Mobotix Growth Stalling
Over the past 2 years, Mobotix has grown robustly. Now, in the last 6 months, Mobotix's growth has slowed substantially and is essentially stalling. In this note, we look at the details in this drop and some of the reasons the drop are occuring.
Let's start with a review of the key financial metrics for calendar Q3 and Q4 2011 (background - see the Q3 report and Q4 report):
- Revenue growth in calendar Q3 2011 was only 0.7% year over year
- Revenue growth in calendar Q4 2011 was 6.3% year over year
This is far lower than the 25%+ year over year growth in the immediate previous quarters. Mobotix claims that this is because previous growth was so high in previous quarters. However, we see this as an excuse. If a company and a market are growing steadily at 30%, than so too should well performing companies.
Europe the Problem?
In both quarters, the most striking source of Mobotix's weakness is the European market. In both quarters, year over year revenue fell about 10% for Europe (excluding Germany). By contrast, Germany continued to grow modestly and the US division grew fairly robustly - 30%+.
Indeed, in the Q4 report, Mobotix does make one reference to concerns about overall economic conditions. However, Mobotix also is projecting "revenues to grow by 30% to 35% in the current fiscal year." To do so, they will need a sharp rebound very quickly.
Comparing to Axis's Q4 2011 results, we see European revenue growth lagging as well (though as Axis only reports EMEA including the Middle East and Africa it is difficult to determine the specific impact of Europe alone). That noted, given the economic challenges of the European Union, slowing growth (or revenue declines) would not be surprising.
Product Development and Access Control Offering
Over the past year, Mobotix's product development on core surveillance offerings has been modest, at best, as the company focused on developing its access control / door solution. As the Q4 report notes, Mobotix is "aiming to be the technology leader in the door station field in the short term." While the company does not break down sales for its door offering, we suspect delays and limited uptake on it contributed to the modest growth.
In the Q4 report, Mobotix does allude to work on "basic development for another camera line." It will be interesting to see when and what is released. We think this will be important for Mobotix to retain its competitiveness in a market where many entrants are catching up on resolution, form factor options, panoramics, etc.