Axis Slow Growth Returns - Q4 2013By: John Honovich, Published on Jan 31, 2014
The seesaw continues and this time, it is going down.
$700+ Million Revenue for 2013
With the year complete, Axis' 2013 annual revenue was 4.7 billion SEK or ~$720 million USD.
The company's market capitalization is ~3x sales, or ~$2.2 billion USD.
In Q4 2013, while total headcount reached 1627 employee, this only increased by 35 people, by far the lowest amount for Axis in years. They explained, "After several years with a very high rate of recruitment, the hiring rate was adjusted during the year to become more aligned with current market growth." In other words, future growth is likely to continue to be low, so hiring will match that.
Geographic Sales Breakdown
Growth in the Americas and EMEA were both modest, at best. The US was particularly poor, at just 7%, especially compared to historic high numbers here. EMEA was not much higher at 9% but that is a lot better than the flat performance in recent quarters.
Asia, by far, was the fastest growing region at a robust 39%. While Asia still only represents 14% of Axis total business, this is a good sign for them.
R&D Spending Continues to Grow
Despite the weaker growth and slower hiring, R&D spending increased notably quarter over quarter. Axis annual pace of R&D spending is now over $120 million (contrast - Avigilon did $100 million in 2012 sales).
On the other hand, Axis product development continues to focus on niche products (like this week's nitrogen pressurized stainless steel cased PTZs). The good news is that it gives them a wide array of high end options with few competitors. The bad news is that their 'bread and butter' cameras are being strongly undercut on price at comparable (and often better) quality.
Video Analytics Being Emphasized More
Axis is increasing its marketing / positioning of video analytics and intelligent video, including it in the deck:
For example, Axis, for the first time, added in an array of advanced analytics on a new high end 1080p PTZ.
Despite the continued lackluster performance, Axis says their outlook is unchanged, citing 20 - 25 percent annual growth. On the other hand, Axis grew 17% for the year, which is not terrible. On the other hand, it is not clear to us what will enable them to grow at a faster rate in 2014.
Sees weak Americas growth this quarter as a 'one off' and is 'convinced that improvement going forward' there. Also, emphasized expansion in America with opening of 6 regional offices.