H2 2010 Financial Results Examined

JH
John Honovich
•Published Mar 11, 2011 00:00 AM
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IndigoVision's financial results through Jan 31, 2011 show that the company's financial performance continues to lag the overall IP video market. While the company's growth rate increased from 6% in their year end 2010 financial results to 25% in the recently released 2011 Interim results [link no longer available], that increase (and overall growth) remains below the overall market.

Let's start by reviewing key data points from the new results:

  • Total Revenue for the 6 months was 15 Million GBP (equivalent to ~$25 Million USD) up 25% year over year
  • Region: APAC strongest at 38%, Americas at 33%, EMEA at 13% (EMEA is their largest, home market)
  • Gross Margins fell from 62% to 58%; Reasons cited: "competitive pricing conditions in some of our markets and a continuing shift in the mix of sales towards cameras"
  • Charging for Software Upgrades starting May 1, 2011. Previously 'unlimited software upgrades' were provided at no additional charge. This may be significant as such costs can be fairly expensive.

While the increase in growth rate is certainly a positive sign, in the past 6 months, surveillance sales across the world have surged. For instance both Axis and Mobotix, significantly larger competitors, turned in 40% growth rates. We suspect that IndigoVision is moderately losing market share.

Additionally, a number of 'smaller' IP video companies who have been growing very strongly over the last few years are on the verge (or have already) surpassed IndigoVision's revenue level (yearly rate of ~$50 Million USD). Such companies include Arecont, Avigilon, Gentec and Milestone (who are all above $40 Million annual revenue). This is significant as just a few years ago, IndigoVision had a sizeable lead over these companies.

On the positive side, IndigoVision is emphasizing its upcoming support for ONVIF. The lack of third party IP camera support has been a visible weakness. Over the next year, as ONVIF support matures, this should help rectify this specific problem.