Posts Tagged ‘IBC 2016 trends’

Download New Report: IBC 2016 Media Technology Industry Analysis

Analysis, broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, technology trends | Posted by Josh Stinehour
Sep 09 2016

As the 2016 IBC Show kicks off in Amsterdam, Devoncroft Partners has published a 100+ page overview of recent developments in the broadcast and media technology sector.

A link to the download the report is available at the bottom of this page.

ibcshow-frontpage

The analysis reflects recent discussions we’ve had with executives at media companies, service providers, and technology vendors.  In particular, the presentation includes perspectives on the following,

  • Media Revenue Models Transitioning
  • Investment in OTT Technologies, Services
  • Invesotr Concerns on Media Industry Transition
  • Continued Media Restructuring
  • Media Technology Industry Market Performance 2009 – 2015
  • Technology Vendor Results in 2016
  • Market Catalysts in 2016
  • Sector Expectations for 2017
  • Review of Technology Trends, Project Deployments
  • Considerations for Future Media Technology Architectures
  • Implications of Market Developments on Technology Vendors

 

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

If you would like to schedule a meeting at the IBC show, please let us know as soon as possible.  We have limited availability remaining.

We hope to see you in Amsterdam.

 

Please click here to download a PDF copy (10 MB) IBC Show 2016 – Observations and Analysis of the Media Technology Industry from Devoncroft Partners (registration required).

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Media Tech Vendor M&A: Blackmagic Design Acquires Ultimatte

broadcast technology market research, Broadcast Vendor M&A | Posted by Joe Zaller
Sep 09 2016

Blackmagic Design today announced it has acquired blue and green screen Ultimatte.

Terms of the deal were not disclosed.

Ultimatte was founded in 1976 and has won an Emmy for their realtime compositing technology, a Lifetime Achievement Award from the Academy of Motion Picture Arts and Sciences, as well as an Oscar.

Ultimatte is known worldwide for delivering broadcast quality compositing results that make virtual sets indistinguishable from real sets. Ultimatte creates realtime blue and green screen removal hardware that is used in broadcast studios around the world to seamlessly composite reporters, talk show hosts and more into virtual sets. Almost every newscaster and weather reporter stands in front of a green or blue screen while delivering the news and weather. For the past 40 years, Ultimatte has been the industry standard hardware or software responsible for keying these people in front of weather maps, stock charts, and other info graphics. In fact, many of these newscasters are using Ultimatte to place them into completely virtual sets.
Ultimatte uses advanced 4:4:4:4 image processing and provides enhanced matte controls that lets customers accurately separate the subject from the background. Customers also get matte correction features, indirect and direct lighting features, spill suppression tools, edge artifact controls and more, all in realtime.
“Ultimatte’s realtime blue and green screen compositing solutions have been the standard for 40 years,” said Grant Petty, Blackmagic Design CEO. “Ultimatte has been used by virtually every major broadcast network in the world. We are thrilled to bring Ultimatte and Blackmagic Design together, and are excited about continuing to build innovative products for our customers!”

 

Media Tech Vendor M&A: Telestream Buys Vidcheck

Broadcast technology channel strategy, Broadcast Vendor M&A | Posted by Joe Zaller
Sep 05 2016

telestream-logo-transparant

Telestream announced that it has acquired Vidcheck, a provider of automated quality control (QC) solutions for broadcast and media technology applications.

Vidcheck_Logo

The deal, which was funded by cash from operations, has been completed. Terms were not disclosed.

Vidcheck founder Tom Dove will remain with the enlarged company.

The Vidcheck deal is Telestream’s sixth acquisition.  Similar to its recent purchases of cloud encoding company Panda, and captioning specialist CPC, Telestream CEO Dan Castles described the Vidcheck deal as a “tuck-in,” rather than a transformation. Although Telestream’s Vantage workflow orchestration platform currently includes an option called Analysis, the company believes that it can drive greater value for its customers by offering Vidcheck’s automated file-based QC software as part of its overall offering.

“Vidcheck’s team and product portfolio line up very well with our area of expertise,” said Castles. “It is not just some great technology and products that we are acquiring but also a gifted, talented and passionate team that will reinforce our resources here at Telestream. We look forward to leveraging our combined know-how to offer our worldwide customer base an even more complete and exciting product portfolio.”

Telestream says it will also continue to integrate and interoperate with multiple QC vendors, as it already does today.

 

© Devoncroft Partners 2009-2016. All Rights Reserved.

.

.

