Audinate: surpassing expectations and expanding market dominance 

It’s unlikely you’ve heard of Audinate (ASX:AD8), a holding in the Montgomery Small Companies Fund. Audinate is a company with shares listed in the small cap sector of the Australian stock market. It might have flown under your radar by virtue of its size. But the other reason you might not have heard of it is you’re probably not a customer. 

Audinate, however, has hundreds of customers, its technology is incorporated into four times as many products as its peers, it is growing at double-digit rates, and its total addressable market is also growing.  

The big story, however, is that the company continues to inspire an impressive array of earnings upgrades, consistently beating expectations for revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) growth. Of course, those upgrades deliver stellar returns to existing shareholders like those in the Montgomery Small Companies Fund because they reflect rising earnings and an expanding price-to-earnings (P/E) Ratio. If the company can continue to beat expectations, the current P/E will prove to be relatively low, and the share price still has good value, suggesting plenty of room for further share price gains. 


Audinate is a technology company best known for developing Dante, a digital media networking technology. Dante is widely used to deliver multiple channels of uncompressed, multi-channel, low-latency digital audio over a standard ethernet network. This technology is utilized in various professional audio applications, including live sound reinforcement, recording, broadcasting, and commercial installations. 

Dante enables audio, control, and all other data to coexist effectively on the same network, facilitating complex setups in professional environments. It simplifies the setup and connection of audio devices, allowing for scalable, flexible audio networking. With Dante, users can easily connect a wide range of audio equipment, including microphones, mixers, amplifiers, and speakers, without the need for traditional analog cables, thereby reducing setup time and potential signal degradation over long distances. 

Audinate’s Dante technology has become the industry standard due to its reliability, ease of use, and high-quality audio transmission capabilities, making it a preferred choice for audio professionals worldwide. 

From Yamaha, Bose and Bosch to Bolen, Wyrestorm and Soundcraft, dozens of original equipment manufacturer (OEM) audio hardware manufacturers now produce thousands of Dante-enabled products available for Dante systems. 

HY23 results update 

Audinate has delivered an impressive performance in the first half of 2024, surpassing expectations with robust revenue and EBITDA growth. Both metrics significantly outpaced consensus estimates. The strong performance reflects the company’s momentum in both audio and now video, supported by a notable increase in design wins and an expanding ecosystem. 

Audinate achieved revenue that beat consensus by 11 per cent. Revenue of U.S.$30 million was up 48 per cent year-on-year, and in Australian dollars, revenue was up 51 per cent year-on-year to $47 million. To put that $47 million of revenue in perspective, the company achieved full revenue of $46.3 million in FY22. 

EBITDA came in at $11.9 million, marking a remarkable year-on-year increase and surpassing consensus estimates by more than 20 per cent. 

Meanwhile, the company increased the number of Dante-enabled products to 4,008 (3,688 products in the previous corresponding half) with 155 net new products released (in FY23, the company achieved 243 net new products) and 54 design wins during the period (this was 78 in 1H23). 583 OEM brands now license Dante technology, a record increase in any half-year period from 538 at the end of FY23 and 514 at the end of FY22. 

A substantial growth opportunity is in video and migrating the same benefits audio clients enjoy to their video technology requirements. Importantly, sales are gaining traction. The company has experienced a strong initial uptake from video customers, reporting 50 video OEMs licensing Dante in the half and 66 video products in the market. In fact, Audinate reached its full-year 2024 target for over 30,000 units in-field or shipped, six months ahead of schedule. 

Keep in mind each new design win entrenches the company’s network effect and provides a future recurring revenue stream. 

Clearly, if the company can repeat its audio success across video, the value accretion has the potential to be substantial.  

The company achieved its second consecutive period of positive free cash flow ($3.4 million), with operating cash flow conversion exceeding 100 per cent. 


The outlook for the remainder of the fiscal year remains predictably positive, with gross profit guided by the company to be consistent with historical trends, ongoing positive operating cash flow, potential for significant additional orders, and the company actively exploring merger and acquisition opportunities with a healthy cash position of $118 million and no debt. 

Despite management’s conservative guidance, citing a higher portion of first-half revenue compared to the usual split, there is potential for upside given the growth trajectory already observed. Indeed, consensus FY24 earnings per share have been materially upgraded by 29 per cent in the last month. 

Over the next three years, revenue is expected to grow by between 20 and 35 per cent per annum, EBITDA is expected to grow annually by between 45 and 79 per cent and net profit after tax (NPAT) is expected to grow by an annual average of 50 per cent. Watch this space. 

The Montgomery Small Companies Fund owns shares in AudinateThis blog was prepared 5 March 2024 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Audinate, you should seek financial advice. 


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