Axis Q2 2014 Growth Up But

By: John Honovich, Published on Jul 09, 2014

Axis' seesaw growth continues. After Axis missed and profits sank in Q1 2014, the second quarter's overall growth numbers improved (20% growth in local currencies). However, the geographical breakout shows this to be an anomaly and downward revised market growth rates indicate future challenges.

****' ****** ****** *********. After **** ****** *** ******* sank ** ** ****, *** second *******'* ******* ****** numbers ******** (**% ****** in ***** **********). *******, the ************ ******** ***** this ** ** ** anomaly *** ******** ******* market ****** ***** ******** future **********.

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Americas ***** ****

******** ****** ******* **** an ******* **** **% in ** ** **** 13% ** *** *** quarter.

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EMEA Huge ****

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Downward ****** ****** *****

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****, ** ******, ** just *** ******* *****, not *** ***** ************ but ******* ******* ******** ******* ** have **** *** *** overall ******. * ***** ****** market ***** ** ******* for *** ************.

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***** ****(**:**), **** ************ **** their ****** **** *** below *** ******* ******* and ************ *** **** domestic manufacturers, Dahua and *********.

Price *******

**** ********* **** ****** research ******* ****** ******* sales ***** ******* ** 5-10% *** ****. **** did *** ******** **** that. ** ****, **** is ********** ***** **** sales ****** **** ***** revenue.

Axis ******** ** ********* ****

**** *** ********** ***** 'strong ******' **** ********** customers **** **** ** breed *** ****** ** pick *** '**** ********** components' rather **** *** * solution. *******, ** ************ that *** ***** *******, end ** *** ********* are ********** *** ***** that **** *** **** they **** ***** **** Camera *********, ****, ***.

New ******** *** **** ***

*******, **** ********* ** new ******* ******** ********* their ********** ** * decelerating ******.

**** ****, *********** ***** Axis *** ******* ******* has **** ******** ** the **** *** (*.*.,*****,** ******,* ******, ***.).

****** **** ****** ******* solidify ***** **** ** the *** ** *** end ******, *** ***** progress ** ***** ******* competitors **** ** ***** low **** ** *** now ***-** ** *******, combined **** **** ********* in ********* *** ****** / *** *** *********, means **** **** *** going ** ******** ** suffer ******** ** *** small ****** ***** / mass ****** ******** **** they ********** ********* *** a *** ****** **** for ****.

Axis ** ********* *********

*** ****, ***:**** ** **** / Half **** ****** ******* ** **** **********.

Comments (7)

The report also mentions that inventory levels at US distributors is up. I take this to mean increased sales to these distributors have not yet sold through at the same pace. I assume Axis recongnizes sales when they invoice the distributor.

In Q1 2014, they said that inventory levels at US distributors declined. I am not sure if this is just a catch up for that.

Axis might argue that this is a bullish sign as it means that distributors are bullish about future sales accelerating. [Update: In the call, they mentioned that previous levels were low and that this increase is positive sign.]

I don't know. Since inventory levels declined and then increased so far, it will take the next 2 quarters to really get a good gauge of what is happening.

Btw, Axis' share price jumped nearly 10% for the day (July 9, 2014). I am a little surprised as I don't see what fundamentally changed for the better in these results (i.e., it's in line with their past year plus performance pattern).

Since the Chinese camera guys are encroaching into traditional Axis markets, what is Axis doing to try and penetrate the Chinese market?

Can they even compete there?

It's a good question and Axis has provided us some feedback that we are putting together for a post next week.

If I had to guess though, Axis is targeting very high end projects inside China where advanced / niche feature sets that they are strong in can help them win. I find it hard to believe that Axis can compete for small systems in China.

Btw, Axis gave a rule of thumb of 8 to 10 years for replacement of cameras, consistent with Lifespan of Video Surveillance Systems survey results.

Axis CEO on Dropcam/Google deal: "focused on the consumer segment, selling everything online .... no direct effect from our perspective."

This is somewhat bizarre, considering consumer was/is clearly a key area for AVHS (and Dropcam was a former Axis partner).

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