Cisco Service Provider Video Segment Grows 12% in Fiscal 2016

Analysis, broadcast industry trends, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 17 2016

Cisco announced its 2016 fiscal year results for the twelve months ending July 30, 2016.  In its financial reporting Cisco breaks out the results of its Service Provider Video (“SPV”) product segment. Cisco_logo

With Cisco’s divestiture of its CPE business to Technicolor, the SPV segment reporting offers greater visibility into Cisco’s products targeted to media customers.  Those product categories span Cable Access Products, Cloud-based video solutions, Content Security, Content Management and Distribution Products, Digital Headend, and Virtualized Video Processing Systems.

Many of these product categories were acquired in a series of M&A transactions in the media technology sector including 1 Mainstream (2015), NDS (2012), BNI Video (2011), Inlet (2011), Extend Media (2010), and Scientific Atlanta (2005).

When excluding revenues from the divested CPE business, the SPV segment had revenues of $1,920 million for the 2016 fiscal year, an increase of 12% over the 2015 fiscal year.  As a percentage of Cisco’s total product sales (not including services revenue), SPV represented 5.2% in FY2016 and 4.7% in FY2015.

The 2016 fiscal year results benefited from an especially strong second quarter driven by sales of video solutions and cable access products in China.

Fiscal Fourth Quarter 2016 Results:

For the fiscal fourth quarter, Cisco’s SPV segment had revenue of $444 million, a decline of 12% versus the fourth quarter of 2015.  SPV accounted for 4.6% of Cisco’s product revenue in the fourth quarter, a decline versus the contribution of 5.3% in the fourth quarter 2015.

Again, the above figures only include revenues for the continuing operations of the SPV segment.

 

Update on Cisco’s Broader Activities in Media Technology Sector

Not captured in the SPV segment are the sales of Cisco’s general-purpose technologies such as switchers and blade servers in the media sector.  Cisco has been an active contributor to the virtualization and IP transition efforts in the media technology industry.

Cisco’s CTO of Engineering and Chief Architect Dave Ward gave a presentation as part of the ImagineLIVE Power Sessions at the 2016 NAB Show.  During the presentation, Mr. Ward reviewed Cisco’s perspectives on the future of technology architecture in the media sector and Cisco’s role in that architecture.

 

cisco-slide-1

 

When referring to the above slide, Mr. Ward offered background on the high-level focus of Cisco in the media sector. “The target that we have for the industry and the target that we work on with Imagine is actually all at the top layer.  At the top layer creating a Media Platform-as-a-Service (PaaS) where a media workflow engineer – or any independent part of those workflows – those engineers can focus on doing their jobs and the stack and the network can take care of themselves” said Mr. Ward.

Later in the presentation Mr. Ward provided a more detailed review of the technology architecture supporting the Media PaaS target along with an overview of where Cisco’s technology would fit into that architecture.

 

cisco-slide-2

 

The blue line in the above slide represents the divide between where Cisco will focus and where Cisco will partner with other vendors – in this instance with Imagine.  As stated by Mr. Ward, “Imagine’s job is everything above that layer [blue bar] and what I’m trying to build is everything below that. A self- managing orchestrated reactive system that can allocate resources, can engineer admission control into an IP datacenter and across the WAN, and make it all as easy as possible.”

 

 

Related Content:

Press Release: Cisco Fiscal Year 2016 Results

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

ATEME Grows 21.5% in 1H 2016; Cites UHD Adoption

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 17 2016

Video compression specialist ATEME announced first half 2016 revenue of €14.98 million, an increase of 21.5% versus the first half of 2015. ATEME_Black-960x218

On a quarterly basis, Q1 2016 had revenue €7.4 million, a 12.2% increase over Q1 2015.  Revenues for the second quarter of 2016 were €7.5 million, a 32.3% year-over-year improvement.

Management cited the renewed confidence of media clients as a market driver along with an accelerating adoption of 4K / UHD.  Several examples of 4K / UHD were given including TF1 and M6 broadcasting eight soccer matches from the 2016 European Football Championship and the broadcasting of the semifinals rounds of the French Open Tennis tournament.

ATEME highlighted its first major orders for the Company’s next-generation compression solution, TITAN (launched in early 2016).   Those major orders were with DirecTV and an unnamed Tier1 cable operator in the US, along with Arcana (Malaysian satellite operator) and FPT Telecom (Vietnam).

