Archive for the ‘Quarterly Results’ Category

Net Insight Revenue Grows 25% in Q1 2016, Driven by M&A

Analysis, Quarterly Results | Posted by Josh Stinehour
Apr 28 2016

Video transport technology provider Net Insight reported its Q1 2016 results.  Revenue was SEK 110.0 million, up 25.3% versus Q1 2015.  On a constant currency basis revenue for the quarter increased 24.1%. logo-net-insight

The vast majority of the year-over-year growth was attributable to the acquisition of ScheduALL in September 2015.  Organic growth in Q1 2016 amounted to 3.5% versus the year earlier period.

Net income for the quarter was SEK 14.0 million or (0.04 earnings per share), an increase of 250% over the net income of SEK 4.0 million (0.01 earnings per share) from Q1 2015.

Gross margins for Q1 2016 were 61.7%, a slight increase above the 60.1% from the previous year’s quarter.  Operating margins were 7.1%, which is approximately the same as Q1 2015.

Revenue by Geography

  • Sales from Western Europe were SEK 47.8 million, an increase of 26.6% versus Q1 2015. The region contributed 43% of total revenue for the quarter.  In Q1 2015, Western Europe also represented 43% of overall sales
  • The Americas contributed SEK 35.2 million or 32% of Net Insight’s revenue in the quarter (versus 41% in the Q1 2015). This was a slight decrease in performance of 1% versus the revenues from Americas in the year earlier period.  When excluding the revenue contribution from ScheduALL, revenues in the Americas decreased 31% (SEK -10.8 million) in the quarter.  Management attributed the organic decline to a large order recognized during Q1 2015 within the US.
  • Rest of World sales were SEK 26.9 million, an increase of 88% versus the year earlier period.  As a percentage of total sales, Rest of World contributed 25% in the quarter versus 16% during Q1 2015


Revenue by Product Type

  • Sales attributed to Net Insight’s hardware products were SEK 44.7 million in the quarter, a decrease of 17.5% versus the previous year. As a percentage of total sales, hardware products were 41% of the quarter’s sales versus 62% during Q1 2015.
  • Software licenses accounted for SEK 30.0 million of revenue in the quarter, a substantial increase of 94% over the year earlier period. Software contributed 27% of overall revenue during the quarter versus 18% in Q1 2015.
  • Support and services sales were SEK 35.5 million during the quarter, an increase of 110% versus the year earlier quarter. Support and services were 32% of overall revenue in the quarter, an increase from the 19% contribution in Q1 2015.


Net Insight’s sales by product type have been transitioning towards software and services and away from hardware for the past several quarters.  This was further accelerated with the acquisition of ScheduALL.  The trend is highlighted by the below chart from Net Insight’s earnings release.



Revenue by Customer Vertical

  • Sales in the Broadcast & Media (BMN) customer vertical were SEK 89.1 million, an 25% increase over the prior year’s quarter. BMN was responsible for 81% of Net Insight’s revenue in the quarter, less on a percentage basis than the 86% in Q1 2015.
  • Sales in the Digital Terristrial TV (DTT) vertical were SEK 18.7 million, an increase of 64% over Q1 2015. On a percentage basis, DTT represented 17% of overall revenue in Q1 2016, compared to 13% in Q1 2015.
  • The CATV/IPTV vertical was 2% of total sales in Q1 2016. It was 1% of total sales during Q1 2015.


Net Insight ended the first quarter with 204 employees a substantial increase over the 138 employees from a year earlier.  The acquisition of ScheduALL is the primary cause for the increase.

Cash and cash equivalents was SEK 170 million at the end of the quarter, up slightly from the SEK 164 million balance as of December 31, 2015.

Commenting on the results for the quarter, Net Insight CEO Fredrik Tumegård stated, “Sales increased by 25 per cent in the quarter with a stable operating margin of 7 per cent. The quarter has been characterized by continuous market penetration of our solution for true Live OTT, integration of last year’s acquisition of ScheduALL and both activities are progressing according to plan.”



Related Content:

Press Release: Net Insight releases Interim Report for January – March 2016



© Devoncroft Partners 2009-2016.  All Rights Reserved.




Vislink Reduces Headcount 26% in Communications Division. Reports 2015 Results.

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Mar 25 2016

UK-based Vislink plc, which owns broadcast industry brands Advent, Link, MRC Gigawave, and Pebble Beach, announced full year 2015 results.  2015 revenue was £57.8 million, a decline of 6.7% versus 2014 revenue. vislink

The revenue decline was attributable to Vislink’s surveillance business, which completed a large one-time order in the first half of 2015.

Net income for 2015 was (£0.9) or (0.7p) per share, compared to net income of £3.7 or 3.2p per share in 2014.

2015 operating income was (£0.8) versus operating income of £5.5 during 2014.  It is important to note management capitalizes a portion of R&D expense, which is therefore not reflected in the current period’s operating expenses and instead amortized over future periods.

R&D expenses recognized in 2015 were £5.8, a 3.6% increase over 2014.  As a percentage of revenue, R&D expense was 10%, a slight increase from the 9% in 2014.  The increase was attributable to the addition of a full 12 months of Pebble Beach (acquired in March of 2014).

Sales and marketing (S&M) expenses were £9.4, a rise of 6.8% against 2014 S&M.  On a percentage of revenue basis S&M was 16.3%, an increase over the 14.2% of revenue from 2014.

Administrative expenses were £6.1, a decrease of 10% versus 2014 levels.  The decrease in administrative expenses was the result of a restructuring of the Vislink Communications Systems division.

Headcount for the Communications System division decreased from 250 at the end of 2014 to 185 at the end of 2015 – a 26% decline for the year.  The Company incurred a charge of £2.5 related to the restructuring.

In contrast, the headcount of Vislink’s Pebble Beach increased from 63 at the start of the year to 75 at the end of the year.

Vislink ended 2015 with a cash balance of £3.3, down from £8.4 at the end of 2014.

Broadcast Performance:

Vislink’s broadcast revenue for the 2015 year was £50.2, a 9% increase versus broadcast revenue in 2014.  The gain was primarily related to the inclusion a full 12 months of Pebble Beach.

Pebble Beach revenue for 2015 was £10.9 million.  Vislink acquired Pebble Beach in March of the 2014, so year-over-year comparisons are not appropriate.  During the earning release, management highlighted a $2.0 million (USD) order received from Scripps Group in 2015.

Broadcast revenue for Vislink’s Communications Systems division was £39.3 million for 2015, an increase of 4% over the prior year.

Broadcast Regional Performance:

The table below from Vislink’s earning release shows a complete breakdown of the Company’s broadcast revenue by geographic region.


Business Outlook:

In a December 8, 2015 press release Vislink had alluded to an upcoming acquisition, stating “the Company is in advanced discussions with a small bolt-on acquisition, which would provide software to broadcasters and be highly complementary to Pebble Beach Systems’ existing broadcast solutions.”  There was no acquisition announcement as part of Vislink’s release.

Within the earnings release, management cited recent product releases positioning Vislink to benefit from technology transitions related to IP and virtualized software.

Executive Chairman of Vislink, John Hawkins said “We continue to transition to a software and services business represented by the evolving profit mix within the business. Pebble Beach Systems has had a strong financial performance in 2015 as it continues to expand its sales activities through its key partnerships and increasing geographic presence.  In its core broadcast markets Vislink Communication Systems found market conditions in 2015 challenging and they are expected to remain variable in 2016. However, the significant restructuring of Vislink Communication Systems, coupled with the investment and launch of new products and an increasing order pipeline, provides an encouraging platform for improved results from Vislink Communication Systems.”


Related Content:

Vislink 2015 Earnings Press Release

Vislink 2015 Earnings Presentation



© Devoncroft Partners 2009 – 2016. All Rights Reserved.



Avid 2015 Revenue and Profitability Decrease with Continued Transformation

Analysis, Annual Results, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Mar 21 2016

Avid Technology announced full year 2015 results.  Management also provided long-term guidance for financial performance through 2018. Avid Logo_ white background

Total revenue for 2015 was $505.6 million, a decrease of 4.6% versus 2014 revenue.  Product revenue for the year was $336.4 million, a decline of 11.1% against 2014.  Products represented 66.5% of overall revenue in 2015.  Services revenue was $169.2 million, an increase of 11.6% versus the year prior.  Services contributed 33.5% of total revenue for the year.

Net income was $2.4 million or $0.06 per share.  This compares to 2014 net income of $14.7 million, which was $0.38 per share.

Gross margins for 2015 were 60.9%, a slight decline versus the 61.4% from 2014.

Operating income for 2015 was $6.9 million, a decrease of 64.6% versus 2014 operating income.  2015 Operating income included a restructuring cost of $6 million.

R&D expense for the year was $95.8 million, a 6.1% increase over 2014 R&D levels.  As a percentage of total revenue, R&D expenses were 18.9%, compared to 17% of total revenue in 2014.

Sales and marketing costs for 2015 were $122.5 million, representing a 7.8% decline versus 2014 sales and marketing levels.  Sales and marketing expenses were 24.2% of 2015 revenue, a slight decline versus 25.1% of total revenue in 2014.

G&A expense was $74.1 million for 2015, a decline of 8.7% versus the prior year.  Expressed in terms of total revenue, G&A expense was 14.6% of sales in 2015 versus 15.3% in 2014.

When considering the 2015 figures included six months of Orad’s operations, the decline in S&M and G&A illustrates the impact of anticipated cost synergies from the acquisition and Avid’s restructuring initiatives.

There are many one-time expenses and non-cash items in Avid’s income statement results.  To provide a more normalized view of profitability Avid cites adjusted EBITDA, which is defined as operating income plus add-backs for costs attributed to amortization, restructuring, restatements, stock-based compensation, acquisitions, integration activities, and efficiency program costs.  Adjusted EBITDA was 2015 $41.5M, a decline of 26% versus the same figure in 2014.

Cash used in operations for 2015 was $34 million.  The net effect of financing events, capital expenditures, and the Orad acquisition left Avid with $17.9 million of cash at the end of 2015.  The balance sheet does not account for the recent financing initiative announced by Avid in February.

