Audinate is a position we have held in the Emerging Companies Portfolio since November of 2021, successfully increasing and trimming/taking profits on the holding along the way. We topped up our position in Audinate last week, with the stock trading down ~30% from recent highs. However, the weakness extended further following the announcement CFO Rob Goss had tendered his resignation. As with the departure of any senior figure, the announcement raises red flags for investors, particularly in Rob’s instance, given his contribution to the company over the last 7 years. Rob was instrumental in Audinate’s IPO and subsequent success and was much liked by investors.
Whilst investors will point to his departure as signs cracks are appearing, all commentary coming from the company suggests Rob was after a break before a new challenge, and he has made himself available until the AGM in October, i.e. it doesn’t smell like an unfriendly departure. It also provides ample time to find and integrate a replacement for the now vacant position; we suspect the role will be well sought after, given the position the company is in.
As at the HY results, Audinate had $118m in net cash, it was profitable and growing at ~20% year on year. Its Audio connectivity product was the market leader and is continuing to pick up market share with a significant moat around its offering, available in more than 4 times the amount of products vs the nearest competitor. The video and software solutions were also seeing strong penetration in those markets, providing a clear picture of the opportunity Audinate has in capturing the full suite of AV connectivity products.
The company has also consistently beaten targets and given its FY24 guidance (provided in February) appears conservative, we are backing them to continue the trend.
- Although the timing is disappointing, we continue to like Audinate’s (AD8) medium-term picture, and we are catching up with the company later in the week.
MM remains bullish AD8
Add To Hit List
