Axis Strong US Growth, Flat EMEA - Q3 2018 Financials

By John Honovich, Published Oct 18, 2018, 09:23am EDT

This spring, Axis had its best financials in many years (see Axis Strong Q2 2018 Results). However, over the summer, Axis had many products sold out.

New Axis financial results for Q3 2018 show decreased growth and mixed results, with strong US growth but flat in EMEA.

Inside this note, we examine Axis financials and look at the challenges and opportunities for the company.

Financials ********

******* *** ** **% in ***** ********** **** over **** ***** **** (*** **** report). **** ** * steep **** **** ** which *** **** **** year ****** ** **%.

****' **** *********** *** this *** ******* ********:

*** ****** ****** ***** particularly ******** ** ***** of *** ********* *********** situation ** *** ****** components ******.

** *** *** ***** how **** **** ** a '******' ***** ** Axis *************** ******.

*** *********** ******* **** quarterly ********** ** **** Axis ********** **** *** manage / ********** / channel ***** ** **** quarters **** ******. *** company *** * **** record ** ********* ****** bouncing ** *** ****.

Shortage ******

**** *** *** ******** nor ******* *** **** better ****** ***** **** been ** **** *** not **** * ******* shortage, ******, **** *** various ******* ** **** heard ** ******* *******, it ** ****** ***** material.

Americas ******, **** ****

******** **** **% ***** EMA *** ****, ********** a **** ***** *** the ******* ** ***** in ***** *******:

******, ** *** **** 5 *****, *** ******** has **** **** **% to *** *********** **% of **** ***** *******:

***** *** ***** *** certainly *** **** ******** impact ** **** **********, this ********* * **** trend ** **** ***** stronger ** *** ******** than ** ***** **** region ** ****.

Profits ******

**** ******* ******** ** be ****** **** **.*% gross ******* *** **.*% operating *******:

**** ** ******* **** have ******* **** ******* and ******** ***** ****** models ** *** **** few *****.

********, ***** ***** **** profits, **** ***** *** prices *******. *******, ***** they ** *** **** enough ******** ** **, that ** ******** *** the **** *****.

Hikvision *** ******* **** ** *** ****

*********,********* ** ****** **** it ********* ** *** 'biggest **** ** *** year'** *** ********:

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

*** ***** ********* ********* has **** **** ** that ********* *** ********* plenty ** ******** ** sell.

********* ** ********** ****** be *** ** *** next *** ***** *** we **** ** ****** on ****** ** ****.

 

 

Comments (5)

One clear advantage Hikvision has over Axis is that Hikvision has evidently plenty of products to sell.

If Axis' and Hikvision's manufacturing forecasters got together they could probably average out estimations to a more realistic build schedule for both companies.

That's funny! I do wonder how much of the 'global components' shortage is related to Hikua cornering the market on certain components. To be clear, I have no inside information, just wondering based on their large size and reports over the years of Hikua's aggressiveness in negotiating advances in components.

I have been under the impression that Axis' shortages are related to camera-specific components, not general purpose things like resistors, capacitors, PoE magnetics, etc. This is based on some conversations with Axis people, and the fact that there does not appear to be any general component shortages in the manufacturing space at large that I have heard of.

If the shortages are indeed camera-specific, then it would likely be around things like imagers that might be common to both companies (since Hik uses mostly HiSilicon SoC's, and Axis uses a lot of their own ARTPEC chips). I had considered that some of the consolidations, and demands, in the semi conductor manufacturing sector might be making it difficult for Axis to get their ARTPEC chips produced, but if that were the case I would expect their shortages to be more broad vs. limited to specific models.

It is also worth noting that Avigilon has not had component availability issues (at least not that I have heard on the street). Similarly, Hanwha has been able to meet demands, though of course with lower overall volume.

If Hik were cornering the market on something, I would expect we would see the effects in more than just Axis, but that doesn't seem to be the case. It feels like Axis' issues are around Axis-specific items. I don't fully trust that it is "component shortages" as much as potentially general manufacturing and ramp-up issues, but that is only my own guess with no data or conversations to support it.

For large volume manufacturers like Axis the shortages are almost always going to be a result of critical components in the imaging pipeline that you can not easily substitute without changing the performance/specs and firmware of the camera and that have limited manufacturers.  I would guess imaging sensors (Sony, Aptina, etc.) followed by lenses (CBC, Fujinon, etc.) as the potential culprits for the shortages.

As for the reason, I would consider the huge growth in DIY/consumer brands as well as drones rather than any particular surge in our industry.  There's definitely a decent overlap in sensors used by these two markets with those used by video security manufacturers though I'm not as sure about the lenses.

That reports seems right on track with what we are seeing. Our US sales were up over 23% but the EMEA was only up 5%..I would say the Middle East sale being flat for them was more about the current financial and political issues of the region and less about their product availability. The situation with Qatar and the other gulf states along side the struggling economies of the UAE and KSA...We are just now seeing large projects released in Saudi that had been awarded more than a year ago. 

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