Avigilon CEO Aims For $3 Billion

By: John Honovich, Published on Oct 05, 2016

Despite Avigilon's stock price collapse, management turnover, decelerating growth and net losses, Avigilon CEO shows that he is optimistic as ever.

In this report, we examine Avigilon's CEO outlook and why the focus on top line revenue growth has proven so damaging for the company.

******* ********'* ***** ***** ********, management ********, ************ ****** and *** ******, ******** CEO ***** **** ** is ********** ** ****.

** **** ******, ** examine ********'* *** ******* and *** *** ***** ** top **** ******* ****** has ****** ** ******** for *** *******.

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

Background - $*** *******

*** ******** ******** *** proclamation *** ** **** / **** ************ ******** ***** $*** million ******* (***) **** for ****. ******** ***** ********* / **-*** ** ** the **** ****** ** achieve $*** ******* ****** run ****.

******, **** ******* ** it *** *** **** *** they ****** ***** **. While **** *** **** far **** ********* $*** million *** ******* *** the ****, ** **** do $*** ******* *** for **** ******* (** 2016), **** **** **** accomplished *** '*** ****' (i.e., $*** * * quarters = $*** *******). To ** **, **** will **** * **** over **** ****** **** of ~**% *** **, which ** ******** ***** what **** **** ***** doing this ****.

*******, ******* *** ********** large ******** ****** ************ against *** *** **** the **** * ***** (~25% *****), ******** ***** not **** **** *****, even *** *** ****** run **** *******.

New ****

********'* *** ** *** keynote ** ** ******** Canadian ******** *****. ****** that*********, ** ****** *** *** ********* his **** **** *** then **** **** ****:

**** * *** **** you ** **** **’* to **** ******* *** continue ** ***** *** top **** *** *************. It’s ** *** **** a ******* ******* ** annual ******* *** ****. It’s **** ** ****** our *********** ******, *** to **** **be *** ******** ****** ** *** $** ******* ****** ** ****** ** ********* * ** *** **** ****** ***** ** ******. [IPVM emphasis added]

$* ******* ******* ** the ************ ********* **** 10% ** * $** billion ******.

*** ********** ****** ** the ****** ******* ****** out ** **** **** is * **** ***** where ** ** ***** celebrated. ** **** ***, he *** **** **** be ************. *******,******* ** *** ********* as * *****, ***** ** ** doubt ********'* *** ** still ******* ** *** line ******* ****** ****** anything ****.

Focus ** ******* ********

***********, ******** ** ******* in ** *** $*** million ****:

  • ********** *** ******* ** 'win ** *** *****'**** ** *** ********** team (******* ********).
  • **************** ******* *** *********** ** ******** ** see ******** ** *********** instability / ******* ******** coming **** ********'* *** / ********** ********. 
  • *** ***** ****** *** following ******** ** *** stock ***** (** ** $34, **** *** ** ~$8.50) *** ******* * huge ****** ** ******** attention ** *** *******, along **** ********* ********** from ********* (*.*., ******** '************ **********' / 'Authoritarian' ***).
  • *** ***** *** ** ~$8.50 ** *** **** exact ***** ** *** 4 ***** *** **** Avigilon's *** ******* ********* the $*** ******* ****, so *** *** ****, *** the ***** *** ********* no *** **** ** the **** * *****.

**** ********* *** ******* closely, ** ***** *** focus ** ******* ***** all **** *** ****** this. ** ** *********, allowing *** ***** **** revenue ***** ** *** expense ** ******** *********** long **** ***********.

Never ****

** ******** ***** ************ Avigilon's ******************, ** ** **** from *** *********:

*** *** ****** *** thing ** ** ***** quit. *** **** ** be ********* *** *** have ** *********. ******* comes **** *** **** to ******* **** ****. Success *** ******* *** always ********, *** ** stems **** *** ****** up.

***** ** ** ***** perseverance ** ********* *** there *** **** ****** that ****** ** ******* done. ******* ***'* **** against * **** **** than ****** **** **** not ********* *** **** open *** **** *****; you *** ****** ***** yourself ***.

***** ********'* ******* ********** channel (***** ****** ****** of *******/*********) *** *********'* Chinese ********** ****** ****** invasion, ***** ** **** so **** ********'* *** can **.

******** *** ********* ** a *** **** *******. They *** ********* ** a **********, ******, ******* but **** ** **** become **** ******** ***** building * ******* ************ and *** ** ******** with **** *** **** revenue ******.

**** ** ******? *** knows? **** *** ***** price ** ****** ****, we ***** *** ** acquisition ** *** **** sensible ***** *******.

Comments (11)

Where is the 30B from?

Sean, good question, that is based on forecasts for the combined future revenue of video surveillance and access control.

Here is a related slide:

Obviously, that slide says $25B, not $30B but surely there are many market others forecasts with numbers much higher or forecasts that look further out (to 2022, etc.).

This chart says that the global market is $25B but Avigilon's CEO stated that the US market is $30B.

"It’s also to expand our addressable market, and to grow to be the dominant player in the $30 billion dollar US market by attaining a 10 per cent market share or higher. [IPVM emphasis added]"

3, you are right, I missed that.

Now, I don't have any idea how he got a US $30 billion market. I am sure there is some stat out there or some segmentation that might claim that but it is way too high for the 'real' US video / access market.

"Not quitting" is not plan. Where will the cash influx come from to either grow your footprint by adding sales (outside/inside) and/or acquisition. The last thing a public company can do when your stock is not just flat but down is to spend money. Going from 500M to 3B is 600% growth which is ludicrous without significant, radical change.

What's the advantage of chasing revenue growth in lieu of margins? To me that seems like it would only increase overhead, further eroding margins or resulting in price increases. Price increases would only further erode revenue. Kind of a catch-22. Not being facetious, just trying to understand why the revenue is so critical to Avigilon from a financial/business perspective. Is it pure market share?

What's the advantage of chasing revenue growth in lieu of margins?

Ask Hikvision :)

There are certainly are some economies of scale, both in manufacturing and marketing. Those could be advantageous though I am skeptical about how significant that is.

For early stage startups, revenue growth is generally the defining factor in valuation, since profits are neither expected nor encouraged early on. However, for Avigilon, now a decade old in a mature business, I do not get why top line revenue growth would make as much sense. And investors certainly have shown that the top line revenue growth at the expense of profits and a strong internal organization is not attractive.

Ask Hikvision :)

Be careful mentioning that name. If you say it two more times Marty Calhoun will appear in this thread.

Axis Shrugged.

This is what I saw in my e-mail:

By the time I said 'Ding Dong!', I realized my error. Still it was a rush...

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