Avigilon Massive Growth Continues

By: John Honovich, Published on Feb 28, 2013

Bucking an industry trend, Avigilon's massive growth continued in calendar Q4 2012, with revenue growing ~73% year over year, even higher than their 2012 overall growth rate. The note below details the key financials details and most interesting comments made on management's call.

First, key details from Avigilon's 4th quarter financial report:

  • Total 2012 revenue broke $100 million (CAD), up 67% from 2011's $60 million (with the last quarter, Q4, higher than the year's average).
  • Net income Q4 2012 was ~9%, the same as the quarter year over year but higher than earlier quarters in 2012.
  • Marketing expenses for the year increased 177% from ~$3 million in 2011 to ~$8.5 million in 2012 but Q4 2012 was only up ~50% over Q4 2011 as the 'new' program with huge increase in marketing started in Q4 2011
  • Selling expenses increased a far more modest 47% year over year plus "selling expenses as a percentage of revenue have fallen to 16% from 19%."
  • Avigilon said manufacturing infrastructure can now support $200+ Million revenue

Massive Employee Growth Continues

Total employee count grew 71% from 149 to 255 year over year. Management said they might hire another 100 or more employees this year.

R&D Investments Lag

Gross R&D expenses were only up ~30% from ~$1.4 million in 2011 to ~$1.86 million in 2012. Plus, as a percentage of revenue, R&D expenses is just 5-6%, much below competitors. However, Avigilon notes, "We expect to continue to increase expenses, as a percentage of revenue, to a level more typical with industry norms as we focus on enhancing and expanding our product offerings." This is worth tracking.

Aiming for Enterprise Market

Avigilon emphasized growth in the enterprise market, larger deals, in contrast to what it describes as 'run rate business', the mid market where they do most of their business today.

Casino Development Growth

Avigilon reported strong penetration into a market that they just recently entered: "As of January 1, 2013 our system has been installed by 53 casino operators in 67 properties around the world, with a total of 10,420 channels of video running under our VMS. Our largest casino sale in 2012 was to the Hard Rock Casino & Hotel in Albuquerque, New Mexico, which included our ACC VMS, 250 Avigilon 4-channel analog video encoders and 200 Avigilon high-definition cameras."

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

Tyco

A major development of Q3 was signing up mega-integrator Tyco. In this Q4 report, Avigilon noted,"Although not a major contributor to our 2012 revenues, we anticipate that Tyco will contribute to a greater percentage of our revenue in 2013 and forward as we further execute on our plans. Our sales team is working closely with Tyco’s corporate office to educate their more than 69,000 employees in 50 countries about the advantage Avigilon and our products, and we are seeing an increasing number of orders from Tyco every week."

Additionally, during the call, Avigilon called deals with mega integrators like Tyco and Siemens 'long term strategic investments' that ramp up over 18 months and physically takes year to work through all the branch offices of these integrators.

Inside Sales

Avigilon is growing an inside sales team:"We also introduced an inside sales department in late 2012, based out of our Dallas office, which primarily makes outbound calls on sales leads that come through our website, trade shows, advertisements and direct mail campaigns. To date this has been very successful in generating new sales and supporting our existing sales teams. We will continue to add resources to inside sales during 2013."

UK Sales Performance

Geography, UK turned in the worst performance at 'only' 25%. Avigilon noted, "The UK market is one of the most highly competitive globally, due its acceptance of surveillance, and is experiencing a difficult economy currently. However, we do not believe that the decrease in the fourth quarter is indicative of a decrease in the market for surveillance in the UK, nor of a decrease in the potential for Avigilon in this market, as we have seen a number of the delayed sales close in the first quarter to date and anticipate the majority of the others to close before the end of the quarter."

Asia Pacific

A big 2013 sales focus is the Asia / Pacific region. Avigilon noted that they are building their own sales force, rather than using agents, saying that it might take longer to ramp up better to do their own. While Asia / Pacific grew 72% to $5.3 million, it is still only 1/10th of US revenue, as an example.

Future Products

Avigilon only mentioned that their next VMS version, ACC 5.0, is schedule to be released later this year.

Competitive Market View / Old School Dying Off

Avigilon viewed the competitive market largely unchanged year over year except that a handful of innovative companies from the ten year ago are dying off, and their customers are often choosing Avigilon. They did not mention any specific companies in that segment but we would suggest American Dynamics, Dedicated Micros, NICE, Verint, etc.

IPVM's Analysis

Obviously, an extremely strong quarter, made even more impressive because (1) their revenue growth re-accelerated (back up to 73%) and (2) their core competitor's revenue growth are almost all decelerating (i.e., see Axis and Mobotix's recent results). The main negative sign we see is the continued low investment in R&D. It will be interesting to see when and if Avigilon follows through on their plans to increase R&D to 'industry norms', which would mean more than doubling expenditures, even without factoring in for continued growth.

All in all, Avigilon's rapid expansion continues while core competitors slow down or lose ground.

Comments (13) : PRO Members only. Login. or Join.

Related Reports

Barnes Buchanan 2019: Despite 'Strange Narrative' Great Time To Be In Security on Feb 11, 2019
A "strange narrative" is being spun, said Michael Barnes [link no longer available] at the 2019 Barnes Buchanan Conference. However, despite that...
What Is the Importance of Revenue vs Profitability for Integrators? Statistics on Mar 01, 2019
A company can be highly profitable but if it is small, they will still not make much money. By contrast, a company can generate lots revenue, but...
ADT Stock Drops After Announcing Loss And Amazon Delay on Mar 12, 2019
ADT's stock price dropped significantly after reporting heavy losses and delays in its Amazon partnership, as seen in the screenshot below: In...
Verkada Gets Half Billion Dollar Valuation on Apr 26, 2019
Last week, when we profiled Verkada (The Fastest Growing Video Surveillance Sales Organization Ever - Verkada), we predicted they would raise $40...
Knightscope Adds Just 2 Total Customers In Past Year, Yet Raising Money at $300 Million Valuation on May 02, 2019
This is no longer funny. While Knightscope has laughed it up promoting robot selfies, joking about a 'suicidal robot', the man who attacked a...
Genetec Beats Milestone For IHS #1 on Jun 21, 2019
For years, Milestone has touted that they are the #1 VMS. Now, Genetec has beaten them in IHS rankings. But what is this? Even other manufacturers...
Avigilon President Henderson Is Out on Jul 09, 2019
Avigilon's President and COO James Henderson is out, abruptly, after a remarkable ascension over the past 8 years, Motorola VP Jack Molloy has...
Resideo Stock Plunges 37%, CFO Ousted on Oct 23, 2019
The horrible year for the ADI / Honeywell Home spinout, Resideo, just got worse, with their stock plunging another 37% today. Not even a year...
Resideo CEO To Step Down on Dec 03, 2019
Resideo's CEO, Mike Nefkins, is stepping down, just 18 months after being brought in to lead the now plagued spin-out. Inside this note, we...
Vivint Valuation Falls $1.5 Billion on Dec 19, 2019
Residential market struggles continue. Now, Vivint's valuation has fallen $1.5 billion in its impending merger. Inside this note, we examine...

Most Recent Industry Reports

Hanwha Wisenet X Plus PTRZ Tested on Feb 14, 2020
Hanwha has released their PTRZ camera, the Wisenet X Plus XNV-6081Z, claiming the "modular design allows for easy installation". We bought and...
PRC Warns Against China Video Surveillance Hacks, Hikvision Targeted on Feb 14, 2020
Hackers are targeting China video surveillance manufacturers and systems, according to the PRC's main cyber threat monitoring body. The hackers...
IPVM Conference 2020 on Feb 13, 2020
IPVM is excited to announce our 2020 conference. This is the first and only industry event that will be 100% sponsor-free. Like IPVM online, the...
Bosch Dropping Dahua on Feb 13, 2020
Bosch has confirmed to IPVM that it is in the process of dropping Dahua, over the next year, as both IP camera contract manufacturer and recorder...
BluB0X Alleges Lenel, S2, Software House Are Dinosaurs on Feb 13, 2020
BluB0X is running an ad campaign labeling Lenel, S2, Software House, Honeywell, AMAG and more as dinosaurs: In a follow-up email to IPVM,...
London Live Police Face Recognition Visited on Feb 13, 2020
London police have officially begun using live facial recognition in select areas of the UK capital, sparking significant controversy. IPVM...
Converged vs Dedicated Networks For Surveillance Tutorial on Feb 12, 2020
Use the existing network or deploy a new one? This is a critical choice in designing video surveillance systems. Though 'convergence' was a big...
Monitoreal "Completely Autonomous" Home AI Tested on Feb 12, 2020
Monitoreal claims to allow users to "see the things you want (people, vehicles, animals) and ignore the things you don’t”, using AI to distinguish...
Cisco Video Surveillance Is Dead, Long Live Cisco Meraki Video Surveillance on Feb 11, 2020
A dozen years ago much of the industry thought that Cisco was destined to dominate video surveillance. They stumbled repeatedly, failing. Now it is...
BICSI For IP Video Surveillance Guide on Feb 11, 2020
Spend enough time around networks and eventually someone will mention BICSI, the oft-referenced but only vaguely known standards body prevalent in...