Avigilon Weakest Quarter Ever (Q1 2016)

Author: John Honovich, Published on May 11, 2016

Just 2 years ago, Avigilon revenue grew an astounding 74%.

Now, that feels like 20 years ago.

Avigilon's growth rate continues to fall, while struggling with profitability. In this note, we examine the results, the CEO's error and what this means for the future of Avigilon.

**** * ***** ***, ******** *********** ** ********** **%.

***, **** ***** **** ** ***** ***.

********'* ****** **** ********* ** ****, ***** ********** **** *************. In **** ****, ** ******* *** *******, *** ***'* ***** and **** **** ***** *** *** ****** ** ********.

[***************]

Financial ******* - ******, ******* ****

********'******** ***** **% **** **** **** ** ******** ********. ** **********, Avigilon *********** **% * **** ****** * ***** *** ** *** **%. **** ***** ********* out ******** ******** ******** ***** ** ******** *****, ********'* **** growth ** ******* ****.

********, ********* ****** *** **** ~**% **** **** ****, ** just ~*%.

Competitive **********

**** **** ***** ** *** **** ******* *** **** ******, ** **%** ******** ********, **** *** ****** ******* **** ********. **** is * **** ****** **** **** * ***** ***, **** Avigilon *** ******* ~** **** *** *** ******** *******.

***, ***** *** ******** ********* *** ******** *********, ***** ******* manufacturers *** ***** ******* ** *** **% ***** ***, ** course, ********* *** ***** *** ***** * ** ** ***** levels.

Geographic *********

********** ********* *** *** **** ******.

*** ******** ****** *** ****, **** **% ******, ****** **** a **** ***** **** *** **** ******** ***'* ************* ******* to ******* ********** ** **** ******.

****** / *** ****** **** *** ************ **** ** **** 9%, ********** ******** ** **** ****** **-**% ****** *****. ** suspect ********'* ***** ************** ** ****** *** ** ****** ***** as ** ** ** ***** *******. ****, *************, ******** ******* reporting ******** ** ** *****, ***** **** **** **** ********** in *** **** ****.

Sales ******* ****** ******* ****

***** *** ********* ******** **** ** ***** ****** **** ****, up **** *%. ** **** ****, ***** *** ********* ******** were ** **%, * ********** *********. *******, ** *** **** happening ********** *** ******* ** ******** ****** ******, *** *****, eliminated ********* ******** **** *** *** **** *****, ***.

**** ** ********** ********* ** ******* ** ******** ************ *** focused ** ***** *** ********* ***********, ******* **** **** **** *** to **** ****** **. **** ****** ** ******* *** *********, this ***** *** ******* ******** ******** ** ********'* ****** ******.

Patent *********

******** **** **** *** **** ** ***** ****** ********* ***** an ***** *******'* *****, ** **** * ********** ******** **. Based ** ******* ** ************ ******** ****, ******** ***** ****, ****** ***., *** ********, *** **********, Luxriot, *** *******, **** ** ***** *** **** ***** ** likely **** ******* *********.

********'* *** ***** ******** ** ******* ******* *******, **** ****** that ** *** '******** ** ******** ** *******', ***** ***** ***** ****** ******** ******** ****. ** *** *** **** *** ******* ***** ********** "**** quite ************" *** **** "**** ******** ** ******** ************ **** ********** ******* * ******* from **."

**** *********** *** *************, ********'* *** ********** **** ******** **** not **** **** *****, ** ******** ***** ******* ** ******* "***** ** ********" *** ********** ************* *** ** ****** ***** than ***** ******** ***** ***.

CEO *****

******** *** ********* **** **** *** "******* ** **** ** ******** ** **** ** [*****] ********", ********** that *** ***** ** **** ** ******** *** **** ********* hardware ***** ******** ********* '**** **********.'

**** ***** ** ***** *** ** *** *** **** **** he ******** ****. ***, ******** ********* **** ** ***** ******* ******* hardware *** **** ****** ****** ******* ** **** ** (*** Avigilon's **** *** *******), ** ***** ******** ******* *** ****** to ******* *************. ***, *** ******** ** ******* *** *** to *** ******** ********, **** **** ** **** ********, ** definition. *** ***** *** **** ** *********** ********, *** **** of * ******* ***** ******** *********** **.

