Avigilon's Projected Market Cap and IPO Plans

Author: John Honovich, Published on Nov 01, 2011

In September 2011, Avigilon announced plans to IPO. At that time, we analyzed the prospectus looking at their massive growth and comparatively weak profit margins. Now, Avigilon has ammended their prospectus filling to detail how much they are going to raise, what they are going to be valued at and what they are doing to do with the proceeds. In this note, we examine all of these points and compare it to industry metrics to understand Avigilon's competitive positioning.

From the updated Prospectus, a number of important new points stand out:

  • Net proceeds from the IPO for Avigilon's internal corporate use is projected at $17.9 Million CAD. 
  • Total proceeds are just under $25 Million CAD but that includes stock being sold for Avigilon's prinicpals as well as transaction costs for the deal.
  • The share price offered will be $4.50.
  • 26.4 Million shares are existing and 4.5 new shares will be sold
  • The market capitalization before new funding is raised will be ~$120 Million CAD ($4.50 x 26.4 Million).
  • $7.1 Million of proceeds is planned for expanding sales and marketing 'including opening branch sales offices in Brazil, China, India, Eastern Europe and South Africa within the next 12 to 18 months'
  • $5.4 Million of proceeds is planned for expanding product development.

Analyzing Market Valuation

With a projected market valuation of ~$120 Million and 2011 revenue expected to be in the ~$50 Million range, prices to sales ratio is a strong but not unreasonable 2 to 3x. For instance, Axis's stock trades at a similar range. More typically, moderate growth surveillance companies trade at 1x to 2x. Struggling companies trade at less than 1x (e.g. IndigoVision). Surveillance companies in the irrational Chinese stock market, like Hikvision trade a 10x. All in all, Avigilon's valuation looks to be fair.

Analyzing Use of Proceeds

The main source of the proceeds will go to sales expansion. We think international expansion could work quite well for Avigilon as they offer a low cost, easy to use offering that meets core concerns in less economically developed countries.

On the other hand, a little over $5 Million for product development is not a huge amount of money. While it is a solid boost over their historical expenditures of about $2 Million per year, as a point of comparison, Axis spends $5 Million on R&D every month. However, we suspect that Avigilon can and will dedicate increased funding to R&D based on their growing cash flow. That noted, their product development should be carefully watched to determine how strong their long term growth prospects and product competitiveness remains.

Comments : PRO Members only. Login. or Join.

Related Reports

Last Chance - Security Sales Course Summer 2018 on Jul 19, 2018
Today is the last day to register. Based on member's interest, IPVM is offering a security sales course this summer. Register Now - IPVM Security...
Directory of Video Surveillance Startups on Jul 18, 2018
This directory provides a list of video surveillance startups to help you see and research what companies are new or not yet broadly known entity...
Arecont Acquisition By Costar on Jul 11, 2018
Arecont Vision acquisition by Costar Technologies has been approved by the court, concluding the bankruptcy process triggered by Arecont's...
Eastern and SavvyTech Merge, Form ENS, Targets ADI on Jul 09, 2018
ADI, ENS is coming for you. Or, at least, they hope. Two US distributors, NY based EasternCCTV and California based SavvyTech have merged, to...
Arlo IPO Filing Reveals Key Financial and Competitive Details on Jul 09, 2018
Arlo is going to IPO at a projected valuation greater than Axis. Now, Arlo has released their 175-page Form S1 Registration Statement for its...
Drops Dahua, Fenner Becomes ISS CMO on Jul 09, 2018
Hired to improve Dahua's miserable marketing just last year, Janet Fenner has quit Dahua, joining VMS manufacturer ISS as Chief Marketing...
Pelco Is For Sale on Jun 27, 2018
Pelco is for sale, being shopped by an investment bank, IPVM has confirmed from multiple sources. The company, acquired by Schneider Electric in...
Snap Surveillance Profile on Jun 26, 2018
There are not a lot of video surveillance companies that survive 9 years with only one feature that makes their product stand out. In the case of...
Cybersecurity Startup VDOO Disclosing 10 Manufacturer Vulnerabilities Starting With Axis And Foscam on Jun 20, 2018
Cybersecurity startup VDOO has uncovered significant vulnerabilities in Axis cameras along with many others not yet disclosed. In this report, we...
Buy Arecont: Top Bid $10 Million Cash on May 22, 2018
Last year, Arecont had a deal for a purchase price of $170 million (see Failed Arecont China Acquisition). This year, Arecont has a deal for a...

Most Recent Industry Reports

Free 100+ Manufacturer-Customized Camera Calculator Released on Jul 19, 2018
Now, any manufacturer has a customized IPVM Camera Calculator, free. The goal is to make it easier for companies to help their customers better...
Improved Security And Surveillance Bidding - 2018 MasterFormat Divisions Examined) on Jul 19, 2018
Navigating the world of system specifications and bidding work can be complex and confusing, but a standard format exists, and understanding it...
Last Chance - Security Sales Course Summer 2018 on Jul 19, 2018
Today is the last day to register. Based on member's interest, IPVM is offering a security sales course this summer. Register Now - IPVM Security...
Directory of Video Surveillance Startups on Jul 18, 2018
This directory provides a list of video surveillance startups to help you see and research what companies are new or not yet broadly known entity...
Ladder Lockdown and Ladder Levelizer Tested on Jul 18, 2018
Ladders are a daily necessity for surveillance and security installers, but working on an unstable surface can be extremely dangerous. In addition...
FST Fails on Jul 17, 2018
FST was one of the hottest startups of the decade, selected as the best new product at ISC West 2011 and backed with tens of millions in...
Axis ~$100 Camera Tested on Jul 17, 2018
Axis has released their lowest cost camera ever, the Companion Eye Mini L, setting their sights on a market dominated by Hikvision and Dahua. Can...
Amazon Ring Alarm System Tested on Jul 16, 2018
Amazon Ring is going to hurt traditional dealers, and especially ADT, new IPVM test results of Ring's Alarm system underscore. IPVM found that...
Hikvision Wins Chinese Government Forced Facial Recognition Project Across 967 Mosques on Jul 16, 2018
Hikvision has won a Chinese government tender which requires that facial recognition cameras be set up at the entrance of every single mosque...
Installing Dome Cameras Indoors Guide on Jul 16, 2018
IPVM is producing the definitive series on installing surveillance cameras. This entry covers one of the most common scenarios - installing dome...

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