Audinate share price spikes 11% on record FY24 profits

The Audinate Group Ltd (ASX: AD8) share price has surged into the green on Monday and is now trading more than 11% higher at $10.50 apiece.

The jump follows the tech company's FY24 results announced today, where it posted record gross and operating profits. Investors appear to be buying the stock en masse in response. Meanwhile, the S&P/ASX 200 index (ASX: XJO) is slightly in the green at the time of writing.

Let's see what the company posted in its results.

Audinate share price climbs on strong full-year results

Key highlights from Audinate's FY24 include:

• Revenue soared 28.4% to US$60.0 million (A$91.5 million).
• Gross profit surged 33.2% to US$44.5 million, with a gross margin of 74.3%. This was a record for the company.
• Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 85% to A$20.4 million, also a company record.
• Net profit before tax increased to $12.1 million, up from $1.4 million in FY23.
• Free cash flow of positive $6.9 million.

What else happened in FY24?

FY24 saw the Audinate share price trade in a wide range. Despite this, the company managed to expand its business lines. Software sales grew 32.6% year over year, boosting the gross profit to a company record.

Audinate's Dante units saw 34% growth compared to last year, whereas the sales recovery in Ultimo chip shipments, which jumped 70%, also contributed to revenue growth.

Moreover, Dante video licensees increased by 59% and Audinate's total video products tallied 84 by year's end.

The company also reported a 22% year-over-year increase in unique visitors to its website, reaching 1.5 million for the year.

This produced an audio market adoption "of 12 times that of [its] nearest competitor", according to "customer product catalogue size". This could impact the Audinate share price.

What did management say?

Audinate CEO Aidan Williams praised the company's performance, remarking on the highlights of the year:

I am incredibly proud of the exceptional financial results that our entire team at Audinate has worked so diligently to achieve.

The operating leverage in the cost base continues to be evident in the percentage of incremental revenue that converts into EBITDA. On the technology front, we've made significant strides in video, and I'm thrilled about the strategic opportunities we've unlocked with the launch of Dante Director.

What's next?

Looking ahead, Audinate acknowledges it is coming off a higher growth year, which could make comparisons difficult in FY25.

Management expects the "preference for software-based Dante implementations" to continue, and is looking to an "overall margin" of 80%.

Gross profit is expected to be lower in FY25 due to a slight decline in revenue. However, this is expected to return to "more predictable order patterns in FY26".

In the meantime, it will invest in measures to keep the business healthy – but these will come at a cost.

Consequently, we expect cost growth to be in the range of 7% — 9% in FY252 (compared to historical annual cost growth of 28.5% over the last three years).

Audinate share price snapshot

The Audinate share price has been a mixed performer over the past year and is up nearly 2% in that time.

Shares are up almost 20% in the past week following the company's FY24 results on Monday.

The post Audinate share price spikes 11% on record FY24 profits appeared first on The Motley Fool Australia.

Motley Fool contributor Zach Bristow 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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