*********

*** **** **** ******** ** **** **** ** *** *** normal -- ******** ******* ** ******* ** ***** ******* ******** financial *********. ********'* ******** *** ***** ******, ****** ****, **** everyone, *** *********** ** ******* ***** *** **** *******.

*******, ***** ** * **** **** ** ******* *************. ** is *** * ****** ************'*******'**********'. ***** ***** *** ** ******* ***** ** ****** ****** the ******** ************, *** *** ******* ** ****** ******, ***** going *** ******* **** ******** ***** ******* *********** *** *******'* ********.

*** *** ****** *** ************* ****** ** *** ****** ********* program, ****** **** ****** *** *** *********** ***** ** ***** / ******** ***********, ** *********** ***** ***. **** ** *** patent ******* ** *********** **********, *** **** ******** **** *** have **** *********** *** *** ******** ****** ** **** *** (e.g., ****** '*************' **** ************).

** ***** ******* **** *** **** ****** ****, *** ******** the **** *** ********'* ***, ** ******** ******* ***. ***** is ***** * **** ****** *** ***** ************ ************* (*.*.,****** ********** *** *******) *** ********, **** *** ********** / ****, ***** ****** a **** **** ***** ********* *** * ****** ************.

Comments (16)

Hikvision has about 2 billion left of that 3 Billion better hurry and make a sale for they run out!

A Hikvision / Avigilon deal makes good sense. If it was cash (and Chinese companies are good coming up with all cash bids), I think Avigilon's CEO would got for it. And for Hikvision, they get their high-end play / vehicle for the West.

I hope this does not occur. I suspected that the "poison pill" was setup for just this eventuality.

The poison pill was setup to force a minimum acquisition price far above the current stock price. So any acquirer could still acquire Avigilon if they were willing to pay the price.

That said, I do not believe that Hikvision would attempt a hostile takeover, regardless of price willing to pay, as those are messy and would undermine the rationale of buying a company like that.

On the other hand, I do not believe Avigilon CEO would have any objection to selling to anyone if the money was right. He's always been about maximizing money / 'shareholder value' and I doubt he would object to the source of the money.

How's the run rate looking for 2016?

This quarter was ~70 million, 4th quarter needs to be ~125 million to cover.

You're mixing currencies. This quarter was ~70 million USD. The 125 figure is in CAD, which makes it easier, since 125 CAD is equal to ~97 USD today.

So they need 125 million CAD to cover their revised goal of "$500 million in annual run-rate revenue". They have already implicitly acknowledged they will not meet the original $500 million (CAD) annual target.

If they really want to pull out a $125 million Q4 2016, they may be able to do it but not clear how much that means either way, unless they fundamentally re-energize the business.

You're mixing currencies...

They report in USD, but forecast in CAD?

They just started switching to USD. Back when they made the target / goal, it was all CAD.

Fair enough.

As long as they stick with what they are good at, selling cameras and currency arbitrage, they should be able to make it.

Does anyone know if they have the resources to go private?? It may be in their best interest in the long run.

In terms of going private, they would have to raise more money, but it's possible.

The bigger question, to me, is to what end would Avigilon's CEO want to go private. That tends to make sense if you want to dedicate years to turning things around and then selling off or going back public. I suspect he would find it more attractive to sell, declare victory and then launch a new startup, whether in this market or somewhere else.

Well, they are already moving in that direction by buying back tens of millions of dollars of their own stock and then shredding it.

With the introduction of analytics on the cameras (EOL for Rialtos around the corner), this will help sales of Avigilon hardware (cameras and NVRs) instead of dealers using 3rd party equipment.

"Vast majority of industry participants will eventually require a license from us."

They don't think anyone will come up with anything new?

Their position is that they hold fundamental patents that apply broadly, even if new developments are built on top of them. Whether they are right or whether they can enforce, I do not know.

This is an extension of the OV position that they held positions on any type of calibration (including auto calibration) and any time metadata is used with video analytics (i.e., data is recorded about the video based on analytics of that video). If valid, it would be hard for anyone to get around that.

Login to read this IPVM report.
Why do I need to log in?
IPVM conducts unique testing and research funded by member's payments enabling us to offer the most independent, accurate and in-depth information.

Related Reports

Hikvision USA Starts Layoffs on Sep 18, 2018
Hikvision USA has started layoffs, just weeks after the US government ban was passed into law. Inside this note, we examine: The important...
Favorite Intercom Manufacturers 2018 on Sep 14, 2018
Intercoms are certainly increasing in popularity, driven by the integration of video and IP networking. But who is the favorite? On the one side,...
VMS Export Shootout - Avigilon, Dahua, Exacq, Genetec, Hikvision, Milestone on Sep 13, 2018
When crimes, accidents or problems occur, exporting video from one's video surveillance system is critical to proving incidents. But who does it...
Ambarella on Computer Vision and US Hikua Ban on Sep 10, 2018
Ambarella, a widely-used video surveillance component supplier, is betting on the rise of computer vision and is already seeing a sales impact from...
Dell Launches IoT for Surveillance on Sep 05, 2018
Historically, Dell has been a PC and server provider (e.g., "Dude, you're getting a Dell") and widely used for surveillance storage. However, in...
Hikvision FIPS 140-2 Cybersecurity Certification Examined on Aug 27, 2018
A week after the US government passed a law banning Hikvision, Hikvision announced it had obtained a FIPS 140-2 certification from the US...
Ligowave Wireless Profile - Ubiquiti Competitor on Aug 27, 2018
Ubiquiti has become the most common choice for wireless in video surveillance (see Favorite Wireless Manufacturers) but not without controversy and...
Axis Strong Q2 2018 Results on Aug 20, 2018
Axis reported strong Q2 2018 financial results and, for the first time in many years, Axis grew faster than Hikvision. However, the company's...
ISS VMS / Video Analytics Company Profile on Aug 16, 2018
Who is ISS? In the past few months, they had one of the craziest ISC West promo items in years. Then, they hired industry veteran and ex-Dahua...
Dahua NA Consolidates Rep Firms Led By Ex-FLIR Team on Aug 01, 2018
When Dahua acquired Lorex / FLIR SMB, Dahua NA had 11 manufacturer rep firms and FLIR had another 6. Now, Dahua NA, led by the ex-FLIR team, has...

Most Recent Industry Reports

Genetec Takes Aim At 'Untrustworthy' 'Foreign Government-Owned Vendors' on Sep 24, 2018
Genetec is taking aim at 'untrustworthy' 'foreign government-owned vendors'. This is not a new theme for Genetec as nearly 2 years ago, Genetec...
4MP Camera Shootout - Axis, Dahua, DW, Hanwha, Hikvision, Uniview, Vivotek on Sep 24, 2018
4MP usage continues to climb, especially for low cost fixed lens models. To see who was best, we bought and tested seven 4MP models from Axis,...
Alexa Guard Expands Amazon's Security Offerings, Boosts ADT's Stock on Sep 21, 2018
Amazon is expanding their security offerings yet again, this time with Alexa Guard that delivers security audio analytics and a virtual "Fake...
UTC, Owner of Lenel, Acquires S2 on Sep 20, 2018
UTC now owns two of the biggest access control providers, one of integrator's most hated access control platforms, Lenel, and one of their...
BluePoint Aims To Bring Life-Safety Mind-Set To Police Pull Stations on Sep 20, 2018
Fire alarm pull stations are commonplace but police ones are not. A self-funded startup, BluePoint Alert Solutions is aiming to make police pull...
SIA Plays Dumb On OEMs And Hikua Ban on Sep 20, 2018
OEMs widely pretend to be 'manufacturers', deceiving their customers and putting them at risk for cybersecurity attacks and, soon, violation of US...
Axis Vs. Hikvision IR PTZ Shootout on Sep 20, 2018
Hikvision has their high-end dual-sensor DarkfighterX. Axis has their high-end concealed IR Q6125-LE. Which is better? We bought both and tested...
Avigilon Announces AI-Powered H5 Camera Development on Sep 19, 2018
Avigilon will be showcasing "next-generation AI" at next week's ASIS GSX. In an atypical move, the company is not actually releasing these...
Favorite Request-to-Exit (RTE) Manufacturers 2018 on Sep 19, 2018
Request To Exit devices like motion sensors and lock releasing push-buttons are a part of almost every access install, but who makes the equipment...
25% China Tariffs Finalized For 2019, 10% Start Now, Includes Select Video Surveillance on Sep 18, 2018
A surprise move: In July, when the most recent tariff round was first announced, the tariffs were only scheduled for 10%. However, now, the US...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact