Audinate (ASX:AD8) have developed a protocol for delivering audio over IP addresses known as Dante. It is well on its way to becoming the industry standard. It is a professional audio-visual solution and is found in millions of devices in a wide range of installations and applications across the world. For example stadiums, churches, universities, conference facilities, theatres and studios.
Their strategy involves two key elements in order to drive long term growth. Firstly they need to get their chips, cards, modules or software into as many AV products as possible. To this end they now work with 621 customers who ship Dante enabled products. This number has doubled over the last four years. Those 621 customers have then installed the Dante protocol in over 4,000 AV products. When a product producer is designing a new product, Audinate tries to get them to design Dante into the product. The number of enabled products is a leading indicator of revenue.
This gives them a huge competitive advantage. As the chart below shows, adoption of Dante is more than 12 times their nearest competitor, entrenching their position as the de facto industry standard.
Source: Dante, 1HFY24 Results Presentation, 12/2/24
The second component to the growth strategy, is to build out a large ecosystem of Dante trained AV professionals. They have now trained and certified over 240,000 individuals globally, which is also double what it was four years ago.
They were initially focused exclusively on audio products, but in 2020 they also introduced video products into the market. There are now 50 original equipment manufacturers (OEM) licensing Dante video, up from 30 a year ago, with the number of Dante equipped products they supply having increased from 20 to 66. Adding video equipment significantly expanded their total addressable market which is now estimated at US$2 billion.
Source: Dante, 1HFY24 Results Presentation, 12/2/24
Audinate listed in mid 2017. Since that time revenue has grown from $15m to $85m. From an initial listing price of $1.22 the share price has risen to over $20 in six and a half years. To date they have not paid any dividends.
The latest half year result built on the already strong growth profile. Shipment of Dante units displayed very strong growth compared…