Revenue by Geography:

  • Revenues for the EMEA region during the first half of 2016 were €8.1 million, a 19.8% increase over 1H 2015. As a percentage of total sales, EMEA was 54% of revenue during 1H 2016, which compares to 55% during 1H 2015.
  • The USA / Canada region contributed revenue of €4.1 million, a 47.4% rise over the year-earlier period. USA / Canada was 27.3% percent of total sales in the period versus 22.8% during 1H 2015.
  • Latin America was responsible for €1.47 million of revenue during the first half, a slight decline of -0.7% versus 1H 2015. For 1H 2016, Latin America accounted for 9.8% of total sales, compared to 12.0% during 1H 2015.
  • Asia Pacific accounted for €1.23 million of revenue, a decline of -1.1% versus the first half of 2015. The Asia Pacific region contributed 8.2% of total sales during 1H 2016, versus 10.0% during 1H 2015.

The strong growth in the EMEA and USA / Canada regions was attributed to investments made in prior periods including the opening of a new office in Denver.

The revenue results were announced in a press release.  The full operating results will publish in late September.  In the press release ATEME expressed an expectation of reducing operating loss during 1H 2016 from the €2.5 million loss recorded in the first half of 2015.

 

Business Outlook:

Commenting on the first half results, ATEME President Michel Artieres stated, “”The first half of 2016 marked an important stage in our commercial development in the United States where activity increased by almost 50%. The contracts secured during this period confirm the potential of our new TITAN software with major operators in both the US and Europe; sales of TITAN will further underpin growth over the second half in a market driven by the rise in video consumption around the world and the increasing penetration of Ultra High Definition (UHD). As such, we are confident in our ability to continue to improve our operating performance.”

 

 

Related Content:

Press Release: Ateme 1H 2016 Results

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

NeuLion Announces Aggressive Sales Expansion with Q2 Earnings Release

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 16 2016

NeuLion, technology product and service provider for digital distribution, announced second quarter of 2016 financial results.  NeuLion,_Inc_-729822400065GAAP revenue for Q2 2016 was $24.1 million, an increase of 6.2% versus Q2 2015, and a decrease of 8.4% compared to Q1 2016.

NeuLion’s acquisition of Saffron Digital was completed on June 3, 2016, so less than a month of Saffron’s sales were included in the quarter’s results.  Saffron was a $14.7 million (USD) annual revenue business in 2014.

Gross margins (exclusive of depreciation and amortization) were 83.0% for Q2 2016, an increase of 200 basis points versus the year-earlier period, and an increase of 100 basis points against the preceding quarter.  The margin improvement was attributed to lower costs with technology licenses in NeuLion’s consumer electronics products.

Operating loss for Q2 2016 was $0.3 million, which compares to an operating loss of $2.5 million during Q2 2015, and operating income of $3.4 in Q1 2016.

Net loss for the second quarter of 2016 was $0.8 million, which compares to a loss of $3.2 million in Q2 2015, and net income of $2.1 million during Q1 2016.

Selling, general and administrative (“SG&A”) expenses were $12.9 million for the quarter, an increase of 13.2% versus Q2 2015, and an increase of 8.4% when measured against the preceding quarter.  SG&A expense as a percentage of revenue were 54.0% for Q2 2016.  In the comparable periods, SG&A was 50.0% of sales in Q2 2015 and 45.0% in Q1 2016.

In NeuLion’s prepared remarks for the quarter, President and Chief Executive Officer Roy Reichbach highlighted the Company’s plans to invest in sales and marketing.  “Our technology is best in class and now is the time to match our sales and marketing prowess with our technology development skills” said Mr. Reichback.  The investment in sales resources calls for the hiring of 22 or more new sales personnel.  This will add to the headcount of 22 at the end of the second quarter.

Research and development (“R&D”) expense was $5.3 million for Q2 2016, a 29.3% decrease on a year-over-year basis, and an increase of 20.5% against the preceding quarter.  The year-over-year decline stems from synergies achieved in the integration of DivX.  R&D expense represented 22.0% of the quarter’s revenue, in comparison to 33.0% in Q2 2015 and 17.0% in Q1 2016.

Cash and cash equivalents ended the quarter at $46.1 million.  This compares to a cash balance of $61.5 million at the end of the prior quarter.  A major contributor to the decline was the $7.5 million of upfront cash consideration used in the Saffron acquisition.

NeuLion had 524 full time employees at the end of Q2 2016.  This is up from 498 total employees as of the end of the preceding quarter.

Revenue by Service and Product Offerings:

  • NeuLion Digital Platform revenue was $15.9 million for Q2 2016, an increase of 2.6% over Q2 2015 revenue, and a decrease of 13.1% compared to Q1 2016. Excluding revenues related to the NHL and Rogers – which have declined based on the MLBAM and NHL partnership – NeuLion grew its Digital Platform revenues 12% year-over-year.
  • DivX and MainConcept product lines contributed GAAP revenue of $8.2 million for Q2 2016, a 13.9% increase over Q2 2015, and an increase of 2.5% versus Q1 2016.

