Audinate’s EBITDA Collapses 91.5% as Revenue Falls to $28.7 Million

Half-Year Financial Overview

Audinate Group Limited, a leader in digital audio-visual networking solutions, reported a challenging first half of fiscal 2025 with revenues falling 38.4% to $28.7 million compared to the same period last year. This decline was mirrored in US dollar terms, where revenue dropped 38.0% to US$18.9 million, underscoring the global nature of its business and currency exposure.

The company’s EBITDA suffered a dramatic 91.5% decrease, sliding to just $0.8 million from $9.9 million previously. This steep contraction reflects the dampened demand for Audinate’s chips, cards, and modules, as manufacturing customers work through excess inventory rather than placing new orders. Consequently, Audinate posted a net loss after tax of $2.2 million, a reversal from the $4.7 million profit recorded in the prior corresponding period.

Operational Dynamics and Cost Management

Despite the revenue headwinds, Audinate’s gross margin improved significantly to 82.5%, up from 71.8% a year earlier. This margin expansion was driven by a higher proportion of software sales, which carry better profitability than hardware components. Operating expenses were tightly managed, decreasing slightly by 1.1% to $23.1 million, helped by a $1 million reduction in employee incentive costs, even as headcount increased from 204 to 226.

Sales and marketing expenses rose modestly by $0.2 million, reflecting increased investment in marketing initiatives aimed at engaging the growing Dante installed base. Administration costs also increased by $0.5 million due to higher software subscription fees, travel, and professional services, indicating ongoing efforts to support future growth.

OEM Growth Signals Future Potential

Notably, Audinate reported encouraging growth in its OEM ecosystem, a critical driver for its recurring revenue model. The number of OEMs actively developing Dante-enabled products rose to 173 from 159, while those shipping products increased to 476 from 430. This translated into a net addition of 196 Dante-enabled products during the half-year, up from 155 in the prior period.

This pipeline expansion suggests that while short-term revenue is pressured by inventory cycles, the company’s long-term prospects remain intact. The typical sales cycle involves a 12 to 24-month product design phase before manufacturing and revenue recognition, implying that current OEM engagement could translate into future revenue growth.

Balance Sheet and Cash Position

Audinate maintains a strong balance sheet with cash and term deposits totaling over $111 million at December 31, 2024, providing a solid liquidity buffer amid the current downturn. Operating cash flow was positive at $1.18 million, though significantly lower than the prior period’s $11.8 million, reflecting the reduced sales activity.

The company’s intangible assets, including capitalised development costs, increased, leading to higher depreciation and amortisation expenses of $7.4 million, up from $5.9 million. This investment underscores Audinate’s commitment to innovation despite near-term financial pressures.

Outlook and Strategic Considerations

Audinate’s half-year results highlight the cyclical nature of its business, heavily influenced by OEM inventory management. While the current environment has suppressed chip and hardware sales, the growing OEM pipeline and improved software mix offer a pathway to recovery. Investors will be watching closely for signs that inventory digestion is complete and new orders resume.

Management’s focus on cost control and strategic marketing investments suggests a balanced approach to navigating this challenging phase. The company’s robust cash reserves provide flexibility to support ongoing product development and market engagement.