earning per share were $0.17 for the quarter. The company generated C$7.8m cash from operations in the quarter.  This compares to cash from operations of C$15.3m during the same period last year and C$12.3m during the previous quarter.

Revenue results were below the consensus estimates of equity analysts of $C91.7m.  Earnings results were slightly above the consensus estimates of analysts of earnings of C$0.24 per share.

The company said that its shipments during August 2015 were C$29m, and that its purchase order backlog at the end of the quarter was in excess of C$70m.   The combined shipments and backlog of C$99m is a record level for Evertz.

During management’s exchange with analysis, EVP Brian Campbell attributed this record level to expected orders not shipping in the quarter and to the nature of some of the orders stretching into future quarters including certain managed services commitments for disaster recovery.  Mr. Campbell noted the large IRD project mentioned on earlier calls was a national deployments, so is requiring a staged deployment at multiple locations.

Consistent with earlier quarters, Evertz EVP Brian Campbell attributed the overall performance “to the ongoing transition to HD, channel proliferation, the increasing global demand for high-quality video anywhere anytime, to worldwide demand for Evertz’s comprehensive product portfolio”.  Mr. Campbell added further color citing the “the growing adoption of Evertz IP-based Software Defined Networking solutions, our state-of-the-art DreamCatcher replay and Evertz IRD compression solutions.”

Revenue in the US/Canada region was C$50m, down 10% versus the same period a year ago, and flat versus the previous quarter. US/Canada sales were 59% of total revenue during the quarter, up from 57% of revenue during the same period a year ago, and 54% of revenue last quarter.

International revenue was C$34.9m, representing a 17.8% decline versus the previous year’s result and a decrease of 16.7% when compared to the previous quarter. International sales were 41% of total revenue, down from 43% last year and 46% last quarter.

The top ten customers in the quarter accounted for 30% of revenue (C$25.5m), and no customer accounted for an excess of 6% of revenue. Evertz had 81 individual customers each representing over $200,000 of revenue.

Gross margins in the quarter were 56.4%, down slightly from 57.0% last year and also down from 57.2% last quarter. Evertz executives reiterated that the gross margin performance in the quarter were within the company’s target range of 56% to 60%.

R&D expenses in the second quarter were C$16.3m, an increase of 3.1% versus the same period last year, and down 4.8% versus the previous quarter.  R&D expenses were approximately 19.1% of revenue in the quarter, higher on a percentage basis than last year (13.6%) and last quarter (15.7%) due to lower revenue.

Selling and administrative expenses for the quarter were C$14.8, an increase of 10.4% versus last year, and a decrease of 4.5% versus the sequential quarter. Selling and administrative expenses represented approximately 17.4% of revenue in the quarter versus 15.5% of revenue during the same period last year, and 16.8% of revenue in the previous quarter.

The company ended the quarter with $97.1m of cash and cash equivalents up slightly from C$100.7 at the end of last quarter.

Management’s exchange with equity analyst Thanos Moschopoulos from BMO Capital Markets on the call was worth highlighting for its commentary on the current market environment:

Thanos Moschopoulos (BMO): Brian, can you comment on the current spending environment, and how that’s changed, if at all, relative to last quarter? And also, how do you expect the spending environment to look going forward?

Brian Campbell (Evertz): Again, we’re cautiously optimistic on the spending environment. When you do take a look at this last quarter and the backlog and shipments that we’ve got going into Q2 of 2016, we’ve got — we had a quite strong order intake. So we’re feeling cautiously optimistic about the broad spending environment and very confident in our product positioning with the Software Defined Video Networking, the state-of-the art conventional broadcast infrastructure equipment we’ve got; and the DreamCatcher slow-motion sports replay. So those products are both winning new business for us and are also pulling along other of our products as well, too.

Thanos Moschopoulos (BMO): And so the case that you’re gaining share in a stagnant environment or putting aside the competitiveness of your products, is the actual underlying environment showing any improvement at all?

Brian Campbell (Evertz): That’s hard to tell. On a quarter-to-quarter basis, we only — we’ve got limited visibility, there are only a small handful of public companies in our sector. So we’re looking at the opportunities in front of us, and we have been winning marquee installations, designing, delivering and deploying Software Defined Video Networking. And I haven’t seen any other competitors deliver anything in scale.

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© Devoncroft Partners 2009-2015.  All Rights Reserved.

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New Devoncroft Report Available for Download: IBC 2015 – Observations & Analysis of the Media Technology Industry

Analysis, broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor Brand Research, Broadcast Vendor M&A, Broadcaster Financial Results, market research, Quarterly Results, technology trends, Top Broadcast Vendor Brands | Posted by Joe Zaller
Sep 04 2015

In preparation for the 2015 IBC Show, Devoncroft Partners has published an analysis of the trends and strategic drivers in the broadcast and media technology sector.

