There is no doubt the top line number was quite soft. 13% growth on a CC basis for a tech/SaaS business still in it's 'growth' phase is certainly not a strong number. Digging into the numbers more, it seems the video business is entirely to blame. My numbers are below:
Elite wearable grew revenue 21% and ARR 27% YoY. These are strong numbers and the business has always had a 2nd half skew.
Whilst elite video grew revenue 16% and ARR by 12% YoY, if you look at the number on a half over half basis, the business actually declined. Revenue dropped from $24.1mil in H2 19 to $24.0mil this half. ARR also dropped from $34.1 to $32.7mil. Two key points - these numbers are presumably reported on a statutory basis and thus the decline would have been greater had the currency not moved in our favor. Secondly, the video business does not have a 2nd half revenue skew like the wearable business does, so this decline in revenue is a real loss.
Unfortunately nothing was mentioned on the call so we can only speculate on the reasoning. It seems Vision is still an exceptionally small part of the overall revenue number and, whilst growing very strongly (505%), is too small to move the needle at this stage.
Key takeaways for me are:
- EW is still tracking very well and vector seems to have been a success
- EV has declined and there is no visibility on why (possible a large client leaving hence ARR reduction from last half)
- Vision growing strongly but looks like it will take a 2-3 years to scale up to a meaningful size
- Prosumer cost base 'right sized' was a good decision for now and significantly helped the overall group EBITDA of $5.7mil
Any thoughts?
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