Mobotix's Financial and Strategic Positioning 2009
Mobotix pursues an aggressive strategy contrarian to most megapixel camera companies. Committed to their decentralized approach, Mobotix has grown to over $60 M USD annual sales and to be one of the largest IP camera manufacturers globally.
Recently, Mobotix released their 2008/2009 Annual Report, providing an overview of their current performance and outlook.
In this premium section, we examine Mobotix's financial and operational positioning with a specific look at their slowing growth rate, evolution in products offered and planned shifts in markets served. For a background and introduction to their products, review our examination of Mobotix's megapixel product offering.
Financial Performance Overview
Financial performance is not as strong as Mobotix portrays in their press release. In that release, they emphasize 27.1% revenue growth for the just finished fiscal year compared to the previous year.
However, an examination of their Q2 2009 performance, relative to their Q2 2008 performance indicates only 7-8% revenue growth. [This was calculated by analyzing a number of documents and was confirmed in an e-mail with Mobotix] Unlike some companies whose growth rate dropped immediately after the September 2008 crisis, Mobotix's rate dropped later. Of the entire year, the growth rate was the slowest in Q2 2009.
Given that Mobotix's revenue was growing at almost 50% rate just a year ago, a drop to 7% is quite severe and significant. With the consensus that the global economy is improving, that rate should improve. However, it is a very real question how long and if they can ever return to the 40% growth rates.
Mobotix reports over 100,000 cameras in deployment.
Mobotix claims a 7.3% market share of network cameras (citing IMS). This would place the overall network camera market size at approximately $850 M USD.
Employee growth was very modest with total headcount only increasing 4% from 196 to 204 employees. This is an interesting metric, given the 27% revenue growth. The slow employee increase is a bearish sign. Mobotix does note that they plan to increase headcount in this new fiscal year but do not quantify levels.
Mobotix's sales are very European centric. 75% of sales are within Europe, with their home market, Germany, alone accounting for 31%. The rest of the world, including both the Americas and Asia only accounts for 25% of sales - approximately $16 M USD.
While Mobotix does not itemize US sales, they note that US revenue increase 53.2% last year.
53% of cameras sold are fixed cameras, 40% are domes and the remainder is accessories, etc. Included in the domes category are their hemispheric/360 degree cameras.
Domes sales drove growth in the last year with dome sale revenue up 58.8% (from 11.5M Euros to 18.3 M Euros. By contrast, fixed cameras grew fairly slowly - up only 9% for the year.
Mobotix focused their report around two key developments:
- The introduction of a new processor technology, called P3, that doubles the processing power of the cameras. In their new products, Mobotix emphasizes a doubling of frame rates as a practical consequence of this. Mobotix noted that the, "product had to be adjusted mechanically in a rather complex process, which led to delays in the launch of new technology." However, they claim that this will enable substantial potential future savings. This was undefined.
- Mobotix reported that their hemispheric cameras were the most successful product launch in the history of the company. Though they did not quantify this success, the strong growth in revenue from dome cameras (which the hemispheric cameras are part of) likely benefited from this introduction.
In their report, Mobotix is clear that they are focused on being a "one stop shop for complete projects" and that they aim to put "pressure on pure-play software providers by offerings [Mobotix's] control center software free of charge."
More interesting is a claim about moving down market. Specifically:
"In coming fiscal year, further simplication of the products will also lead to a stronger focus on the private security sector (home security, medical care, consumers)."
That would be a major shift, especially given Mobotix's most common use in the professional/industrial markets where their high resolution and ruggedized form factors are highly valued.
Risks and Challenges for Mobotix
Mobotix's plans places it on a collision course with their VMS partners and fierce competition with lower cost Asian products.
The key risk is the schism between high quality cameras that appeal to the professional market and free software that appeals to the consumer/SMB market. Review our Mobotix product examination for an overview of the technological product issues involved.
At the higher end of the market, Mobotix's VMS has challenges competing with Milestone, Genetec, etc. Mobotix lacks the third party camera support, access control support, PoS/ATM support, true enterprise management, etc. Large deployments have difficulties using a single supplier because of the constraints of any vendor. While Mobotix's free software and recording to NAS arrays certainly reduces costs, Mobotix deficiencies as a VMS software often offsets this benefit.
At the lower end of the market, Mobotix faces a number of Asian companies including ACTi, a powerful company in its own right, who has the same approach of being a one stop shop and giving away free VMS software. Mobotix's pitch of lower total cost will be hard to make against Asian companies selling $300 USD megapixel cameras.
At the same time, Mobotix clearly has a number of leading product offerings - the dual imager megapixel cameras, the hemispheric cameras, recording to NAS, not requiring an NVR, VoIP integration for door/access etc. For example, at the lower end, I am sure they can carve out their niches but it is questionable how large those niches will be. While they may be profitable in those areas, the total revenue potential may be limited.