Audinate's share price climbs sharply amidst $50m capital raising

ASX-listed tech firm Audinate (ASX: AD8) has seen a sharp rise in its share price over the past year, with the latest round of gains arriving amidst a major capital raising.

The audio and video networking company saw a return to profitability in FY2023, after seeing revenue growth in each of the past four fiscal years despite the strong headwinds of pandemic-related lockdown measures.

Audinate raises $50m via share placement

Investor confidence in AD8's future growth prospects is signalled by its recent raising of $50 million via a fully underwritten placement.

The offering saw AD8 issue 3.8 million new shares at an issue price of $14 each, which represented a 7.8% discount to its five-day volume-weighted average price and a 9% discount to its preceding close price.

According to the company, the placement was fully underwritten and enjoyed the support of both new and existing institutional investors.

'We greatly appreciate the support of existing shareholders and the opportunity to bring some new investors onto the register,' said AD8 CEO Aidan Williams.

'Recent positive results and support from investors position us well to "win in video" and accelerate our vision of the operating system for AV. We are conscious of the trust placed in us to deploy this additional capital wisely in our longer strategic mission to pioneer the future of AV.'

Strong demand for the share allotment scheduled for 13 September ran above the initial $50 million fund-raising target. AD8 now intends to launch another share purchase plan to raise an additional $20 million.

New funds will be used to drive organic growth, as well as spur video growth and for upcoming M&A opportunities.

AD8 bills itself as a 'global leader in audio and video networking,'' with a focus on the distribution of high-quality digital media signals over computer networks.

Its flagship Dante media solution seeks to replace the analog cables that are traditionally used to connect audio and video systems, using a computer network linked by more streamlined Ethernet cables. Key areas of application include conference facilities, places of worship, university and corporate campuses, arenas, stadiums and amusement parks.

Record revenue growth leads to profitability breakthrough

Just prior to its $50m capital raising, AD8 released full-year results pointing to record levels of revenues in FY23, helping the company to break through the profitability threshold.

AD8 posted revenue of AU$69.7 million in FY23, for a 50.6% rise compared to the preceding fiscal year. Revenue in US dollar terms was US$46.7 million, for a rise of around 4.0%.

AD8's two main revenue categories – chips, cards & modules (CCM) and software, saw strong growth throughout FY23.

CCM sales rose 42%, thanks to a more than 30% rise for Brooklyn models and a more than 50% increase for Ultimate in the second half. Software revenue growth was 24%, with Reference Designs and Dante Embedded Platform both performing especially well.

Inflation also worked in AD8's favour, with US dollar revenue growth of 40% outstripping growth in Dante units shipped of 30%, thanks to FY22 price increases. Revenue growth safely outpaced a 29% rise in operating expenses to $39.2 million in the year ended 30 June 2023, as AD8 expanded its staff team and stepped spending on sales and marketing.

Robust revenue growth enabled AD8 to achieve EBITDA of A$11.0 million for a leap of 156.4%. Net profit before tax was AU$1.4 million, as compared to a loss of $4.4 million for the previous year.

According to its full-year statement, AD8 has seen compound annual growth of more than 31% in its USD revenues over the three-year period running through the Covid pandemic, despite the adverse impact of lockdown measures.

AD8's share price currently stands at $13.45, for a year-to-date rise of over 73% and a 94.65% increase over the past year.

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