Avigilon Weakest Quarter Ever (Q1 2016)

By: 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.

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

***, **** ***** **** 20 ***** ***.

********'* ****** **** ********* to ****, ***** ********** with *************. ** **** note, ** ******* *** results, *** ***'* ***** and **** **** ***** for *** ****** ** Avigilon.

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

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

********'******** ***** **% **** **** year ** ******** ********. By **********, ******** *********** **% * **** ago*** * ***** *** it *** **%. **** after ********* *** ******** currency ******** ***** ** previous *****, ********'* **** growth ** ******* ****.

********, ********* ****** *** down ~**% **** **** year, ** **** ~*%.

Competitive **********

**** **** ***** ** *** same ******* *** **** ******, up **%** ******** ********, **** far ****** ******* **** Avigilon. **** ** * huge ****** **** **** 2 ***** ***, **** Avigilon *** ******* ~** Axis *** *** ******** average.

***, ***** *** ******** certainly *** ******** *********, major ******* ************* *** still ******* ** *** 10% ***** ***, ** course, ********* *** ***** are ***** * ** 5x ***** ******.

Geographic *********

********** ********* *** *** much ******.

*** ******** ****** *** Asia, **** **% ******, though **** * **** small **** *** **** Avigilon ***'* ************* ******* to ******* ********** ** that ******.

****** / *** ****** East *** ************ **** at **** *%, ********** compared ** **** ****** 20-30% ****** *****. ** suspect ********'* ***** ************** is ****** *** ** strong ***** ** ** is ** ***** *******. Also, *************, ******** ******* reporting ******** ** ** sales, ***** **** **** been ********** ** *** past ****.

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

***** *** ********* ******** grew ** ***** ****** rate ****, ** **** 7%. ** **** ****, sales *** ********* ******** were ** **%, * tremendous *********. *******, ** saw **** ********* ********** the ******* ** ******** slowed ******, *** *****, eliminated ********* ******** **** the *** **** *****, etc.

**** ** ********** ********* to ******* ** ******** historically *** ******* ** ***** and ********* ***********, ******* that **** **** *** to **** ****** **. With ****** ** ******* new *********, **** ***** put ******* ******** ******** on ********'* ****** ******.

Patent *********

******** **** **** *** have ** ***** ****** licensees ***** ** ***** adopter's *****, ** **** a ********** ******** **. Based ** ******* ** their******* ******** ****, ******** ***** ****, IQrity ***., *** ********, IVS **********, *******, *** Topview, **** ** ***** are **** ***** ** likely **** ******* *********.

********'* *** ***** ******** to ******* ******* *******, only ****** **** ** was '******** ** ******** of *******', ***** ***** ***** ****** ******** acquired them. ** *** *** that *** ******* ***** eventually "**** ***** ************" and **** "**** ******** ** ******** participants **** ********** ******* a ******* **** **."

**** *********** *** *************, Avigilon's *** ********** **** delaying **** *** **** them *****, ** ******** fully ******* ** ******* "***** ** ********" *** historical ************* *** ** higher ***** **** ***** adopters ***** ***.

CEO *****

******** *** ********* **** that *** "******* ** **** ** hardware ** **** ** [their] strategy", ********** **** *** money ** **** ** software *** **** ********* hardware ***** ******** ********* 'more **********.'

**** ***** ** ***** and ** *** *** even **** ** ******** this. ***, ******** ********* **** of ***** ******* ******* hardware *** **** ****** prices ******* ** **** do (*** ********'* **** not *******), ** ***** Avigilon ******* *** ****** to ******* *************. ***, for ******** ** ******* its *** ** *** solution ********, **** **** to **** ********, ** definition. *** ***** *** cost ** *********** ********, the **** ** * premium ***** ******** *********** is.

*********

*** **** **** ******** is **** **** ** the *** ****** -- Avigilon ******* ** ******* to ***** ******* ******** financial *********. ********'* ******** are ***** ******, ****** they, **** ********, *** constrained ** ******* ***** low **** *******.

*******, ***** ** * real **** ** ******* deterioration. ** ** *** 9 ****** ************'*******'**********'. ***** ***** *** an ******* ***** ** relief ****** *** ******** organization, *** *** ******* of ****** ******, ***** going *** ******* **** controls could ******* *********** *** company's ********.

*** *** ****** *** extraordinary ****** ** *** patent ********* *******, ****** that ****** *** *** operational ***** ** ***** / ******** ***********, ** ObjectVideo ***** ***. **** if *** ****** ******* is *********** **********, *** core ******** **** *** have **** *********** *** the ******** ****** ** once *** (*.*., ****** '*************' **** ************).

** ***** ******* **** the **** ****** ****, and ******** *** **** for ********'* ***, ** Avigilon ******* ***. ***** is ***** * **** market *** ***** ************ manufacturers (*.*.,****** ********** *** *******) *** ********, **** new ********** / ****, could ****** * **** term ***** ********* *** a ****** ************.

Comments (16)

Eddie Perry

05/11/16 02:30pm

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

John Honovich

IPVM | In reply to Eddie Perry | 05/11/16 07:03pm

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.

Undisclosed Integrator #2

In reply to John Honovich | 05/12/16 12:06am

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

John Honovich

IPVM | In reply to Undisclosed Integrator #2 | 05/12/16 12:26am

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.

Undisclosed #1

05/11/16 02:44pm

How's the run rate looking for 2016?

Undisclosed #1

In reply to Undisclosed #1 | 05/11/16 05:00pm

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

John Honovich

IPVM | In reply to Undisclosed #1 | 05/11/16 06:10pm

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.

Undisclosed #1

In reply to John Honovich | 05/11/16 06:46pm

You're mixing currencies...

They report in USD, but forecast in CAD?

John Honovich

IPVM | In reply to Undisclosed #1 | 05/11/16 07:02pm

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

Undisclosed #1

In reply to John Honovich | 05/11/16 08:28pm

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.

Mark Jones

05/11/16 11:44pm

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

John Honovich

IPVM | In reply to Mark Jones | 05/12/16 12:28am

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.

Undisclosed #1

In reply to Mark Jones | 05/12/16 12:48am

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

Undisclosed Integrator #3

05/16/16 03:07pm

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.

Undisclosed Integrator #4

07/01/16 04:47pm

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

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

John Honovich

IPVM | In reply to Undisclosed Integrator #4 | 07/01/16 05:35pm

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.

Read this IPVM report for free.

This article is part of IPVM's 6,300 reports, 840 tests and is only available to members. To get a one-time preview of our work, enter your work email to access the full article.

Related Reports

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...

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...

"Stress in the Residential Market" - Major Lender Exits on Nov 06, 2019

The residential security / 'alarm' market is getting worse, at least for traditional players. Now, one of the biggest lenders in the industry 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...

Knightscope Sells Just 1 Net New Robot In 6 Months on Oct 04, 2019

For the first half of 2019, US government records show that Knightscope has sold just 1 net new robots ('machines-in-network'), inching up from 52...

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...

OpenALPR Doubles Prices on Jun 06, 2019

There is no 'race to the bottom' in cloud / AI video surveillance. In May, Verkada increased their prices. Now, OpenALPR is doing the same with a...

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...

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...

Brinks Home Security / ASCMA Risks Bankruptcy on Apr 08, 2019

ASCMA, aka MONI, aka Brinks Home Security has issued a warning in their most recent financials that they risk bankruptcy. In this note, based on...

Most Recent Industry Reports

LIVE Now "Fever Camera" Show Day 2 on Jun 03, 2020

IPVM is excited for the world's first "Fever Camera" show. Day 2 is today from 11am to 4pm EDT. Recordings from Day 1 are posted at the end of this...

Cobalt Robotics Presents Indoor Security and Access Robots on Jun 03, 2020

Cobalt Robotics presented indoor security robots at the May 2020 IPVM Startups show. Inside this report: A 30-minute video from Cobalt...

Dahua Sues Ex-North American President, Says Legal Typo on Jun 03, 2020

Dahua's former North American President Frank Zhang claims he is owed almost $11 million but Dahua counter claims it is just a "scrivener's error",...