Hikvision 2018 Revenue Tops $7 Billion USD But Growth Slows To Low

By: Charles Rollet, Published on Feb 15, 2019

Hikvision's annual revenue topped $7 billion for the first time in 2018, although growth slowed sharply. In this post, we analyze the latest figures, including:

  • Revenue vs Growth
  • Comparison to Axis
  • Reasons for Lower Growth

Overall, the numbers indicate that Hikvision is facing tough challenges from a variety of areas, although its vastly greater size than its competitors continues.

Revenue Up, Growth Down

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Total 2018 revenue for Hikvision was over $7.3 billion USD, but the most recent quarter growth was down to 12.9%, decelerating every quarter of 2018:

  • Q1 - 33%
  • Q2 - 22%
  • Q3 - 14.6%
  • Q4 - 12.9%

At 18.8% annual growth for 2018, this is Hikvision's slowest growth in many years:

Despite this, Hikvision remains comfortably at the top of the video surveillance industry in revenue terms. While its closest rival Dahua has not released its full 2018 report yet, its revenue for the first three quarters of 2018 stood at around $2.2 billion (though Dahua has already made significant job cuts in China, portending its own challenges).

Lower Growth Challenges

For many years, Hikvision has powered itself by 30%+ growth, driven by the robust Chinese domestic market. This has allowed them to be far more aggressive in International expansion than any of their domestic or overseas rivals. If the 'new normal' for Hikvision is ~10% growth, Hikvision will likely to be more cautious in their expansion plans (e.g., just months ago Hikvision's President said that "we need to focus on how to survive").

Axis Growing Faster Now

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By comparison, annual revenue for Axis (the largest Western video surveillance manufacturer) topped $1.1 billion in 2018. That's a 19.7% increase compared to 2017, slightly higher than Hikvision's 18.8% growth.

However, Axis' revenue growth eclipsed Hikvision's for the last two quarters. In Q4 of 2018, when Hikvision only grew about 13% year-on-year, Axis grew 31%. Hikvision's Q3 growth was also substantially lower, at 14.6% compared to 20% for Axis.

Reasons for Lower Growth

Hikvision's latest disclosure is limited to data and offers no further context. However, there are a wide variety of explanations:

Outlook Going Forward

A few major uncertainties remain on the horizon for Hikvision's growth/continued dominance in 2019:

  • How much will the Chinese government spend on video surveillance and how strong will the Chinese economy be? Even after years of International expansion, 70% of Hikvision's revenue comes from within China, so how much Beijing buys is far more important, in pure financial terms, than Boston or Barcelona.
  • Will Hikvision be hit by US sanctions over the Xinjiang human rights crisis? If so, Hikvision may not only be shut out of the US, its global supply chains will be harmed as well.
  • How serious is Huawei about video surveillance? The Chinese telecom giant says it wants to be among the "top 3" global video surveillance providers over the next few years, but Hikvision's CEO has dismissed the idea. The possible competition remains a significant worry for Hikvision's Chinese investors, though.
  • To what extent will the national security concerns that have hit Huawei over 5G play out when it comes to Hikvision? Will Hikvision see itself completely shut out of some Western markets, as has been the case for Huawei?

Conclusion

Even slower growth is a distinct possibility in 2019 and this may fundamentally change how Hikvision operates and expands. While Hikvision's vast size advantage is not threatened, their ability to outspend the market in aggressive expansion might.

8 reports cite this report:

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