IndigoVision's Market Challenges Deepen

Author: John Honovich, Published on Oct 14, 2011

IndigoVision's fiscal 2011 financial results do not look good. While the company remains profitable, growth is far below their key competitors. For the past 2 years, IndigoVision has faced challenges. Now their 2011 fiscal year financial statement shows that those challenges have deepened. In this note, we examine IndigoVision's finacials, what risks IndigoVision faces and how it is falling behind direct competitors such as Avigilon, Mobotix, Exacq, etc.

Let's start with a review of IndigoVision's key financial metrics:

  • Over the past year, IndigoVision's stock has plummeted from over 500 GBP to 175 GBP - a drop of more than 65%. Today, the company's market capitalization is only 13 GBP (~$21 Million USD).
  • For the fiscal year ending July 31, 2011, revenue was 28.9 GBP (~$45 Million USD). This was only up slightly from 28 GBP the previous year.
  • The stock is now trading at less than half of revenue - a very low level even relative to the conservative metrics common in surveillance (typically about 1 to 2 times revenue).
  • The company asserts that things are not looking better in the near future: "We have had a slow start to the current financial year and although sales in the first seven weeks of the current year are approximately in line with last year, order intake is down on the corresponding period last year." It is possible that revenue will actually decline over the next 6 months.
  • Most of the company's revenue comes from EMEA and North America but both regions revenue was down slightly. Solid growth was reported in both Latin America and Asia Pacific.
  • Gross margins dropped from 60% to 56%, operating profit margin dropped from ~10% to ~4%.
  • The company acknowledged problems in product release over the past year: "With the benefit of hindsight we underestimated the challenge of establishing a range of cameras and early products have slowed the business down."
  • Focus for improvements looks to be on improving new product introductions: "Over the last twelve months a great deal of work has been undertaken improving the rate of introduction of new products."

Financial Analysis

While growth has been essentially flat, relative to their direct competitors this is quite bad. The company with the closest business model - Avigilon - has been absolutely killing it in the same time frame - up about 90% YoY and now on pace to do $55 Million in 2011. While Avigilon's growth rate is exceptional, growth of 30%+ is fairly typical for focused IP video only companies. In the past year, Arecont Vision, Avigilon, Genetec and Milestone have all leapfrogged over IndigoVision in annual revenue with such growth rates.

On the other hand, the fall in their stock price, relative to competitors, seems overdone. Trading at ~0.5 price to sales ratio puts them close to Vicon territory - a company who has little hope of turning around and a weak product portfolio with multiple OEM'ed products. IndigoVision, while struggling, still has a strong product portfolio and technology track record. The company is also an IP only player meaning that it faces little risk from declining analog sales (as traditional CCTV manufacturers like Vicon do).

Potential Causes and Future Outlook

We believe the two main reasons behind IndigoVision's recent struggles is (1) the slow rate of new products and (2) their failure to open up fully. As the company admitted itself, over the last 18 months, it did not release many new products while competitors where releasing numerous new products. Equally important, the company has been slow to open up its VMS to other cameras and its cameras to other VMSes [NOTE: IndigoVision is now claiming to be supporting ONVIF both for the camera and VMS sides]. As the IP market goes mainstream and the level of competition increases, offering open options becomes increasingly critical.

Additionally, the company has had fairly significant turnover both in sales (the financial statement acknowledges very high turnover - "six new sales managers with an overall unchanged headcount") and in engineering (their CTO left a while back). We do not know what is going on inside IndigoVision but these are typically not good signs.

It will be interesting to see what progress IndigoVision makes in the next year. The company does have strong core products in both cameras and VMSes but it remains to be seen if they can re-accelerate new product development and catch up on lost ground.

Comments : PRO Members only. Login. or Join.

Related Reports

Eagle Eye Favorability Results 2019 on Mar 21, 2019
Eagle Eye has been the biggest spender in the cloud VMS market including (via their owner) acquiring Brivo for $50 million and CameraManager from...
Top Metrics For Ensuring Integrator Profitability - Statistics on Mar 20, 2019
How do integrators ensure the profitability of their projects? As part of our profitability study, 100+ integrators answered the following...
Retired Mercury President Returns As Open Options President on Mar 18, 2019
Open Options experienced major changes in 2018, including being acquired by ACRE and losing its President and General Manager, John Berman who...
Hikvision Favorability Results 2019 on Mar 18, 2019
Hikvision favorability results declined significantly in IPVM's 2019 study of 200+ integrators. While in 2017 Hikvision's favorability was...
ADT Stock Drops After Announcing Loss And Amazon Delay on Mar 12, 2019
ADT's stock price dropped significantly after reporting heavy losses and delays in its Amazon partnership, as seen in the screenshot below: In...
Network Optix Favorability Results 2019 on Mar 11, 2019
Network Optix is arguably the last new VMS. Founded in 2010, more than a decade after most client/server VMS offerings, the company has become a...
BCDVideo Expansion And Switch From HP To Dell Examined on Mar 11, 2019
BCDVideo says they have more than tripled revenue in the past 5 years and are continuing to grow, powered most recently by switching their lead...
Start Up Safe Zone $150 Gunfire Detector Profile on Mar 06, 2019
While gunfire detectors have been around for years, typically they are limited to enterprise level or municipal deployments. Startup AVidea, makers...
Axis Brags About "Whiskey Tasting" With Independent Consultants on Mar 06, 2019
Last weekend, Axis paid for a group of 100+ of the most powerful people in the industry, supposedly independent consultants / AEs that specify many...
Top ISC West 2019 Booth Moves on Mar 05, 2019
With ISC West just a month away, we examine the most notable exhibitor moves including big exhibitors who dropped out and a number of significant...

Most Recent Industry Reports

IBM / Genetec Surveillance System Investigated Over Philippines Human Rights Abuses on Mar 22, 2019
A lengthy investigation into an IBM video surveillance project in the Philippines, raising concerns IBM helped local police conduct a bloody...
Eagle Eye Favorability Results 2019 on Mar 21, 2019
Eagle Eye has been the biggest spender in the cloud VMS market including (via their owner) acquiring Brivo for $50 million and CameraManager from...
Large Hospital Security End User Interview on Mar 21, 2019
This large single-state healthcare system consists of many hospitals, and hundreds of health parks, private practices, urgent care facilities, and...
Silicon Valley Cybersecurity Insurance Startup Coalition Profile on Mar 20, 2019
Many industry people believe cybersecurity insurance is not worth it, as the voting and debate in our Cybersecurity Insurance For Security...
Covert IP Camera Shootout - Axis, Hanwha, Hikvision, March, Vivotek on Mar 20, 2019
Covert cameras were one of the last holdout areas for analog cameras. However, in the past few years, IP / HD covert cameras have become...
Top Metrics For Ensuring Integrator Profitability - Statistics on Mar 20, 2019
How do integrators ensure the profitability of their projects? As part of our profitability study, 100+ integrators answered the following...
Avigilon Launches 'Renewed Products Program' on Mar 19, 2019
There are lots of 'pre-owned' cars but pre-owned IP cameras? While such programs are common in other industries, in video surveillance, they are...
Hanwha Tax Evasion Probe, Camera Division Implicated on Mar 19, 2019
A Hanwha group subsidiary was raided as part of a tax evasion probe. While a Korean news media report listed the raided entity as 'Hanwha...
Genetec Security Center 5.8 Tested on Mar 19, 2019
Genetec has released Version 5.8. This comes after a wait of more than a year that caused frustrations for many Genetec partners. Our previous...
Retired Mercury President Returns As Open Options President on Mar 18, 2019
Open Options experienced major changes in 2018, including being acquired by ACRE and losing its President and General Manager, John Berman who...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact