Avigilon page post 3

Subject: Avigilon (Aiocf) Pink Sheets
Author: Buynholdisdead
Date: 11/16/2014
Sector: Technology
Industry: Hardware


Avigilon Corporation (Aiocf) Closing Price $17.45 on November 5th, 2014. The stock went up $4.37 the day after they reported.

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Lumber: $319.90

Today the Price is $16.22: the p/e is 25.34

**February 29th, 2012 4Q:2011 earnings highlights:
**Revenues were $18.9 million up 85% from $10.2 million
**TTM Revenues were $60 million up 86% from $32.3 million
**Cost of Revenues were $9.3 million up 69% from $5.5 million
**Gross Profit were $9.6 million up 108% from $4.6 million
**Gross Profit Margin were 51%
**TTM Gross Profit were $27.6 million up 89% from $14.6 million
**TTM Gross Profit Margin were 46%
**Net Income were $1.6 million up from $(216) million
**TTM Net Income were $3.8 million up from $964 thousand
**4Q Earnings per share were $.05 up from $.00
**TTM Earnings per share were $.14 up from $.05
**Diluted share count were 31,021,287 up from 17,248,202 Year over Year
**4Q Cash Flow was ($.8 million) flat from ($.8 million)
**TTM Cash Flow was ( $4.5 million) down from ( $2.1million)
**Cash $12.4 million up from $2.3 million
**Debt 0 down from $1.8 Million
**Inventory for the quarter were 11,254,000 up 47% from 5,307,000 YoY

**May 10th, 2012 1Q:2012 earnings highlights:
**Revenues were $17.8 million up 78% from $10 million
**TTM Revenues were $67.8 million up 84% from $36.8 million
**Cost of Revenues were $9.3 million up 66% from $5.6 million
**Gross Profit were $8.5 million up 93% from $4.4 million
**Gross Profit Margin were 48%
**TTM Gross Profit were $31.6 million up 93% from $16.4 million
**TTM Gross Profit Margin were 47%
**Net Income were $647 thousand up from $121 thousand
**1Q Earnings per share were $.02 up from $.01
**TTM Earnings per share were $.15 up 150% from $.06
**Diluted share count were 34,832,000 up from 31,021,287 Quarter over Quarter
**Cash Flow for the quarter was ( $3 million) down from ($2.7million)
**Cash $9.5 million down from $12.4 million
**Debt 0
**Inventory for the quarter were 13,390,000 up from 11,254,000

**August 8th, 2012 2Q:2012 earnings highlights:
**Revenues were $24.4 million up 52% from $16 million
**TTM Revenues were $76.2 million up 71% from $44.5 million
**Cost of Revenues were $12.7 million up 35% from $9.4 million
**Gross Profit were $11.7 million up from $6.7 million
**Gross Profit Margin were 48%
**TTM Gross Profit were $36.6 million up 89% from $19.4 million
**TTM Gross Profit Margin were 48%
**Net Income were $1.3 million up 18% from $1.1 million
**2Q Earnings per share were $.04 flat from $.04
**TTM Earnings per share were $.15 up 88% from $.08
**Diluted share count were 35,040,000 up from 34,832,000 Quarter over Quarter
**Cash Flow for the quarter was $2.6 million up from ($2.5) million
**Cash $12.4 million up from $9.5 million
**Debt 0
**Inventory for the quarter were 9,755,000 down from 13,390,000

**November 7th 3Q:2012 earnings highlights:
**Revenues were $25.5 million up 69% from $15.1 million
**TTM Revenues were $86.6 million up 69% from $51.3 million
**Cost of Revenues were $12.5 million up 51% from $8.3 million
**Gross Profit were $13 million up 88% from $6.9 million
**Gross Profit Margin were 51%
**TTM Gross Profit were $42.7 million up 88% from $22.6 million
**TTM Gross Profit Margin were 49%
**Net Income were $2.2 million up 120% from $1 million
**3Q Earnings per share were $.06 up 50% from $.04
**TTM Earnings per share were $.17 up 89% from $.09
**Diluted share count were 36,436,000 up from 35,040,000 Quarter over Quarter
**Cash Flow for the quarter was $8 million up from $1.5 million
**TTM cash flow was $6.8 million up from ($4.4 million)
**Cash $45.6 million up from 12.4 million
**Debt 0
**Inventory for the quarter were 9,515,000 down from 9,755,000
**Trading range between $7.02 to $9.96
**P/E range 41.29 to 58.59
**P/S range 2.95 to 4.19