Revenue by Geography:

  • Revenues from North America were $14.9 million for the quarter, an increase of 0.9% on a year-over-year basis and a decrease of 18.7% on a sequential basis. North America accounted for 62.0% of total sales in the quarter, compared to 65.0% in Q2 2015 and 70.0% in Q1 2016.
  • Europe contributed revenue of $2.3 million in second quarter of 2016, representing a 13.0% increase versus Q2 2015 and a 19.2% increase against Q1 2016. For the quarter, Europe was 10.0% of sales.  During Q2 2015 Europe accounted for 9.0% of sales and in the preceding quarter Europe represented 7.0% of total sales.
  • Revenues in Asia were $6.9 million for the quarter, an increase of 17.6% versus Q2 2015, and an increase of 14.7% against Q1 2016. As a percentage of sales, Asia contributed 29.0% of revenue in the quarter.  This compares to a contribution of 26.0% in Q2 2015 and 23.0% in Q1 2016.

Management Discussion and Analysis:

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

EFL Digital, responsible for the digital business of the English Football League, selected NeuLion as its digital platform.  Sky Sports selected NeuLion as the technology provider for its live OTT event services.  Also in the quarter, NeuLion worked with the UFC to deliver a live OTT 4K pay-per-view event.

Responding to an analyst’s question, EVP Marketplace Strategy Chris Wagner added commentary on NeuLion’s work with the UFC, stating,

“…the momentum for 4K delivery, we’re seeing that. I mean UFC delivered over the top, a pay-per-view that earned in round numbers about $60, which gave the fan the ability to get HD or 4K.

So what we see from content rights holders and content owners is a move to start to organize their events, create some 4K content, definitely it’s going to be delivered over the top…The MVPDs like it because it’s broadband and it’s their most profitable product. Fans love it. The feedback that we got from people who bought the digital tickets for 4K and watched on their Sony was pretty significant. We know we had – the average engagement time was essentially the entire fight.

So the rights holders know that the quality matters to consumers. I think you’ll see a positioning around 4K content. If you really want that quality, you know perhaps it’s charged differently and more expensive than lower forms of quality. UFC has done that with HD for a while now with different price points. But we’re seeing all of our content rights holders and owners of sort of think through how they’re going to focus and deliver on 4K.”

 

Related Content: 

Press Release: NeuLion Q2 2016 Results

Transcript: NeuLion Q2 2016 Earnings Call (Seeking Alpha)

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Harman Professional Solutions Declines in FY2016. Growth Expected in FY2017

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 15 2016

Harman announced fiscal fourth quarter and full year fiscal 2016 results for the period ending June 30, 2016. harmanlogo

Harman’s Professional Solution division contains the operations of several established audio, lighting, and automation solution brands, including AKG, AMX, JBL, Martin, Soundcraft, and Studer.  These solutions are used in the broadcast sector along with several related verticals such as Installed Sound and Touring.

During Harman’s investor day, management provided a revenue split by vertical for fiscal 2015 in the Professional Solutions division.  Broadcast contributed less than 5% of the division’s revenue, with the Touring and Installed Sound markets responsible for approximately two-thirds of the division.

Fiscal Year 2016 Results:

The Professional Solution division had revenue of $1,014 for fiscal year 2016, a decrease of 3.3% versus fiscal year 2015. On a constant currency basis, revenue decreased 1.0% on a year-over-year basis.  For the full year, Professional Solutions contributed 15.0% of Harman’s total revenue, compared to 17.0% during 2015.

The decrease in sales for the Professional Solutions division was attributed to the combination of unfavorable currency impacts, Harman’s continued channel reorganization toward solution sales, and lower demand in both Brazil and certain European geographies.

Gross margins for the division were 38.1% for 2016, a decrease of 269 basis points compared to 2015.

Selling, General, and Administrative (“SG&A”) expense were $317 million for the Professional Solutions division, a decrease of 2.8% versus the year prior.

The Professional Solutions division had operating income of $70 million for the year, a decrease of 31.4% compared to 2015.  This equates to operating margin of 6.9% during 2016 and 9.7% in 2015.

EBITDA (Earnings before interest taxes depreciation and amortization) was $105 million for 2016, a decrease of 22.8% against 2015.  EBITDA margin was 10.3%, which compares to 13.0% during 2015.  Both EBITDA and Operating Income exclude restructuring, non-recurring, and acquisition-related costs of $22 million and $19 million recorded during 2016 and 2015, respectively.

