Guess which ASX 300 stock is rocketing 17% after record half

Audinate Group Ltd (ASX: AD8) shares are catching the eye on Monday morning.

At the time of writing, the ASX 300 stock is up a sizeable 17% to a record high of $18.75.

This follows the release of the media networking solutions provider’s half-year results.

ASX 300 stock delivers record result

• Revenue up 47.7% to US$30.4 million (A$46.6 million)
• EBITDA up 137% to A$10.1 million
• Net profit after tax of A$4.7 million (compared to loss of A$0.4 million)
• Operating cash flow up 18% to A$11.8 million
• Cash and equivalents balance of A$111.7 million

What happened during the half?

For the six months ended 31 December, Audinate reported a 47.7% increase in revenue to a record of US$30.4 million.

A key driver of this growth was revenue from Chips, Cards and Modules (CCM), which grew 45.6% to US$22.7 million.

Among the highlights were its Brooklyn modules and Ultimo chips, which grew revenue by 50% and over 200%, respectively. The latter was boosted by easing supply constraints, which allowed the ASX 300 stock to satisfy a backlog of pent-up demand. Management expects Ultimo revenue growth to revert to a lower rate in the second half.

Also performing positively was its Software business, which reported revenue growth of 56.2% to US$7.3 million. The products primarily responsible were IP Core (up ˜100%), Dante Embedded Platform (up ˜75%), and retail software sales (up ˜60%).

Audinate’s gross margin percentage increased to 71.8% from 71.2% in the previous corresponding period, held back by the fulfilment of pent-up Ultimo demand. Further improvements in margin are expected in the second half due to cost reduction initiatives and favourable product mix shift.

EBITDA more than doubled during the half and came in at a record of A$10.1 million. This was driven by strong sales growth and an improving EBITDA margin despite an increase in its headcount from 186 to 204.

The company also invested in new products during the half. Management highlights that it achieved significant new product milestones with its Dante Connect product. In addition, momentum has continued to build with its video solutions business, with 50 manufacturers now licensing its offerings (up from 30 a year ago).

Management commentary

Audinate’s co-founder and CEO, Aidan Williams, commented:

Our first half results have again been excellent as the business was able to fully satisfy the demand for Dante products free from recent constraints. It was an outstanding result to achieve our aim of a cumulative ecosystem of >30,000 video products ahead of schedule, and I look forward to further successes over the remainder of FY24.

Outlook

While no guidance was given for the full year, management remains cautiously optimistic on its outlook. It said:

The Company continues to be watchful of potential softening global economic conditions over the rest of FY24. Improving supply chain conditions and shorter lead times for our customers result in a reduced sales order backlog, complicating management of any softening in economic conditions. The Company continues to explore several M&A opportunities, buoyed by a stronger balance sheet from the capital raise.

This ASX 300 stock is now up over 130% since this time last year.

The post Guess which ASX 300 stock is rocketing 17% after record half appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 Audinate Group. The Motley Fool Australia has positions in and has recommended Audinate Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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