**February 28th 2013, 4Q:2012 earnings highlights:
**Revenues were $32.7 million up 73% from $18.9 million
**TTM Revenues were $100.3 million up 67% from $60 million
**Cost of Revenues were $16.4 million up 76% from $9.3 million
**Gross Profit were $16.3 million up 72% from $9.5 million
**Gross Profit Margin were 50%
**TTM Gross Profit were $49.4 million up 81% from $27.5 million
**TTM Gross Profit Margin were 49%
**Net Income were $3.1 million up 94% from $1.6 million
**Net Margin were 9%
**4Q Earnings per share were $.08 up 60% from $.05
**TTM Earnings per share were $.20 up 43% from $.14
**Diluted share count were 35,223,000 down from 36,436,000 Quarter over Quarter
**Cash Flow for the quarter was $2.5 million up from ($1.1 million)
**TTM cash flow was $10.1 million up from ($4.7 million)
**Cash $49.9 million up from 45.6 million QoQ
**Debt 0
**Inventory for the quarter were 11,906,000 up from 9,515,000
**Trading range between $10.60 to $12.26
**P/E range 53 to 61.3
**P/S range 3.72 to 4.31

**May 9th, 1Q:2013 earnings highlights:
**Revenues were $32 million up 80.4 % from $17.8 million
**TTM Revenues were $114.5 million up 69% from $67.8 million
**Cost of Revenues were $15.7 million up 69.3% from $9.3 million
**Gross Profit were $16.3 million up 92.5% from $8.5 million
**Gross Profit Margin were 51%
**TTM Gross Profit were $57.3 million up 81% from $31.6 million
**TTM Gross Profit Margin were 50%
**Net Income were $2,798 million up 332.5% from $647,000
**1Q Earnings per share were $.07 up 250% from $.02
**TTM Earnings per share were $.25 up 67% from $.15
**Diluted share count were 40,551,000 up 15% from 35,223,000 Quarter over Quarter
**Cash Flow for the quarter was $157 thousand up from ($3 million)
**Cash $50.7 million up from $49.9 million
**Debt 0
**Inventory for the quarter were 13,139,000 up 10% from 11,906,000
**Trading range $10.77 to $14.08
**P/E range 43.08 to 56.32
**P/S range 3.81 to 4.99

**August 8th, 2Q:2013 earnings highlights:
**Revenues were $39.2 million up 61% from $24.4 million
**TTM Revenues were $129.4 million up 70% from $76.1 million
**Cost of Revenues were $18.5 million up 46% from $12.7 million
**Gross Profit were $20.7 million up 77% from $11.7 million
**Gross Profit Margin were 53%
**TTM Gross Profit were $66.4 million up 82% from $36.5 million
**TTM Gross Profit Margin were 51%
**Net Income were $3.4 million up 162% from $1.3 million
**2q Earnings per share were $.08 up 100% from $.04
**TTM Earnings per share were $.29 up 93% from $.15
**Diluted share count were 40,399,000 down from 40,551,000 Quarter over Quarter
**Cash Flow for the quarter was ($3.5 million) down from $2.6 million
**Cash $32.1 million down from $50.7 million
**Debt 0
**Inventory for the quarter were 14,701,000 up 12% from 13,139,000
**Trading range between $14.84 to $18.07
**P/E range 39.55 to 62.31
**P/S range 1.51 to 5.64

**November 5th, 3Q:2013 earnings highlights:
**Revenues were $51.2 million up 101% from $25.5 million
**TTM Revenues were $155.1 million up 79% from $86.6 million
**Cost of Revenues were $24 million up 92% from $12.5 million
**Gross Profit were $27.2 million up 109% from $13 million
**Gross Profit Margin were 53%
**TTM Gross Profit were $80.5 million up 89% from $42.7 million
**TTM Gross Profit Margin were 52%
**Net Income were $8.6 million up 291% from $2.2 million
**3q Earnings per share were $.21 up 250% from $.06
**TTM Earnings per share were $.44 up 159% from $.17
**Diluted share count were 41,370,000 up from 40,399,000 Quarter over Quarter
**Cash Flow for the quarter was $2.1 million down 74% from $8 million
**Cash $34.2 million up from $32.1 million QoQ
**Debt 0
**Inventory for the quarter were 16,660,000 up 13% from 14,701,000
**Trading range between $14.63 to $20.08
**P/E range 33.25 to 45.64
**P/S range 3.90 to 12.17

**March 4th, 4Q: 2013 earnings highlights:
**Revenues were $55.9 million up 71% from $32.7 million
**TTM Revenues were $178.3 million up 78% from $100.3 million
**Cost of Revenues were $23.5 million up 43% from $16.4 million
**Gross Profit were $32.5 million up 99% from $16.3 million
**Gross Profit Margin were 58%
**TTM Gross Profit were $96.7 million up 96% from $49.4 million
**TTM Gross Profit Margin were 54%
**Net Income were $6.7 million up 123% from $3 million
**4Q Earnings per share were $.16 up 100% from $.08
**TTM Earnings per share were $.53 up 165% from $.20
**Diluted share count were 40,709,000 down from 41,370,000 Quarter over Quarter
**Cash Flow for the quarter was $6.7 million down 168% from $2.5 million
**Cash $105 million up from $34.2 million QoQ
**Debt 0
**Inventory for the quarter were 19,444,000 up 17% from 16,660,000
**Trading range between $25.99 to $31.00
**P/E range 49.03 to 58.49
**P/S range 5.93 to 7.08

**May 7th, 1Q: 2014 earnings highlights:
**Revenues were $55.8 million up 74% from $32.0 million
**TTM Revenues were $202.1 million up 77% from $114.5 million
**Cost of Revenues were $24 million up 53% from $15.7 million
**Gross Profit were $31.8 million up 95% from $16.3 million
**Gross Profit Margin were 57%
**TTM Gross Profit were $112.2 million up 96% from $57.3 million
**TTM Gross Profit Margin were 56%
**Net Income were $8 million up 186% from $2.8 million
**1Q Earnings per share were $.18 up 157% from $.07
**TTM Earnings per share were $.63 up 152% from $.25
**Diluted share count were 44,498,000 up from 40,709,000 Quarter over Quarter
**Cash Flow for the quarter was ($11.1) million down from $157 thousand
**Cash $60.1 million down from $105 million QoQ
**Debt 0
**Inventory for the quarter were 32,523,000 up 67% from 19,444,000
**Trading range between $18.59 to $29.94
**P/E range 29.50 to 47.52
**P/S range 4.09 to 6.59

**Aug 7th, 2Q: 2014 earnings highlights:
**Revenues were $65.2 million up 66% from $39.2 million
**TTM Revenues were $228 million up 76% from $129.4 million
**Cost of Revenues were $29.1 million up 57% from $18.5 million
**Gross Profit were $36 million up 74% from $20.7 million
**Gross Profit Margin were 55%
**TTM Gross Profit were $127.5 million up 92% from $66.3 million
**TTM Gross Profit Margin were 56%
**Net Income were $2.8 million down 18% from $3.4 million
**2Q Earnings per share were $.06 down 25% from $.08
**TTM Earnings per share were $.61 up 110% from $.29
**Diluted share count were 47,042,000 up 6% from 44,498,000 Quarter over Quarter
**Cash Flow for the quarter was $3.7 million up from ($3.5 million)
**Cash $156.7 million up from $60.1 million QoQ
**Debt 0
**Inventory for the quarter were 32,066,000 down from 32,523,000 QoQ
**Share based compensation 1%
**Trading range between $16.47 to $23.95
**P/E range 27 to 39.3
**P/S range 3.40 to 4.94

**Nov 4th, 3Q: 2014 earnings highlights:
**Revenues were $71 million up 39% from $51.2 million
**TTM Revenues were $247.8 million up 60% from $155.1 million
**Cost of Revenues were $30.8 million up 28% from $24 million
**Gross Profit were $40.2 million up 48% from $27.2 million
**Gross Profit Margin were 57%
**TTM Gross Profit were $140.4 million up 74% from $80.5 million
**TTM Gross Profit Margin were 57%
**Net Income were $11.6 million up 35% from $8.6 million
**3Q Earnings per share were $.25 up 14% from $.22
**TTM Earnings per share were $.64 up 39% from $.46
**Diluted share count were 47,288,000 up from 47,042,000 Quarter over Quarter
**Cash Flow for the quarter was $11.5 million up 448% from $2.1 million
**Cash $167 million up 7% from $156.7 million QoQ
**Debt 0
**Inventory for the quarter were 34,279,000 up from 32,066,000 QoQ
**Share based compensation 2%
**Trading range between $12.10 to $20.15
**P/E range 18.9 to 31.48
**P/S range 1.67 to 3.85
** HD dome and HD bullet cameras with embedded adaptive video analytics. Powered by their pattern-based, self-learning video analytics technology. These intelligent cameras automatically adjust to changing scene conditions and continue to adapt to scene changes without the need for manual calibration, delivering a new level of performance and ease of installation. They also utilize a breakthrough teach-by-example technology that not only enable the analytics to learn continuously by watching the scene and also learns from operators actively using the system. This is made possible from their acquisition of VideoIQ.
**ACC 5.4 The newest version of the Avigilon Control Center software features complete support for configuration and management of their entire range of video analytics products. The end to end solution provides users with highly accurate real-time alarms in a unified platform.
** HD video appliance series. These new low cost solutions enable Avigilon to effectively compete in budget constrained opportunities. These all in one solutions allow end users to reduce both installation time and cost by combining a Power over Ethernet network switch along with full video management server and client software capabilities into a single compact form factor. The HD Video Appliance is powered by their ACC software which comes pre-installed and configured, enabling end users to experience the benefits of ACC and our patented HDSM technology immediately, such as intelligent bandwidth, storage management, and faster search times.
**received patent number US 8,831,090 on their HDSM technology by the United States Patent and Trademark Office.


Revenue by Geographic Region Three months ended  
            September 30th              % 
($000's)           2014                2013                 Growth      
Canada             4,433               4,462                 -1%
United States     39,751              27,437                 45%
United Kingdom     5,795               3,791                 53%
EMEA              15,505              10,564                 47%
Asia Pacific       3,006               2,364                 18%
Latin America      2,482               2,364                  5% 
Total revenues    70,972              51,157                 39%

Avigilon is a Canadian company that designs and manufactures HD and megapixel (“MP”) network-based (IP) video surveillance systems, video analytics and access control equipment for the global security market. The system is designed to provide high quality video capture, analysis, transmission, recording, playback and physical access control. The system can be designed to not only work with legacy analog cameras but also the new digital cameras. This is a highly fragmented market and is projected t reach US $23.2 billion by 2016. The new era of security cameras is digital with the digital cameras projected to grow at over 24% cagr to 2016. According to IHS research in a study done in 2012 the 15 largest suppliers accounted for 43.5% of the market in 2011 and no company commanded more than a 5.9% share of the market.

Income Statement
Revenue grew at 39% Yoy. Avigilon is growing their sales staff in all regions and the regions with the highest growth in sales staff saw the largest increase in growth. Cost of Revenues (Sales) was up 28%. As sales goes up so does the Cost of Sales. The cost of sales was made up of materials, components, manufacturing labor and overhead costs and transportation costs and other supply chain management costs. While Cost of sales was up 28% as a percentage of sales it was down 4%. Gross Profits were up 48% and this was due to favorable foreign exchange gains, product mixes, and lower manufacturing efficiencies. As a percentage of revenue Gross Profits were up 4%. Sales and Marketing increased by 50%. This is part of the companies plan to grow the company. As a percentage of revenue sales and marketing was up 2%. R and D increased by 28% this quarter and was 9% of revenue compared to 6% of revenue in 2013. General and Administrative expenses increased by $5.2 million and were 13% of revenue compared to 7% of revenue in 2013. G & A expenses consist of cost relating to wages, information systems, customer and technical support, legal and finance functions, professional fees, insurance, and other corporate expenses. The year over year increase is largely due to additional personnel and the related expenses to support the business growth. As the build out their infrastructure you can expect G & A expenses to increase to support planned growth. Net Income increased by 35% and as a percentage of revenue it was 16%. The increase is due to expansion into international markets.

The income statement is still growing and has shown improvement YOY and sequentially.

Balance Sheet

Cash was up 7% QoQ and inventory was up 7%. Their debt still sits at $0. Their property and equipment costs were up 44%. This is partially due to the expansion of their Richmond, British Columbia manufacturing plant. They now have a total manufacturing space of 61,000 square feet. They now have enough manufacturing space to accommodate up to $500 million in annual revenue without the need for significant additional capital expenditures.

The balance sheet is also stronger with debt at 0 and Cash up QoQ.

Cash Flow Statement

Cash flow was up 448% this quarter YOY. The biggest reason for this increase was due to the increase in Net Income. Net Cash from operating activities is at $14 million with net income making up $11.6 million of that. It seems to be working as their Revenue keeps growing, their Income keeps growing, their cash keeps growing, and their Cash flow keeps growing

The Cash flow Statement is strong with Cash flows up 448%.

Conclusion

Avigilon is continuing to hire Sales Managers and Directors in new and existing regions. They feel by doing this in existing regions that they can drive higher sales and in new regions it allows them to get recognition of their product out there. I would say that they are running the business very well. The CEO Alexander Fernandes stated on the conference call that he expected the low end of the market in security cameras to be commoditized. One of the analysts stated that it seemed to be happening faster than planned and Alexander stated that it didn’t surprise him but that they were not seeing any pricing pressures and that was evident in their robust gross margins and profitability. He also stated that they were producing a low cost HD equipment not in order to discount to win sales but to provide a value product for end to end solutions. Fernandes wanted to make it clear in the conference call that there wasn’t a clear leader in the market. But that Avigilon was the fastest growing company. He said that while there are large companies in the market that none of them own even 10% of the market. He also stated that many of them have lost their focus because they are involved in many more markets than just security. Fernandez also stated that he plans on hitting his revenue target of $500 million by 2016 even at that number they will still have plenty of growth available since the market by 2016 will be sitting at $30 billion dollars. That means at that point they will have 2% of the market with 98% of the market still to go. This is a fast growing company and they seem to be doing everything right. Their stock price came down and I believe that it was because the Canadian markets were hit because of oil prices. The Toronto stock market seems to be dominated by oil companies since on the Toronto exchange there are more oil and gas companies than any other stock exchange in the world. I believe since the Toronto exchange tanked they threw out Avigilon along with the oil companies.

My thesis on this is that everyone wants security cameras. They need to have them to stop crime, for crowd control and to monitor possible terrorist situations. The new digital cameras have astonishing clarity and they are able to do more to monitor all scenes. This will cause a huge upgrade from Analog cameras, and will provide a big opportunity for Avigilon. I have only one question to anyone who is reading this. If you haven’t looked at Avigilon, why haven’t you?

Andy
Long Avigilon

http://discussion.fool.com/avigilon-page-post-2-31441337.aspx

13 Likes

I have only one question to anyone who is reading this. If you haven’t looked at Avigilon, why haven’t you?

Great question, Andy, because it is a compelling story (and I have a good size position myself). What could be holding people back? Well, here are some possibilities:

  1. It’s a Canadian company, headquartered in Vancouver. - Well Vancouver is pretty civilized. Probably as least as civilized as plenty of states in the US that I can think of.

  2. It’s not a MF recommendation. - But it is. It’s been a recommendation of MF Canada for some time. (MF One subscribers have access which is how I found out about it.) You also have discussion about it on this board, more probably than plenty of stocks on dead boards on MF SA or MF RB.

  3. It’s high beta. - Yep, it sure is, so you should probably keep your position reasonable sized.

Those are my thoughts on it.

Saul

6 Likes

Great answer Saul thanks.

1. It’s a Canadian company, headquartered in Vancouver. - Well Vancouver is pretty civilized. Probably as least as civilized as plenty of states in the US that I can think of.

That’s true Saul. The Canadians are a very civilized people with a strong and steady government. But since they are a Canadian company their will be foreign exchange risk.

It’s not a MF recommendation. - But it is. It’s been a recommendation of MF Canada for some time. (MF One subscribers have access which is how I found out about it.) You also have discussion about it on this board, more probably than plenty of stocks on dead boards on MF SA or MF RB.

I heard that MF Canada had recommended it and I am glad to have it confirmed.

It’s high beta. - Yep, it sure is, so you should probably keep your position reasonable sized.

That’s True Saul and you can see it in the range of the P/E every quarter. But what great growth they have ahead of them.

Thanks,
Andy

1 Like

If you haven’t looked at Avigilon, why haven’t you?

Andy, I have a significant position in Avigilon, but I think any serious discussion of the company as an investment needs to take into consideration what a more normalized market looks like once this large (and one-time) industry conversion from analog to digital HD is complete.

To me, Avigilon seems to be betting big on that post-conversion market. They’re using the conversion to fuel growth, grab marketshare, and consolidate a fragmented industry to make themselves the top dog. That’s all great stuff, and makes me happy as a shareholder. But what happens once this tailwind fades and the market returns to normal? What does that market look like?

In their investor presentation, the company shows the security market being $12 billion in 2012 and growing to $23 billion in 2016. Avigilon’s goal is to grow to a revenue run rate of $500 million annually by the end of 2016. The good news is that, even if we assume the market fades back to that $12 billion level over the subsequent 3-5 years, that’ll still be 24 times the company’s revenue – so lots of room for continued growth if they can continue consolidating the industry.

I also see signs of Avigilon setting the stage for increased software and services, eventually generating nice recurring revenue selling upgrades to the security software that improve automated security tasks (like real-time detection of shoplifting or other sketchy behavior with alerts to employees) as well as non-security tasks that leverage the monitoring system for business purposes (tracking individuals throughout a store and gathering data on their shopping habits – they looked at the price tag of this item, but didn’t buy it, so maybe they should automatically get an email the next time that item goes on sale), etc. Obviously, providing revenue-enhancing opportunities would change the way businesses look at security investment and hopefully raise the ceiling on industry spending.

So overall, I think Avigilon is making the right long-term moves, but I do think it requires a little analysis to come to that conclusion.

Neil
Long AVO

6 Likes

Andy,

Thanks for the great write-up, interesting company that I will give a closer look.

I have been a Fool for a little over a year so still new to all this and this has become my favorite board (thanks Saul and all who contribute).

I use Scottrade, and looking at AIOCF right now, the bid is 16.27 and the ask is 15.73. This makes no sense to me, what am I missing? I have never seen this before.

Thanks for any help!

Brian

Neil,
Thanks for sharing your thoughts. I think your insight is very sharp. I agree that in time this will slow down but right now they are building up their company for great growth ahead. No company has more than 6% market share at this point in time and by 2016 Avigilon thinks they will have 2% of the market. Could they grow to be 10% or 25%? Who knows yet but I think it might be possible. This CEO is very focused.

In their investor presentation, the company shows the security market being $12 billion in 2012 and growing to $23 billion in 2016

Your statement is true according to their latest financials and they state that in USD. But on the last conference call he made this statement.

Again, just to give perspective, by 2016, our total adjustable market will be approaching $30 billion if you factor in analytics, video surveillance as well as access control.

Now I need to know is he talking USD or Canadian. If it is USD like I was assuming then he is increasing the Market by $7 billion.

Andy

1 Like

Brian,
Be very careful placing an order for this stock in the U.S. It is on the pink sheets and can be very volatile. Find out if Scott trade will allow you to buy it on the Canadian (Toronto) exchange under the ticker name AVO. Their is more liquidity there. But also see what Scott trade will charge you to trade on the Canadian exchange. If it is to much then put in a limit order on the pink sheet of Aiocf and just wait and see if the price will come in. Remember AVO is in Canadian dollars and Aiocf is in USD. I have bought this a number of times on Fidelity. Fidelity actually allows you to buy Canadian companies on the Canadian exchange so it gives you better liquidity. When I buy Aiocf I look at the price and see the range it is trading in and usually put in a limit order towards the bottom of the range. Not to say I won’t miss out or that it might not go down further but that is what I do.

Hope this helps
Andy

1 Like

That is very helpful Andy.

Thanks,

Brian

Hi Brian, Schwab also lets you buy it in Canada where there is lots of liquidity, and a normal spread between bid and asked.

Saul

Thanks Saul.

Can anyone here comment on how Avigilon products compare with its competitors?

I did a quick search and found this shootout :

The final scores for each camera were as follows:

IndigoVision - n/a
Bosch - 7/10
Axis - 5/10
Avigilon - 4/10

http://zeecure.com/articles/indigovision-shootout-with-avigi…

2 Likes

That is interesting Freecapital but like the article states I would much rather see an independent study. There are to many variables where you could make any product look bad. I haven’t seen any studies yet but lets see if there is one around.

Andy

Neil after reading back through the financials and the conference call I believe that I am correct. In the financials it states.

The security surveillance market is large and growing rapidly. The worldwide video surveillance systems market, which includes cameras, video management software, storage hardware, analog video encoders and related equipment, but excludes installation costs, is projected to increase to US$23.2 billion by 20161.

And on the last conference call Fernandes the CEO stated.

Again, just to give perspective, by 2016, our total adjustable market will be approaching $30 billion if you factor in analytics, video surveillance as well as access control. And assuming we do $500 million, that’s a very small percentage of the global market. So there is massive growth opportunity both domestically and abroad.

With the addition of VideoIQ they have grown their Market by 7 billion.
I really like the fact that not only are they growing Revenue, Net Income, Cash Flow, Cash but they are also growing Market share and their market is getting larger. I really like all that they are doing.

Neil the only reason that I am bringing this back up is because this shows that their market can expand and with an expanding market it only equals more growth for them. They were able to get a USD patent this quarter which further strengthens them in the market.

Andy

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Andy, I think we’re more or less on the same page :wink: I was just making the point that, for the long-term investor, it’s going to be the post-conversion market that matters and not the sizes being quoted for 2016 (which certainly reflect conversion from analog to digital), and the good news is that it looks like that market should still be plenty large enough to provide Avigilon with a nice runway for continued growth.

So I think the company is making the smart move, using the conversion to grow, grab marketshare, invest, and consolidate, to better position itself well for the long term. I suspect that once the rush to convert from analog to HD begins to die down, we’ll see a lot of competitors exit the space and leave Avigilon even better positioned.

Neil
Long AVO

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I did a quick search and found this shootout

I have no idea how accurate that comparison is since it was performed by a competitor. I have no doubt they cherry-picked very specific situations that their cameras are tuned for, and remember that Avigilon offers a huge selection of cameras that are designed for maximum effectiveness in different situations.

But that aside, the value proposition of Avigilon’s solutions isn’t just in the camera, but also in the management, storage, distribution, and analysis of the footage – including automated event detection, alerts of suspicious behavior, forensic analysis capabilities, etc. These are all areas where Avigilon shines, and why they acquired both RedCloud and VideoIQ (neither have anything to do with the actual hardware cameras).

You want a security system that is going to automatically detect threats or suspicious behavior and alert you to it – security guards are expensive, have human fallibilities, and can’t be everywhere all the time. If something does go missing, you want to be able to do a quick “object” search for it and have the software identify exactly when it went missing so you can quickly review the relevant footage and figure out what happened without having to sit through days or months of security footage trying to figure it out by hand. This is the kind of stuff Avigilon’s software does. And it’s adaptive, so you can train the software to look for the kinds of situations specific to your particular business or facility.

So whether or not that shootout is accurate, it pretty much misses the entire point of why you’d choose Avigilon.

Neil
Long AVO

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So I think the company is making the smart move, using the conversion to grow, grab marketshare, invest, and consolidate, to better position itself well for the long term. I suspect that once the rush to convert from analog to HD begins to die down, we’ll see a lot of competitors exit the space and leave Avigilon even better positioned

I wasn’t thinking about what would happen after the growth is done but that is a very good point Neil and that is why I am glad you are willing to discuss this. When everyone is thinking through a company we come up with alot more views to help with our decisions. Great points Neil.

Andy
Long Aiocf :slight_smile:

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Though I own a some , I haven’t spent my limited time studying the exact market size and what segments Avignon is going after. But considering all the crummy videos I see on TV from security cameras, the conversion market should be huge. And probably take a long time to complete. Then there is the home market, barely been touched.

We are in a Surveillance Era, unfortunately at the expense of privacy. I used to think Orwell’s 1984 was impossible because it would take half the population to watch the other half, and who would watch the watchers?
With HD cameras,drones, flash storage, and facial and pattern recognition software it doesn’t sound impossible anymore.

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Anyone know why Avigilon or AMBA aren’t going after the combat helmet camer market in the military sector?
Ant

Anyone know why Avigilon or AMBA aren’t going after the combat helmet camer market in the military sector?

AMBA is just a chip company. They don’t make or sell the cameras.

Avigilon does make cameras, but they specialize in commercial/industrial/government security. That’s already a huge, fragmented industry in which to grow and specialize, so branching out into other segments would likely just be a big distraction.

Remember that businesses don’t have to go after every opportunity that presents itself. There’s a great quote from Steve Jobs about this:

People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.

Neil
Long AMBA, AVO

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One more point…

Making something the military could use is not the same thing as making something you can sell to the military. To cater to that market requires considerable dedication and patience. From rules for procurement to everything being milspec, to say nothing about countless federal regulations most companies are not subject to, it is not something you can dabble in.

I remember reading about the Air Force being interested at one time in buying specific civilian radar detectors because they could be used to detect something their current units could not. When they presented the company with the considerable pile of paperwork they would have to process, the CEO said No. They would sell the Air Force all they wanted, but they were not going to jump through hoops to do it. (They bought them anyway, as I heard it.)

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