Avid Technology, Inc. Soars on Strong Back-to-Back Financials
Avid Technology, Inc. (NASDAQ:AVID) stock took a hit during the marketwide sell-off in December. Unfortunately, it was one of the few technology stocks that didn’t enjoy the benefits of the supercharged January effect. The Avid Technology stock price was flat for the first two-and-a-half months of the year.
Things changed, though, after the company reported strong fourth-quarter results in mid-March and equally as strong first-quarter results on May 6. AVID stock is up more than 90% since the start of the year and, thanks to a strong outlook, could easily double from current levels in the second half of the year.
Avid Technology, Inc. Overview
Most Academy Award winners thank their families and co-stars, but they should also be giving a shout-out to Avid Technology, Inc.
Avid is a multimedia tech company that specializes in digital audio and video editing software used by the biggest names in the movie, music, television, sporting, and news broadcast industries. Its easy-to-use editing software is also used by professionals for the biggest live concert tours and customers mixing music and making movies at home.
The numbers speak for themselves:
- 6 out of 6 major Hollywood film studios use Avid.
- 9 of 10 of the leading international news networks rely on Avid.
- 4 of 5 of the largest station groups use Avid.
- 70% of commercially published music is created using Avid.
- 90% of original content from leading streaming providers is produced using Avid.
- Its customers have won Oscars, Grammys, and Emmys.
- At the 2018 Academy Awards, every winner and nominee for film editing, sound editing, sound mixing, and original score used Avid.
(Source: “Our Company,” Avid Technology, Inc., last accessed May 9, 2019.)
Avid Technology Stock
|AVID Stock Information|
|Market Cap||$375.5 million|
|Shares Outstanding||42.0 million|
|50-Day Moving Average||$8.02|
|200-Day Moving Average||$5.98|
(Source: “Avid Technology, Inc. (AVID),” Yahoo! Finance, last accessed May 9, 2019.)
Avid Technology stock tumbled during the marketwide swoon in December and ended the year down 12%. The company continued to disappoint investors in the early part of 2019. Over the first 10 weeks of the year, the Nasdaq soared more than 17%. Over the same time frame, AVID stock lost 1.9% of its value.
All of that changed on March 15, after the company reported strong fourth-quarter and year-end results. Over the next few trading days, Avid’s share price soared more than 65%.
Avid Technology stock held onto those strong gains and built on them after reporting strong first-quarter results after the markets closed on May 6. The following day, it hit a new 52-week intra-day high of $10.65 for a year-to-date gain of 127%.
As of this writing, AVID stock is trading around $8.30, but thanks to a strong outlook, that price could double.
Chart courtesy of StockCharts.com
Q1 Revenue at High End of Guidance, Adjusted EBITDA Exceeds Guidance
After the markets closed on May 6, Avid announced its financial results for the first quarter ended March 30, 2019.
First-quarter revenue was $103.3 million, a five-percent increase over the $97.3 million recorded in the same prior-year period. (Source: “Avid Technology Announces Q1 2019 Results,” Avid Technology, Inc., May 6, 2019.)
The company’s first-quarter operating income was $5.4 million, up from an operating loss of $3.3 million in Q1 2018. Non-generally accepted accounting principles (non-GAAP) operating income was $10.2 million, up from $3.0 million year-over-year.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) essentially doubled to $12.6 million.
Avid reported a first-quarter net loss in 2019 of $0.01 per share. In the year-ago period, the company posted a net loss of $0.22 per share.
Adjusted earnings jumped to $0.11 from a loss of $0.06 per share in the first quarter of last year. Free cash flow (FCF) was $4.6 million, up from first-quarter 2018’s $3.3 million.
President and CEO Jeff Rosica said, ” We are focused on delivering meaningful product innovations to the market, including several new products in Q2, that we expect will support our growth in the second half of 2019 and beyond.” (Source: Ibid.)
Looking ahead to the second quarter, Avid expects to report revenue in a range of $97.0 to $105.0 million and adjusted EBITDA in a range of $8.5 to $13.5 million.
Avid Technology also reaffirmed its full-year guidance for revenue between $420.0 and $430.0 million, adjusted EBITDA between $60.0 and $65.0 million, and FCF between $12.0 and $17.0 million.
Avid Technology stock has been on a tear since the company reported strong fourth-quarter results in mid-March. During that quarter, the company also posted double-digit growth in subscriptions and e-commerce revenue.
Avid Technology, Inc. entered 2019 with strong momentum; investors just didn’t realize it. And that momentum continued with strong first-quarter results. For fiscal 2019, Avid Technology expects its adjusted earnings to soar 148% and its revenue to climb three percent.
All of that should help catapult AVID stock above $10.00 and out of penny stock territory.
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