Fourth Quarter of Fiscal Year 2016 Results:

Revenue in the fiscal fourth quarter of 2016 for the Professional Solution division was $286 million, an increase of 0.4% versus the fiscal fourth quarter of 2015, and an increase of 23.3% compared to FY Q3 2016. For FY Q4 2016, Professional Solutions contributed 15.0% of Harman’s total revenue, compared to 17.0% during FY Q4 2015, and 14.5% in FY Q3 2016.

During FY Q4 2016, gross margins for the division were 36.0%, a decrease of 360 basis points compared to FY Q4 2015, and an increase of 249 basis points against FY Q3 2016.

SG&A was $86 million for the Professional Solutions division, flat versus FY Q4 2015, and an increase of 14.7% versus the preceding quarter, FY Q3 2016.

Operating income for the division during the quarter was $17 million, a decrease of 37.0% compared to FY Q4 2015, and a substantial increase over the $3 million of operating income in FY Q3 2016.  Operating margin for FY Q4 2016 was 6.1%, compared to 9.4% in FY Q4 2015 and 1.1% in FY Q3 2016.

EBITDA was $26 million for FY Q4 2016, a decrease of 27.8% against FY Q4 2015, and an increase of 116.7% over the preceding quarter.  EBITDA margin was 9.1% for the quarter.  This represents a decrease of 370 basis points and an increase of 409 basis points versus FY Q4 2015 and FY Q3 2016, respectively.

Management Commentary on Professional Solutions Division:

In discussing the fiscal year results, Harman’s Chairman and CEO Dinesh Paliwal highlighted the new solution-based go-to-market strategy and cost reduction actions in its European operation – both enacted during the 2016 fiscal year.  Commenting on expectations for Fiscal 2017 for the Professional Solutions division, Mr. Paliwal stated, “we are focused on taking additional steps to improve cost structure in North America. We are already seeing encouraging signs of momentum in the Enterprise segment. Not only have we booked several significant awards in corporate, government and education markets, we will also launch a number of integrated solutions to support these focused verticals. We expect these actions will help restore Professional to historic levels of growth and profitability” (Sourced from Seeking Alpha transcript).

The below slide from Harman’s earnings presentation highlights some of the notable developments for the Professional Solutions division during the 2016 fiscal year.

harman-slide

In addition to the above, the Professional Solutions division announced a new President, Mohit Parasher, in May 2016.

 

Business Outlook:

Management’s guidance for the Professional Solutions division in FY2017 is revenue of $1,045 million and EBITDA of $140 million.  This expectation translates to year-over-year revenue growth of 3% and EBITDA margin improvement of 309 basis points.

Responding to a question about Professional Solutions on Harman’s conference call with analysts, Mr. Paliwal elaborated on expectations for the division as follows,

“We have built a robust portfolio of audio, video, lighting and automation. And we have expanded our customer segment to corporate, government and education beyond traditional recording studios and touring sound. This business has a four-pronged turnaround strategy, which I feel very comfortable with. The number one starts with leadership, sense of urgency. We have fixed that. Number two, we are addressing our channels, channels we are going some market direct, some we are going indirect. But we are training the channels to sell the solutions to enterprise and entertainment segment.

And the third is cost leadership. You know us in HARMAN, we are really paranoid about cost every year and automotive is a good training ground. So, we already took some very strong actions last year. We shut down two factories in Europe in high cost and we moved into a brand-new factory in Hungary and that we already set over 100 basis point of bottom-line improvement, which is already starting to happen. So, we will have that this year to improve.

And then of course we have whole slew of new integrated products being launched this year which absolutely are going to fit the segment strategy for corporate, government, education and entertainment and enterprise” (Sourced from SeekingAlpha transcript).

 

Related Content:

Press Release: Harman FYQ4 2016 Results

Presentation: Harman FYQ4 2016 Results

Earnings Transcript: Harman FYQ4 2016 Results (SeekingAlpha)

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Vitec Group Acquires two Businesses, Grows Broadcast 10% in 1H 2016

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 15 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 the first half of 2016.  Vitec Group Logo

Total revenue for 1H 2016 was £171.1 million, an increase of 9.7% versus 1H 2015, and an increase of 5.7% when compared to 2H 2015.  Operating profit was £12.6 million, a decrease of 8.7% versus 1H 2015, and a 41.7% decrease against 2H 2015.  On a constant currency basis, revenue increased 3.1% and operating profit increased 5.2% on a year-over-year basis.

Operating profit declined despite the revenue growth because of non-repeat, high-margin Haigh-Farr antennas contracts in the comparison period (1H 2015) and a greater mix of lower margin broadcast services business during the first six months of 2016.

