Posts Tagged ‘broadcast industry trends’

Harmonic Q2 2017 Revenue Declines 25% as Industry-Wide Structural Shift to Cloud, Software, and SaaS Accelerates

Analysis, broadcast industry technology trends, broadcast technology market research, Broadcast technology vendor financials, OTT Video, Quarterly Results | Posted by Joe Zaller
Aug 02 2017

Harmonic announced that its revenue for the second quarter of 2017 was $82.9 million, down 24.9% compared to the previous year, and down 0.8% versus the previous quarter.

Bookings for the second quarter of 2017 were $91.1 million, down 22.3% compared to last year, and up 11.0% compared to the previous quarter.

The company attributed its revenue decline to a slowdown in spending, resulting from a strategic shift in spending at broadcasters and media companies, who the company says are increasingly prioritizing OTT and direct-to-consumer offerings over traditional linear platform deployments.

“Over-the-top software, cloud solutions and related subscription business models are becoming more significant drivers of our Video business,” Harmonic CEO Patrick Harshman told investors during the company’s Q2 2017 earnings call. “While subscription video-on-demand over-the-top platform growth is not news, the drive of traditional media companies and service providers to new unified live over-the-top services targeted at both mobile devices and the big screen in the living room is accelerating faster than we anticipated.”

On a GAAP basis, the Harmonic’s net loss for Q2 2017 was $31.5 million, or $(0.39) per diluted share in Q2 2017. This compares to a GAAP net loss of $20.7 million, or $(0.27) per diluted share last year, and a GAAP net loss of $24 million, or $(0.30) per diluted share last quarter.

In light of Harmonic’s declining revenues and ongoing losses, the company indicated it planned to reign-in costs during the second half of 2017.  Newly-appointed CFO Sanjay Kalra told analysts: “recognizing these accelerating marketplace changes, we have initiated a realignment of our investments, spending and infrastructure to optimally align with customer demand and opportunity… Our combined second half [2017] operating expenses will be $11 million to $15 million below first half operating expenses.”

GAAP gross margins were 41.1% for the quarter, compared to 43.1% last year, and 48.8% last quarter. The company attributed the decline to lower than expected revenue in the quarter.

Non-GAAP gross margins were 47.9%, compared to 53% last year, and 52.1% last quarter. Non-GAAP video product gross margin was 51.4%, compared to 56.1% last year, and 54.9% last quarter. Non-GAAP cable edge gross margin was 19% during Q2 2017, compared to 38.3% last year, and 29.1% last quarter.

Research and development expense was $27 million for the quarter, compared to $26.5 million last year, and $26.5 million last quarter. Expressed as a percentage of total revenue, R&D expense represented 32.9% of sales in the quarter, compared to 24.3% last year.

SG&A expense was $32.6 million for the quarter, compared to $36.5 million last year, and $36.5 million last quarter. Expressed as a percentage of total revenue, SG&A expense represented 39.6% of sales in the quarter, compared to 33.5% last year.

 

Geographic Revenues

Revenue in the Americas region was $40.6 million during Q2 2017, a decrease of 29.6% versus the prior year, and an increase of 7.1% versus the previous quarter. The Americas accounted for 49.3% of total Q2 2017 revenue, down from 53.1% last year, and up from 45.7% last quarter.

Discussing the company’s sharp revenue decline in the Americas, Harshman indicated the industry has reached an inflection point in ongoing structural shift from linear platforms to OTT and direct-to-consumer offerings: “Particularly in the U.S. the strategic emphasis on high-quality over-the-top services is impacting the pace of investment in more traditional broadcast and pay -TV systems… What we’re seeing now is a pullback on investments in those traditional platforms and a real strategic mandate to an all-hands-on-deck on the over-the-top, the streaming strategy. It’s not just down to a delayed decision around specific technology, but it’s more, I think, a derivative of a broader strategic shift that we’re seeing playing out…. There’s a lot happening in the media and pay -TV landscape in the U.S., so there’s a lot of thinking going on, there’s a lot of planning, not the least of which is related to the underlying technology platforms. But there’s a lot that our customers are grappling with and trying to figure out.”

EMEA revenue in Q2 2017 was $24.95 million, down 25.3% versus the prior year, and down 1.9% versus the previous quarter. The EMEA region accounted for 30.3% of total Q2 2017 revenue, compared to 30.7% last year and 30.7% last quarter.

APAC revenue in Q2 2017 was $16.75 million, down 14.5% versus the prior year, and down 4.8% versus the previous quarter. The APAC region accounted for 20.3% of total Q2 2017 revenue, compared to 16.2% last year and 23.6% last quarter.

 

Product Revenues

Video products revenue for the quarter was $44.8 million, down 27.9% versus the previous year, and down 1.5% versus the previous quarter. As a percent of total sales, video products represented 54.5% of revenue in Q2 2017, compared to 56.8% in year-earlier period, and 54.9% in the previous quarter.

Similar to other firms that have embarked on the shift from hardware/CapEx revenues to software/SaaS revenues, company CFO Karla explained: “when a traditional CapEx booking comes in, we typically recognize the vast majority of that booking as revenue immediately or within a quarter or two. But if that booking comes in as a SaaS order, revenue is instead recognized ratably over time, resulting in much less current period revenue, but an expanded backlog. So to be clear, as our Video segment mix shift to SaaS, we expect a near-term revenue and operating profit headwind, offset by a growing backlog that over time will provide greater revenue visibility.”

Harshman took an optimistic tone when asked about the company’s shift to software and SaaS.  “While software-as-a-service is still a relatively small component of this overall over-the-top business, the adoption of our SaaS solutions in the second quarter was greater than expected,” he said. “Cloud and SaaS total contract value grew 90% sequentially to a little over $7.5 million, while our annual recurring revenue grew 87% to nearly $6 million. Had these subscription bookings been traditional CapEx orders recognizes revenue immediately, second quarter Video revenue would have grown year-over-year. I will be surprised if [SaaS isn’t 20% of our video revenue] within a year…. I mean I hesitate a little bit, but only because just a quarter ago, we were sitting here relatively pleased candidly that we were at 5% and to see it surge to 8% in the second quarter was certainly a surprise to us.”

Cable Edge revenue was $5.36 million during the quarter, a decline of 66% versus the previous year, and an increase of 9.8% versus the previous quarter. Cable Edge represented 6.5% of revenue in Q2 2017, a decrease versus the 14.4% contribution in the previous year, and an increase versus the 5.9% in the previous quarter.

Harmonic’s Cable Edge business has been in decline for more than a year due to the transition by cable TV operators from legacy EdgeQAM products, to a new generation of products based on C-CAP (Converged Cable Access Platform) technology.

Once again, Harshman was optimistic when describing the outlook for Cable Edge products.  “The real news here is that we continue to make material progress advancing our CableOS technology leadership and new business pipeline,” he said. “Our confidence is further bolstered by recent advanced purchase orders. Since our May conference call and through July, we received over $15 million of new CableOS orders, bringing our CableOS backlog to approximately $20 million. Relative to our initial expectations, we are seeing a higher percentage of this demand being associated with new distributed access architectures, which make sense given the growing industry focus.”

Services and support revenue were $32.1 million in Q2 2017, an increase of 4.0% versus the previous year, and a decline of 9.8% versus the previous quarter.  As a percentage of overall revenue, service and support accounted for 39.0% in Q2 2017, versus 28.8% last year, and 39.2% last quarter.

 

Segment Revenues

Broadcast and Media sales were $35.85 million, down 18.1% versus last year, and up 2.8% versus the previous quarter. In aggregate, Broadcast and Media accounted for 43.6% of total revenue, compared to 40.3% last year, and 42.1% last quarter.

Service Provider revenues were $46.42 million, down 29.4% versus last year, and down 3.3% versus the previous quarter. In aggregate, Service Providers accounted for 56.4% of total revenue, compared to 60.5% last year, and 57.9% last quarter.

 

Business Outlook

The company provided the following guidance for Q3 and Q4 2017.

For the third-quarter of 2017, the company expects revenue to be within the range of $80 – $90 million, comprised of Video revenue in the range of $72 ­- $81 million; and Cable Edge revenue in the range of $8 – $9 million. Q3 non-GAAP gross margins are expected to be in the range of 51% to 52%, with Video gross margin of 55% to 56% and Cable Edge gross margins of 20% to 21%. Q3 2017 non-GAAP operating expenses are expected to be in a range of $48 million to $50 million. Q3 2017 non-GAAP operating losses are expected to be in the range of $9 million to $1 million, and non-GAAP EPS is expected to be in the range of $0.11 to $0.03 The company expects cash and short-term investments at the end of Q3 to be between $40 million and $50 million.

For the fourth-quarter of 2017, the company expects non-GAAP revenue to be within the range of $90 – $100 million, which includes Video revenue of $80 – $86 million and Cable Edge revenue of $10 – $14 million.  Q4 2017 non-GAAP gross margins are expected to be 52% to 53.5% with Video gross margins of 55% to 57% and Cable Edge gross margins of 27% to 29%. Q4 2017 non-GAAP operating expenses are expected to be in a from $48 million to $50 million. Q4 2017 non-GAAP operating profit is expected to be in the range of a loss of $3.3 million to profit of $5.5 million. Q4 non-GAAP EPS is expected to be in the range of $0.05 loss to $0.04 profit. The company expects cash and short-term investments at the end of Q4 to be between $40 million and $50 million.

Harmonic exited the quarter with total backlog and deferred revenue of $194.4 million, a record for the company.  The company ended the quarter with $52.9 million in cash, down from $56 million last quarter. Employee count at the end of Q2 2017 was 1,338 compared to 1,403 last year, and 1,358 at the end of Q1 2017.

.

.

Related Content:

Press Release: Harmonic Announces Second Quarter 2017 Results

Previous Year: Harmonic Exceeds Revenue Guidance for Q2 2017, Anticipates Double-Digit Operating Margins by Q4

.

.

 

© Devoncroft Partners 2009 – 2017. All Rights Reserved.

.

.

.

 

Evertz Announces Record Backlog and Shipments along with C$13.5 million IP Order

Analysis, Broadcaster Financial Results, Quarterly Results | Posted by Josh Stinehour
Sep 19 2016

Evertz announced revenue for the first quarter of its 2017 fiscal year, which ended on July 31, 2016.  Revenue for the quarter was C$87.0 million, up 2.5% versus the same period a year ago, and down 9.7% versus the previous quarter. evertz-logo

The strengthening US dollar contributed a foreign exchange gain of C$6.6 million during the quarter.

Net earnings for the quarter were C$18.6 million (C$0.25 earnings per share), flat versus the first fiscal quarter of 2016, and an increase of 129.6% versus the preceding quarter. The company generated C$19.9 million cash from operations in the quarter.  This compares to cash used by operations of C$7.8 million during the same period last year and cash from operations of C$10.1 million during the previous quarter.

Revenue results for the quarter were below the consensus estimates of equity analysts of C$95.1 million, while earnings results were above the consensus estimates of analysts of C$0.24 per share.

During management’s exchange with analysts, EVP Brian Campbell attributed the lower level of revenue in the quarter to the typical lumpiness of orders along with the stretching of certain orders into future quarters.

The Company said its shipments during August 2016 were C$31 million, and that its purchase order backlog at the end of the quarter was in excess of C$70 million.   The combined shipments and backlog of C$101 million is a record level for Evertz.

The top ten customers in the quarter accounted for 30% of revenue and no customer accounted for an excess of 6% of revenue. Evertz had 104 individual customers each representing over $200,000 of revenue.

Gross margins in the quarter were 57.3%, down slightly from 56.4% last year and also down from 57.1% last quarter.  For the quarter operating margins were 28.5%, compared to 29.9% during the same period last year and 23.9% in the FQ4 2016.

Evertz ended the quarter with C$125.4 million of cash and cash equivalents up slightly from C$123.1 million at the end of last quarter.

Revenue by Geography:

  • Revenue in the US/Canada region was C$52.1 million, an increase of 4.2% versus the same period a year ago, and flat versus the previous quarter. US/Canada sales were 59.9% of total revenue during the quarter, up from 58.9% of revenue during the same period a year ago, and a substantial increase versus the 53% contribution during the preceding quarter.
  • International revenue was C$34.9 million, flat versus the previous year’s result and a decrease of 22.6% when compared to the previous quarter. International sales were 40.1% of total revenue, down from 41.1% last year and 47.0% last quarter.

Operating Expenditures by Function:

  • R&D expenses (before tax credits) in the second quarter were C$17.5 million, an increase of 7.4% versus the same period last year, and an increase of 1.2% versus the previous quarter. R&D expenses were 20.1% of revenue in the quarter, higher on a percentage basis than the 19.2% last year and the 17.9% last quarter.
  • Selling and administrative expenses for the quarter were C$14.9 million, a slight increase of 0.7% versus last year, and a decrease of 8.0% versus the preceding quarter. Selling and administrative expenses represented approximately 17.1% of revenue in the quarter versus 19.2% of revenue during the same period last year, and 17.9% of revenue in the previous quarter.

Management Commentary on Results:

Consistent with earlier quarters, Evertz EVP Brian Campbell attributed the overall performance and combined shipment and order backlog “to the ongoing transition to HD, channel proliferation, the increasing global demand for high-quality video anywhere anytime”.  Also consistent with previous quarters, Mr. Campbell added emphasis on “the growing adoption of Evertz’s IP-based software-defined networking solutions.”

While Evertz declined to provide an update on the number of SDVN deployments (over 50 SDVN installments as of the 2016 NAB Show), the Company did issue a press release on the receipt of a C$13.5 million purchase order for a “state-of-the-art” IP facility for a US customer.  The purchase order includes multiple EXE hyperscale and IPX modular switch cores, IP media gateways, and compression and control solutions.

In responding to a question by Thanos Moschopoulos of BMO Capital Markets on the interest level of cloud for Evertz customers, Mr. Campbell provided commentary on cloud adoption in the media sector.  “It’s very much early days, but it is meaningful” stated Mr. Campbell.  “And Evertz is well down the path in virtualizing the important components for customers to meet to their needs, whether that’s in a public cloud or in a private cloud or hybrid” continued Mr. Campbell.

 

 

Related Content:

Press release on Evertz FY Q1 2017 Results

MD&A on Evertz FY Q1 2017 Results

Financial Statements for Evertz FY Q1 2017

Press Release on “State-of-the-Art” IP Facility Order

 

 

© Devoncroft Partners 2009-2016.  All Rights Reserved.

 

 

Interested in Updated Market Sizing Data on the Media Technology Sector, Join us for a Webinar Tomorrow (8/31)

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, market research | Posted by Josh Stinehour
Aug 30 2016

This Wednesday (August 31th) IABM DC is holding a brief webinar where Devoncroft’s Joe Zaller will review findings from the updated 2016 IABM DC Global Market Valuation Report (GMVR), the definitive reference on market sizing, segmentation, and forecasting for the broadcast and media technology sector.  IABM DC Logo and GMVR Cover Image

IABM DC is a 50/50 joint venture between Devoncroft Partners and IABM, the industry trade association that advocates on behalf of media technology suppliers worldwide.

In addition to a summary of key findings, the webinar will provide an overview of the vendor initiative supporting the GMVR, the technology segmentation underlying the report model, and the deliverables available for purchase.  For the 2016 edition the GMVR initiative continued to benefit from direct participation from a substantial number of vendors and service provider.  Partners to the report initiative provide data submissions (under strict confidentiality) on actual and project revenue.  This data is then anonymized and used to create the most comprehensive and authoritative reference on current and future market sizing for the sector.

The 2016 edition of the GMVR contains market sizing figures for historical years beginning in 2009 along with forward projections thru the 2019 calendar year.  A more detailed description of the GMVR is available from the report initiative website (www.iabmdc.com).

The webinar will begin at 8:00 am US PT (11:00am US ET / 5:00pm CET).  You can sign up for the webinar at the following website.  All interested parties are welcome to attend.

 

Should you have any detailed questions on the GMVR, please email us.

We hope you are able to join the webinar this Wednesday (8/31).

 

Related Content:

Sign up for Webinar

 

 

© Devoncroft Partners 2009-2016. All Rights Reserved.

 

Autodesk M&E Declines 16% in Q2, Driven by Subscription Model Transition

Analysis, Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Aug 26 2016

Autodesk reported revenue for the second quarter of fiscal year 2017, which aligns with the three month period ending July 31, 2016.  Autodesk breaks out the revenue performance of its Media and Entertainment (M&E) business segment, which comprises visual effects and post-production solutions including Maya, Flame, and Shotgun.  Autodesk_Logo

Autodesk M&E revenue for the quarter was $34 million, a decrease of 16% compared to the second quarter of fiscal 2015, and a 2.9% decrease versus the preceding quarter, FQ1 2017.  M&E contributed 6.2% of Autodesk’s total sales in the quarter.  This compares to 6.7% during the year-earlier quarter and 6.8% during the preceding quarter.

There was no commentary provided by Autodesk’s management on the reason for the year-over-year decline, though Autodesk’s overall revenue decline was attributable to the Company’s transition from perpetual licenses to a subscription revenue model.

The close of the second quarter marked another milestone for Autodesk’s transition to a subscription business model, as the Company no longer sells perpetual licenses for its Suite products.  Autodesk discontinued selling perpetual licenses for individual products with the close of the fourth fiscal quarter of 2016.  Beginning with the start of the current quarter (FQ3 2017) Autodesk only sells subscription or flexible license offerings.

Update on Business Model Transition

Autodesk’s M&E division has been a public data point on the impact of pricing compression in the post-production technology segment of the media technology sector.  Revenue for the M&E division has been on a declining revenue trajectory for almost a decade given the impacts of the transition from hardware to software, the collapsing of functionality into Suites, and now the shift from perpetual licenses to subscription.

The below chart illustrates the revenue performance of the M&E division since the second half of fiscal 2008.

autodesk-chart

At the same time, the gross margin of the M&E division has benefited from these market trends.  Gross margins increased from 74.4% in the first quarter of fiscal 2008 to 80.0% during the first fiscal quarter of 2017.

The short-term implications of the business model transition is captured in the first paragraph of Autodesk’s prepared remarks for the quarter, “Autodesk is undergoing a business model transition in which it has discontinued most new perpetual license sales in favor of subscriptions and flexible license arrangements. During the transition, revenue, margins, EPS, deferred revenue, billings and cash flow from operations will be impacted as more revenue is recognized ratably rather than up front and as new product offerings generally have a lower initial purchase price.”

Related Content:

Press Release: Autodesk FY Q2 2017 Financial Results

Prepared Remarks: Autodesk management FY Q2 2017 Financial Results

Conference Call Transcript:  Autodesk FY Q2 2017

.

.

© Devoncroft Partners 2009-2016. All Rights Reserved.

.

.

 

EVS Revenue Increases Over 70% in Q2, Driven by Upgrades for Rio 2016

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

Production and playout video server specialist EVS reported Q2 2016 financial results.  Revenues for the second quarter of 2016 were €39.8 million, an increase of 70.8% over Q2 2015 results, and an incrEVS_Logo (2013)ease of 48.0% versus the preceding quarter, Q1 2016.  Excluding the effect of exchange rate movements and big event rentals, the EVS’s Q2 2016 revenue increased 67.6% versus the year earlier period.

Driving revenue in the quarter were upgrades by outside broadcast (“OB”) companies upgrading equipment in preparation for the large events of 2016, in particular the Rio 2016 Summer Olympics.  Year-over-year revenue growth also benefited in part from a softer comparable period of Q2 2015.

Net profit for Q2 2016 amounted to €12.6 million (€0.93 per share), compared to €0.70 million (€0.05 per share) in the year earlier period and €4.9 million (€0.36 per share) in the preceding quarter.

Gross margins for the quarter were 77.3%, an increase of over 1000 basis points compared to Q2 2015, and an increase of 680 basis points when measured against Q1 2016.  Gross margins were boosted in part by higher margins associated with Rental revenue.  Management attributed the margin increase in Rental revenue to the completion of C-Cast development work, which negatively impacted the gross margin of Rental revenue in earlier periods.

Operating profit for the second quarter of 2016 was €17.40 million, up 815.8% compared to the second quarter of 2015 and up 128.9% versus the first quarter of 2016.  Operating margin for the quarter was 44.0%, a sharp rise over the 8.0% operating margins from the same period last year and the 22.7% operating margin achieved during the first quarter of 2016.

Research and development (“R&D”) expenses for the second quarter of 2016 were €5.45 million, or 14.0% of total revenue, a decline of 11.5% versus the R&D expense in Q2 2015, and a decline of 6.0% against Q1 2016.  As a percentage of sales, R&D expense was 26.0% of total revenue in Q2 2015 and 22.0% during Q1 2016.  Year-over-year comparisons were impacted by costs associated with the closing of EVS’s development office in Chengdu during Q2 2015.

Selling and administrative expenses for the second quarter of 2016 were €7.44 million, or 19.0% of total revenue, representing an increase 4.3% over the second quarter of 2015, and an increase of 16.3% versus the preceding quarter.  As a percentage of sales, selling and administrative expense was 30.6% of total revenue in Q2 2015 and 24.0% during Q1 2016.

EVS ended the quarter with 482 employees, down slightly from 483 at the end of the first quarter of 2016, and down from the 471 employees at the end of Q2 2015.

The order book stood at €41.8 million as of August 24, 2016, with 80% to 85% of the current order book set to invoice during the third quarter of 2016.  The current order book represents an increase of 13.6% over the order book on August 25, 2015 and a decline of 22.3% compared to the order book on May 10, 2016.

Revenue by Destination:

  • Revenues from Outside broadcast vans during the second quarter of 2016 were €22.2 million, a 75.3% increase versus the second quarter of 2015, and a 47.2% increase compared to first quarter of 2016. For the second quarter of 2016, this segment contributed 56.0% of the total revenue, which compares to 54.0% in Q2 2015 and 56.0% in Q1 2016. Revenue in this category was driven by customer upgrades to support the large event taking place in 2016.
  • Revenues from Studio & others during the quarter were €13.7 million, up 53.2% compared to the year earlier period, and up 16.0% versus the preceding quarter. For the second quarter of 2015, this segment contributed 34.0% of total revenue, a decline versus the contribution of 38.0% in Q2 2015 and 44.0% in Q1 2016.
  • Revenues from Big sporting event rentals during the quarter were €3.9 million, an increase of 127.3% versus the year-earlier period. There were no rental sales in the first quarter of 2016.  For the second quarter of 2016, this segment contributed 10.0% of total revenue, a decrease versus 7.0% contribution in Q2 2015.

The below slide from EVS’s Q2 2016 earnings presentation illustrates the revenue breakout by destination for historical periods.

slide

Revenue by Nature:

  • Systems revenue in the quarter was €36.80 million, up 68.8% versus Q2 2015, and an increase of 49.3% against Q1 2016. During the second quarter of 2016, Systems revenue represented 92.0% of total revenue, comparable to the 94.0% in Q2 2015 and 92.0% in Q1 2016.
  • Services revenue was €2.98 million for Q2 2016, up 97.4% versus the year ago period, and a rise of 34.2% compared to Q1 2016. Contribution to the second quarter of 2016 revenue was 7.0% of the total, which is in-line with the contribution of 6.0% in Q2 2015 and 8.0% in Q1 2016.

Revenue by Geography:

  • Revenue from EMEA (excluding events) in the second quarter was €13.5 million, up 52.5% against last year’s comparable quarter, and a rise of 57.7% compared to Q1 2016. Sales in EMEA (excluding events) accounted for 38.0% of EVS’s revenue during the quarter.  This compares to 41.0% of total revenue during the second quarter of 2015 and 32.0% during first quarter of 2016.
  • Americas’ revenue for the second quarter of 2016 was €14.6 million, an increase of 107.8% versus the year-over-year period, and an increase of 38.5% compared to the preceding quarter. Americas accounted for 41.0% of total revenue during the quarter, up from 33.0% of total revenue during Q2 2015 and 39.0% in Q1 2016.
  • Q2 2016 revenue from the APAC region was €7.71 million, up 36.0% versus last year’s quarter, and a slight decline of 0.3% versus the preceding quarter. APAC accounted for 22.0% of total revenue in the Q2 2016, versus a contribution of 26.0% during Q2 2015 and 29.0% in Q1 2016.

 

Business Outlook:

As part of the earnings release, Management increased and narrowed revenue guidance for the full year.  Revenues for 2016 are now expected between €128 million and €138 million.

During EVS’s conference call, Managing Director & CEO Muriel De Lathouwer, offered commentary on the market environment.  “We see that the adoption of 4K and IP progressed across all geographies with more concrete discussions that we have now on those subjects with our customers. We are very happy with the order book and the evolution, but we still don’t want to have too much excitement as we know that part of the uptake of these new technologies will be included in the traditional lifecycle of upgrades.”

 

Related Content:

Press Release: EVS Q2 2016 Results

Presentation: EVS Q2 2016 Results

 

 

© Devoncroft Partners 2009-2016. All Rights Reserved.

 

 

Software Growth Drives Substantial Increase in Dalet 1H 2016 Margins

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 22 2016

Dalet, a provider of software solutions for the creation, management and distribution of multimedia content, announced revenues for the first half of 2016 of €21.9 million, a decrease of 4% versus 1H 2015 revenues of €20.9m.  Dalet_Logo_New

The year-over-year decline is attributable to a 43% decrease in revenue from hardware resale compared to the first half of 2015.  Revenues in 1H 2015 included a one-off large contract where Dalet was responsible for the entire infrastructure, including the hardware procurement.

Gross margin for the first half of 2016 was 87.1%, up from 79.0% in the comparable period during 2015.  The over 800 basis point rise in gross margin is again related to the sharp decrease in low-margin hardware resale during 1H 2016.

Revenue breakdown:

  • Software license revenue was €5.9 million for 1H 2016, up 9% versus 1H 2015. License revenue represented 28.2% of total revenue in 1H 2016, compared to 24.6% in 1H 2015. Growth in software licenses was driven by the North America and Asia-Pacific regions.
  • Maintenance support was €7.6 million, up 10% versus the 2015 first half. Maintenance revenue represented 36.3% of total revenue in 1H 2016, compared to 31.5% in 1H 2015. Growth in maintenance mirrors the expansion in software licenses and was similarly driven by installed base gains in the North America and Asia-Pacific regions.
  • Services revenue was €4.2 million in 1H 2016, up 7% versus the year-earlier period. Services revenue was 20.1% of total revenue during the first half of the year and 17.8% during the first half of 2015.
  • Hardware revenue was €3.3 million, down 43% versus 1H 2015. Hardware revenue represented 15.8% of total revenue in 1H 2016, versus 26.0% in 1H 2015.

On a geographic basis:

  • Revenue in Europe remained the largest geographic component at €9.2 million during the first half of the year, a decrease of 14.3% when measured against the first half of 2015. Europe represented 44% of total revenue for the first six months of the year, versus 49% in the same period of 2015.  Year-over-year comparisons in Europe were affected by the aforementioned large contract from the first half of 2015 involving a significant hardware resale component.
  • Revenues from the Americas were €8.0 million, or 38% of total revenue for 1H 2016, up from 36% in 1H 2015. This represented year-over-year growth of 1.5% in the Americas region.
  • First half 2016 revenue from the Middle East and Africa (MEA) was €0.6 million, down 27.6% versus 1H 2015. The MEA region represented 3.0% of revenue in 1H 2016, down from 3.9% during the first half of 2015.
  • APAC revenue in 1H 2016 was €2.9 million, up 20% versus the comparable 2015 period. APAC revenue was 14% of total revenue in 1H 2016, up from 11.1% in 1H 2015.

The revenue and gross margin results were announced in a press release.  The full operating results will publish in late September.

Business Outlook:

In the press release announcing the first half results, Management indicated revenue performance was as expected for the first six months of 2016.  Dalet is anticipating continued growth in the second half 2016, especially in terms of gross margin.  Management also stated an objective of improving operating margins to a goal of 4% to 5% by the 2017 fiscal year.

The Company entered the second half of 2016 with an order book of €23 million, which is expected to invoice during the period.

 

Related Content:

Press Release: Dalet First Half 2016 Results

 

 

© Devoncroft Partners 2009-2016. All Rights Reserved.

 

 

DTS Grows 41% in Q2; Offers Commentary on Competitive Environment

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 18 2016

DTS reported revenue of $48.7 million for the second quarter of 2016, a 41% year-over-year increase over Q2 2015, and a 7.7% increase over the preceding quarter. logo

Revenue growth was driven by DTS’s acquisition of iBiquity in the fourth quarter of 2015.  iBiquity was a developer and licensor of HD Radio technology.

GAAP gross margins were 87.2% during the quarter down from the 92% gross margins recorded during Q2 2015 and also a decline against the 86.5% gross margins in Q1 2016.

GAAP operating margins were 19% during the quarter.  This compares favorable versus the same period last year when GAAP operating margins were 11% and the preceding quarter when GAAP operating margins of 4.0% were recorded.

On a GAAP basis net income for Q2 2016 was $4.7 million or $0.26 per share compared to net income during the year earlier period of $2.3 million or $0.12 per share.  Net income for Q1 2016 was $0.5 million or $0.03 per share.

Cash and cash equivalents ended the quarter at $43.8 million, up from $37.2 million at the end of the first quarter of 2016.

Revenue by Market Segment:

  • DTS’s Home division had revenue of $23 million during the quarter, down 5% against the second quarter of 2015. Management attributed the decline to softness in standalone Blue-ray players and a strong Q2 2015 in DTS’s TV segment.  The Home division accounted for 49% of total revenue in the quarter.
  • The Company’s Automotive division had revenue of $17.5 million in the second quarter, a substantial increase over the comparable year-earlier period (pre-acquisition of iBiquity). As a percentage of total sales, Automotive contributed 37% of overall revenue.
  • Revenues from DTS’s Mobile category were $6.4 million, an increase of 37% over Q2 2015. Mobile accounted for 14% of DTS’s overall revenue in the quarter.

Operating Expenses by Category:

  • Sales, General and Administrative (“SG&A”) expenses were $20.8 million in Q2 2016, an increase of 4.9% versus the year prior. SG&A represented 42.6% of sales during the quarter, which compares to 52.8% during Q2 2015.
  • Research and development (“R&D”) expenses were $12.6 million during the second quarter, an increase of over 30% compared to the second quarter of 2015. The increase is primarily due to an increase in headcount associated with iBiquity.  For the quarter, R&D expense was 25.8% of sales.  In the year-earlier period R&D represented 27.9% of sales.

Update on Market Adoption of Next-Generation Technologies:

As part of the Q2 Earnings release, management highlighted the market adoption of DTS-enabled content in both the cinema and the home.

The Company’s immersive audio technology, DTS:X, was incorporated in several feature films in the quarter such as Warcraft, Now You See Me 2 and The Secret Life of Pets.  In total, 31 feature films have been released with DTS:X audio technology.  DTS’s technology is now used in over 130 screens globally, which represents a more than 60% increase over the preceding quarter.

During the quarter DTS announced an agreement with Paramount Home Media Distribution to release a collection of full-length movies using DTS:X beginning with Daddy’s Home, The Big Short, Zoolander 2, and Whiskey Tango Foxtrot.

The below slide is taken from DTS’s investor presentation for the quarter.

slide

During DTS’s conference call with analysts, Chairman and CEO Jon Kircher responded to a question about competition in the theater market and offered context on the competitive environment.

“I think, the marketplace wants choice. DTS:X in the cinema as well as from an immersive audio format perspective is designed to offer a range of performance and flexibility advantages. So, today, we are in 130 screens and growing that doesn’t include all those that potentially or under contract. There is ongoing discussions with other parties around expanding that number. Year-over-year with the product essentially being slightly more than 15 months ago, we are actually tracking I think pretty well to into an accelerating future for DTS:X in cinemas. So, the bottom-line is that, not unlike our prior experience over the past 20 years in the professional space, or in the consumer space is that DTS is going to have an important role to play as it relates to the high quality consumption and enjoyment of immersive entertainment. And this is just part of a broader strategy to support our business downstream (source: SeekingAlpha transcript)” said Mr. Kircher.

 

Business Outlook:

Based on the strong quarterly results, management increased its guidance for the full year 2016.  DTS now anticipates full year revenue in the range of $185 million to $190 million, with growth driven by the mobile and automotive markets.  Operating margins for the full year are expected between 10% and 15%.

 

Related Content:

Press Release: DTS Q2 2016 Earnings Release

Presentation:  DTS Q2 2016 Investor Presentation

Transcript: DTS Q2 2016 Earnings Call (Seeking Alpha)

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

2016 Big Broadcast Survey (BBS) Reports Now Available

broadcast technology market research, Broadcast Vendor Brand Research, market research | Posted by Josh Stinehour
Jul 21 2016

The 2016 Big Broadcast Survey (BBS) Reports are now available.

We have been publishing the BBS Reports since 2009.  Each new edition is created through several months of research, including interviews with technology end-users, global surveys of technology decision makers, analysis of the end-user responses, and visualization of the data collected.  Now in its eighth year of publication, the BBS remains the most comprehensive annual study of technology end-users in the global broadcast and media technology industry.  Nearly 10,000 technology professionals in 100+ countries participate in the BBS each year, making it the largest market study of the media technology industry.

Based on feedback from technology vendors, media companies, and investors, we have updated the vendors, product categories, and market trends profiled in the 2016 BBS to better align with recent market developments.

Select updates include the global tracking of IP Standard Adoption, a product level review of the 4K upgrade cycle, and planned usage of programmatic advertising exchanges.

The continual updates over the past eight years have helped the BBS reports remain a critical reference for industry executives to improve strategic decision-making, customer engagement, marketing strategy, product planning, and sales execution.  In addition to technology vendor and service provider strategic planning, BBS reports are also used frequently for M&A and investment activities by both buyers and sellers.

Three types of 2016 BBS reports are available:

  • 2016 BBS Global Brand Reports: provides deep insight into how each more than 100 broadcast technology suppliers (see full list below) are perceived by market participants, along with comprehensive benchmarking of broadcast technology vendors on a wide variety of metrics
  • 2016 BBS Product Reports: provide detailed information from buyers, specifiers, and users of broadcast technology products in 32 separate categories (see full list below)
  • 2016 BBS Global Market Report: provides detailed information about industry trends, major projects being planned, products being evaluated for purchase, current and future plant infrastructure, broadcast technology budgets, and planned deployment of new technologies including 4K, HEVC compression, and IP-based technology infrastructure

 

For additional information on the 2016 BBS report, please call or email me.

As is Devoncroft’s custom, we will publish highlights from this year’s BBS reports on the Devoncroft website.  These articles are posted on a semi-regular basis, so please check back often.

To receive posts when published, please enter register with your email in the box in the upper right-hand corner of the page.

The below table of logos (in alphabetical order) lists the technology vendor brands covered in the 2016 BBS.

2016-BBS-Logos

 

Technology Product Categories & Vendor Brands Covered in the 2016 BBS, by Application Area

 

Acquisition & Production:

ENG Cameras

Canon, Hitachi, Ikegami, JVC, Panasonic, Sony

Large Format Single Sensor Cameras

ARRI, Blackmagic Design, Canon, Red, Sony

Production Switchers

Blackmagic Design, For-A, Grass Valley, NewTek, Panasonic, Ross Video, SAM, Sony

Studio / System Cameras

Grass Valley, Hitachi, Ikegami, JVC, Panasonic, Sony

 

 

Post Production: 

Graphics & Branding

Adobe, Autodesk, Avid/Orad, ChyronHego, Evertz, Grass Valley, Imagine Communications, Ross Video, Vizrt

Video Editing

Adobe, Apple, Avid, Blackmagic Design, EVS, Grass Valley, Imagine Communications, Sony

 

 

Content Communications and Infrastructure:

Bonded Cellular

Dejero, LiveU, Teradek, TVU

Routing Switchers

Blackmagic Design, Evertz, Grass Valley, Imagine Communications, Ross Video, SAM, Utah Scientific

Signal Processing / Interfacing / Modular

Aja Video, Axon, Blackmagic Design, Evertz, For-A, Grass Valley, Imagine Communication, Ross Video, SAM

Video Transport

Aspera, Cisco, Ericsson, Evertz, Harmonic, Imagine Communications, Lawo, Media Links, Net Insight, Nevion, Riedel, Signiant

 

 

Storage:

High Performance Shared Storage:

Avid, Harmonic, Hitachi, HPE, Isilon Systems/EMC, NetApp, Quantum

Playout / Transmission Servers

Avid, EVS, Grass Valley, Harmonic, Imagine Communications, Ross Video

Production Servers

EVS, Grass Valley, Harmonic, Rohde & Schwarz, SAM

 

 

Audio:

Audio Consoles

Avid, Calrec, Lawo, Salzbrenner Stagetec, Solid State Logic (SSL), Soundcraft, Studer, Wheatstone, Yamaha

Audio Processing & Monitoring

Adobe, Avid, Dolby, Linear Acoustic, RTW, TSL, Wohler

Intercom / Talkback

Clear-Com, Riedel, RTS Intercom Systems, Trilogy

Microphones

AKG, Audio-Technica, beyerdynamic, Electro Voice, Marshall Electronics, Neumann, Schoeps, Sennheiser, Shure, Sony

Monitors (speakers)

Adam, Avid, Focal, Genelec, JBL, KRK Systems, Mackie, Neumann, PMC,

 

 

System Automation and Control:

Broadcast Business Management Systems

arvato/S4M, Imagine Communications, MediageniX, MSA Focus, SintecMedia, Wide Orbit

Archive & Archive Management

Masstech, Oracle/Front Porch Digital, Quantum, SGL, XenData

Media Asset Management

arvato/S4M, Avid, Dalet, EVS, Imagine Communications, Prime Focus Technologies, Vizrt, VSN

Playout Automation

Grass Valley, Imagine Communications, Pebble Beach, Playbox, Snell

Workflow Orchestration / BPM

Aspera, Avid, Imagine Communications, IBM, Sony, Telestream

 

 

Playout and Delivery:

Encoding / Transcoding

Arris, ateme, Cisco, Dalet/AmberFin, Elemental Technologies, Ericsson, Harmonic, Imagine Communications, Telestream

Integrated Playout (Channel in a Box)

Evertz, Grass Valley, Harmonic, Imagine Communications, Pebble Beach, Playbox, SAM

On-line / Streaming Video Delivery Platforms

Brightcove, Kaltura, Neulion, Ooyala, Piksel

Transmitters

GatesAir, Hitachi, NEC, Plisch, Rohde & Schwarz, Screen Service, Toshiba

 

 

Test, Quality Control and Monitoring:

Multiviewers

Avitech, Axon, Evertz, For-A, Grass Valley, Imagine Communications

Test & Measurement

Imagine Communications, IneoQuest, Leader, Phabrix, Rohde & Schwarz, Tektronix

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Don’t Miss The Media Technology Business Summit at the 2016 NAB Show

Analysis, broadcast industry technology trends, broadcast industry trends, Broadcast technology vendor financials, Broadcast Vendor M&A, Conference Sessions, technology trends | Posted by Joe Zaller
Apr 16 2016

Media Technology Business Summit

1:00pm – 5:00pm, Sunday, April 17, 2016

Las Vegas Convention Center, Room N249

Open to all 2016 NAB Show Registrants

.

2016 Devoncroft NAB Media Technology Busienss Summit

.

Conference Agenda

1:00pm – Strategic Industry Analysis: Valuations, M&A, and Equity Finance

  • Joshua Stinehour, Principal Analyst Devoncroft

.

 

1:25pm – Follow the Money: Trends Driving Media Investment

  • Joe Zaller, Founder & President Devoncroft

.

 

1:50pm – Change is the New Normal: Transforming for Business Success in the New Media Landscape

  • Ulf Ewaldsson, SVP, Group CTO, & Head of Group Function Ericsson

 

.

2:10pm – The Vendor C-Suite: Strategies for an Evolving Market

  • Louis Hernandez, Jr., President & CEO Avid
  • Charlie Vogt, CEO Imagine Communications
  • Larry Kaplan, Founder & CEO SDVI
  • Dan Castles, CEO Telestream

.

 

2:50pm – The Broadcaster C-Suite: Trends Driving Investment Decisions

  • John Honeycutt, CTO Discovery Communications
  • Renu Thomas, EVP Media Operations, Engineering & IT Disney/ABC Television Group
  • Richard Friedel, EVP and GM Fox Network Engineering and Operations
  • Håvard Myklebust, CTO TV2 Norway

.

 

3:30pm – Leveraging Hyperscale IT Infrastructure for Next-Generation Media Workflows

  • Michelle Munson, President, CEO, and Co-Founder Aspera, an IBM Company
  • Michael Koons, VP, Worldwide Systems Engineering Cisco Systems
  • Tom Burns, CTO, Media & Entertainment EMC/Isilon
  • Ulf Ewaldsson, SVP, Group CTO, & Head of Group Function Ericsson

.

 

4:00pm – Service Provider C-Suite: Perspectives on Industry Trends

  • Chris Walters, CEO Encompass Digital Media
  • Ramki Sankaranarayanan, Founder & CEO Prime Focus Technologies
  • Avi Cohen, CEO RR Media

.

 

4:30pm – AWS Keynote – “All In”: Cloud Transformation of the Media Industry

  • Alex Dunlap, General Manager AWS CloudFront
  • Sam Blackman, CEO and Co-Founder Elemental Technologies

.

 

We look forward to seeing you there. Additional information on the Summit is available from the Devoncroft Partners website and the NAB Show website.

.

.

.

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

.

.

.

 

%d bloggers like this: