Audinate's Pivot to Control: A Strategic Shift from Components to Software
FY26 shows 15% revenue growth and an EBITDA loss as Audinate pivots from Dante components to audio-video-control software and services, targeting free cash flow breakeven by FY28.
AD8.AX · Earnings Call · 2026-08-16
A Year of Strategic Repositioning
Audinate Group Limited celebrated its 20th anniversary with a fiscal year that marks a deliberate strategic shift. FY26 revenue grew 15% in USD to $46 million, at the upper end of guidance, with gross margin holding at 82%. But underlying EBITDA turned to a loss of $3.6 million from a positive $0.7 million in FY25, reflecting what CFO Chris Rollinson called "a deliberate choice" to invest ahead of revenue. The company also restructured, reducing 10% of roles, to align its cost base with new strategic priorities. As CEO Aidan Williams noted, “the full benefit of cost base realignment will be realized in FY '27 and beyond” — Aidan Williams, Co-Founder and CEO · 2026-08-16.From Video Components to the Three-Legged Stool
The most significant change is how Audinate now frames its growth strategy. Instead of chasing a video component business mirroring its audio success, the company is now emphasizing the "three legs of the stool" — audio, video, and control. Williams explained in Q&A: “So instead of focusing on video is the next thing or how big is video going to be as a component business, we want to point investors towards thinking about there's a component business, but there's also a business selling products into installations like our AVIO business that we have today.” — Aidan Williams, Co-Founder and CEO · 2026-08-16 The company has organized into three categories: embedded components, installed products, and AV software and services. This repositioning is anchored on the control function and the installed base of over 8 million Dante devices.Iris: A Small Start, but a Big Bet
Iris, acquired for $31 million, is the linchpin of this strategy. It brings camera control and video production into the Dante ecosystem. However, Iris contributed only $200,000 in revenue in FY26, and the earn-out is not tracking to plan. Rollinson confirmed: “So at this stage, the answer is not on track to hit the earn-out” — Chris Rollinson, Chief Financial Officer · 2026-08-16. The earn-out requires $10–15 million in revenue after three years, a stretch given current traction. Despite this, the company sees Iris as a strategic asset to deepen engagement with the AV industry.AI and the Network Advantage
Audinate also addressed the AI wave, arguing that its networking and control technologies provide the foundation for workflow automation. Williams stated: “Both Dante and Iris put audio and video signals onto networks with APIs to control them, and this creates a natural foundation for AI and workflow automation.” — Aidan Williams, Co-Founder and CEO · 2026-08-16 The company believes that the Dante Director and other software products will become more valuable as AI-driven control becomes commonplace.Outlook: Path to Free Cash Flow
For FY27, Audinate guides gross profit growth in line with FY26, flat operating costs, and stronger operating cash flow. Williams reiterated the expectation: “We expect materially stronger operating cash flow in FY '27, driven by improved revenue and a leaner cost base.” — Aidan Williams, Co-Founder and CEO · 2026-08-16 The company targets free cash flow breakeven by FY28. This is a shift from the previous focus on component volume to a more software and services-oriented model that leverages the AVIO Adapters and control solutions.Why This Matters
Audinate's pivot is a bet that the value in AV installations lies in software and control, not just hardware. With a robust balance sheet ($65 million cash, no debt), the company has the runway to execute. The strategic shift, the Iris integration, and the restructuring position Audinate to capture recurring revenue from its massive installed base. However, near-term profitability remains elusive, and the market will watch whether Iris and control software can scale. The company's narrative has shifted from being a component supplier to a provider of the "network operating system" for AV.So putting this all together, underlying EBITDA was a loss of $3.6 million, down from a positive $0.7 million in FY '25. Now this reflects a deliberate choice.