Avigilon 2014 Financials Disappoint Investors

By: John Honovich, Published on Mar 04, 2015

Hikvision admits their equipment got hacked in a large government deployment - stock down just 7.5%

Avigilon announces revenue up 42% - stock down 15%

If you are an Avigilon investor, you just cannot win over the last year.

In this note, we break down Avigilon's most recent financials including:

  • Their real growth rate
  • Becoming a US manufacturer
  • Their position on the Canon / Axis offer
  • OV patent licensing revenue
  • The long awaited new CFO

Financial ******** 

*******, **** ******* *** $271.4 ******* ** **% year **** ****. *******:** **** ******** ********* Report.

*** *** *** *******, revenue *** $**.* *******, up **% **** **** year. *** **********, ** 2014 *** **%, ** **** *** **%, Q1 **** *** **% and **** **** **** was ~**%.

Their **** ****** ****

** ******** ~**% **** growth **** *** **, year **** ****, ***** factoring *** (********) ******** exchange ************ *** ************. Unlike ****, ******** ******* to ******** ******* ** local ******** ***** ** organically, ******** ** ******* their **** ****** ****.

*** *** **** *** years, *** ********** ** 2014, ******** ********* ******* from *** *** / USD ******** ****. *** chart ***** ***** *** steady ********* ********** ********:

** **** ***** **** Avigilon's ****** *****, **** benefited ****** *** * major **********:

***********, **** *** *** first **** ********* *** VideoIQ ***********, ***** ***** ~$20 ****** ** ******* inorganically.

** *** **** ****, a **** ****** **** at ** ******** ***** 30% ** ***** ***** good *** *** ***** surveillance ********, ********** ***** the ******* ****** ******** being ***********. *******, ********'* growth **** ** ***** sharply ****, ** **** or ****, **** **** they **** ***** **** a **** *****.

Becoming * ** ************

******** ** ******* * 40,000 **** ** ************* facility **** **** ****** to ** ***** *********** in ** ** ** 2015. **** **** **, in ********, ** ***** 60,000 **** ******** ** Canada. ******** **** ******** these **** ******* $* billion ************* ********.

*** ** ******* ********'* largest ******, ** ***, with $*** ******* **** revenue, ~**% ** *** company's *****.

Canon / **** ********

********'* *** *** *** benefits ** *****'* ********* of ********* *** ***** to ******* ****, ********* that:

"** ********* ***** *** entities *** ********** ********** to **** ** **** an ***-**-*** ********, **’* now * ******** ******** to **** ***** ********** were ***** **."

** ******, ***** ****** this **** *** ****, including **, ******* ** is **********. ******, ** Avigilon's *** *****, * move ** * ******** position **** ** *********** to *******.

***********, ********'* *** **** weaker *********** **** ****:

"*** **** ***** ** inevitable ******** ***** *** management *** ******** *** key ********** ***** *** a *** ******** *** become ******* **** ********* to ******** ******* *** business."

OV ****** ********* 

***** ** *** ********* announcement, ******** ****** ***** acquisition ****** ** **'* licensing **********, ********* ****** **** ~$** ******* on *********** *** **** *.** years, **** **% ** that ******* ****** **** 4 (** *****) *************.

** *** ****, ******** tempered ********, ******, "*** expected ******* ** *** licensing ** -- ** least ** **** ****** year ** ******** ** be ********** ******." **** emphasized **** **** ** not **** ** "** custom ***** **** ******* licenses, *** **** ** more ** * ******** template. *** ** **** that ****** ** **, it ****** *** ********* over **** *** ******* in * **** ********** manner ****** *** ********."

*************, ********'* *** **** it ***** **** ******* generation *** *** *** primary ******* ** ***** patents. *******, ** ********:

"*** **** ********* ****** the *********** ** *** patent ** ** ******** ourselves ** *********** ******** the ****** ***** ************ market."

*******, ** *** *** clarify *** **** ***** use ***** ******* ** dominate. ** ************ **********, *** ******** *** is ** ******* ** block ****** ** ***** deals ** ******** *** users **** ***** *********** are, ** ** ***** might, ** ********** ** Avigilon's *******.

The **** ******* *** ***

*** **** ******* *** CFO *** ***** *** been *****.

********'* ***** ********** ***** 10 ****** *** **** their*** ************ **** *** night ************** **** ** ** released. ** **** ****, Avigilon's ***** *** *** Jung **** **** ** 'interim ***'. ****** ******** did **** * ** of ******* [**** ** longer *********] ** **** 2014, *** ******* *** is ***** ***** ** months *****.

******** *********, "** *** know *** ** *** CFO ***** *** ** have *** *** ********** a ********* ********* ** takeover **** ********. *** search **** ****** ****."

Stock *****

******** ***** ********* *** roller-coaster ****:

Avigilon ******** *** ******

** ****,******** *** * $*** million **** ****.

*** ******* ** ******* more **** **** *** there. **** '****' **** to **** ** * CAGR ** **% ** get *****.

(******, ** ** **** easier ** *** *** Avigilon's ***** ********** ***** is * $*** ******* annual *** **** ** Q4 ****).

****** ***, ********'* ****** has **** **********. **** their **** *******, **** are *** ** *** largest ************ ********* ** the ***** *** ** powerful ********* **** ********* and **** *** ***** out, ** ******** **** more *********** *** ********.

*** *** ********* **** be ******* ************'* ******** *****. *** **** *** HD '******** ** *******', and ******* **** ** resolution ** ********** ****, Avigilon **** **** ** lean **** ** *** overall ******** *** **** specifically ** *************** ** analytics.

** ** ***** *** early ** **** *** Avigilon **** ** **** analytics *** ******* ********* can ******* *** **** type ** ****** **** HD *** ** ***** first ******.

Comments (3)

Tim Campbell

03/05/15 08:39am

As an Avigilon investor, I'm not disappointed by the company's financials. They are executing on their strategy set out in earlier years' reports, they are growing well, gaining market share ... even the survey you ran on this site had them rated in the top five for hardware, software and service - the only company to pull off that feat.

It's not the "investors" who are disappointed so much as "speculators" who are looking for short-term bumps. One year ago analysts were touting Avigilon as a good buy even though it was selling above $30 a share. Since then the company's revenues have grown by 52%, and they are on target to nearly double again in the next two years, and yet somehow the company is barely worth the $21 a share it was selling for yesterday?

The only investors this makes sense to are the ones who lose a lot of money in the market.

As an Avigilon investor, I'd be happy to see the company's shares beaten down into the mid-teens once again for a while so I could buy some more :)

It's important not to confuse volatile stock prices with a company's success. They do not always trend together.

John Honovich

IPVM | In reply to Tim Campbell | 03/05/15 12:24pm

Ok, Tim, next time I'll go with BNN's lead: "Avigilon posts biggest one day drop in company's history" :)

In all seriousness, since the stock was down sharply, it does signify the net of investors / marketplace were disappointed. As I alluded to in my opening, I don't agree.

As for the company's success, there is no doubt about it, given both the company's achieved size and its well-regarded products across cameras, VMS and analytics.

However, looking forward, I think (1) things are getting harder for Avigilon and (2) that they are taking some risky steps.

Obviously, the whole video surveillance / security market is tougher now than it was a few years ago and that impacts everyone. Beyond that, with MP / HD maturing, that's a clear negative for Avigilon because just a few years ago it was easy to win on higher resolution, now it's much harder with so many other real options.

The recent moves (the two patent deals and the building) are unnecessarily risky. Maybe they turn out to be brilliant (Vancouver real estate prices double in the next 3 years, they block out their competitors from analytics, etc.) but there's an equally plausible future scenario where they turn out to be duds. As a company, I think they would have been better off buying more complimentary products to feed into their incredible sales machine.

As for the stock price, things are worth what people will pay for them. I don't think Axis is worth $2.8 billion but Canon does and that's what counts. Avigilon is great at selling to security integrators and buyers. They may need to do a better job at selling to investors.

Tim Campbell

In reply to John Honovich | 03/05/15 01:53pm

Well, I can't honestly say I was pleased about seeing $3.75 per share get knocked off my investment in a few hours :)

The size and suddeness of the drop did surprise me, though. The day before Avigilon announced its Q4, the shares were trading at just under 40 times trailing earnings. After the release of the higher Q4 numbers, the shares were knocked down at one point to almost 25 times the new trailings earnings.

There was nothing unexpected in the annual report. Numbers came in about as expected, and the deals had all been previously announced. Maybe there was an expectation of an extra boost because of the exchange rate, or some such thing. Guess I'd have to ask someone who sold ... maybe they were cashing out after the big run up in price the month before the report.To be honest, the low/mid $20s seems a fair value given slower growth (though an estimated 30+ CAGR over the next two years is not bad).

If the numbers on the new building work out as suggested - approx the same as current rent - then it seems a rational move. Downtown Vancouver property may be a little overpriced, but it has been steady despite declines in oil prices that have hurt Western Canada, or more restrictions by the Chinese government on money leaving the mainland with corrupt officials. Of course the price could dip, but long-term, from a Canadian perspective, it is still prime real estate. And being a former Telus building, it is likely very well hardwired for the Internet - and Telus, a big telecommunications company, will remain a neighbor even after the move. Possibly there is a tie-in there.

Regarding the patent deals - all I can do is repeat what many others have said on this site ... we'll have to wait and see what they do with them. They were definitely expensive, but I'm sure more of their thinking will become clearer soon.

It will be interesting to see how they navigate the shifting marketplace in the next couple of years. It definitely feels like they are repositioning themselves, and management - despite riling up a few guys on this site - does seem quite capable of carrying out its plans.

Login to read this IPVM report.

Related Reports

Worst Camera Manufacturers 2020 on May 06, 2020
Which camera manufacturer have integrators had the worst experience with in...
No Blackbody Mistake, Half Million Dollar, Hikvision Fever Camera System in Georgia on Sep 16, 2020
A Georgia school district touted buying Hikvision fever screening "about...
2020 Mid Year Video Surveillance Industry Guide on Jul 27, 2020
The first half of 2020 has been shocking, for the world generally, and for...
Dahua Revenue Plunges, 3 Execs Resign Q1 2020 on Apr 29, 2020
Dahua's sales dropped by 19.47% in the first quarter of 2020 amid the...
Sunell Panda Cam Body Temperature Measurement Camera Tested on May 14, 2020
Sunell is far less well known than its gargantuan domestic competitors Dahua...
Dahua Critical Cloud Vulnerabilities on May 12, 2020
Dahua has acknowledged a series of cloud vulnerabilities that researcher...
Genetec and Dahua-Backed Intelbras Split Examined on Jul 29, 2020
China is the cause of the breakup between Canada's and Brazil's largest video...
Costar Technologies / Arecont H1 2020 Financials Examined on Sep 16, 2020
Costar's financial results have been hit by the coronavirus with the company...
ADI Sales Down 21% in April on May 14, 2020
ADI sales were down 21% in April, the company disclosed, as the pandemic hits...
Motorola Solutions Sells Avigilon Products To North Carolina Utility on Jul 16, 2020
Just 2 years after Motorola acquired Avigilon, concerns are growing among...
This YouTuber is Now Selling ThermoHealth Temperature Screening on Jul 29, 2020
An enterprising 20-year old is mass marketing medical devices on Facebook and...
Hikvision Illicitly Uses Back To The Future In Marketing on Jul 03, 2020
NBCUniversal told IPVM that Hikvision UK's ongoing coronavirus marketing...
Favorite Access Control Credentials 2020 on Sep 15, 2020
Credential choice is more debated than ever, with hacking risk for 125kHz and...
Hikvision Global Revenue Falls, Hit By Coronavirus on Apr 27, 2020
Hikvision's global revenue fell in the first quarter of 2020 due to the...
Colombia's President Promotes Bad Hikvision Fever Camera Setup on Jun 17, 2020
Colombia's President Iván Duque has promoted a haphazard Hikvision fever...

Recent Reports

Mobile Access Control Usage Statistics 2020 on Sep 21, 2020
Most smartphones can be used as access control credentials, but how...
Axis Compares Fever Camera Sellers to 9/11 on Sep 18, 2020
Axis Communications, the West's largest surveillance camera manufacturer, has...
Chilean Official Investigated for Motorola And Hikvision Contracts on Sep 17, 2020
A corruption investigation is underway in Chile after a crime prevention...
Huawei HiSilicon Production Shut Down on Sep 17, 2020
Huawei HiSilicon chips are no longer being manufactured or supplied to...
Virtual ISC West and GSX+ Exhibiting Contrasted on Sep 17, 2020
Both ISC West and ASIS GSX are going virtual this year, just weeks apart, but...
X.Labs Sues FLIR on Sep 16, 2020
X.Labs, the maker of Feevr, has sued FLIR, the publicly traded thermal...
Video Surveillance 101 September Course - Last Chance on Sep 16, 2020
Today is the last chance to sign up for the Fall Video Surveillance 101...
No Blackbody Mistake, Half Million Dollar, Hikvision Fever Camera System in Georgia on Sep 16, 2020
A Georgia school district touted buying Hikvision fever screening "about...
Costar Technologies / Arecont H1 2020 Financials Examined on Sep 16, 2020
Costar's financial results have been hit by the coronavirus with the company...
Startup Cawamo Presents Live Alerts With Edge AI and Cloud VMS on Sep 15, 2020
Cawamo, an Israeli edge-to-cloud analytics and VMS startup, presented its...
Favorite Access Control Credentials 2020 on Sep 15, 2020
Credential choice is more debated than ever, with hacking risk for 125kHz and...
Dangerous Hikvision Fever Screening Marketing In Africa on Sep 15, 2020
A multi-national African Hikvision distributor is marketing dangerously...
New Products Show Fall 2020 Announced - Register Now on Sep 14, 2020
IPVM's sixth online show will feature New Products from over 25...
Hanwha 8K / 33MP Camera Tested on Sep 14, 2020
Hanwha Techwin has released an 8K / 33MP resolution camera, the TNB-9000 with...