Audinate Faces FY25 Inventory Challenges but Poised for Recovery in FY26

A Transitional Half-Year with Strong Software Momentum

Audinate Group Limited (ASX: AD8), the global leader in professional AV networking technology, reported its 1H25 results exceeding market guidance despite a challenging trading environment. The company is navigating a transitional year as manufacturing customers work through accumulated inventory, leading to a 38% decline in overall revenue to A$28.7 million. However, this headline figure masks a significant 13% increase in software revenue, a key indicator of Audinate's underlying growth and strategic shift.

The transition away from chips, cards, and modules (CCM) towards software products is evident, with CCM revenue down 56% while software revenue grew steadily. This shift has driven gross margin expansion to 82.2%, up 10.7 percentage points from 1H24, underscoring the higher profitability of Audinate's software offerings.

Strategic Product Launches and Market Position

Audinate continues to cement its leadership in digital audio networking with its Dante platform, which boasts 12 times the adoption of its nearest competitor. The company reported 4,372 Dante-enabled AV products in the market, with 196 new product launches in 1H25 alone, fueling future revenue potential. OEM design wins increased by 15%, reflecting a strong pipeline of new products incorporating Dante technology.

Key product launches during the half included the commercial release of Dante Director, a cornerstone of Audinate's platform software strategy, and upcoming launches in 2H25 such as the Dante AVIO Install Series and Dante Virtual Soundcard Pro. These products are expected to broaden Audinate's revenue base and expand market reach, particularly in the professional AV installation segment.

Financial Strength and Investment in Growth

Audinate's balance sheet remains robust with A$111.3 million in cash and term deposits, providing ample financial flexibility to invest in strategic growth initiatives. The company has increased investment in sales and marketing activities, including the launch of the 'Dante Certified Partner' program to deepen engagement with system integrators and expand product specification.

Research and development continues to be a priority, with ongoing enhancements to Dante Director and other software products aimed at delivering enterprise-ready features such as remote monitoring, event notifications, and security enhancements. Despite a 91% decline in EBITDA to A$0.8 million, reflecting the transitional nature of FY25, Audinate is positioned for a moderate growth rebound in 2H25 and a return to regular ordering patterns by FY26.

Outlook: Navigating Transition Towards Long-Term Growth

Audinate's management acknowledges FY25 as a year of transition, with inventory adjustments continuing to impact near-term revenue. However, indicators from manufacturers, system designers, and installers suggest strong underlying demand for Dante technology. The company expects a moderate strengthening in gross profit in the second half of FY25, driven by new product launches and expanding adoption of its software platform.

Looking ahead, Audinate's strategic focus remains on strengthening its audio networking dominance, growing its video platform capabilities, and managing AV installations through interoperable control solutions like Dante Director. With over 6 million Dante-enabled devices currently in use and more than 1 million added annually, Audinate is well positioned to capitalise on a US$2 billion networked AV market opportunity.