Avigilon Accelerates Growth

By: John Honovich, Published on May 08, 2013

Avigilon grew revenues a massive 80% year over year for Q1 2013. That's an incredible pace, faster even than what they did last year. Equally important, both gross margin and net margins raised substantially, closing their historic gap with market leaders.

Avigilon's stock price surged in the past 2 weeks, up ~25% from ~$11 CAD to $14 CAD per share, giving Avigilon a half billion dollar market capitalization.

Details from the financial report include:

  • Revenue grew by at least 70% in all regions except for Latin America (24%).
  • Marketing expense growth rate moderated, after a ~100% surge in the past year.
  • Gross R&D expenditures were ~6.4% of sales in 2013, compared to 7.6% in 2012.
  • Business development expansion planed, including more hires in "retail, transportation, banking and government, among others." Plus new BD resources in EMEA and Asia Pacific."
  • "Website traffic increased by over 70% relative to the prior year"
  • This year, introducing a new marketing channel and training program.
  • "The expansion to our newly expanded facilities in our manufacturing plant was substantially complete by the end of March 31, 2013 The additional 14,400 square feet increase our manufacturing space by approximately 150% over our current facility."

Details from the call include:

  • Generated $4.6 million in operating cash flow this quarter though expect cash flow break even in the short term
  • Not expecting margins to trend back down
  • Average sales cycle 12 to 18 months
  • 'Seeing more austerity creating more downward pressure' but casinos, retailers, etc., 'have some catching up to do from cap ex freezes in 08 / 09'
  • 'Heightened awareness of general public' does not bring short term results but has a positive influence on the long term decision making and raising awareness of surveillance
  • Mayflex primary VAR in UK but still sell direct to certain prime integrators; says Mayflex opens up opportunities
  • Analyst asks if insurance premiums much lower by using HD. Avigilon answer, 'Absolutely' 
  • 'We typically do not need to discount beyond our pricing schedule to win deals'
  • Largest customer in quarter was 3.5% of sales (~$1 Million)
  • $40k - average deal size historically
  • Average deal size is going up but not dramatic
  • About 750 deals in Q1 2013, assuming $40k average deal size and $32 million revenue
  • Task of hiring is getting easier as the profile and strength of company increases
  • Dallas Airport remains Avigilon's single largest project to date

Financials Table

This table summarizes financial performance:


Given Avigilon's large size ($100+ million), the massive growth rate (80%) and the relative modest growth rate of major competitors (companies like Axis and Milestone are in the 15-20% range), Avigilon is clearly gaining share. 

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