Audinate Group Q1 FY25 trading update

Audinate Group (ASX:AD8) has reported a trading update for Q1 FY25. The company recorded an unaudited gross profit of US$7.2 million (A$10.6M). Audinate is experiencing challenges such as shorter order lead times, increased inventory levels, slow clearance of raw materials, and weaker than expected end-user demand. These issues are expected to continue into Q2 FY25, maintaining a similar gross profit run rate.

Outlook and strategic plans for Audinate

Audinate Group's Q1 FY25 trading update highlights the company's challenges and strategic plans. Despite current setbacks, Audinate remains focused on long-term growth, with cost growth for FY25 projected at 7%-9%, aligning with their strategic investments in new product development. The company anticipates a recovery in FY26, expecting normalized customer order patterns and resumed growth. Audinate's strong long-term outlook is driven by the increasing adoption of its Dante technology, with over 6 million devices in use and potential for platform software business expansion. The second half of FY25 will see new product launches, which are expected to boost future earnings. With continuous growth in demand for Dante technology and strong participation in training programs, Audinate is poised to maintain its market presence and product offerings.

Executive insights on current challenges

Initially, we had anticipated a lower gross profit for FY25 compared to FY24, but with the current performance, achieving this target seems unlikely. Management plans to update the market after Q2 FY25 trading, expecting a moderately stronger second half of the financial year. FY25 is considered a transitional year as the company navigates inventory challenges and awaits a recovery in end-user demand. Growth is expected to resume in FY26 with normalized customer order patterns.