The share price of Audinate (ASX: AD8) is rocketing after the company gave an update. The share price is up around 11%.
Audinate is a provider of digital Audio-Visual (AV) networking technologies. The company’s Dante platform distributes digital audio signals over computer networks, and is designed to bring the benefits of IT networking to the professional AV industry.
What’s going on with Audinate?
In the update it said that it is well-positioned with a strong balance sheet and recent revenue growth, though it has withdrawn recent FY20 growth commentary. It remains cautious of near-term impacts from further lockdowns. Large gathering events like live concerns, theatre and sports have been greatly impacted and may take time to recover.
On the positive side, the company said commercial installed AV (like corporate and education), the effects may be less and recovery may be faster. In some high-use facilities, the closure has brought forward upgrade projects.
In the March quarter unaudited revenue was up 14% to US$5.3 million. Though the final quarter could see lower demand. At the end of March 2020 it had $30.9 million cash with no debt.
To try to lower expenses the company has lowered marketing and travel expenditure. It is also monitoring all other discretionary spending.
Whilst its Malaysian manufacturing is affected, the Chinese manufacturing is back to full operations which management thinks will be sufficient to meet customer demand, along with the current inventory.
Is the Audinate share price a buy?
With a fall of 41% since the COVID-19 declines started, Audinate is definitely priced cheaper than before. However, I can’t say I know enough about the business to say how its medium-term outlook has been affected by this. These technology shares could be even better ideas:
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Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.
