Posts Tagged ‘online video 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.

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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

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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.

 

 

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.

 

 

AWS Continues Strong Growth and Margin Expansion in Q2

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

Amazon reported results for the second quarter of 2016.  Since the first quarter of 2015, Amazon has been reporting the individual results of Amazon Web Services (AWS).  AWS had revenue of $2.88 billion in the quarter, a 58% increase over the year-earlier quarter, and an increase of 12.4% against the preceding quarter, Q1 2016.  For the trailing twelve months ending in the second quarter AWS generated $9.9 billion in revenue.  Amazon_AWS_Logo

AWS represented 9.5% of Amazon’s total sales for the quarter, an increase from the 7.8% contribution for Q1 2015, and an increase from the 8% contribution in Q1 2016.

While AWS represented 9.5% of sales from Amazon in the quarter, it contributed 56% of Amazon’s total operating income.  Operating income for the quarter was $718 million, a 135% year-over-year increase, and an 18.8% increase over the first quarter.

Operating margins for AWS in the quarter were 24.8%, a substantial increase over the 16.7% operating margins during Q2 2015, and an increase over the 23.5% margins in Q1 2016. The reporting of operating income includes a burden for stock-based compensation.  The margin expansion is reflecting efficiencies from AWS ever-growing infrastructure.

The reported revenue for AWS consists of the more than 70 services now offered from the AWS platform across including the sales of compute, storage, and database.  Amazon does not specifically address how much AWS revenue was attributable to the media industry.  However, the AWS figures are a great data point for better understanding the broader adoption of cloud services.

Speaking at the 2016 NAB Show Cloud Innovation Conference, Bhavik Vyas Global Alliance & Segment Leader in Media & Entertainment for AWS, offered several examples of media companies using AWS infrastructure for media operations.  The below slide is from Mr. Vyas’s presentation.

Bhavik-slide

 

The below chart from Amazon’s Q2 2016 earnings presentation illustrates the growth of revenue and operating income for AWS over the past year.

AWS-slide

Management attributed the growth in AWS revenue and profitability to increased customer usage and cost structure productivity.  This was partially offset by continued pricing decreases and increased spending on technology infrastructure.

Operating margins don’t capture the cash flow impact of capital expenditures and payments attributable to the financing of equipment for AWS, which is not disclosed directly.  It is a very capital intensive business.

Additional information from Amazon’s filings are illustrative of the significant level of investment in technology infrastructure attributed to AWS.  The Company’s total capital expenditures (cash) were $1.7 billion during the quarter, an increase of 42% versus both year-earlier period and the preceding quarter.  According to Amazon’s SEC filings, “This primarily reflects additional investments in support of continued business growth due to investments in technology infrastructure (the majority of which is to support AWS) and additional capacity to support our fulfillment operations.”

Cash capital expenditures do not account for property and equipment acquired under capital lease obligation (non-balance sheet items).  Property and equipment acquired under capital leases were $1.4 billion in Q2 2016, flat versus Q2 2015, and an increase of 60% against Q1 2016. Amazon attributes this spend to “investments in support of continued business growth primarily due to investments in technology infrastructure for AWS.”

On Amazon’s call with earnings analyst, Brian Olsavsky, SVP and Chief Financial Officer, responded to a question on the market rates of cloud adoption as follows, “We think still very early. Again, we like our position, our industry leading position in the cloud space, and we’re working on things that would incent more and more customers to accelerate their cloud conversion. The lower prices and services that we offer, and as I said, we’ll work on things that will make it easier and easier for customers to work with us with their hybrid data centers or transfer their volume to us.”

 

Related Content:

Press Release: Amazon Q2 2016 Earnings

Presentation: Amazon Q2 2016 Earnings

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

 

Harmonic Exceeds Revenue Guidance for Q2. Anticipates Double-Digit Operating Margins by Q4

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 10 2016

Harmonic announced revenue for second quarter of 2016 of $109.5 million, an increase of 6% versus Q2 2015 and an increase of 33% versus the preceding quarter Q1 2016.  Guidance for Q2 2016 had been for revenue in the range of $102 million – $107 million.  Meaning, the quarter’s revenue result exceeded the high-end of previous guidance. Harmonic_Logo

The quarter’s growth was primarily the result of revenue contribution from the Thomson Video Networks (“TVN”) acquisition, which closed in late February.  TVN contributed approximately $18 million in revenue for the quarter.  Management is expecting TVN to contribute $55 million to $60 million for the full year.

Included below is a slide from Harmonic’s earning presentation, which highlights several updates with the Company’s Video Business.  Of particular note, Harmonic’s VOS platform – for software bundles, COTS servers, and pure virtual machines – exceeded 75% of video encoding sales during the quarter.

harmonic-slide

GAAP gross margins were 46.9% for the second quarter, a 599 basis point decline versus the 52.8% recorded in Q2 2015 and a 288 basis point decline when compared to the 49.7% gross margins in Q1 2016.  Harmonic attributed the gross margin declines to a less favorable product mix and delays in recognizing software and services revenue.

For the quarter, Harmonic recorded a GAAP net loss of $20.4 million or $(0.27) per diluted share.  This compares to a net loss of $0.3 million or ($0.01) per share in Q2 2015 and a net loss of $25.2 million or ($0.33) per share in Q1 2016. This brings Harmonic’s GAAP net loss for the first six months of 2016 to $45.6 million.

The GAAP figures include several non-cash items or one-item items such as restructuring charges, amortization of intangibles, stock-based compensation, and inventory write-downs.  On a non-GAAP basis Harmonic’s net loss for the first six months of 2016 was $8.4 million.  One of the larger one-time items are charges related to the restructuring and integration of TVN.  Management is anticipating these costs in the in the range of $22 million to $24 million for 2016.

In its conference call with analyst, Harmonic confirmed it remains on track to realize $20 – $22 million of annual synergy savings from the integration of TVN.  The full impact of these savings will begin with the start of 2017.  Management believes the savings, combined with higher revenue levels will result in the Company achieving double-digit non-GAAP operating profit in Q4 2016.

“…as a percent of revenue our OpEx in Q3 and Q4 will be lower and particular in Q4 we’ll be at probably I think the lowest point that Harmonic has had for OpEx as a percent of revenue in a number of years and I think the most important point is with the operating expense run rate that we expect to have we will be in a position to generate double-digit operating profit in 2017 without a significant increase in revenue” said Harmonic’s CEO Patrick Harshman on the Company’s earnings call with management.

Bookings for the second quarter of 2016 were $117.3 million, an increase of 18.1% versus the year earlier period, and a 7.0% increase versus the preceding quarter.

The Company’s total backlog and deferred revenue was $190 million, up 57.7% and 5.8%over Q2 2015 and Q1 2016, respectively.  This is the highest level of backlog and deferred revenue in Harmonic history.

On a geographic basis:

  • Revenue from the Americas region contributed $57.7 million for the quarter, a decrease of 4.4% versus the prior year and a sequential increase of 17.8% against the preceding quarter. Americas accounted for 53% of Harmonic’s revenue for Q2 2016, a decline versus the 58% from Q2 2015, and also a decline when compared to the 59% contribution recorded in Q1 2016
  • Revenue from the EMEA region was $33.4 million for Q2 2016, an increase of 22.3% versus Q2 2015, and a substantial increase of 68.5% against the preceding quarter. The EMEA region was responsible for 31% of Harmonic’s revenue in the quarter, an increase versus the 27% contribution from Q2 2015, and a further increase from the 25% contribution in Q1 2016.  The strong performance in EMEA is likely attributable to the TVN acquisition.  At the time of the acquisition 50% of TVN’s revenue came from the EMEA region.
  • APAC revenue was $17.6 million during the quarter, a 14.4% increase against Q2 2015, and a 35.6% increase against Q1 2016. APAC represented 16% of Harmonic’s revenue for the quarter, a slight increase versus the 15% contribution in Q2 2015, and equivalent to the contribution in Q1 2016

On a product line basis:

  • Video products revenue for the quarter was $62.2 million, an increase of 10.8% compared to Q2 2015, and a significant increase of 6% versus Q1 2016. As a percent of total sales, video products represented 57% of revenue in Q2 2016.  This compares to 54% in year-earlier period Q2 2015 and 54% in the preceding quarter Q1 2016.  TVN contributed $18 million to Video products revenue in the quarter.  Management is expected continued sequential growth from Video products in Q3 and Q4.
  • Cable Edge revenue was $15.8 million during the quarter, a decrease of 26.2% versus Q2 2015, though an increase of 17.3% compared to the preceding quarter. Cable Edge represented 14% of revenue in Q2 2016, a decrease versus the 21% contribution in Q2 2015, and a decrease against the 16% of revenue recorded in Q1 2016.  A continued near-term decline of Harmonic’s legacy EdgeQAM technology is anticipated.  Harmonic remains on schedule to ship its CableOS product line in the fourth quarter of this year.
  • Services and support revenue amounted to $30.9 million in Q2 2016, an increase of 20.2% against Q2 2015, and an increase of 27.5% versus Q1 2016. Service and support revenue was 29% of revenue for Q2 2016, an increase over the 25% from Q2 2015, and a decrease against the 30% from Q1 2016

On a segment basis:

  • Broadcast and Media sales were $43.8 million during the quarter, a year-over-year increase of 12.2%, and a substantial rise of 43.4% against the preceding quarter. Broadcast and Media was responsible for 40% of revenue for the second quarter of 2016, a slight percent increase from the 38% in both Q2 2015 and Q1 2016.
  • Service Provider sales were $64.9 million in the second quarter, a 1.4% year-over-year increase, and an increase of 26.6% versus Q1 2016. Service Provider represented 60% of revenue in the quarter, a slight decrease from 62% contribution in Q2 2015, and a decrease from the 62% contribution during Q1 2016.

Operating Expenses:

  • Research and development (“R&D”) expense was $26.5 million for the quarter, an increase of 21.5% compared to Q2 2015, and an increase of 12.5% against Q1 2016. Expressed as a percentage of total revenue, R&D expense represented 24.3% of sales in the quarter.  This is up from 21.2% in Q2 2015, though down from the 28.8% in Q1 2016.
  • SG&A expense was $36.5 million for the quarter, an increase of 16.7% versus Q2 2015, and a rise of 11.1% compared to Q1 2016. As a percentage of total sales, SG&A was 33.5% of revenue in the quarter.  This compares to 30.3% in Q2 2015 and 40.2% in Q1 2016.

The increases in both operating expense categories was driven by the integration of TVN operations.

The Company’s cash position ended the second quarter of 2016 at $65.3 million, down from $76.2 million from the end of Q1 2016.  The decrease in cash was primarily due to an increase in accounts receivable.

Harmonic ended the second quarter with 1,403 employees, up from 1,019 at the end of Q1 2016.  The TVN acquisition added approximately 438 employees.

Business outlook:

For Q3 2016 management is anticipating total revenue in the range of $104.5M – $109.5M and GAAP gross margins of 50.0% – 51.0%.  Operating loss is expected between $12.5 million and $10.5 million with net loss of between $12.5 million to $10.5 million.

Video revenue is expected to contribute between $92.5 million and $95.5 million in the upcoming quarter with Cable Edge accounting for revenue of $12.0 million to $14.0 million.

Also, as part of the earning release, Management increased full year guidance to a GAAP revenue expectation of $408 million to $418 million for 2016.  Video revenue is now anticipated between $348 million to $353 million and Cable Edge revenue is expected between $60.0 million and $65.0 million.

Commenting on quarter’s results, Mr. Harshman stated, “So putting it all together here, our strong order book, positive market demand trends, and strong internal execution enable us to remain confident in delivering the double digit operating profit we targeted in Q4 as we exit the year.”

 

 

Related Content:

Press Release: Harmonic Q2 2016 Earnings Announcement

Press Release: Harmonic Q2 2016 Earnings Presentation

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Disney Acquires Equity Stake in BAMTech

Analysis, Broadcast Vendor M&A | Posted by Josh Stinehour
Aug 09 2016

Disney announced a $1 billion acquisition of a minority stake in BAMTech, the entity holding Major League Baseball’s streaming technology and content delivery business.  The spin-out of BAMTech from MLB Advanced Media (“MLBAM”) was announced in late 2015.  The Disney investment in BAMTech had been rumored for several months.

In its quarterly SEC filing, Disney disclosed it acquired an initial 15% equity position in BAMTech for $450 million.  Disney has committed to purchasing an additional 18% equity interest in BAMTech for $557 million in January 2017.  Those two investments value BAMTech at $3.05 billion.

Disney declined to provide any specifics on BAMTech’s operating profile, though did note there is “some very slight dilution from the acquisition.”  However, Disney’s management felt this was more than offset by the trajectory of BAM Tech’s business and the opportunities to combine with Disney’s content properties, most notably ESPN.

Based on the previous public statements by MLBAM’s CEO Bob Bowman, the  $3.05 billion valuation level implies a revenue multiple of 12.2x expected 2016 revenue for BAMTech (please note several estimates involved in that calculation).

As part of the investment, Disney also gains the right to acquire majority ownership “in the coming years.”  The NHL currently holds a 7% – 10% equity position in BAMTech based on the August 2015 partnership deal between the companies.

The announcement coincided with Disney’s fiscal third quarter results.  During Disney’s call with analysts, CEO and Chairman Bob Iger, added context on Disney’s diligence of BAMTech.

“I love the business model because I love the quality of what they’ve created, largely from a technology perspective.  You’re look at an industry-leading platform.  And we did a fair amount of due diligence on this, speaking with people who have been clients of their service.  And also, we did our own due diligence in the sense that we’ve been clients of competing services.  And we concluded that what they’ve got is really robust” said Mr. Iger.

Since Disney is already a customer of BAM Tech, one immediate question is why Disney thought it was necessary to buy BAM Tech as opposed to renting its services as a customer.  During an interview with CNBC, Bob Iger responded to the customer vs. owner question from CNBC host Julia Boorstin.

“First of all, we think it is a good investment. We love their business model.  We think that in today’s world having the ability to stream on a scale basis live sports and live programming is a competitive advantage and something that is necessary.  We love the user interface.  So, overall we look at is as an investment.  But as a partner, as a part owner, and ultimately as a majority owner, we feel it gives us an ability to jump start not only ESPN, but are other business as well, into a space that we think is not only very exciting but extremely important in a very dynamic media marketplace.  So much better to own than to rent” responded Mr. Iger.

 

Related Content:

Press Release: Disney Acquisition of Minority Stake in BAMTech

 

 

© Devoncroft Partners 2009-2016.  All Rights Reserved.

 

 

Quantum Announces 20th Consecutive Quarter of Scale-out Storage Growth; Cites Large Virtual Reality Deal

Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Jul 28 2016

Quantum announced results for its first fiscal quarter of 2017, representing the three month period ending June 30, 2016.  QuantumTotal revenue for the quarter was $116.3 million, an increase of 4.9%
versus the year earlier period (FY Q1 2016), and a 3.1% decrease versus the preceding quarter (FY Q4 2016).  The first fiscal quarter of the year is generally Quantum’s weakest.

The quarter’s revenue of $116.3 million exceeded the high end of management’s guidance of $115 million (issued during the previous quarter).  The Company’s gross margins were in-line with guidance for the quarter, and its earnings result were slightly above earlier guidance.

Gross margins (GAAP) were 43.3% for the quarter, a slight improvement over the 42.4% gross margins from the year earlier period, and a slight decline compared to the 45.6% gross margins in the preceding quarter.

Net loss (GAAP) for the quarter was $3.8 million, equating to $0.01 loss per diluted share.  Quantum recorded a net loss of $10.7 million (or a loss of $0.04 per diluted share) during the year-earlier period and a net loss of $52.4 million in the preceding quarter.  The preceding quarter, fiscal fourth quarter of 2016, included a non-cash goodwill impairment charge of $55.6 million.

As of June 30, 2016 cash and cash equivalents were $34.5 million, a slight increase over the $33.8 million balance as of March 31, 2016.

Most relevant to Quantum’s activities in the media and entertainment segment, the Company’s scale-out storage business, which includes Quantum’s StorNext storage offerings, registered its 20th consecutive quarter of year-over-year growth.  Scale-out storage revenue was $30.8 million in the quarter, an 11% increase versus last year’s first quarter.

Management disclosed a win rate for scale-out storage in the quarter in the 70% range.  Over 120 new scale-out storage customers were added during the quarter, which compares favorably to the more than 90 new customers added in the first quarter of fiscal 2016.  During the call with equity analysts, management also highlighted several recent scale-out storage projects in the media and entertainment sector including a $200,000 plus deal “with one of the emerging leaders in virtual reality.”

The earnings release noted Quantum’s NAB Show announcement of integration between Avid’s Interplay MAM system and Quantum’s StorNext.  The integration enables media customers to control StorNext archive and restore functions through Interplay.  Commenting on the Avid Integration at the NAB Show, Geoff Stedman, SVP of Marketing at Quantum, said, “Through initiatives ranging from solution development to closer alignment of sales and support activities, Quantum is working closely with Avid to help Avid customers better manage their content over the long term. Together our technologies empower users to optimize their media storage and access to content on a broad range of archive platforms, providing significant time and cost savings that make it easier to achieve their creative and business goals.”

 

Update on Convertible Notes due November 2017

Quantum’s CFO Fuad Ahmad provided an update on Quantum’s efforts to address its convertible note balance, in the amount of $69.3 million, due in November 2017.  On the earnings call with analysts, Mr. Ahman said, “we want to be proactive, but sensible about our financing options. To that end, we’re in discussions with a number of financial institutions regarding expanding our credit lines to provide sufficient near and long-term liquidity and to create a clear and executable roadmap to address the convertible notes, which I may add will mature in another 15 months.”

Quantum had repurchased approximately $83 million dollars of prior convertible notes during November 2015.

 

Guidance for Fiscal Second Quarter, Full Year 2017

Quantum’s management issued guidance for the second fiscal quarter of revenue between $188 million to $122 million with GAAP gross margins of between 41% and 42% and a GAAP loss per share of $0.01 to $0.00.

Management also reaffirmed the full year guidance of at least $500 million in total revenue, equating to year-over-year growth of at least 5%.  Driving this growth is an expectation of a continued increase in scale-out storage revenue across Quantum’s vertical focus areas – Media and entertainment, surveillance and intelligence, and unstructured data archives for technical workflows.

Scale-out storage is expected to account for 35% to 40% of Quantum’s total revenue, which would represent a year-over-year growth of 40% to 60%, if achieved.

Quantum’s CEO Jon Gacek offered the following commentary on the outlook for scale-out storage, “Looking more closely at scale-out storage, Q1 was our 20thth consecutive year-over-year growth quarter, and given our increasing market traction and opportunity, we feel very good about our ability to achieve our scale-out growth objectives for the year.”

 

Related Content:

Press Release: Fiscal first quarter 2017 earnings release

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Akamai Media Division Declines in Q2, Despite Strong Growth in OTT Business

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Jul 27 2016

Content Delivery Network (CDN) service provider Akamai announced Q2 2016 financial results.  Akamai does more than $2 billion in annual revenue with operations across multiple industry verticals and several technology segments.  In its financial disclosures Akamai breaks out its revenue for Media Delivery Solutions (product category reporting) and for its Media Division (customer type reporting).  Akamai-Logo

Media Delivery Solutions encompasses a broader use case than traditional media operations.  Revenues associated with gaming, social media, software downloads, and other activities are reported in the Media Delivery Solutions category along with revenues related to the streaming of movies, television shows, and live events.   In a similar way, the Media Division includes revenues separate from the streaming of movies and television, such as technology solutions for security or website acceleration.

To address investor concerns on exposure to “do-it-yourself” initiatives from large customers, Akamai has started disclosing the revenue contribution of six large internet platform customers – Amazon, Apple, Facebook, Google, Microsoft, and Netflix.  In aggregate these six customers represented less than 11% of Akamai’s total revenue in Q2 2016, down from 18% in Q2 2015.  During the quarter’s earnings call, Akamai’s CFO’s Jim Benson indicated the six customers are predominantly classified as media customers.  Because of this, the revenue declines associated with “do-it-yourself” initiatives from these six internet platform customers has negatively impacted Akamai’s results in both Media reporting segments.

Media Delivery Solutions Category

Akamai’s Media Delivery Solutions category generated $197 million in revenue, a 9% year-over-year decline against Q2 2015 and a decline of 4% against the previous quarter, Q1 2016.  On a constant currency basis, the Media Delivery Solutions category was down 10% when compared to last year’s second quarter.

Management attributed the revenue declines to lower traffic from one of its largest customers.  Outside of Akamai’s business with the six large internet platforms, Media Delivery Solutions revenue grew 11% in the quarter versus the year prior.

As a percentage of Akamai’s total revenue, Media Delivery Solutions represented 34% during the quarter.  This compares to 45% of total revenue in Q2 2015.

Media Division

The Media Division had $288 million of revenue in the quarter, a decrease of 2% versus Q2 2015 and a decline of 1.2% against the preceding quarter.  Again, the decline was attributable to lower revenue from the six large internet platform customers.  Excluding activity from these six customers, Akamai’s Media Division grew 14% year-over-year.

During the quarter, the Media Division accounted for 50.4% of Akamai’s total revenue.  For the year-earlier quarter, the Media Division contributed 54.5% of Akamai’s sales.

In his prepared remarks on the Company’s earnings call, Akamai’s CEO Dr. Tom Leighton highlighted the strength of Akamai’s OTT business within the media division.  “…our OTT business has continued to grow at a rapid rate, following the record breaking results of the Super Bowl and March Madness in Q1, Akamai delivered a very successful EURO 2016. In addition to providing very high video quality in countries throughout Europe and North America, we set a new record for internet traffic for a single sporting event, during the final round match between Portugal and France” said Dr. Leighton.

 

Commentary on Media Vertical Results

The negative growth rates for its Media Delivery Solutions and Media Division were anticipated by Akamai’s management team.  Akamai experienced a moderating of growth in its Media Division segment during 2015 because of “do-it-yourself” initiatives, in particular at two of Akamai’s largest media customers (included in the six large internet platforms).  These two large customers accounted for 5% of Akamai’s total revenue in Q2 2016, down from 12% of the Company’s revenue in Q2 2015.  This continues a broader trend of Akamai’s Media Division (customer category) experiencing a declining growth rate in each of the last 10 quarters.

In responding to a question from Ganjit Sing of Morgan Stanley on growth rates related to over-the-top video (OTT) distribution, Mr. Benson offered commentary on OTT’s relative revenue contribution to Akamai’s Media Division.

“…it’s not a huge contributor to revenue in the near term. It just isn’t. What we’re seeing is steady growth in that customer base in the traffic. Steady growth in revenue. You have not seen a step function move to viewing content via those platforms. They are growing steadily. They’re growing nicely, but there has not been a catalyst yet to see a huge movement of people cutting the cord and moving online. So I think they will be a steady grower, but today the larger contributors to revenue and the media business are still software download customers, gaming, and social media.”

Later in the call, Dr. Leighton added further context on the video business when responding to a question about the nature of tasks insourced by large media customers.  Dr. Leighton stated, “…The insourcing of traffic is mostly around files where quality matters less and it’s easier to do…On the other side of the house, as we talked about, our OTT business is growing very well, much faster than the media business as a whole. And that’s because it’s more difficult to do with a high quality level, especially live and linear. And people are often paying to watch it, and so you really want to have a good experience there”

 

Successful Litigation Resolution

Separate to the earnings announcement, Akamai benefited from a final judgement in a long-standing legal case.  The day after the second quarter ended, July 1, 2016, Akamai received a $51 million judgement in its favor regarding a decade old patent dispute with Limelight.  The U.S. District Court in Massachusetts entered the final judgement after a series of appeals stemming from original damages awarded to Akamai in a 2008 jury ruling against Limelight.  The appeals process even reached the U.S. Supreme court in 2014.

 

 

Related Content:

Press Release: Q2 2016 Earnings Results

Press Release: $50 million dollar judgement in Akamai’s favor

 

 

© Devoncroft Partners 2009 – 2016. All Rights Reserved.

 

 

Net Insight Announces Record Second Quarter for 2016

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

Video transport technology provider Net Insight reported its Q2 2016 financial results.  Revenue was SEK 132.3 million, an increase of 42% over Q2 2015 and up 20% versus Q1 2016. logo-net-insight

A positive currency impact contributed 5.5% of the gain for the quarter and the acquisition of ScheduleALL contributed an additional 43.8% of the quarterly revenue increase.  Organic year-over-year growth for the quarter was still strong at 21.3%.

Management attributed the strong organic performance to deliveries relating to the Euro 2016 Football Championship in France and the upcoming Olympics in Brazil.  “We have had a great start to the year and I’m proud to present the strongest quarter ever for Net Insight” stated CEO Fredrik Tumegård at the outset of the Company’s earnings call.

Net income for the quarter was SEK 5.7 million or (0.01 earnings per share), an increase of 55.8% over Q2 2015, though a decrease of 71% against the preceding quarter, Q1 2016.

Gross margins for Q2 2016 were 62.8%, an increase above the 60.6% from the previous year’s quarter, and an improvement over the 61.7% gross margins from Q1 2016.

Operating income for the quarter was SEK 12.0 million, a 144.8% increase over the same 2015 period, and a 53.8% increase over the preceding quarter.  Operating margins were 9.0% for Q2 2016, which compares favorably to the 5.3% from Q2 2015 and the 7.1% operating margin from Q1 2016.

Since Net Insight capitalizes a portion of its development expenses, not all of the development expenditures in a given quarter are recognized in operating income.  This is offset by the amortization of previously capitalized development expenditures.  The difference in current development expense capitalization and historical development expense amortization for the quarter was SEK 4.4 million.

Net Insight had operating expenses of SEK 71.1 million in the quarter, an increase of 38% compared to Q2 2015, and an increase of 18.5% versus Q1 2016.

Sales and marketing expense was 36.4 million, an increase of 11.6% versus Q2 2015.  Expressed as a percentage of revenue, sales and market expense was 27.5% in the quarter versus 34.9% during Q2 2015.  The decline in sales and marketing as a percentage of revenue is consistent with the expected sales synergies from last year’s acquisition of ScheduALL.

Administrative expenses increased by 88.6% from 7.9 million SEK in Q2 2015 to SEK 14.9 million during the current quarter.  Administrative expenses represented 11.2% of revenue in the quarter, compared to 8.5% in the year earlier period.

Total Development expense (including the capitalized portion) for the quarter was SEK 38.4 million, a rise of 72.1% when compared to Q2 2015.  For the quarter total Development expense was 29% of revenue versus 23.9% in Q2 2015.   The increase in Development expense was caused by the integration of ScheduALL and further investments in Net Insight’s Live OTT Solution, Sye (released at the 2016 NAB Show).

