Audinate’s 1H25 Gross Profit Falls 29% but Software Revenue Climbs 13%

Financial Performance Overview

Audinate Group Limited (ASX: AD8), the pioneer behind the Dante® media networking solution, reported its half-year results for the period ending 31 December 2024, revealing a mixed but ultimately encouraging financial picture. The company posted a gross profit of US$16 million, down 29% from US$22 million in the prior corresponding period, primarily due to ongoing OEM inventory overstocking that has dampened hardware sales.

Despite this revenue headwind, Audinate’s gross margin percentage rose significantly to 82%, up from 72% a year earlier. This improvement reflects a favorable shift in product mix towards higher-margin software offerings, which now constitute 44% of total revenue, compared to 24% in 1H24.

Hardware Challenges and Software Momentum

The company’s hardware segment, comprising chips, cards, and modules (CCM), experienced a steep 55% revenue decline to US$10.1 million, as OEM customers worked through excess inventory. Brooklyn modules and Ultimo chips were notably impacted. However, Audinate’s software revenue grew 13% to US$8.3 million, driven by products such as IP Core, DEP, and Dante Domain Manager. These software solutions, being on-demand and less susceptible to inventory cycles, underscore the resilience and growth potential of Audinate’s software business.

CEO Aidan Williams highlighted this transition, noting that customers are increasingly moving from hardware CCM products to embedded software Dante solutions, which offer improved unit economics and scalability for manufacturing partners.

Operational Efficiency and Cash Position

Audinate reported a positive EBITDA of A$1 million and operating cash flow of A$1.2 million, down from A$10 million and A$12 million respectively in 1H24, reflecting the challenging market environment. Operating expenses were trimmed by 3%, aided by reduced employee incentives, even as headcount increased from 204 to 226.

The company’s balance sheet remains robust, with cash and term deposits totaling A$111.3 million at period end, providing ample runway for strategic investments and growth initiatives.

Strategic Outlook and Market Position

Audinate’s strategy centers on three pillars: expanding Dante Audio adoption, accelerating Dante Video integration, and developing a platform software business for AV professionals. While Dante Audio is already the industry standard, Dante Video and platform software are in early growth phases, offering significant long-term upside.

In 1H25, the company secured 61 design wins, a 15% increase year-on-year, and saw growth in OEMs developing and shipping Dante-enabled products. The installed base of Dante devices surpassed 6 million, with over a million new devices added annually, reinforcing Audinate’s market leadership.

Looking ahead, Audinate expects moderate growth in the second half of FY25 as OEM inventory levels normalize, with a return to typical order patterns anticipated in FY26. The recent launch of Dante Director, a management and monitoring software, signals the company’s intent to diversify revenue streams further.