This 90-page report is free. Registration is required.

A link to download this report can be found at the bottom of this page.

 

Included in the analysis are excerpts from:

 

  • The 2015 Big Broadcast Survey (BBS), the largest and most comprehensive study of technology trends, buyer behavior, and vendor brands in the broadcast and media technology sector

 

Devoncroft IBC 2015 Media Technology Analysis

 

The report covers and provides commentary on a the following media technology trends and drivers:

 

Yes, media delivery and consumption has changed… BUT:

  • Importance of industry-specific context when reviewing data points
  • Digital delivery is a cause, not the effect
  • For media technology industry, impact extends far beyond the obvious

 

 

Media business models in transition:

  • So far, media companies have benefited from OTT
  • But if cord cutting accelerates, does OTT enhance or erode profit?
  • Investor concerns have led to value erosion at both commercial and public broadcasters

 

 

Evolution of media business models driving transition of spending priorities:

  • Value to media companies of linear versus digital consumers
    • – New technologies required to monetize digital content
  • Reflected in changing investment patterns
  • Reflected in in-house technology development at media companies
  • Reflected in M&A – Ad Tech / Software
  • Reflected in new service offerings from media companies

 

 

Structural shift in technology spend:

  • Comparison of media technology CAGR 2009-2014
  • Value shift in favor of service revenue
  • Research shows that media technology spending shifts once HD transition is complete

 

 

Impact on technology vendor performance:

  • Spending pause in studio and infrastructure
  • Has spending resumed in delivery and OTT?

 

 

Review of NAB 2015 Strategy Conference:

  • Drivers of technology strategy
  • Insights from broadcaster CTOs, vendor CEOs, service providers

 

 

Review of 2015 Big Broadcast Survey (BBS):

  • Ranking and review of top media technology projects
  • Ranking and review of top media technology trends
  • Review of growth expectations for product categories and geographic regions

 

 

Thoughts on future industry evolution:

  • Where do technology suppliers add value in the future?
  • Timing of next technology transition
  • Impact of Software Defined Networking (SDN)
  • The move away from specialized products and applications
  • Implications for suppliers of media technology and services
  • The next format war – where is future value, and who is battling for dominance

 

 

Research background

 

 

We welcome feedback, comments, and questions on this report.

If you would like to schedule a meeting at the IBC Show, please let us know as soon as possible.

We are in the process of our IBC Show schedule, and have very limited availability remaining.

We hope to see you in Amsterdam.

 

 

Please click here to download a PDF copy (8 MB) IBC Show 2015 – Observations and Analysis of the Media Technology Industry from Devoncroft Partners (registration required).

 

 

Related Content:

Download IBC 2015 Media Technology Industry Analysis from Devoncroft Partners (registration required)

Collaborative Market Sizing Initiative Reveals Structural Shift in Broadcast and Media Technology Industry

2015 Big Broadcast Survey (BBS) Reports Now Available

 

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Amazon Web Services to Acquire Elemental Technologies for a Reported $500 Million

broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Sep 03 2015

Amazon Web Services, Inc. (AWS) announced it has reached an agreement to acquire Elemental Technologies.

Elemental_Logo

According to a statement from AWS, the deal brings together Elemental’s leading video solutions with the AWS Cloud platform to provide media and entertainment companies with a range of integrated solutions to efficiently and economically scale video infrastructures as the media industry increasingly moves to internet based delivery.

Terms of the acquisition were not disclosed, but several outlets are reporting that the value of the deal was approximately $500 million.Amazon_AWS_Logo

It the rumored $500 million acquisition price is true, it represents a strong valuation for Elemental. For the full year 2014, Elemental had revenue of approximately Elemental had revenue of $49.2 million, according to INC Magazine’s listing of the fastest growing private companies in the United States

In December 2014, Elemental closed a $15m series D funding round, led by led by Australian telco giant, Telstra, who in August 2014 acquired online video platform provider Ooyala for $360m.

According to Crunchbase, Elemental raised a total of roughly $44 million from investors over the years, including venture firms General Catalyst Partners, Voyager Capital, Steamboat Ventures, and Norwest Venture Partners. Others of its investors include the Australian telco Telstra, the European pay TV giant Sky, and the angel investor groups Oregon Angel Fund and Alliance of Angels.

blackman, elemental

Speaking on a panel of industry executives at the 2015 NAB Show, Elemental founder and CEO Sam Blackman said the company had more than $50 million in revenue, had grown its top-line revenue by more than 55% over the past year, and that he would “be disappointed if we didn’t do that again this year.”

Elemental will continue to operate its business under its existing brand, delivering the full range of solutions for pay TV operators, content programmers, broadcasters, governments, and enterprise customers. Elemental will also expand the integration of its offerings with AWS, and through close collaboration with AWS, accelerate the innovation of next-generation services that feature a range of solutions for customers leveraging on-premises assets, hybrid architectures, and cloud.

In a blog post, Blackman said I am thrilled to announce today that Elemental is joining forces with Amazon to accelerate the development and adoption of our software-defined video platform. Elemental’s top core value of Integrity is similar to Amazon’s Leadership Principal ‘Earn Trust of Others.’ Amazon ups the ante on Elemental’s core value of ‘Customer Centrism’ with their ‘Customer Obsession.’ And Elemental’s third core value, ‘Innovation,’ is matched by Amazon’s ‘Invent and Simplify.’ This alignment around the fundamental, intrinsic cultural values shared by our teams ensures that we will do great things together.

Elemental will continue to operate its business under its existing brand, delivering the full range of solutions for pay TV operators, content programmers, broadcasters, governments, and enterprise customers. Elemental will also expand the integration of its offerings with AWS, and through close collaboration with AWS, accelerate the innovation of next-generation services that feature a range of solutions for customers leveraging on-premises assets, hybrid architectures, and cloud.

“The media and entertainment industry is at a unique inflection point, and as a part of Amazon, we will be in an even stronger position to help our customers delight their viewers globally,” said Sam Blackman, co-founder and CEO of Elemental. “We’re thrilled to have Amazon supporting our growth and ongoing commitment to our customers’ success.”

“We’re thrilled to have Amazon supporting our growth and ongoing commitment to our customers’ success.”

“Elemental shares Amazon’s passion for invention and putting the customer first,” said Andy Jassy, Senior Vice President of Amazon Web Services. “Together, we’ll collaborate on deeper technology integrations and new infrastructure offerings so that media and entertainment companies can evolve their hybrid and cloud models as they continue to innovate their services for viewers.”

 

Today’s Elemental announcement 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:

Press Release: Amazon Web Services to Acquire Elemental

TechCrunch Amazon Acquires Elemental Technologies for a Reported $500 Million, In Cash

Elemental Blog: Sam Blackman – Building Earth’s Biggest Video Infrastructure!

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Collaborative Market Sizing Initiative Reveals Structural Shift in Broadcast and Media Technology Industry

Analysis, broadcast industry technology trends, Broadcast technology vendor financials, market research | Posted by Joe Zaller
Aug 18 2015

Evolving end-user business models alter industry economics, drive significant changes in technology buying patterns, product and supplier choice, and outsourcing

 

IABMDC Logo

 

Gloucestershire, UK and Coronado, CA —  Spending on products and services in the $48 billion broadcast and media technology industry shifted dramatically between 2012 and 2014, according to the newly released Global Market Valuation and Strategy Report (GMVR), published by IABM DC LLC, a joint venture between IABM and Devoncroft Partners.

Considered by many to be the definitive source for broadcast and media technology market sizing, and now in its tenth year, the GMVR draws on actual and future projected revenue and product shipment data supplied to IABM DC by technology vendors and service providers under a framework of strict confidentiality. In aggregate, the 2015 GMVR data model covers approximately 3,000 technology vendors and service providers.

2015 GMVR data provides clear evidence of an industry-wide change in buying strategies by media technology end-users such as content creators, broadcasters, pay TV operators, and service providers.

After experiencing a 4% CAGR (compounded annual growth rate) between 2009 and 2012, the market total for broadcast and media technology products and services slowed considerably between 2012 and 2014, achieving a CAGR of 1.3%.

 

Structural Shift in Broadcast and Media Technology Industry

 

 

Significantly, revenue from products (both hardware and software) declined by 0.5% between 2012 and 2014, while revenue from services increased by 2.9%.  During 2014, services accounted for approximately $26 billion, or 54% of total spending by broadcast and media technology end-users.

“The commercial models of many broadcasters and media companies have changed dramatically,” said Joe Zaller, founder and president of Devoncroft Partners.  “The combination new digital and on-line delivery platforms, the shift to a file-based workflows, the increasing need for digital monetization, and the promise of commercial-off-the-shelf (COTS) IT hardware managed by software-defined networking have been catalysts for an industry-wide rethinking of both what technology is required to support future business goals, and whether it will be purchased or outsourced. We believe these factors will continue to alter the structure of the industry through the end of our forecast period (2018).

These factors, and their impact on the market are explored in more detail throughout the 2015 GMVR.

