Here’s why the Audinate share price is rebounding 9% today

high, climbing, record highhigh, climbing, record high

The Audinate Group Ltd (ASX: AD8) share price is climbing today following the company’s release of its trading update.

At the time of writing, the media networking solutions provider’s shares are swapping hands at $6.17, up 9.40%.

What did Audinate announce?

Investors appear pleased with the company’s latest performance, driving up the Audinate share price this morning.

According to its release, Audinate reported robust growth for the March quarter, achieving unaudited revenues of US$6.5 million. While the result reflected a 7.1% decrease over the prior corresponding period (Q3 FY21), management noted it had successfully navigated around the tight chip supply.

As such, supplies of a key chip used in Brooklyn and Broadway products were replenished in March, leading to strong trading conditions in April.

Gross margin stood at 75.8%, although spot inventory purchases are yet to fully flow through to the cost of goods sold.

Audinate stated that while chip supplies continue to be constrained, it has been building its inventory of key chips. Since the end of last year, the company’s raw materials inventory balance has increased by $3.7 million.

Supply of Ultimo chips continues to be modest, constraining the number of units shipped but not significantly impacting FY22 revenue.

Furthermore, Audinate advised demand for Dante products remains strong with sales orders to be fulfilled throughout FY22 and FY23.

Its total backlog of sales orders has increased with the addition of video product orders acquired from Silex.

Management pointed out that its ability to fulfil orders has improved due to improved supply of key chips. However, manufacturing risks associated with an uncertain COVID-19 situation in mainland China remain.

Audinate CEO, Aidan Williams commented:

We have navigated what was expected to be the weakest quarter of FY22 and whilst some supply chain risks remain, we are making good progress in filling demand for Dante by replenishing our inventory of chips.

I am also thrilled to have achieved two major product milestones with the release of IFE and our first video software – both are strategically important achievements for the ongoing growth of Audinate.

Audinate share price snapshot

Over the past 12 months, the Audinate share price has lost more than 70%.

When looking at year to date, the company’s shares have fared worse, down 36%.

Based on today’s price, Audinate presides a market capitalisation of around $434.78 million.

The post Here’s why the Audinate share price is rebounding 9% today appeared first on The Motley Fool Australia.

Should you invest $1,000 in Audinate right now?

Before you consider Audinate, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Audinate wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

More reading

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended AUDINATEGL FPO. The Motley Fool Australia has positions in and has recommended AUDINATEGL FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s