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 They are dominating the global transition away from outdated analogue equipment and into the digital world.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 that rely on manual management of cables and cords,” Michael said.
“In a world where technology is making everything easier for users, it is clear to see in the following example that anxiety levels can be reduced significantly through the inclusion of Dante.
“Through their Dante offering, Audinate sells a protocol that’s 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 will ideally utilise Audinate’s software to manage the networking digitally.
“As of AD8’s most recent presentation, there are now over 4,000 Dante-enabled products from over 600 manufacturers in the audio space, while the more recently launched video offering is now used by 50 manufacturers in 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, public transport, amusement parks, zoos and theatres.
“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 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 graph that has continued its rapid rise since 2013.
“Audinate has consistently demonstrated its ability to expand on their existing customer base as they continue to entrench themselves as the de-facto standard in digital audio networking technologies and we have no reason to expect this trend to cease any time soon,” Michael said.
“After a rapid run up from mid-2023 to March 2024, in recent months some heat come out of the share price to now be trading at a considerable 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 finishing up after a lengthy period in the role and profit-taking after the run up. In our view, none of these change our expected trajectory of the business looking ahead, instead it has provided an opportunity to bolster our current position,” Michael said.
Audinate (ASX:AD8)
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