Operating profit is reported before costs associated with the acquisition of business ($2.7 million during 1H 2016), restructuring (£2.8 million in 1H 2016), and also the £0.7 million gain on sale of The Vitec Group’s manufacturing facility in Bury St Edmunds.  Vitec indicated the restructuring activities initiated in 2015 resulted in savings of £2.5 million in the first six months of the year.

Vitec Acquisitions:

Vitec acquired two businesses in the first half of 2016.  In January Vitec purchased Provak Foto Film Video B.V., a Netherlands distributor partner for cash consideration of £0.9 million.  On April 12, 2016, Vitec’s Broadcast Division acquired Offhollywood Digital for upfront cash consideration of £1.6 million along with contingent compensation of up to $8.0 million (USD) if gross profit targets are met for the periods to December 2018.  Offhollywood Digital provides camera-back modules for RED cameras along with related services.

Vitec often structures its acquisitions with contingent consideration.  During the period Vitec made yet another payment in the amount of £2.8 million on the earn-out related to the 2013 acquisition of Teradek.

Vitec Broadcast Division:

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

Vitec reports the results of its Broadcast Division separate from its Photographic division. For the first half of 2016, the Broadcast Division represented 60.0% of The Vitec Group’s total sales.  In 1H 2015 and 2H 2015 the Broadcast Division accounted for 60.0% and 59.0%, respectively.

The below slide is taken from the Vitec Group earnings presentation and offers a summary on the key developments with the Broadcast Division in the first half of 2016.

Vitec-slide

The Broadcast Division had revenue of £102.3 million in 1H 2016, an increase of 10.0% versus 1H 2015 (an increase of 4.0% on constant currency basis), and an increase of 6.6% compared to the preceding period, 2H 2015.

In the Company’s release, management noted strength in the US market, which offset a more challenging environment in the EMEA region.

Positive currency benefits from a weaker British pound accounted for 60% of the Broadcast Division’s growth in 1H 2016.  Given the currency volatility stemming from the recent EU referendum in the UK, The Vitec Group expects to realize a net currency benefit in the second half of 2016.  Management indicated the hedges it maintains on the GBP to USD and GBP to EUR exchange rates will also delay part of the impact of a weaker GBP into the 2017 fiscal year.

Product sales for the Broadcast Division were £78.7 million for 1H 2016, an increase of 0.5% over 1H 2015, and a decrease of 4.0% over 2H 2015.  As a percentage of Broadcast Revenue, Products sales accounted for 76.9% of revenue in 1H 2016.  This compares to 84.6% in 1H 2015 and 85.4% during 2H 2015.

Within Product sales management highlighted the increased sales of wireless transmitters and receivers, camera monitors, and mobile power.  The US market was especially strong for broadcast battery products.  These results were offset by a decrease in large camera support sales.

Services sales from Vitec’s Bexel subsidiary were £23.6 million in 1H 2016, an increase of 66.2% versus 1H 2015, and an increase of 62.8% against 2H 2015.  Services represented 23.1% of Broadcast revenue during 1H 2016.  In 1H 2015 Services were 15.4% of sales and during 2H 2015 Services were 15.1% of Broadcast Revenue.

The strong growth in Services was due to a large contract with the NFL for project management and support to upgrade the communication infrastructure for all 31 NFL stadiums. The contract includes the pass-through of low margin products impacting the profitability of the Broadcast Division.

Operating profit for the Broadcast Division in 1H 2016 was £8.5 million, a decrease of 12.4% versus the 1H 2015 result (down 10.0% on constant currency basis), and a decrease of 34.6% against 2H 2015. In addition to the greater concentration with Services, operating profit was also negatively impacted by Vitec’s continued investment in the development of its wireless products and camera monitor business.

Operating margin for the Broadcast Division was 8.3% during the first half of 2016, a decrease of 220 basis points against 1H 2015, and a decrease of 600 basis points compared to 2H 2015.

 

Business Outlook:

Commenting on the first half results and outlook for the full year, Group Chief Executive Stephen Bird offered the following, “The Board’s expectations for the full year are unchanged. We anticipate that the Group’s performance in the second half of the year will benefit from the Rio 2016 Olympics, full year savings from the previously announced restructuring plans, and, potentially, from weaker Sterling.”

