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The Street – Why Avid (AVID) Is Falling Today
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This also is an indicator.
Video revenue in the quarter was $84m, down 11% versus the same period a year ago, and down 28% versus the previous quarter. Video revenue accounted for 55% of the total revenue during the quarter, versus 63% last quarter. Although service revenue was strong in video, Avid had a 20% decline in video product sales versus last year. In the pro video market, overall video editing unit sales were up by more than 30% versus last year, but because of a larger percentage of software sales, the overall the revenue from these sales was 30% lower than the same period a year ago due to lower hardware sales. Shared storage and workflow systems were strong in the quarter, growing 8% versus last year.
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[Craig Seeman] “Granted it may take a little extrapolation but these are the numbers …”
Craig,
Those numbers are the same from the breakdown chart in my link.
If I squint hard I see a 50/50 split in hardware / software. But I might be looking at it wrong. What numbers make you think they rely more on hardware for revenue?
Franz.
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Or to put it simply, even when Media Composer/Symphony sales are UP they continue to LOSE money because they make significantly more from hardware.
video editing unit sales were up by more than 30%
yet
overall the revenue from these sales was 30% lower than the same period a year ago due to lower hardware sales.That shows a huge disparity over what’s selling (software) and what they need to sell to increase revenue (hardware).
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Craig,
If that’s true, those are pretty wild swings.
Video was 40% of revenue in 2011, then 63%, then 55% for the quarter in this report (this was all before they sold their consumer products line). Those seem like wild swings in sales to me.
I still don’t really see any conclusive breakdown of hardware vs. software in any of this, though.
Franz.
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[Franz Bieberkopf] “I still don’t really see any conclusive breakdown of hardware vs. software in any of this, though.”
In my followup post I note 30% increase in software but still heavy loses in revenue due to lack of hardware sales. Video Software sales barely make a dent in revenue.
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[Franz Bieberkopf] “Mitch Ives] “If they’re listed publicly on the exchange, they have to provide that information in their 10Q’s and 10K reports…”
Mitch,
… you’d think if they broke those rules, they might even get delisted.
Franz.
“LOL
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Craig,
But you’re making the case that their profit and future is in hardware.
Do they currently generate more revenue from hardware?
Do they make higher profit margin from hardware?I don’t see any answers about either of those questions.
Revenue is down on a rise in units sold because the units (software) sell for less. This tells me nothing about the profit potential. If the profit is higher on the cheaper widgets (software) then it would seem that is where the future is.
Franz.
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Avid has released the following statement:
Avid statement:
The financial results being quoted in this article are erroneous. Due to the accounting evaluation and restatement process Avid has been going through, we have not issued any financial statements after Q3 2012. As we have previously reported, as a result of the restatement, previously issued financial statements are not accurate and should not be relied upon. We request that you delete any reference to Avid’s financial results, as your reporting is inaccurate.
Avid’s de-listing from NASDAQ and its subsequent listing on OTC is the result of delays in the reporting of financial information — it was not related to operating performance in any way.
We are continuing to work very hard to correct the accounting, which is related to nearly 5 million transaction lines spanning eight-and-a half years. We announced that we are targeting completion of the restatement by mid-2014.
We continue to invest in product innovation. Since the beginning of the restatement process, we released Pro Tools 11, Media Composer 7, Sibelius 7.5, two new online shared storage offerings, a brand new mixing console – the S6, as well as a new live sound system – Avid S3L.
With a compelling Avid Everywhere vision established, the launch of the ACA, a significant number of new product innovation announcements planned for 2014, we believe we remain well positioned to support our customers’ ongoing success.
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Media Composer sales growth hasn’t done anything for them. The level of revenue growth needed from MC is probably unreachable.
This is not just my own supposition. Analysts I’ve read all say they really need to push hardware growth. Smaller hardware (compared to software) growth would yield greater revenue. Bigger profit margin potential and then there’s the service contracts that yields.
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Of course they’re erroneous but, based on what Avid has said about the accounting issues, they won’t have any significant changes in revenue. Of course they’re still introducing new products but unless there’s some surprise changes, they don’t seem to be generating the revenue needed to be profitable.
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