Ouch - Mobotix Revenue Declines

Mobotix's deterioration continues. While the company once boasted regular 50% revenue gains before the recession, growth has decelerated over the last few years, with the previous quarter flat and the just announced quarter (Q4 2012) with actual declining revenue. In this note, we break down the financial details, compare them to market peers, like Axis and Avigilon, and assess Mobotix's future.

Financial Details

Key details from Mobotix's 3 month report include:

• Net profits plunged more than 30% from a previously robust ~17% down to a pedestrian 11%.
• Revenue was ~20 million Euros (~27 million USD) for Q4 2012, an annualized pace of $108 million USD
• Mobotix added 38 employees year over year, growing headcount from 328 to 376 but only 5 new employees in Q4 2012
• Mobotix's claimed global market share is down 50%. In this report, they claim 6%. In the 2009 report, they claimed 9%.
• German revenue was up 6% but the rest of Europe was down 5.9% making Europe total revenue slightly net negative. "The debt crisis in Europe has led to significant revenue declines in some European countries," citing Italy, France and the Netherlands specifically.
• US sales revenue was down 17.3% which Mobotix attributes to Hurricane Sandy closing down their US office.
• Development activities: "A mobile remote station for Mobotix cameras and door stations as well the development of the M15, the successor to the M12"

Most importantly, Mobotix projected very weak revenue growth of just 5% for the rest of their fiscal year (next 9 months).

Stock Price Declines

Unsurprisingly, Mobotix's stock price has taken a beating, down 38% over the last year, including a steady decline over the last 3 months. The company's market capitalization is still 211 million euros, a relatively robust 2x revenue.

The price could drop further if investors are scared by lower guidance. Until a few months ago, Mobotix was confidentially predicting 20%+ growth and now has slashed that to a meager 5%.

Delusional or Manipulative?

Given these poor results and guidance, Mobotix must be either delusional or manipulative in their claims throughout the report. For instance, they declare:

"With growth rates up to 50%, Mobotix has continued to rapidly gain global market share since 1999."

Clearly this is untrue, as they implicitly admit in decreasing their global market share claims from 9% down to 6%. Plus, they have not been close to annual growth rates of 50% in about 5 years.

They seem to be oblivious of what's going on around them, in their outlook claiming:

"The fact that [hemispheric camera] technology has established itself as a new type of camera in the market, and significantly major competitors are still unable to offer any products or only products of inferior quality demonstrates the innovative strength of Mobotix."

Unfortunately, 2012 was a breakout year for hemispheric cameras with a wide range of new alternatives.

Mobotix further fails to acknowledge the challenge even for their big new release of 2012:

"The introduction of the S14 camera line - a completely new type of camera, in a form that has been unprecedented in the market before."

Unfortunately for Mobotix, their biggest competitor, Axis, released the same type of camera months later.

Product Challenges

Mobotix new product releases remain well below the rate of their main competitors and they stubbornly refuse to adopt standards, like H.264 for video and ONVIF for integration, that everyone else is doing. These are the same challenges we first examined 2 years ago.

Compared to Competitors

While the industry is clearly no longer growing at the same levels it did a few years ago, Mobotix is taking the hit harder than most competitors. Avigilon is still growing robustly and now passing Mobotix's total revenue. Though Axis revenue continues to decelerate, for the same quarter, growth was 12%, much better than Mobotix and even more impressive given that Axis is now 7 times the size of Mobotix.

What Should Mobotix Do?

Until Mobotix rectifies its broken product strategy, they will continue to decline. Certainly, more growth barriers have risen in the last few years but Mobotix's worst enemy remains their own bad decision making.