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Management Guidance and Consensus ExpectationsĪVID issued Q1 guidance targeting subscription and maintenance revenue between $50 and $53 million along with an EPS target in a range between $0.17 and $0.24. Considering adjusted EBITDA of $58.6 million over the trailing twelve months, we calculate a net-debt to an adjusted EBITDA leverage ratio of 2.3x, down from 2.9x last year. AVID ended the year with $79.9 million in cash against $208 million in total debt. The trend is being supported as the company scales with reductions in operating expenses from cost-cutting measures implemented last year and improving working capital management. AVID PRO TOOLS PRICE INCREASE 2019 FREEGiven the improving profitability and free cash flow that Avid accomplished in the face of all the unforeseen difficulties, I would characterize Avid's rapid pivot and successes as a remarkable outcome.Īnother important point in the Q4 results is the strong free cash flow generation that reached $33.9 million in 2020, up from $12.5 million in 2019. Driven by our ongoing transition to a subscription-focused business and our focus on profitability, this year we turned the corner to being a growing free cash flow story. Overall, we're quite pleased with our progress and our execution through the difficult environment of 2020. Management highlighted the broader positive momentum of the business during the earnings conference call: There is an expectation that this area will pick up through 2021. Management explains that the segment has been pressured during the pandemic with commercial-scale customers delaying investments to production facility expansions. AVID PRO TOOLS PRICE INCREASE 2019 SOFTWAREHardware & Integrated Software segment revenues at $35.9 million fell 28.6% y/y, although recovering from a low of $20.8 million in Q2. AVID PRO TOOLS PRICE INCREASE 2019 PROFESSIONALOn the other hand, one area of weakness for the company is its hardware segment which is the professional scale studio production and broadcast management equipment. The revenue backlog expected to convert within the next year at $231.3 million climbed 16% from the end of 2019. A key metric is the number of paid subscribers across all products that have now reached 300,000, adding 27,000 just in Q4. Similarly, the adjusted EBITDA margin at 16.3% was up 270 basis points from last year from 13.6% last year. Non-GAAP gross margin in 2020 at 63.7% climbed 220 basis points from 61.5% in 2019. The impact on the business with subscriptions gaining importance is observed through wider margins. EPS in Q4 was up 18% compared to $0.28% the period last year, while the full-year result of EPS at $0.65 increased 27.5% compared to 2019. In this regard, even as the headline net revenue figure was lower, subscription revenue increased 61.2% y/y for 2020 which drove earnings higher. The proportion of revenues recognized as recurring at 74% in Q4 climbed from 62% at the end of 2019. The idea here is that the subscriptions result in a lower initial revenue recognition while generating a longer cash flow stream with less variability. AVID PRO TOOLS PRICE INCREASE 2019 LICENSERevenue of $104.3 million represented a decline of 10.3% year over year, although the context is the ongoing transition from its legacy perpetual license business for software into the subscription model. We are bullish on shares of AVID and view the recent pullback from highs as a good buy-the-dip opportunity with an expectation that the strong earnings momentum can continue.ĪVID reported its Q4 earnings on March 9th with non-GAAP EPS of $0.33, which beat expectation by $0.01. The company just reported its latest quarterly results highlighted by record earnings and free cash flow setting up a positive long-term outlook. A shift in recent years towards a cloud-enabled subscription software as a service, "SaaS," business model has helped to fuel higher profitability driving shares up over 270% in the past year. Its editing products like "Media Composer", "PRO Tools", and "Sibelius" along with related content management tools have become the standard for major video and audio production companies. ( NASDAQ: AVID) is recognized as a leader in specialized software and hardware used in digital media production. ![]() Photo by EvgeniyShkolenko/iStock via Getty ImagesĪvid Technology Inc. ![]()
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