Several factors have combined to complicate Avid’s financial disclosures. Most notable, the restatement in late 2014 introduced a considerable amount of amortized revenue from prior financial periods.  Though this revenue is now recognized in Avid’s income statement, it does not represent any actual cash received from clients.  In other words, it is non-cash revenue with 100% gross margins.  In aggregate, changes in deferred revenue represented a negative cash adjustment (versus net income) of $65 million in 2015 and $51.9 million in 2014.  Adding to this complexity are the effects of recent restructuring initiatives, the impact of the Orad acquisition, and the ongoing transition to a subscription model.

CEO Louis Hernandez, Jr. commented on these challenges during Avid’s earnings call, noting “…I know that it would be nicer if the financial expression were more clear and didn’t have the noise of a couple of the variables, the non-marketed products, the amortization, that pre-2010 revenue or that even the shift to recurring.”

Management is aware of this difficulty and has attempted to introduce new metrics to allow analysts to better understand the transition of the business.

Update on Transformation:

Highlighting the progress was bookings growth of 26% in Q4 2015 driven by the largest transaction in Avid history with Sinclair Broadcast Group and the positive impact of the Orad acquisition.  Bookings related to recurring revenue were approximately 38% of total 2015 bookings, a substantial increase over the 26% from 2014.

Below is a chart from Avid’s investor presentation illustrating the recent positive trend in Avid’s bookings in the context of the Company’s continued transformation.


Management also disclosed several metrics on the adoption of Avid’s MediaCentral platform.  At the end of 2015 MediaCentral had over 32,000 users, a 54% increase above 2014 levels.  More than 25,000 of the users are paying subscribers.  This represents an increase of 400% in paying subscribers since the beginning of 2015.

Business Outlook:

Contained in Avid’s earning release was full year guidance for 2016 along with longer term guidance for 2017 and 2018.  These figures are provided in the below tables taken from Avid’s earnings release.

Commenting on both 2015 performance and the business outlook, Louis Herandez, Jr added, “Avid is in the final stretches of its dramatic transformation and the benefits of Avid’s Platform approach to solving the media industry’s more pressing needs is reflected in both a solid close to 2015 and dramatically improved financial expectations for 2016 and beyond.  We are on track to complete the transformation and position Avid for long term sustainable and profitable growth with an improved financial model.”



Related Content:

Press Release on Avid’s 2015 Financial Results

Presentation on Avid’s 2015 Financial Results



© Devoncroft Partners 2009 – 2016. All Rights Reserved.



NeuLion Grows 2015 Revenue by 69%

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Mar 11 2016

NeuLion, a technology product and service provider for digital distribution, announced Q4 2015 and full year 2015 financial results.

2015 GAAP revenue was $94.0 million, a 69% increase versus 2014 revenue.  The January 2015 acquisition of DivX contributed approximately 73% of the year-over-year increase in GAAP revenue.

Commenting on NeuLion’s organic growth in Q4 2015, CEO Kanaan Jemili stated, “Revenue from our NeuLion Digital Platform grew 20% on new customer additions and expanded usage from existing customers.”

Net Income for the full year 2015 was $25.9 million versus $3.6 million for 2014.  The sharp increase in 2015 net income was primarily attributable to a $31.2 million income tax benefit recognized during Q4 2015.

Gross margins (exclusive of depreciation and amortization) were 81% for 2015, an increase over the 75% gross margins from 2014.  Kanaan Jemili attributed the margin improvement to further scale in NeuLion’s Digital Platform business and the addition of revenue streams from the acquisition of DivX.

Operating income for 2015 was negative $1.86 million, which compares to positive $3.5 million during 2014.

Selling, general and administrative (“SG&A”) expenses were $45.6 million for the 2015, an increase of 68.6% versus 2014.  SG&A expense as a percentage of revenue was 48.5% for 2015, flat when compared to 2014 levels.

Research and development (“R&D”) expense was $24.9 million for the full year, an almost tripling (197%) of R&D expense versus $8.3 million in 2014.  R&D expense represented 26.5% of 2015 revenue, in comparison to 15.1% in 2014.  The increase in R&D expense was almost entirely attributable to additional headcount from the acquisition of DivX.

Cash and cash equivalents ended the year at $53.4 million.  This compares to a cash balance of $25.8 million at the end of 2014.  Positive changes in working capital accounts contributed $18.3 million to the increase in cash.

NeuLion had 638 total employees (504 full time) as of February 29, 2016.  This is down from the 767 total employees (567 full-time) as of March 1, 2015.

Q4 2015 Results:

NeuLion’s Q4 2015 GAAP Revenue was $27.8 million, a 68% increase compared to Q4 2014.

Net income for the fourth quarter was $32.8 million versus $1.6 million for Q4 2014.

Gross margins for Q4 2015 were 81%, an improvement versus the 75% gross margins in Q4 2014.  The 600 basis point increase was primarily the result of the addition of revenues from DivX and improved operating costs for NeuLion Digital Platform.

Q4 2015 operating income was $1.7 million, a slight decrease of 2.3% versus Q4 2014.  Operating margins for the quarter were 6.3%, compared to 10.9% in Q4 2014.

SG&A expense for Q4 2015 was $13.2 million, a 65% increase versus Q4 2014.  R&D expense was $5.5 million during the fourth quarter, an increase of 161% when compared to Q4 2014.

Revenue by Service and Product Offerings:

  • NeuLion Digital Platform revenue was $66.1 million for 2015, an increase of 19% over 2014 revenue. For Q4 2015 GAAP revenue was $19.8 million, representing a 20% increase in year-over-year performance.
  • DivX and MainConcept product lines contributed GAAP revenue of $28.0 million for 2015. The product lines contributed GAAP revenue of $8.0 million for the fourth quarter of 2015.  Comparable periods are not available since the DivX and MainConcept product lines were acquired in January 2015.


Management Discussion and Analysis:

NeuLion’s earnings release highlighted several notable customer projects and related milestones.

Management called attention to the launch of Univision NOW, a new direct-to-consumer over-the-top service by Univision.  Univision NOW uses the NeuLion Digital Platform.  Other customer case studies mentioned were the delivery of multiple live NBA games in 4K with BT Sports and a 4K live stream of the national soccer teams of Mexico and Senegal from Miami (carried by Univision).

More broadly, NeuLion’s management reviewed key performance indicators of its Digital Platform including a 26% year-over-year increase in the number of live events and a 35% year-over-year increase in video traffic.

Separate to the earnings release, NeuLion announced a $10 million stock buyback.  The stock repurchase will occur over the next 12 months.  $10 million represents a meaningful percentage of NeuLion’s market cap, which is currently $264 million.



Related Content: 

NeuLion Press Release for 2015 Financial Results



© Devoncroft Partners 2009 – 2016. All Rights Reserved.



International Sales and IP Adoption Drive Evertz Quarterly Growth

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Mar 09 2016

Evertz announced revenue for the third quarter of its 2016 fiscal year was C$99.8 million, up 10% versus the same period a year ago, and down 1.0% versus the previous quarter.evertz-logo

Net earnings for the quarter were C$24.4 million (C$0.32 per share), up 15.1% versus the same quarter last year, and up 24% versus the previous quarter. The company generated C$49.6 million cash from operations in the quarter, up from C$27.5 million cash used last year, and C$23.6 million generated last quarter.

The revenue result (second highest in Evertz history) was slightly above the consensus estimates of equity analysts, who were looking for revenue of $C97.5m.  Consensus earnings expectations for the quarter were C$0.24 per share.

Evertz EVP Brian Campbell attributed the strong performance to ongoing industry technical transition to IP networking and file-based workflow.  Brian Campbell also highlighted the growing adoption of Evertz’s IP-based software-defined networking solutions, compression solutions, and DreamCatcher IP-based replay and production suite.

Revenue in the US/Canada region was C$53.5 million, flat versus the same period a year ago, and down 12.4% versus the previous quarter. US/Canada sales were 53.7% of total revenue during the quarter, down from 59% of revenue during the same period a year ago, and 60.8% of revenue last quarter.

International revenue was C$46.2 million, an increase of 24% versus the same period last year, and up 17.5% versus the previous quarter. International sales were 46.3% of total revenue, up from 41% last year, and 39.2% last quarter.

The top ten customers in the quarter accounted for 36% of revenue (C$35.9 million), and the no customer in the quarter accounted for more than 11% of revenue (C$10.9 million). Altogether Evertz had 78 orders in the quarter that were greater than C$200,000 (the same as last year, and down from 82 last quarter).

Gross margins in the quarter were 57.1%, up from 57.6% last year and up from 57.2% last quarter. Evertz CFO Anthony Gridley reiterated the gross margin performance in the quarter was within the company’s target range of 56% to 60%.

R&D expenses in the second quarter were C$17.2 million, an increase of 8.8% versus the same period last year, and up 6.8% versus the previous quarter.  R&D expenses were approximately 17.2% of revenue in the quarter, higher on a percentage basis than last year (16.1%) and last quarter (16%).

Selling and administrative expenses for the quarter were C$15.1 million, an increase of 2.0% versus last year, and a decrease of 7.9% versus the previous quarter. Selling and administrative expenses represented approximately 15.2% of revenue in the quarter versus 16.3% of revenue during the same period last year, and 16.3% of revenue last quarter.

The company said that its shipments in February 2015 were C$28m, and that its purchase order backlog at the end of the third quarter were in excess of C$60 million, down slightly from the C$66 million figure in the second quarter.  Combination of the shipments and backlog (C$88 million) represents a 5% increase versus the same period last year.

The company ended the quarter with $129.9 million of cash and short term investments up from C$97.5 million at the end of last quarter, a difference of C$32.4m.  Cash generation in the quarter benefited from a C$18.7 million positive impact from changes in non-cash working capital accounts.

Management’s exchange with equity analyst Robert Young from Canaccord Genuity on the earnings call was worth highlighting for its commentary on the current competitive dynamic in the market:

Robert Young (Canaccord): … they (a competitor) also called out the number of IP projects that they booked and the number that they shipped. I was wondering, would you be willing to share a similar metric?

