Axis Q4 2010 Results Examined

Axis's financial results continue to improve, finishing a strong 2010 with its best quarter [link no longer available] in a few years. In local currency terms, Axis's Q4 2010 revenue was up 40% over Q4 2009. Looking forward, Axis stated outlook was bullish calling for 25-30% network video growth for the next few years and continued expansion.

Let's examine a few of the key details from the Year End Report and Powerpoint presentation:

• Total sales for the year were 2993 SEK or ~$460 Million USD
• All regions experience strong growth: interestingly the Americas was strongest at 46% growth while Asia growth was the slowest of the three regions at 'only' 26% (both measured in local currency terms); this defies some conventional wisdom about Asia's growth, however, we are not sure if this speaks more to Axis's strength in the US or weakness in Asia
• Margins were down across the board: for example, gross margins down 2 points (from 52.5% to 50.5%) and profit margin down 4 points (from 18.2% to 14.2%); Axis cited increased competition and negative currency exchange as driving forces here
• Axis hired aggressively throughout 2010, growing their workforce by about 18% to over 900 employees worldwide
• Between Q3 and Q4 2010, R&D investment spiked ~25%, one of the largest quarter over quarter gains in recent history; this may signal a new round of major product releases following a relative quiet period in H2 2010 (for Axis's standards)
• Axis highlighted AVHS in their presentation; while not making specific financial claims, they positioned it for smaller businesses, this is the first time we've seen AVHS with a dedicated page in their financial reports

The results quite clearly show that Axis is doing well as is the overall IP camera market.