 

Related Content:

Press Release: Vitec Group 1H 2016 Results

Presentation: Vitec Group 1H 2016 Results

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

SES Announces 1H 2016 Results; MX1 a €240 million Annual Revenue Business

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 14 2016

Satellite service provider SES reported 1H 2016 results for its Video business of €665.7 million, an increase of 0.8% versus 1H 2015, and an increase of 4.1% when compared to the second half of 2015.  On a constant currency basis the Video business grew 0.3% on a year-over-year basis.    SESLogo

For the first half of 2016, the Video division contributed 70% of SES’s total revenue, an increase compared to the 66% contribution in 1H 2015, and the 67% contribution for the full year 2015.

SES’s acquisition of RR Media was not completed until July 6, 2016.   As such, no revenues from RR Media were included in SES Video’s first half results.  RR Media generated €63.2 million of revenue during the first half of 2016.

SES merged the former RR Media business with its SES Platform Services subsidiary.  The new subsidiary was rebranded MX1.

Update on MX1 Subsidiary

During SES’s investor day, Management disclosed the combined MX1 business is a €240 million annual revenue business with a backlog of €500 million (or two years of annual revenue).  The regional revenue breakdown is 70% Europe and 30% outside of Europe. Half of MX1’s revenue is generated by the resell of satellite capacity – with SES acting as the satellite service provider for 50% of this capacity.

For the full year 2016 the acquisition of the former RR Media business is expected to contribute €70 million of revenue to SES’s Video business (before eliminating intercompany revenue).

On the Company’s earnings call with analysts, SES’s CEO Karim Michael Sabbagh offered an anecdote on the SES’s initial synergies with RR Media by relaying a recent briefing by Avi Cohen, CEO of MX1 (and former CEO of RR Media) to the board of SES.  “…he [Avi] mentioned three key multimedia clients with whom they have served.  And he said had it not been for SES, we would not have signed them… this speaks for itself when you have the kind of capabilities that they have, that we have and the kind of market access that we have through our almost three decade long experience with these clients” said Mr. Sabbagh.

Update on Satellite Channel Developments

In its earnings presentation, SES reviewed data points on the channel growth over its satellite network during first half of 2016.

Total channels for SES’s Video business was 7,463 at the end of 1H 2016, representing an increase of 4.2% on a year-over-year basis, and sequential growth of 2.7% since the end of 2015.

HDTV channels distributed by SES grew 9.5% to 2,442 (32.7% of total channels).  60% of all channels are now broadcast in the MPEG-4 compression standard.  This compares to 54% in first half of 2015 and 60% at the end of 2015.

The channel count for Ultra HD (UHD) is now 16, versus eight at the end of 2015 and zero a year earlier.  Management highlighted the May 2016 announcement with Viasat to launch an Ultra HD sports channel.  The new channel will launch in Scandinavia in August 2016.

International markets outside of Europe and North America, including the faster growing markets of Latin America, Asia-Pacific, the Middle East and Africa, made up 38% of TV channels over SES satellites.  The channel count in this region grew by 1.7% during the first half of the year to a total of 2,850 channels.

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

SES-slide 

Related Content

Press Release: SES first half of 2016 Results

Presentation: SES first half of 2016 Results

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Brightcove Grows Over 24% in Media Vertical during Q2

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 12 2016

Brightcove, a provider of cloud services for video, reported revenue for the second quarter of 2016 of $37 million, a 13% increase over the second quarter of 2015, and a 1.9% increase over the preceding quarter, Q1 2016.  The revenue result was above management’s guidance of $35.8 million to $36.3 million issued during the first quarter of 2016.  brightcove

Commenting on the results, David Mendels, Chief Executive Officer at Brightcove stated, “Brightcove delivered strong second quarter results that met or exceeded our expectations from both a revenue and profitability perspective.  We are excited by the positive momentum we are seeing across our business, highlighted by the signing of multi-year, multi-million dollar contracts with two media customers, including our first 8 figure contract.”

During Brightcove’s subsequent call with earnings analyst, Mr. Mendels elaborated on the two media deals (noted above) landed during the quarter.  Both are large Japanese media companies (no additional details were provided).  One of the deals has a total committed value of more than $10 million over a 3.5 year period.

Brightcove provides services across several industry verticals including media.  Management disclosed its media business represented 51% of revenue for the quarter.  This compares to 46% during Q2 2015 and 51% Q1 2016.  These figures imply a year-over-year growth in the media vertical of 24.7% by Brightcove.

It is important to note Brightcove maintains a broad definition of media.  New or expanded customers in the media segment for the quarter included AMC and OTT service provider Pluto TV, as well as organizations such as Woven Digital and Yelp.

Gross margins for the quarter were 64%, a slight decline versus the 64.8% gross margins during Q2 2015, and a slight increase over the 63.4% gross margins from the preceding quarter.

Brightcove recorded a loss from operations of $2.2 million for the second quarter of 2016, compared to a loss of $3.2 million for Q2 2015, and a loss of $1.5 million in Q1 2016.

Net loss was $2.4 million for the quarter or $0.07 per diluted share. This compares to a net loss of $3.6 million or $0.11 per diluted share in Q2 2015 and a net loss of $1.6 million or $0.05 per diluted share in the preceding quarter, Q1 2016.

While Brightcove is not generating an accounting profit, it is generating cash.  Operating cash flow for the quarter was $2.0 million, an increase over the $385,000 generated during Q2 2015. In the preceding quarter, Q1 2016, operating cash flow was $2.9 million.

Revenue by Customer Type:

During the quarter, 95% of Brightcove’s revenue came from the Company’s premium offerings versus its volume offerings.  The volume offerings consist of Video Cloud express customers and Zencoder customers on month-to-month and pay-as-you-go contracts.

For the quarter the number of premium customers increased to 1,926 (as of June 30, 2016) from 1,910 at the end of the first quarter.  Average revenue per premium customer was $69,000 in the quarter, an increase of 8% when compared to last year’s quarter, and flat versus the first quarter of 2016.

Revenue by Service Type:

  • Subscription and support revenue contributed $35.1 million in the quarter, an increase of 10% versus the year-earlier period, and a 1.2% increase over the preceding quarter. On a percentage basis, Subscription and support revenue accounted for almost 95% of revenue in quarter.  This compares to 97.1%% of revenue for Q2 2015 and 95.5% for Q1 2016.
  • Professional services revenue was $1.9 million during the quarter, an increase of 101.9% over Q2 2015, and a 19% increase over Q1 2016. As a percentage of sales, Professional services contributed 5% of the total revenue for the quarter.  For Q2 2015, professional services accounted for 2.9% of sales and during Q1 2016 it was 4.5% of sales.

Revenue by Geography:

  • Revenues in North America were $22.6 million for the quarter, an increase of 7.4% against the year-over-year period, and a 1.9% decrease versus the preceding quarter. As a percentage of sales, North America was responsible for 61.2% of Brightcove’s revenue in the quarter, compared to 64.1% in Q2 2015 and 63.4% in Q1 2016.
  • The European region contributed $6.4 million, a decrease of 1.6% versus Q2 2015, and a 5.3% increase when compared to the preceding quarter. On a percentage basis, Europe accounted for 17.2% of total sales during Q2 2016, in comparison to 19.6% in Q2 2015, and 16.7% during Q1 2016.
  • Revenues in Asia Pacific (including Japan) were $7.7 million for the quarter, a 57.3% increase over Q2 2015, and a 12.2% increase against the preceding quarter. Asia-Pacific represented 20.8% of total sales in the quarter, compared to 14.9% during Q2 2015 and 18.4% in Q1 2016.

Operating Expenses by Type:

  • Research and development (“R&D”) expenses were $7.3 million in the quarter, flat versus Q2 2015, and a decrease of 1.3% against the preceding quarter. Expressed as a percentage of total sales, R&D costs were 19.6% of revenue in the quarter, which compares to 22.1% during Q2 2015 and 20.4% in Q1 2016
  • Sales and marketing (“S&M”) costs were $13.9 million for Q2 2016, a 17.4% year-over-year increase and an 11.2% sequential increase. S&M was 37.8% of total sales during the quarter.  In the year-earlier period S&M was 36.3% of sales, and for the preceding quarter S&M represented 34.5% of total sales
  • General and administrative (“G&A”) expenses were $4.5 million during the quarter, a decrease of 13.9% from the year-earlier period and flat against the preceding quarter. In terms of overall revenue, G&A was 12.1% of sales in Q2 2015.  This compares to 15.8% in Q2 2015 and 12.6% in Q1 2016

As of the end of the quarter on June 30, 2016 Brightcove’s cash, cash equivalents, and investments was $30.2 million.  It was $29.3 million at March 31, 2016.

The Company finished the quarter with 450 employees.  At this same time last year, Brightcove had 420 employees.

Financial Guidance:

Management is providing revenue guidance for the upcoming third quarter of 2016 in the range of $37.0 million to $37.5 million.

Also as part of the earnings release, Management raised 2016 revenue guidance.  For the full year, revenue is now anticipated in the range of $148.3 million to 149.3 million.  If achieved, this revenue ranges would represent annual year-over-year growth of 10% to 11%.

 

Related Content:

Press Release: Brightcove Q2 2016 Earnings Release

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

%d bloggers like this: