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Is this the bottom for Audinate (ADB)?

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Question asked 12/07/2025

Is this the bottom for Audinate (ADB)?

Hi MM team, As you, I invested in Audinate a few years ago and was well rewarded. Your perspectives were very useful, thank you! A number of events have turned the market's view on this company; and it would appear that the announcement of the acquisition of Iris Studio did not help to switch perceptions. There is no comment about the acquisition being earning accretive or synergies. What is your latest view on Audinate and is this possibly the bottom? - Thanks, Angela. I am interested if your view has changed with respect to Audinate Group. I note that the current broker consensus is buy and Morningstar are bullish in their analyses last week. - Ian.

Answer

Hi Guys,

Audinate (AD8) has acquired Iris Studio Inc., a U.S.-based company specialising in AI-powered, cloud-based camera control technology, for up to US$28 million – AD8 will pay $US20mn cash up front with an additional $US4mn contingent on revenue goals plus $US4mn of new company shares being issued. The acquisition is expected to be cash flow accretive in the medium term, but AD8 are likely to experience marginal negative free cash flow in fiscal year 2026 due to the investment in Iris Studio.

AD8 hasn’t recovered from its sharp decline in August 2024 following a significant earnings downgrade, at the time citing weaker-than-expected demand and a challenging operating environment. When combined with the significant director selling less than 6-months beforehand it’s understandable why investors have taken time to restore confidence in AD8.

ADB looks interesting here ~$6.50, as they continue to cycle out of the big inventory build up (pull forward of orders) that happened because of Covid related supply chain issues.
We do believe the low is in, but just need to see signs of incremental improvment in their numbers to get us on the buy side again.
We are generally pretty cautious around Morningstar Research.

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Audinate Group (ADB)

LAST UPDATED 09/07/2025 16:12

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