Peter White, chief executive, IABM says: “Although aggregate industry growth has changed, this is undoubtedly a dynamic time for our industry.  Revenue in some product categories has shown a degree of decline, however other parts of the market are growing quickly. The changing media landscape affecting the demand side of the industry is having repercussions on the supply side as well, requiring a re-thinking of many business models. During this period of “metamorphosis” there has been a slowdown of investment by end users as they seek a clearer vision of the business model and product roadmap going forward. Despite this hiatus confidence remains high in the broadcast and digital media technology market, particularly with the emergence of the many new innovations and opportunities that we anticipate will have a positive impact on growth.”

A must-read document for all broadcast industry strategists, the 450-page 2015 GMVR provides market sizing data for approximately 150 product categories, across nine market segments. It includes extensive written commentary about the drivers affecting the market, and an analysis of how changing markets and technologies may shape the future composition of the broadcast and media technology industry. The data tables that accompany the written report provide and regional splits and forecasts to 2018 at the segment and sub-segment levels.

For more information, please visit the IABM DC website.

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About IABM DC

IABM DC provides sought-after market intelligence on broadcast and digital media technology market sizing data to suppliers and purchasers of media technology worldwide. IABM DC is a joint venture between broadcast and digital media trade association IABM and Devoncroft Partners, an organisation that specialises in broadcast and digital media market research, strategic consulting and analysis.

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Broadcast Vendor M&A: ARRIS Buys Pace for $2.1 Billion

Analysis, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Apr 22 2015

In the latest round of media technology consolidation ARRIS announced  it will acquire Pace for $2.1 billion in stock and cash.

ARRIS is financing the deal with just $55 million in cash.  The remaining $2.05 billion comes from a new incremental $800m credit facility underwritten by Bank of America Merrill Lynch, and $1.455 billion worth of newly issued ARRIS shares.

The transaction will result in the formation of “New ARRIS,” which is expected to be listed on the NASDAQ stock exchange under the ticker ARRIS.

Full details of the transaction are available in the Agreement and Plan of Merger file with the SEC.

In a presentation to investors, ARRIS provided the following graphical description of the post-closing structure of New ARRIS:

ARRIS Acquires Pace -- New Arris Post-Closing Structure

 

The deal comes just over two years since ARRIS paid $2.2 billion to acquire the Motorola Home business from Google and catapulted itself to global leader status in the process.

According to the company, the deal “significantly enhances ARRIS international presence, provides large scale entry into satellite segment, [and a] broader product portfolio in equipment, software and services.”

In a letter to employees, ARRIS chairman & CEO said the acquisition of Pace “opens the door for ARRIS’s next phase of growth – through a broader geographic and customer footprint, newly combined complementary product offerings, and enhanced scale. It will provide us with a large-scale entry into the satellite segment. By adding Pace’s innovation and talent, we can further broaden our product portfolio in equipment, software, and services. We will also benefit from Pace’s strong presence in Latin America – one of our industry’s highest growth regions – opening up new global opportunities.”

ARRIS described the Pace product portfolio in the chart below:

ARRIS Acquires Pace -- Pace Product Portfolio

 

The acquisition of Pace gives ARRIS a stronger position in the set-top box business, at the same time as Cisco is being urged by investors to exit from its set-top box unit.  For the first six months if its 2015 fiscal year, revenue in Cisco’s “Service Provider Video” business, which includes STBs decreased by more than 15% versus the same period last year.

“This transaction is another example of ARRIS’s ongoing strategy of investing in the right opportunities to position our company for growth. Adding Pace’s talent, products and diverse customer base will provide ARRIS with a large scale entry into the satellite segment, broaden our portfolio and expand our global presence. We expect this merger will enable ARRIS to increase its speed of innovation. We believe this is a tremendous opportunity for ARRIS and our customers, employees, shareholders and partners around the world as we collaborate to invent the future,” said  Stanzione.

“Pace plc is a great company with a strong track record of pioneering innovation and excellent customer service. Through a combination of organic development and acquisitions, Pace has grown to be a leading technology solutions provider to the PayTV and Broadband industries serving cable, satellite and telco customers across the globe. Over the last three years, Mike Pulli and the wider Pace team have successfully executed against our strategic plan to develop Pace into a more distinctive, profitable and cash generative company, creating significant value for shareholders.

“The Pace Directors believe that ARRIS’s offer recognises this value and also gives our shareholders the opportunity to share in the future success of the combined group. While we believe that Pace is strongly positioned to continue to execute its strategy in the medium and long term, we believe that the combination of the complementary ARRIS and Pace businesses will create a platform for future growth above and beyond our standalone potential. We believe this is a great fit for both companies, our employees, customers and trading partners,” said Allan Leighton, Chairman of Pace.

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Related Content:

Press Release: ARRIS to Acquire Pace plc for $2.1 Billion in Stock and Cash

ARRIS-PACE AGREEMENT AND PLAN OF MERGER

Investor Presentation — ARRIS TO ACQUIRE PACE PLC

ARRIS Employee Letter

Arris-Pace Merger Credit Agreement

Reuters: Arris to buy British set-top box maker Pace in $2.1 billion deal

Reuters — Analysis: Some Cisco investors urge an exit from set-top box unit

Press Release: ARRIS Acquires Motorola Home: Creates Premier Video Delivery and Broadband Technology Company

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Industry Thought Leaders to Discuss “Shifting Media Economics: Impact on Strategy, Finance, and Technology” at 2015 NAB Show

Analysis, broadcast industry technology trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor M&A, Conference Sessions, Online Video, OTT Video | Posted by Joe Zaller
Apr 09 2015

Whether you are a supplier, buyer, or investor in the media technology sector, 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

 

Now part of the NAB 2015 Media Finance and Investor Conference, “Shifting Media Economics: Impact on Strategy, Finance, and Technology,” will be held on Sunday April 12, 2015 in room N235 of the Las Vegas Convention Center.

Designed to be a thought-provoking kickoff to the 2015 NAB Show, this half-day conference examines the “the business of the media business” from the perspective of all levels of the media value chain. It 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.

The keynote, “The Future of TV. One Man’s Opinion.” will be delivered by Bob Bowman, President, Business & Media of Major League Baseball (MLB), who oversees MLB Advanced Media (MLBAM) and MLB Network.

MLBAM has been involved with several recent high-profile streaming events including WrestleMania 31, the opening day of Major League Baseball, the NCAA March Madness basketball tournament, and the recent launch of HBO Now.  Bowman is scheduled to take the stage just one hour before the highly anticipated season 5 premiere of “Game of Thrones” becomes available via HBO Now.

The conference 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.

In advance of the NAB Show, Devoncroft Partners has published an analysis of the trends and strategic drivers in the broadcast and media technology sector. This report is available to download here (registration required).

This conference is intended for senior executives from technology vendors, end-users, and investment firms in the media technology sector. It provides an excellent opportunity to network with industry executives and the financial community ahead of NAB show commitments.

Approximately 400 executives attended this standing-room only event in 2014. We hope to see you there on Sunday April 12, 2015.

Please note that because this event is part the 2015 NAB Show Media, Finance and Investor Conference, registration is required.

 

An overview of the conference is included below.  Full details are available on the NAB Show website.

 

Shifting Media Economics: Impact on Strategy, Finance, and Technology

 

1:40pm – Welcome and Introductions

Presenter:

  • Peter White, CEO IABM

 

 

1:50pm – Review of Market Developments

Josh Stinehour of Devoncroft will take the podium for his annual (enthusiastic) presentation on developments in the media technology sector.  If you have any final announcements you would like Josh to consider for his presentation, let him know.

Presenter:

  • Joshua Stinehour, Principal Analyst Devoncroft Partners

 

 

2:15pm – The Broadcast & Media Technology Industry in 2015

Devoncroft founder Joe Zaller will present a data-driven overview of the forces bringing dynamic change to the media technology sector in 2015. This will include preliminary results of the 2015 Big Broadcast Survey, the industry’s most comprehensive demand-side study, and observations from the 2015 IABM DC Global Market Valuation Report, the industry’s definitive supply-side market sizing report.

Presenter:

  • Joe Zaller, President Devoncroft Partners

 

 

2:40pm – Business Strategy Perspectives from Industry Executives

CEOs from four of the media and broadcast industry’s largest technology suppliers will debate the most important commercial issues facing the industry, and discuss their strategies to position their companies for success in a rapidly evolving marketplace.  The panelists will also offer opinions on how changes in the business environment are impacting vendors and customers.

Moderator:

  • Joe Zaller, President Devoncroft Partners

 

Panelists:

  • Patrick Harshman: President and Chief Executive Officer, Harmonic, Inc.
  • John Stroup: President, Chief Executive Officer, Belden, Inc.
  • Tim Thorsteinson: Chief Executive Officer, Quantel and Snell
  • Charlie Vogt: Chief Executive Officer, Imagine Communications

 

 

3:20pm – The Broadcast Buyer Perspective on Industry Trends

Senior technology executives from four leading broadcasters will offer informed perspectives on the most significant industry trends affecting technology budgets and the technology purchase decision.  The audience will benefit from an emphasis on the business implications of technology decisions to broadcasters.

Moderator:

  • Joe Zaller, President Devoncroft Partners

 

Panelists:

  • Ken Brady: SVP Media Technology and Operations, Turner Broadcasting Systems
  • Richard Friedel: EVP & General Manager, Fox NE&O
  • Fred Mattocks: GM Media Operations & Technology, Canadian Broadcasting Corporation
  • Bob Ross: SVP East Coast Operations, CBS Broadcasting, Inc.

 

 

4:00pm – The Service Provider Perspective on Industry Trends

A panel of executives from leading media service providers will discuss views on both technology developments and deployment considerations for media organizations.  Discussion topics will include solutions for multi-platform content delivery, the economics of outsourcing, how service providers can leverage their scale to deliver increased performance and agility, and how next-generation data center architecture may impact the media ecosystem.

Moderator:

  • Joe Zaller, President Devoncroft Partners

 

Panelists:

  • Darcy Antonellis: Chief Executive Officer, Vubiquity
  • Anil Jain: SVP & GM Media Group, Brightcove, Inc.
  • Steve Plunkett: Chief Technology Officer, Ericsson Broadcast & Media Services

 

  

4:30pm – The Institutional Investor Perspective on Industry Trends

A panel of leading investment professionals in the media and entertainment sector will offer the audience the institutional investor’s perspective on the industry. The discussion will include the panelists’ intelligence-gathering plans for the NAB Show, views on the trends that are driving investment dollars in the sector, and a review of the characteristics influencing the evaluation of an investment opportunity in the media technology industry.

Moderator:

  • Joshua Stinehour, Principal Analyst Devoncroft Partners

 

Panelists:

  • Chris Kanaley: Vice President, Parallax Capital
  • Nick Lukens: Vice President, Vector Capital
  • Bryce Winkle: Vice President, The Gores Group

 

5:00pm – Keynote: The Future of TV. One Man’s Opinion.


Presenter:

  • Bob Bowman, CEO MLB Advanced Media

 

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Strong Sales in Americas Drives Orad Revenue 27 Percent Higher in 2014

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

orad_Logo

Graphics and media asset management (MAM) provider Orad reported that its revenue for the fourth quarter of 2014 was $10.6m, an increase of 21.7% versus the same period a year ago, and up 1% versus the previous quarter.

Product revenue in Q4 2014 was $8.2m, or 78% of total revenue, an increase of 53.4% versus the 4th quarter of last year when product sales were $5.4m, or 61.9% of total revenue.

Service revenue in Q4 2014 was $2.3m, or 22% of total revenue, a decline of 29.7% versus the 4th quarter of last year when service revenues were $3.3m, or 38.1% of total revenue.

Net income for the quarter was $1.1m versus a net profit of $200,000 during the same period a year ago, and a net profit of $800,000 last quarter.

Gross margins for the quarter were 69.9%, versus 68.6% last year, and 71.1% last quarter.

Operating income for the quarter was $900,000, versus an operating loss of $1.5m during the second quarter of 2013, and operating income of $800,000 last quarter.

Cash, cash equivalents and restricted cash at the end of  December 2014 were $10.4m, compared to $9.1m at the end of September 2014, and compared to $5.7m at the end of December 2013.

 

Full Year 2014 Results

For the full year 2014, Orad’s revenue was $40.5m, up 27.3% versus 2013.

Revenue from Europe was $19.2m, up 38.2% versus 2013.  Europe accounted for 47.3% of total 2014 revenue.  In 2013, revenue from Europe was $13.86m, or 43.6% of total revenue.

Revenue from Asia was $6.5m, a decline of 5.7% versus 2013.  Asia accounted for 16% of total 2014 revenue.  In 2013, revenue from Asia was $6.9m, or 21.6% of total revenue.

Revenue from the Americas was $14.3m, an increase of 44.5% versus 2013. The Americas accounted for 35.3% of total 2014 revenue.  In 2013, revenue from the Americas was $9.9m, or 31.1% of total revenue.

Product sales for year were $31.3m, an increase of 31.5% versus 2013.  Product sales accounted for 77.2% of total revenue in 2014, up from 74.8% in 2013.

Service revenue for 2014 was $9.2m, up 14.9% versus 2013. Service revenue accounted for 22.8% of total revenue in 2014, compared to 25,2% in 2013.

Operating income for 2014 was $4.36m, compared to a loss of $1.6m in 2013.

Net income for 2014 was $3.4m, compared to a net loss of $1.9m in 2013.

Gross Margins for 2014 were 69.7% up from 66.6% in 2013.

Operating expenses for the year were up across the board.

R&D expenses for 2014 were $6.1m, up 3.5% versus 2013. R&D expenses accounted for 15.1% of total revenue in 2014, compared to 18.6% of total revenue in 2013

Sales & marketing expenses for 2014 were $13.8m, up 4.5% versus 2013. Sales & marketing &D expenses accounted for 34.2% of total revenue in 2014, compared to 41.6% of total revenue in 2013

G&A expenses for 2014 were $3.9m, up 9.7% versus 2013. G&A &D expenses accounted for 9.7% of total revenue in 2014, compared to 11.4% of total revenue in 2013

“We are pleased to announce that 2014 has been our most successful year in many aspects,” said Orad CEO Avi Sharir. “Profits have continued to increase, reaching the highest level in the company’s history. Our operating income for 2014 was 10.8% from revenues, far better than our outlook of 8%-10%. We have succeeded in meeting these impressive results thanks to our strong increase in revenues resulting from our wide range of products and solutions, our extensive geographic presence and as a result of our increased efficiency. Our strategy to offer customers comprehensive solutions was very successful with several very significant sales. Orad’s solutions’ offering brings added value to the customer by simplifying his workflow, while offering a one stop shop for the entire solution. Our servers took the forefront this year, penetrating new markets. We are seeing increased interest from existing and new customers, and given the size of the potential market, we are aiming to increase our market share. Our strategy to strengthen our presence in the North American market in 2014 proved successful, doubling our bookings compared to 2013.

 

Outlook:

“I am confident that Orad will continue in 2015 in the same direction as we continue to invest in cutting edge new technologies and increase our presence in existing and new markets,” said Sharir.

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Related Links:

Press Release: Orad Reports Financial Results for the Fourth Quarter and for the for the Full Year of 2014

Orad’s Revenue Jumps 40.7 Percent in Q2 2014

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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ChyronHego Taken Private by PE Firm, Delisted from NASDAQ

Annual Results, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Mar 09 2015

ChyronHego LogoVector Capital has completed the previously announced $120m deal to acquire ChyronHego and take it private.

Under the terms of the deal, ChyronHego stockholders will receive $2.82 per share in cash, and ChyronHego common stock has ceased trading on the NASDAQ Stock Exchange.

According the definitive proxy statement, the purchase of ChyronHego will be funded by a combination of equity and debt financing.

Equity financing will be provided by Vector Capital and its affiliates, who have committed to pay approximately $49.3m towards the acquisition, and related expenses.

Debt financing is being provided by Silicon Valley Bank (SVB) and Apollo Investment Corporation (Apollo) in the form of a $50m senior secured five-year term loan, which is expected have interest of “either (i) the Eurodollar Base Rate plus 5.625% (subject to a 1.0% floor with respect to the Eurodollar Base Rate), or (ii) at the Adjusted Base Rate (defined as the highest of (w) 2.75% of (x) the Wall Street Journal Prime Rate and (y) the Federal Funds Rate plus 0.50%) plus 3.875%.”

Separately, SVB and Apollo have also providing a $7m senior secured revolving credit facility that has the same terms as the senior five-year term loan. ChyronHego will use the revolving credit facility for working capital and capital expenditures and other general corporate purposes.

In its last quarter as a public company (Q3 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.

In a securities filing, ChyronHego said it ended 2014 with approximately $5.4m in cash and equivalents; and projected that its revenue for the full year 2014 would be $59m.

“We are delighted to be working with Vector Capital,” said Johan Apel, President and Chief Executive at ChyronHego. “As a private company, ChyronHego will be ideally positioned to reinforce the company’s leadership in news, sports and live production solutions. The Vector team has a strong track record of success in acquiring and operating innovative technology companies, and our partnership with them will enable us to reach new levels of scale, technological capabilities and customer service.”

David Fishman, Managing Director at Vector Capital, who will join ChyronHego’s Board of Directors, said: “We believe that as a private company with Vector’s financial support ChyronHego will be well positioned to capitalize on the significant opportunities in broadcast graphics creation, play-out and real time data visualization. Over time, we are confident the company will be well positioned to capitalize on the exciting trends in the sports, news and live television markets.”

“We welcome ChyronHego to the Vector family,” said Nick Lukens, Vice President at Vector. “We are very excited to roll up our sleeves and get to work with the talented team at ChyronHego. Through our partnership with management, we are committed to strengthening and expanding ChyronHego’s market leading product and service capabilities.”

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Related Content:

Press Release: Vector Capital Completes Acquisition of ChyronHego

Certificate of Merger

ChyronHego Makes Revealing Disclosures About “Going-Private” Transaction

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

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Thorsteinson Replaces Cross as CEO of Quantel and Snell

Analysis, Broadcast technology vendor financials, Broadcast Vendor M&A, Broadcaster Financial Results | Posted by Joe Zaller
Mar 04 2015

Quantel and Snell announced that Tim Thorsteinson has replaced Ray Cross as CEO, effective immediately.news_Tim_Thorsteinson

According to the company, Thorsteinson “is the ideal individual to lead the next stage in the development of the combined Quantel and Snell.”

Cross, who had been CEO of both Quantel and Snell since March 2014, when it was announced that Quantel had acquired fellow UK-based broadcast technology vendor Snell, a deal that had been long-rumored in the industry, since the two companies already had a common parent, Lloyds Development Capital (LDC), the investment arm of Lloyds Bank.

Previously, Cross had been CEO of Quantel since December 2005.

At the time of the Quantel-Snell deal, the company said in a statement that the combined entity had revenue of more than $170 million and office in 16 locations around the globe, making it one of the larger vendors in the broadcast industry.  The company has not provided an update on its performance since that time.

It will be interesting to see what moves Thorsteinson, a longstanding broadcast industry executive, will make as CEO of Snell and Quantel, companies he has competed against in previous roles.

Thorsteinson is a well-known figure in the broadcast industry having headed-up several of the industry’s largest technology vendors over the past 15 years.

In January 2013, Thorsteinson was named CEO of Grass Valley, replacing Alain Andreoli, who had been appointed by private equity firm Francisco Partners following their 2010 acquisition of Grass Valley from Technicolor.

Just over a year later, Thorsteinson oversaw the $220m sale of Grass Valley to Belden Corporation, who combined it with Miranda, keeping the Grass Valley moniker for the enlarged entity.

Interestingly, Thorsteinson was also involved in the sale of Miranda to Belden.  In April 2012, he appointed a director of Miranda Technologies during the time that activist investor JEC Capital was agitating for a sale of that business.  Three months after Thorsteinson became a director of the company, Belden Corporation acquired Miranda for an enterprise value of $356m.

Thorsteinson was the President of Harris Corporation’s Broadcast Communications Division from 2006-2010.  He was appointed to this role following the $460m purchase by Harris of Leitch Technology Corporation, where Thorsteinson had been CEO since November 2003.

Prior to Leitch, Thorsteinson was CEO of Grass Valley Group, and oversaw the December 2001 sale of Grass Valley Group to Thomson Multimedia for $172m.

“We are delighted to have Tim Thorsteinson join Quantel to continue the company’s transformation. Tim has a proven track record of value creation, and his knowledge and experience are a great fit to grow the combined Quantel and Snell business into a major force in the rapidly changing broadcast industry,” said Chris Hurley, Managing Director Lloyds Development Capital and Quantel Board Director. “I would also like to thank Ray for all his hard work and achievements at Quantel over the past 10 years.”

“I’m very excited to be joining Quantel,” said Thorsteinson. “It is one of the larger independent businesses in our industry, with world class products and a rich history of innovation. I want to build on that tradition to create an organization 100% focused on helping our customers prosper in the media technology world.”

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Related Content:

Press Release: Tim Thorsteinson becomes Quantel CEO

Broadcast Vendor M&A: Quantel Acquires Snell

Press Release: Quantel acquires Snell to create new force in media technology

Quantel – Snell FAQ

Belden Makes it Official – Combination of Grass Valley and Miranda to be Called Grass Valley

Broadcast Vendor M&A: Belden Completes Acquisition of Grass Valley, Will Invest $25 Million in Integration of Combined Business

Broadcast Vendor M&A: Belden Buys Grass Valley for $220 Million

Belden Closes Deal to Acquire Miranda

Thorsteinson Appointed to Miranda’s Board of Directors in Otherwise Uneventful AGM

Miranda Nominates Tim Thorsteinson as Director

Activist Shareholder Drama Continues at Miranda Technologies

Technicolor Receives a Binding Offer from Francisco Partners for Grass Valley Broadcast Business

Press Release: Tim Thorsteinson Named President of Harris Corporation’s Broadcast Communications Division

Press Release: Harris Corporation Completes Acquisition of Leitch Technology

WSJ Article: Thomson Multimedia to Buy Grass Valley for $172 Million

Broadcast Vendor M&A: Belden Buys Grass Valley for $220 Million

Belden’s Acquisition of Miranda to Close on or Before July 27, 2012

TVNewsCheck Article (9-29-2011): Tech One-on-One With Simon Derry — Snell Aims To Master the U.S. Market

Advent Venture and LDC close £72m broadcasting merger

Advent Venture Partners and LDC Complete Their Portfolios Merger – March 9, 2009

Video: Pro-Bel and Snell & Wilcox CEOs Discuss Merger (2009)

Press Release (11-6-2003): Chyron Sells Pro-Bel to LDC

Broadcast Magazine (2002): Snell Secures £22m from Advent

Press Release (2002) Advent Venture Partners invests GBP13m in Snell & Wilcox

Variety Article (7-14-2000): Carlton sells tech arm Quantel to LDC for £51 million 

 

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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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

ChyronHego_Logo

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 Johan 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.

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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

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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