Axis Acquires Video Analytics Firm Citilog

By John Honovich, Published Feb 01, 2016, 12:00am EST

Axis rarely makes acquisitions. They get acquired, of course, (i.e., by Canon for $2.8 billion USD last year) but they generally do not buy other companies, typically focusing on internal developments and partnerships.

Now, Axis has acquired a video analytics firm named Citilog.

In this note, we examine Citilog's revenue, offerings, fit within Axis and how this compares to Avigilon and FLIR.

Who is Citilog?

Citilog is a small video analytics developer focused on the traffic market, founded almost 20 years ago in France.

Their annual revenue is in the ~$6 million EUR / USD range and they are modestly profitable, according to their most recent financials. However, the company has not really grown in the past decade. Despite raising at least 3 rounds of funding, including 4.2 million Euros in 2005 [link no longer available], headcount and revenue has only slightly increased since 2008.

Price Paid / Valuation

Axis did not disclose the valuation but given Citilog's low growth, we doubt they would have needed to pay much of a premium (perhaps 2x revenue or the ~10 - 15 million EUR range).

Update: Axis disclosed the price paid as 93M SEK / ~$11.5 million USD in their Q1 financial report, within the range we estimated initially.

Given Citilog's past fund raising and the long wait for an exit, the investors might have broken even but not a great return.

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Market Fit

Citilog is a specialist in an area outside conventional security / surveillance. They focus on the Intelligent Transportation Systems (ITS) market, where emphasis is on using analytics to detect traffic incidents, control intersections, gather traffic data, etc.

As such, this does not compete much with existing Axis offerings or partners.

Axis Positioning of Citilog

Overall, this is a small addition to Axis (whose revenue is roughly 150x larger than Citilog) that might help them in a segment outside the current traditional market which is in a 'race to the bottom'.

Analytics for Axis

Historically, Axis has viewed analytics as a partner oriented solution, where Axis provides the platform and their partners (ACAP) bring the analytics. When Axis declared the MP race over 3+ years ago, they hoped to drive growth with the iPhone / app store model. This has, to be kind, not met their expectations.

In 2015, Axis released their own 'robust' analytics that were, unfortunately, anything but as our test results showed.

We suspect this acquisition, along with Axis releasing their own analytics, is a sign of Axis future analytics plan, to more tightly bundle their own analytics. We also believe this is the prudent move, so long as they can develop / buy solid quality analytics, as integrating / cross-selling third party analytics creates problems both for marketing and for implementation.

Competitive Matchup - Avigilon and FLIR

The most direct competitive matchup is FLIR, who acquired Traficon in 2012 for $46 million. FLIR is now using Traficon's analytics in their newer thermal cameras (the FC-series). Combined with FLIR's acquisition of Lorex (in 2012 as well) and DVTel (in 2015), we see Axis and FLIR on path to be more direct rivals.

Also, while Avigilon does not offer an ITS solution, they are the biggest player in analytics overall (from their VideoIQ as well as their OV patent acquisitions). Now, Avigilon's new H4 camera release is including analytics 'for free' in every H4 camera which is a milestone given Avigilon / VideoIQ's strong track record. 

As the Chinese continue to race to the bottom, Axis and other Western manufacturers, will need to step up their analytic offerings to differentiate and justify the sale of their cameras / offerings.

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