Cash flow from operating activities for the quarter was SEK 7.7 million, a decrease of 48% against the year-earlier period, and a decline of 81.4% compared to the preceding quarter.  Net Insight’s CFO Thomas Bergstrom attributed the decline in part to a sharp increase in account receivables of SEK 28.5 million, which was caused by sales recognized late in the quarter.  Expressed in terms of trailing twelve month revenue, the accounts receivable balance on June 30, 2016 equates to 103 days of sales outstanding.  This compares to a figure of 81 days sales outstanding as of December 31, 2015.

Revenue by Geography

  • For the quarter, Net Insight generated sales from Western Europe of SEK 60.85 million, an increase of 4.1% versus previous year’s quarter. Western Europe was the largest contributor to total revenue, accounting for 45.7% of sales during the quarter.  In Q2 2015, Western Europe represented 62.3% of overall sales.
  • The Americas contributed SEK 38.7 million or 29.2% of Net Insight’s revenue in the quarter (versus 24.2% in the Q2 2015). Compared to Q2 2015, revenues from the Americas increased by 71.2%.  The increase is primarily attributable to the acquisition of ScheduALL, but also deliveries associated with the 2016 Olympics in Brazil
  • Rest of World sales were SEK 33.2 million, an increase of 165.6% versus the year earlier period. As a percentage of total sales, Rest of World contributed 25.4% in the quarter versus 13.4% during Q2 2015. The Company cited strong activity in both the Middle East and South Africa in its earnings release.

Revenue by Type

  • Sales attributed to Net Insight’s hardware products were SEK 66.3 million in the quarter, an increase of 32.8%. As a percentage of total sales, hardware products were 50.1% of the quarter’s sales versus 53.5% during Q2 2015.
  • Software licenses accounted for SEK 28.7 million of revenue in the quarter, an increase of 26.9% over the year earlier period. Software contributed 21.6% of overall revenue during the quarter versus 24.2% in Q2 2015.
  • Support and services sales were SEK 35.7 million during the quarter, an increase of 66.8% versus the year earlier quarter. Support and services were 26.9% of overall revenue in the quarter, an increase from the 22.9% contribution in Q2 2015.

Revenue by Vertical

  • Sales in the Broadcast & Media (BMN) business vertical were SEK 123.0 million, a 60.9% increase over the prior year’s quarter. BMN was responsible for 93% of Net Insight’s revenue in the quarter, more on a percentage basis versus the 82% in Q2 2015.
  • Sales in the Digital Terrestrial TV (DTT) vertical were SEK 9.26 million, a decrease of 37.8% over Q2 2015. On a percentage basis, DTT represented 7% of overall revenue in Q2 2016, compared to 16% in Q1 2015.
  • The CATV/IPTV vertical was0% of total sales in Q2 2016. It was 2% of total sales during Q2 2016.

Net Insight ended the second quarter with 202 employees, a substantial increase over the 138 employees from a year earlier, and a slight decline from the 204 employees at the end of the first quarter.  The acquisition of ScheduALL is the primary cause for the year-over-year increase in headcount.

Cash and cash equivalents was SEK 195.0 million at the end of the quarter, down from the SEK 170 million balance as of March 31, 2016.

 

Management Commentary on Live OTT Solution Offering

During Net Insight’s earnings conference call, CEO Fredrik Tumegård talked extensively on the capabilities and potential of Sye.  Net Insight is still working to secure its first commercial deployment of Sye and management was measured in setting expectations for the market adoption of the product.  “The commercial tests currently underway in Live OTT are proceeding according to plan, as we’ve previously communicated, although it will be some time before revenues hit the bottom line. This is due to a naturally long sales cycle in combination with a renewed business model, where the revenue is first made visible when the viewers are using the new services. It’s important to point out that our technology is innovative and that it always takes time for new technology to gain foothold on the market” said Mr. Tumegård.

The below slide illustrates commercial progress with Sye.  It is sourced from Net Insight’s Q2 2016 earnings presentation.

NetInsight-Slide

 

Related Content:

Press Release: on Q2 2016 Results

Net Insight CEO Statements on Q2 2016 Results

 

 

© 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.

 

 

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