Posts Tagged ‘Broadcast Video Server’

More Broadcast Vendor M&A: Evertz Buys Pharos, Adding Automation and Media Management Capabilities to New Playout Solutions

broadcast industry trends, Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Jan 04 2011

When Evertz released their Q2 numbers last month, the earnings press release included a short paragraph that said:

Subsequent Event: The Company, on December 3, 2010, entered into an agreement to purchase the shares of an international technology based company for under $5 million.

When asked about this purchase by equity analysts on the earnings conference call, Evertz EVP Brian Campbell did not identify the acquired company by name, but said that it had revenue of around C$9m and was modestly profitable.  Campbell went on to say that the newly acquired company provides file-based workflow, automation and content management tools that will help Evertz accelerate its penetration of file-based markets, specifically those it will soon be addressing with its recently announced media server and channel-in-a-box products.  

I have now had it confirmed that the acquired company is UK-based Pharos.

There is good logic behind this deal, and it appears to make sense for both sides.  Evertz recently launched video server and channel-in-a-box products, but lacked the media management and automation systems required for comprehensive control.  Pharos had the right software tools, but lacked a hardware platform – a situation that was increasingly becoming an issue as their competitors consolidated and aligned through M&A (e.g. Miranda’s acquisition of OmniBus) and / or as automation vendors increasingly enter the playout business with their own hardware platforms (e.g. Snell’s Morpheus ICE and the Pebble Beach Dolphin system).

Pharos co-founder Spencer Rodd told me the two companies started talking at the 2010 IBC show about how to integrate Pharos’ automation and media management products with the new Evertz playout server and channel-in-a-box products.  The product integration went well and Rodd said that he was very impressed by what he saw at Evertz, especially its engineering ethos and ability to mobilize engineering teams and get projects done quickly.  Once the initial integration was completed, the two companies recognized that a deeper relationship made sense, and the deal was done.

Although Pharos has been acquired by Evertz, it will remain a stand-alone business unit and both Rodd and fellow co-founder Roger Heath are remaining with the company.

Rodd says that no layoffs are planned and that Pharos is currently hiring in order to expand its team and to penetrate new markets including North America.  This is clearly good news for Pharos, since the company was in danger of being stretched too thinly as it worked to deliver complex multi-site projects for customers world-wide.  The additional resources now available to the Pharos team will enable them to deliver projects more smoothly, and should also give customers the confidence to invest in Pharos technologies.

The deal is due to be announced tomorrow.

.

.

Evertz Reports 13% Increase in Q2 Revenue Driven by Strong International Sales. Announces Purchase of File-based Workflow Specialist.

broadcast industry technology trends, broadcast industry trends, Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Dec 07 2010

Evertz Technologies reported that it earned C$20.9m during its second quarter on sales of C$82.3.  Sales were up 13% year over year, and up 12% versus the previous quarter.  According to a Reuters article, analysts were expecting revenue to come in around C$78.6m.

Without disclosing any specific names, Evertz said that its top ten customers accounted for around 35% of sales (C$28.8m) during the quarter, and that no customer accounted for more than 12% of revenue (C$9.9m).

International sales, which increased 42% versus the same period a year ago, were C$42.8m and accounted for 52% of total revenue.  This is the first time that more than 50% of the company’s revenue has come from the international market.  Meanwhile, sales in the US and Canada were down 8% versus the prior year quarter to C$40.4m.  

The company said that its backlog at the end of the November 2010 was more than C$30m, and that the geographic mix of these future sales was similar to its Q2 performance – so it appears that the its strong international performance will continue.

Gross margins were 57.9%, at the lower end of the company’s target range.  On the earnings conference call company management attributed the lower gross margins to product mix and increased pricing pressure, but said that they were not changing their gross margin targets.

For the first six months of the year the company’s sales were C$156.1m, an increase of 8% versus the first half of last year.  International sales were up 22% during the first six months of the year, while sales from the US and Canada were down 3%.  Gross margins for the first half of the year were 58%.

.

Acquires file-base specialist

In its earnings press release, the company said that it had “entered into an agreement to purchase the shares of an international technology based company for under $5 million.” 

When asked about this purchase by equity analysts on the conference call, Evertz EVP Brian Campbell did not identify the acquired company by name, but said that it had revenue of around C$9m and provides file-based workflow, automation and content management tools.  Campbell said that these new capabilities would help Evertz accelerate its penetration of file-based markets, specifically those it will soon be addressing with its recently announced media server and channel-in-a-box products.  Campbell told analysts that the company’s media server is a full system, encompassing ingest, playout and enterprise storage; and that the company expects to achieve “significant traction” in the market with this product.

When asked about the possibility of future M&A, Campbell said that because of its size and reach, Evertz is often approached by smaller companies who are looking for a bigger partner.  

.

You can read the full Evertz Q2 earnings release here.

Information about the company’s previous quarter results are here.

.

%d bloggers like this: