I also think it’s good to consider whether the effects of the coronavirus were fully visible in last year’s results. In the beginning, many surely considered this remote work boom to be temporary. In other words, so few companies and employees were initially willing to invest large sums of money in video conferencing infrastructure, and often settled for computer cameras, etc.
Now that the situation has dragged on and the remote work boom seems to be here to stay even more strongly, at least to some extent, people are only just waking up to the fact that products like Huddly’s are significantly beneficial. I believe that many companies and employees still have a lot to invest in video conferencing to streamline things. This is also supported by Huddly’s own message that the coronavirus has not significantly affected revenue growth.
Can the market be blamed for the fact that the annual growth of post-COVID video conferencing camera sales is not expected to continue at a rate of 100% p.a.? Furthermore, I don’t particularly enjoy the statement that a camera manufacturer with maximum margins is trading at a 70% discount compared to a software company. This is a retail company selling cameras at P/S 10. Most electronic devices come with software included.
It would be more interesting to see an analysis that includes a scenario of declining margins and fading demand post-COVID. Or even an analysis where increased revenue doesn’t come for free, i.e., without an increase in operating expenses.
The market, for good reason, doesn’t quite believe analyses made that way, as their assumptions are completely maxed out. Of course, if they materialize, the upside could be roughly that much. I’ve been thinking that Inderes has slipped from its neutral stance to over-optimism, but this one hasn’t seen anything else.
Also, a relevant mention, as that is a potential conflict of interest.
It’s quite rare for an analyst to have the guts to slap a partner.
It’s a shame that these promising Norwegian growth companies have so few followers other than Pareto and ABG. The same goes for Zaptec, for example One can only dream of being followed by Inderes, for instance.
Good insights and thoughts – however, I would challenge the idea of video conferencing camera sales growth slowing down a bit.
Even though restrictions will eventually end and people will return to the office, Covid’s impact on how we work is at least significant. It can be seen that in the future, in addition to being social meeting places, offices must adapt to the digital environment and create opportunities for as easy interaction as possible with parties who may not always be in the office.
Various video conferences will increasingly remain a part of our daily lives, especially in project-based work where the organization consists of contributors from several different companies.
Currently, surprisingly many offices are poorly equipped for this change. Video conferencing capabilities in office rooms are either non-existent or rely on laptop cameras – only 1/2 of the people in the room are visible, or just their foreheads. On the other hand, current systems are very expensive and often even too fancy for their intended use (and not easily movable from one space to another).
I see Huddly’s product serving this purpose excellently, and for this reason, I believe sales growth will continue strongly. Of course, competition will be tough, and at some point, the market will undoubtedly become saturated, and thus Huddly’s growth will also slow down.
"The team eventually landed on a modular solution, with carts from Legrand and Salamander Designs outfitted with Crestron Mercury conferencing hubs and 86-inch LG displays topped with Huddly cameras. "
"Continued revenue growth in Q1 for Huddly, but COVID-19 delays growth.
Q1 2021 was a record first quarter for Huddly, with revenues of 84.1 MNOK, up 14% compared to 73.9 MNOK in Q1 2020.
Crestron, Google and Shure continued to be strong partners. Huddly continued to increase investments in channels go-to-market strategy in both EMEA and Americas. Huddly partnered with Mersive Technologies a leading provider of wireless media streaming and collaboration software.
EBIT for Q1 2021 was a loss of 256.4 MNOK, compared to 21.6 MNOK in Q1 2020.
Adjusted EBIT, excluding all option expenses for Q1 2021, was 16.8 MNOK, compared to 21.9 MNOK in Q1 2020. The gross margin was 52 % for the quarter.
In February, the Company announced its successful completion of an offering of new and existing shares in connection with the admission to trading of the company’s shares on Euronext Growth.
Capital raised in connection with the offering and subsequent listing on Euronext Growth was 277.8 MNOK net of transactions cost."
"Huddly forecasts revenue to be in the range from 400 MNOK to 500 MNOK in FY 2021. The COVID-19 pandemic, causing many closed offices globally, has negatively impacted the sales opportunities into the enterprise office market in the start of 2021. The third wave of COVID-19 in the Northern Hemisphere has hit harder and longer than anticipated at the beginning of 2021. Huddly sees signs of improvements in the enterprise office market and believe sales opportunities into this market will increase going forward, especially in second half of 2021 and into 2022. "
To cite Covid-19 at this stage of the pandemic as the reason for growth deceleration is truly incomprehensible, especially when in some circles the thesis was that the pandemic would accelerate growth.
I’m actually a bit surprised by this market reaction. Really tame.
Having mostly watched from the sidelines, the quarter was a clear disappointment to me as well. The market again surprised with its wisdom, as the stock has been heading southeast all spring. Logitech’s cameras sold at full throttle, but Huddly’s sales increased only moderately.
To my knowledge, the company’s own view has always been that the coronavirus has not acutely benefited businesses. Whether one believes that or not is, of course, up to each individual. However, revenue grew organically by a double-digit percentage, which is a good long-term performance, even if market expectations are justifiably higher.
Yes, this wasn’t absolutely incompetent work. The problem is mainly that the price clearly indicated other expectations. It is clear from Pareto’s and ABG’s analyses that some were looking for 100% growth with good profitability.
Plus, blaming the negative effects of the coronavirus is classless and treats investors like fools. Why would it suddenly start to be a problem now, when the pandemic has already clearly affected things for a long time and is possibly even subsiding?
Furthermore, some analyses predicted a post-coronavirus positive driver for Huddly’s products.
The good thing is that underneath all this disappointment, there is still a profitable operational core that can eventually support the valuation.
However, I take back what I said about the tame reaction: initially, I only saw prices of 13 NOK and a rise to 13.4 NOK, but this is still quite a punishment.
Even though it went a bit poorly compared to expectations, I personally plan to watch for at least another two to three quarters. Then we can start to see the possible effects of the post-corona period as well.
One can only dream of being followed by Inderes, for instance.
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