Should you buy, hold or sell Audinate shares?


While our model portfolio holds around 30 positions, within that we also have a smaller sub-group of higher conviction core companies that that we typically take larger positions in, and expect to be in the portfolio for the longer-term.

In assessing and selecting these core companies, the attributes we target include:

  • Dominance in their respective fields.
  • Strong fundamentals, including a healthy balance sheet and strength across our nine key financial metrics.
  • Macro or industry tailwinds that bring a large runway for future growth.

should you buy hold or sell audinate shares

Making it through these filters and sitting firmly within our top three largest shareholdings in Medallion's Australian Equities Growth Fund is technology company Audinate (AD8).

What does Audinate do?

Audinate is a leading global provider of professional digital audio and video networking technologies. They are dominating the global transition away from outdated analogue equipment and into the digital world.

Their Dante platform distributes digital audio and video signals over computer networks, effectively replacing time consuming and messy analogue networks which rely on manual management of cables and cords.

In a world where technology is making everything faster and easier for users, it is clear to see that anxiety levels can be reduced significantly through the inclusion of Dante.

What is Audinate's Dante product?

Through their Dante offering, Audinate sells a protocol which is essentially computer hardware and software that work together so professional audio/video equipment can interact with one and another.

Audinate's hardware is included within the products manufactured by many well-known brands such as Yamaha, Sony and Bose. Once this equipment is Dante-enabled, those end-users would typically then utilise Audinate's software to manage networking.

As of AD8's most recent presentation, there are now more than 4000 Dante-enabled products from over 600 manufacturers in the audio space, while the more recently launched video offering is now used by 50 manufacturers with over 75 products.

A key differentiator is that Dante-enabled products bring users the ability to control and manage products regardless of the manufacturer.

End users include the likes of universities, schools, conference centres, churches, stadiums, recording studios and public transport, among others.

The beauty is, no matter which brand these end users select, it is highly likely that Dante will be included in the equipment, meaning Audinate wins the business regardless.

What did Audinate's half-yearly results reveal?

Audinate's half yearly FY24 results maintained our confidence, delivering strength against the same half of 2023 with:

  • Revenue of $46.6m, increasing by +51%
  • Gross Margins of 71.8%, increasing by +0.6%
  • EBITDA of $10.1m, increasing by +136.5%
  • Profit Before Tax of $5.6m, increasing by +$6m  
  • Cash and Term Deposits at a healthy $111.7m

At this stage, the business is still building scale but at this rapid rate of progression, it is conceivable in our view that the Dante product will emerge as an unregulated monopoly.

This is particularly poignant given Audinate's total addressable market is now estimated at over US$2 billion.

To show visually how truly dominant they are when compared to other players in the market, Dante exhibits 12x the market adoption of its nearest competitor, a chart that has continued its rapid rise since 2013.

Audinate has consistently demonstrated its ability to expand on its existing customer base as they continue to entrench themselves as the de-facto standard in digital audio/video networking technologies. We have no reason to expect this trend to cease any time soon.

Is there an opportunity for new investors?

After a rapid run up from mid-2023 to March 2024, the last three months have seen some heat come out of the share price to now be trading at a quite attractive 25% discount to those March all-time highs.

For investors who feared they may have missed their chance with Audinate, the current price may present an attractive opportunity to begin accumulating a high quality growth business during a pull-back.

The possible reasons for recent weakness are a combination of insiders trimming relatively small positions, the CFO resigning up after a lengthy period in the role and profit-taking after the recent run-up.

In our view, none of these items impact our expected trajectory for the business looking ahead. Instead, being unperturbed, this weakness more so provides an opportunity to bolster our current position.

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Stuart Bromley is the Portfolio Manager for the Medallion Australian Equities Growth Fund as well as a private adviser for Medallion Financial's private wealth clients. He brings a wealth of knowledge from prior roles in corporate finance and provides his clients with advice on both domestic and international equities, exchange traded funds (ETFs), managed funds and corporate deal-flow. Stuart holds a Bachelor of Business (majoring in Finance). Connect with him on LinkedIn.