Avigilon Q3 2012 Up 69%

By: John Honovich, Published on Nov 06, 2012

After turning in a 'weak' quarter of 'only' 52% growth in Q2, Avigilon's growth jumped back up to 69% for Q3 2012. Plus, profitability soared, fueled by marketing investments and limited R&D expenditures. Now, Avigilon has the mega integrator Tyco on board, offering great promise to them yet a threat for their existing partners. Inside this note, we dig into the financials and future outlook.

Improved Profitability

Gross and net margins both improved significantly.

  • Gross margins jumped from 45% to 51% driven by changes in the sales mix but, more importantly, economies of scale. Avigilon reiterated that its target gross margins is actually lower (50% or less) and that it would maintain this target (i.e., keep prices lower) to maximize market share and top line expansion.
  • Net margins leaped to 8.5%, their highest level ever for Avigilon. While it is still modestly lower than the 13-18% of mature competitors, this is far better than the typical <4% net margins Avigilon historically has.

For details, review the 29 page Q3 financial report.

Marketing Expenditures

While Avigilon reduced marketing expenditures quarter over quarter, due to it being the Summer, they were still up nearly 100% over the same time last year. Additionally, Avigilon anticipates its biggest ever marketing expenditure next quarter, larger than the massive $3 million in Q2 2012.

R&D Expenses

R&D grew but at a slower rate than nearly every other Avigilon metric, increasing year over by just under 50% from $1.13 to $1.69 million CAD. We remain concerned by the continued modest new product releases and relative low R&D investment.

New / Upcoming Products

When asked about upcoming products, Avigilon was vague but did mention, "steady stream of new cameras, lower cost cameras, lower cost software, etc." It would seem low cost is an emphasis for the future.

Get Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

Avigilon de-emphasized the role and value of video analytics, saying that it was a few years into the future and still held back by processing cost. Avigilon does not support any video analytics, beyond basic motion detection, on their cameras.

Tyco Signed On

Avigilon was quite excited about officially signing up Tyco (formerly ADT security integration). Before this, they were only selling through branch offices but are now approved corporate wide for Tyco. Avigilon estimated that Tyco is the "single biggest video surveillance reseller", moving "$800 million year of surveillance equipment" annually, concluding that they "don't expect to get 100% but over time [they] will get a significant part." With the agreement, Avigilon will be on Tyco's official price catalog, will have better inducements and an easier purchasing process.

While this may be good news for Avigilon, it is a yellow flag for their existing dealers. Given Tyco's broad reach, this increases the risk that traditional loyal Avigilon dealers will have to deal with their most disliked national competitor.

Enterprise Accounts

Avigilon emphasized the growth in their business development team to target enterprise / large accounts. They recently hired away a Verint salesperson to be their VP BD.

Distribution

While Avigilon said they have no plans to change or expand distribution, they noted that they do use distributors in certain markets such as Latin America, Asia and the UK (Mayflex).

Revenue Geographically

  • Best areas - Asia: ~300% growth to $1.7 million CAD for the quarter; then Canada and Latin America both roughly doubled
  • Worst area - UK - roughly flat year over year, cited a big project last year as the reason
Comments : Members only. Login. or Join.

Related Reports

Avigilon Profits Surge, Stock Jumps (Q2 2017) on Aug 10, 2017
Avigilon said earlier this year they would shift their strategy to maximizing profits. Now, they are delivering it and the stock market is...
Exacq Raises VMS Software Pricing Twice in Less Than a Year on Feb 18, 2019
Most VMSes regularly release new features, but rarely increase their prices. For the 3rd time in 4 years, and 2nd time in 8 months, since being...
Strong Outlook For 2018 on Dec 27, 2017
Integrators entered 2017 with a positive outlook on the industry. During 2017 we saw the race to the bottom hit bottom, cyber security...
Avigilon CEO Aims For $3 Billion on Oct 05, 2016
Despite Avigilon's stock price collapse, management turnover, decelerating growth and net losses, Avigilon CEO shows that he is optimistic as...
Avigilon Opens Up Analytics And Cameras on Nov 06, 2018
Avigilon is opening up. The company historically famous for advocating its own end-to-end solutions and making it harder for 3rd parties to...
Freebie Face-Off: Rise of ~$30 Giveaways Examined on Dec 02, 2019
The freebies are growing. Verkada started this (see The Fastest Growing Video Surveillance Sales Organization Ever - Verkada) and now has given...
IPVM Launches Best New Product Awards on Oct 25, 2018
IPVM is launching its own Best New Video Surveillance Product Awards in 2019. The goal is to provide the industry with a legitimate program, based...
Verkada Raises $80 Million, Triples Valuation To $1.6 Billion on Jan 30, 2020
Verkada's rocketing valuation continues. 9 months ago, they got a half-billion valuation and now they have announced more than triple that, at $1.6...
Amazon Ring Public Subsidy Program Aims To Dominate Residential Security on May 20, 2019
Amazon dominates market after market. Quitely, but increasingly, they are doing so in residential security, through a combination of significant...
ShotSpotter IPOs, Facing Low Revenue and Losses on Jun 09, 2017
A rare event for North American security manufacturers has happened. ShotSpotter has IPOed on the NASDAQ, raising $30.8 million. US IPOs,...

Most Recent Industry Reports

Avigilon ACC Cloud Tested on Jul 08, 2020
Avigilon merged Blue and ACC, adding VSaaS features to its on-premise VMS, offering remote video and health monitoring that was previously limited...
The US Fight Over Facial Recognition Explained on Jul 08, 2020
The controversy around facial recognition has grown significantly in 2020, with Congress members and activists speaking out against it while video...
Sperry West / Alibaba Tablet Temperature Measurement Tested on Jul 07, 2020
In April, we ordered a ~$500 temperature tablet from Alibaba. We set it to the side while doing 18 other temperature screening tests but, after...
Facial Recognition: Weak Sales, Anti Regulation, No Favorite, Says Security Integrators on Jul 07, 2020
While facial recognition has gained greater prominence, a new IPVM study of security systems integrators shows weak sales, opposition to...
Video Surveillance 101 Book Released on Jul 07, 2020
IPVM's unique introduction to video surveillance series is now available as a 145-page eBook. Designed for managers, salespeople, and engineers new...
Startup Duranc Presents AI VSaaS on Jul 06, 2020
Duranc presented its system at the May 2020 IPVM Startups show. A 30-minute video from Duranc including IPVM Q&amp;A Background on the...
Low Voltage Nation Wants to "Help You Carve Out A Fulfilling Career" Interviewed on Jul 06, 2020
It is difficult to make your way in this industry as there is little formal schooling. However, one person, Blake Urmos, the Founder of Low Voltage...
The Next Hot Fever Detection Trend - $100 Wall-Mounted Units on Jul 06, 2020
The first wave of the booming fever detecting market was $10,000+ cameras, now interest for ~$2,000 tablets is high and the next big thing may be...
Cisco Meraki Unlocks IP Cameras With RTSP Tested on Jul 06, 2020
Meraki opened up its cameras to 3rd party NVRs/VMSes by offering RTSP streaming because of "the need to solve a business problem". We tested...