Brian Campbell (Evertz): Thanks, Robert. So in terms of the metric, what is more important for us would be to showcase the on-air installs. We’re quite familiar with the ESPN DC-2 that really launched the industry’s move to IP-based solutions for live production and workflow. And if we just even look to the recent Super Bowl 50, there’s been several industry articles highlighting the fact that the CBS Super truck was there as part of the coverage, or actually, the centerpiece of the coverage. That’s an industry pioneering, one of several that incorporates Evertz Software Defined Video Networking. In fact, it’s an EXE hyperscale, 23-terabit switch in that truck. And in addition, the Levi’s Stadium is a state-of-the-art stadium. It includes Evertz solutions, and for Super Bowl 50, there was an overlay of our Software Defined Video Networking helping to provide the coverage that folks saw at the Super Bowl and also the 4K replay for the in-stadium venue experiences.



Related Content:

Evertz Q3 2016 MD&A

Evertz Q3 2016 Financial Statements



© Devoncroft Partners 2009-2016.  All Rights Reserved.



SES Video Revenue Grows 7.5% in 2015

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Mar 03 2016

Satellite service provider SES reported full year 2015 results for its Video business of €1,354.9 million, a 7.5% increase versus 2014.  On a constant currency basis the year-over-year growth was reduced to 2.2%. SESLogo

For the 2015 year, the Video division contributed 67% of SES’s total revenue, a slight increase when compared to the 66% level of contribution in 2014.

In SES’s presentation to investors, Management highlighted several commercial developments within its Video business.  In particular, SES highlighted the securing of new contracts and the expansion of existing customer relationships with several high-profile media organizations including the BBC World News, Deutsche Welle, Viasat, Scripps Networks Interactive, StarTimes, Canal Holdings, and Televisa.

Also a part of the earnings release, SES announced the acquisition of RR Media, a provider of media services to the broadcast and media industries.  The Company intends to merge the operations of RR Media with its Platform Services group to create a larger global media solution provider.


Update on TV Channel Counts

The earnings release reviewed the TV channel growth over SES’s satellite network during 2015.

Total channels were 7,268 at the end of 2015, representing an 11.3% year-over-year growth versus the end of 2014.  Management disclosed that nearly 60% of all channels are now broadcast in the MPEG-4 compression standard.

HDTV channels distributed by SES grew 18.3% to 2,230.

The channel count for Ultra HD (UHD) is now eight in total.  Those channels are, Fashion One 4K, Airtel 4K, Dish UHD Promo, High 4K TV, INSIGHT, Nasa TV UHD and UHD-1.  In addition, a commercial agreement was signed in July 2015 to provide Sky Deutschland with additional capacity for Ultra HD broadcasts.

The European market accounted for 2,600 of the TV channels distributed by SES, which represents 40% of SES’s total channel count.  Channel growth in the European market was 9% in 2015.  HDTV channel growth in Europe was 26% year-over-year, reaching a total of 675.

In the North American region, SES ended 2015 with 1,744 channels, which is 24% of the total channel count.  HDTV channels increased by 3% in the region to over 1,200 channels.

International markets outside of European and North America (including the faster growing markets of Latin America, Asia-Pacific, the Middle East and Africa) made up 40% of TV channels over SES satellites.  The channel count in this region grew by 24% to a total of 2,900 channels at the end of 2015.  HDTV channels doubled to over 300 during the year.

The below slide from SES’s investor presentation illustrates the channel and geographic growth of the Video business.




Business Outlook

During the call with analysts, CEO Karim Michel Sabbagh added commentary on the position of SES’s Video Business and the rationale for the RR Media acquisition.  Sabbash stated, “And despite the fact that we have a leading position, unchallenged position, in the video segment across the value chain, our view is that we can grow much further, and this was the rationale for us to think through how do we expand our media services capability and led us to the conclusion that the acquisition of RR Media and the merger of RR Media with SES Platform Services is going to be a highly accretive business.”



Related Content

SES Press Release on 2015 Financial Results

SES Presentation of 2015 Financial Results



© Devoncroft Partners 2009 – 2016. All Rights Reserved.



Autodesk FY 2016 Media & Entertainment Revenue Declines 4.2%

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Mar 01 2016

Autodesk reported revenue for Q4 fiscal year 2016 from its Media and Entertainment (M&E) business segment of $40 million, a decrease autodesk_header_logo_140x23of 7% compared to the fourth quarter of the 2015 fiscal year, and a 2.5% increase against the previous quarter.  The year-over-year decline was primarily related to a decline in the M&E business’s Creative Finishing product lines, as Autodesk existed the Creative Finishing hardware business during Q4 FY 2016.

M&E gross margins for the fourth quarter were 80.0% ($32m), down from 79.1% during the same period a year ago, and up from 79.4% during the previous quarter.

Full Year 2016 M&E Revenue Declines 4.2%

Media & Entertainment revenue for the full FY 2016 was $160 million, down 4.2% versus the FY 2015.

M&E gross margins for the full year 2016 were 79.4%, up from 76% in FY 2015.

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 six years ago.



Between fiscal 2008 and fiscal 2016, the company’s M&E business has a CAGR of -5.8%.  During this same time, M&E sales as a percentage of total Autodesk revenue has declined from 12% to 6%.

The decline is consistent with the guidance from Autodesk management.  Revenue headwinds impacting the M&E business have included the shift from hardware to software, the collapsing of functionality into Suites, and the shift from software licenses to subscription.

Update on Business Model Transition

As part of the earnings release, Autodesk provided several updates on the Company’s ongoing transition to a Software-as-a-Service (“SaaS”) business model.  Notably, the total subscriptions (for all Autodesk products) increased by 345,000 to 2.58 million during fiscal year 2016.

The close of the fourth quarter of fiscal 2016 also marked a milestone for Autodesk’s transition to a SaaS business model.  It was the final quarter where Autodesk sold perpetual licenses for individual products.  Q1 FY 2017 is the first quarter where individual products are only available through subscription offerings.  Starting with Q3 FY 2017 Autodesk will cease selling perpetual licenses to its Suite products as well.  Meaning, as of the second half of 2017, Autodesk will have fully transitioned to selling subscription offerings.

During Autodesk’s conference call with analysts, CEO Carl Bass added further commentary on the business model transition.  “…we are dramatically increasing the lifetime value of our customers with our new business model. While this creates short-term downward pressure on our traditional financial metrics, we have repeatedly called out how it creates significant financial returns over the next 3 to 5 years” said Bass.

Part of the business model transition also requires realignment of costs structures to a new sales and marketing approach.  Autodesk had announced in early February 2016 a restructuring plan to accelerate its transition to a Cloud and Subscription Business.  The restructuring plan called for the reduction of 10% of Autodesk’s workforce.

Commenting on the changes to sales and marketing, Carl Bass offered the following, “we are simplifying our entire go-to-market strategy to align with the concept of being an all-subscription company. This involves a significant increase in our direct customer sales and marketing efforts, both at the enterprise level and through e-commerce. Not only will this change the cost structure, but it will increase — it will greatly increase how effectively we serve our customers.”



Related Content

Press Release: Autodesk Reports Fourth Quarter Financial Results

Press Release: Autodesk Announces Restructuring Plan to Accelerate Transition to Cloud and Subscription Business




© Devoncroft Partners 2009 – 2016. All Rights Reserved.



Vitec Group 2015 Growth Driven by M&A Activity

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Feb 29 2016

The Vitec Group, which owns more than a dozen brands in the broadcast industry as well as technical services company Bexel, released its results for 2015.Vitec Group Logo

Total revenue was £317.8 million, an increase of 2.6% versus 2014.  Operating profit was £35.4 million, a decline of 8.8% versus last year.  On a constant currency basis, revenue increased 1.3% and operating profit decreased 1.8%.

In the earnings release, management highlighted the negative impact of currency, the disposal of IMT during 2014, and the softness in comparisons against 2014 given the non-repeat of large events.

Stephen Bird, Group Chief Executive commented, “We have continued to invest additional resources in driving new product sales in line with our strategy. As expected, the full year results reflect the non-repeat of the 2014 Sochi Winter Olympics and FIFA World Cup, and an anticipated negative impact from foreign exchange. There was growth in revenue and operating profit over the prior period excluding these items. The Group is making good progress in streamlining certain activities with lower growth prospects, with some further actions being taken to drive profitable growth.”

Vitec also announced it has sold its main UK Broadcast manufacturing site in Bury St Edmunds.  The proceeds from the sale were £3.9 million.  Vitec is planning to move the business to a smaller leased facility in the same region.  In recent years, Vitec had transitioned a significant amount of its manufacturing to Costa Rica.


Vitec Broadcast Division:

Vitec’s Broadcast brands serve various parts of the broadcast industry: Anton/Bauer, Autocue, Autoscript, Bexel, Camera Corps, Teradek, Haigh-Farr, Litepanels, OConnor, Paralinx, Petrol Bags, Sachtler, SmallHD, Vinten and Vinten Radamec.

The Broadcast Division had revenue of £189.0 million in 2015, an increase of 10.5% versus 2014 when excluding the divested IMT’s revenue from 2014 (and up 7.0% on constant currency basis).

Vitec’s acquisitions of Paralinx (February 2015) and SmallHD (December 2014) contributed approximately 75% of the revenue increases over 2014.

Given the positive contribution from companies acquired through M&A actions, Vitec highlighted its acquisition track record in its presentation to investors.


Vitec FY Presetnation - highlights M&A


Remarking on the Broadcast Division results, CEO Stephen Bird stated, “The Broadcast Division performed satisfactorily in variable market conditions. Our higher technology product businesses are performing well, including further strong growth of our wireless products. This partially offset lower sales of large camera supports, the non-repeat of major sporting events, and investments in the future growth of our higher technology businesses.”

Bird continued, “Broadcast Market continues to show some variability in demand with customers remaining cautious this is impacting large project activity.  The US market has been more positive and Japan is performing well.  However, conditions in EMEA are more challenging.”

Operating profit for the Broadcast Division in2015 was £20.3 million, a decrease of 4.2% versus the 2014 result (down 1.3% on constant currency basis).  Operating profit is stated before restructuring costs and charges associated with acquired businesses.

Restructuring costs for 2015 were predominantly attributable to streamlining activities in the Broadcast Division.

These activities were announced as part of Vitec’s first half earnings release.  Additional streamline actions for the entire company were announced in the year-end earnings release.

In aggregate, one-off costs associated with the continued restructuring are approximately £10 million, an increase from Management’s previous estimate of £6 million.  The restructuring is focused on the UK, US, and Europe operations and will be completed by the end of 2016.




Related Content:

Press Release: The Vitec Group plc 2015 Full Year Results

The Vitec Group plc. Full year results 2015 Presentation

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

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

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



© Devoncroft Partners 2009 – 2016. All Rights Reserved.



Dalet 2015 Revenue Increases 13%

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Feb 26 2016

Dalet, a provider of software solutions for the creation, management and distribution of multimedia content, announced 2015 revenues of €47.4 million, an increase of 13% versus 2014 revenues of €42.1m. Dalet_Logo_New

On a pro forma basis, when including a full 12 months of the revenue from the acquisition of Amberfin in the 2014 revenue result (as opposed to 9 months), then revenue for 2015 increased 10% over the 2014 pro forma revenues.

Gross margin for the full year 2015 were 82%, down from 84% in 2014.  Management attributed the decline in gross margin to a larger component of hardware sales.

Based on the level of gross margins, Dalet’s operating profit is close to break-even for the year before including non-recurring items.

On a geographic basis:

  • Revenue in Europe remained the largest geographic component at €22.5m in 2015, up by 4.6% versus the full year 2014. Europe represented 47.5% of total revenue for the year, versus 50.1% in 2014.
  • Revenues from the Americas were €18.0m, or 37.9% of total revenue for the year, up from 33% in 2014. The 38% growth in 2015 was positively impacted by foreign currency gains of €2.8 million (approximately 68% of the total gain).
  • 2015 revenue from the Middle East and Africa (MEA) was €1.5m, down 33% versus 2014. The MEA region represented 3.2% of revenue in 2015, down from 6.7% in 2014.
  • APAC revenue in 2015 was €5.4m, up 11% versus the previous year. APAC revenue was 11% of total revenue in 2015, up from 10% in 2014. Management attributed to the increase in revenues to the initial benefits of recent commercial investments in the region.


Revenue breakdown:

  • Software license revenue was €13.8m, down 3% versus the previous year on a pro forma basis. License revenue represented 28.2% of total revenue in 2015, compared to 32.0% in 2014
  • Maintenance support was €14.9m, up 26% versus the previous year. Maintenance revenue represented 31.4% of total revenue in 2015, compared to 27.3% in 2014. Management attributed the increase in maintenance-support contracts to the increase in licenses sales in 2014.
  • Services revenue was €9.2m, down 4% versus the previous year. Services revenue was 19.4% of total revenue in 2015, versus 22.2% in 2014
  • Hardware revenue was €10.0m, up 27% versus 2014. Hardware revenue represented 21% of total revenue in 2015, versus 18.3% in 2014. The growth in hardware sales (such as storage, servers) was principally the result of a large broadcast contract where Dalet was responsible for the entire infrastructure.



In the earnings release, Dalet highlighted its past seven years of consecutive revenue growth. The revenue chart below is from the Dalet release.


Management then expressed optimism for continued growth in 2016 based on the size of the order book on January 1, 2016 (€36 million), increases in support contracts, and market acceptance of its software solutions.



Related Content: 

Press Release: Dalet 2015 Financial Results



© Devoncroft Partners 2009-2016. All Rights Reserved.



Despite Record Q4, EVS Revenue Down 9.8 Percent in 2015

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Feb 23 2016

Production and playout video server specialist EVS reported Q4 2015 and full year 2015 results. EVS_Logo (2013)

Revenues for the full year 2015 were €118.5 million, a decrease of 9.8% over 2014 results.

Net profit for full year 2015 was €23.7 million (€1.76 per share), a decrease of 33.3% versus 2014.

Gross margins for the full year were 71.1%, a reduction versus the 74.5% recorded in 2014.  Management attributed the reduced gross margins to lower sales, higher write-offs on inventories, the effect of the headquarters, and the impact of currency fluctuations.

EBIT margin for the full year was 27.6%, which compares to 35.1% during the full year 2014.

R&D expenses for the full year 2015 were €24.5 million, or 20.7% of total revenue, a decrease of 2.7% versus the R&D expense in 2014.

Selling and administrative expenses for the full year 2015 were €26.6 million, or 22.4% of total revenue, representing a 5.9% increase over the full year 2014.

The company ended 2015 with 485 employees, up slightly from 482 at the end of the third quarter of 2015, and down from the 512 employees at the end of 2014.  The year-over-year decline in employees was caused by the closing of the Company’s office in China and more selective recruiting.  Average headcount in 2015 represented a 2.8% decrease when compared to 2014.

The order book stood at €50.4 million as of February 15, 2016.  This represents a 69.1% increase over the order book on February 15, 2015 and an increase of 60.5% versus October 31, 2015.


Q4 2015 Results:

EVS had Q4 2015 revenue of €42.9 million, an increase of 40.5% versus the same period last year, and an increase of 52.1% versus the previous quarter.  Excluding the effect of exchange rate movements and event rentals, the Company’s Q4 2015 revenue increased 36.3% versus the year earlier period.

This is a record level of quarterly revenue for the company.  Management cited several factors contributing to the strong performance including positive effects from currency, initial server upgrades, and the release of customer budgets held back during the first half of the year.

Net profit for Q4 2015 amounted to €13.4 million (€1.00 per share), compared to €8.3 million (€0.61 per share) in the year earlier period and €4.8 million (€0.36 per share) in the preceding quarter.

Gross margins for the fourth quarter were 74%, a slight increase against the 73% gross margins recorded in Q4 2014, and an increase from the 70.0% gross margins recorded in Q3 2015.

EBIT for the fourth quarter 2015 was €18.0 million, up 103.1% compared to the fourth quarter of 2014 and up 150.0% versus Q3 2015.

Operating margin for the quarter was 42.1%, substantially higher than 29.1% from the same period last year and the 25.6% operating margin achieved during the third quarter of 2015. The primary reason for the increase in profitability in the quarter was the strong level of sales.

Operating expense for the quarter grew by 3.7% versus the same period a year ago.

R&D expenses in the quarter were €6.6 million, or 15.3% of revenue, flat versus the same period last year, and down 4.5% versus last quarter.

Selling and administrative expenses in the fourth quarter were €7.1 million, or 16.5% of revenue, up 7.5% versus the same period a year ago, and up 3.9% versus the previous quarter.


Revenue by Segment:

  • Revenues from Outside broadcast vans during the fourth quarter of 2015 were €21.0 million, or 49.0% of total revenue, an increase of 17.5% versus the fourth quarter of 2014. For the full year 2015, this segment contributed 53.8% of the total revenue, a decrease of 7.2% versus 2014.


  • Revenues from Studio & others during the quarter were €21.8 million, or 51.0% of total group sales, up 73.4% compared to the year earlier period.  For the full year, this segment contributed 44.6% of total revenue, an increase of 9.2% versus 2014.


  • There were no revenues associated with Big sporting event rentals during the quarter. For the full year, this segment contributed 1.6% of total revenue, a decrease of 86.5% versus 2014.


Systems and Service Revenue:

  • Systems revenue in the quarter was €40.2 million, or 93.7% of total revenue, up 42.2% versus Q4 2014. During the full year 2015, Systems revenue was €109.7m representing 92.5% of total revenue and was down 10.4% versus 2014.


  • Services revenue was €2.7 million for Q4 2015, or 6.3% of total revenue, up 18.3% versus the year ago period. Contribution to full year 2015 results was €8.8 million for this segment, representing 7.5% of total revenue, which was a decrease of 1.5% when compared to 2014.


Revenue by Geography:

  • Revenue from EMEA (excluding events) in the fourth quarter of 2015 was €22.9 million, up 35.6% against last year’s quarter. Sales in EMEA accounted for 53.5% of group revenue during the fourth quarter.  This compares to 55.4% of total revenue during the fourth quarter of 2014.  For the entire year of 2015, EMEA revenue (excluding events) was €49.8 million or 42.0% of total revenue and a decrease of 20.7% when compared to 2014.


  • Americas’ revenue for the fourth quarter of 2015 was €10.6 million, an increase of 39.7% versus last year. Americas accounted for 24.9% of total revenue during the quarter, down slightly from 25.0% of total revenue during the fourth quarter of 2014. For the entire year of 2015, Americas’ revenue was €41.7 million or 34.7% of total revenue and was up 25.0% when compared to Americas’ revenue during 2014.


  • Q4 2015 revenue from the APAC region was €9.2m, up 55.3% versus last year’s quarter. APAC accounted for 21.4% of total revenue in the fourth quarter, up from a contribution of 19.4% during Q4 2014. For the full year 2015, APAC’s revenue was €25.6 million or 21.6% of total revenue and was down 19.9% when compared to APAC’s revenue in 2014.



The Company’s full year 2015 results were above management’s guidance of revenue in the range of €110 to €115 million.  Commenting on the market environment, Managing Director & CEO Muriel De Lathouwer stated, “After a period of high cautiousness, we observed at the end of the year some of our customers releasing budgets that were put on hold during the first part of the year. In 2016, we expect the industry to remain in mutation and technology transitions to continue weighting on investment decisions.”

Management stated the Company has limited visibility around top-line revenue for the 2016 calendar.  EVS is expecting around €10 million of rental revenue associated large events, primarily the EURO football championship and Rio Olympics.



Related Content:

Press Release: EVS Reports 2015 Results

EVS Q4 and FY 2015 Earnings Presentation



© Devoncroft Partners 2009 – 2016. All Rights Reserved.



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