Audinate Group

The Business

Audinate's Dante protocol lets audio equipment from different manufacturers talk to each other over standard computer networks, replacing analogue cabling in concert halls, stadiums, and conference rooms. Embedded Components, protocol chips and software licensed into other companies' hardware, generates 69% of revenue. Adaptors and a growing Platform Software business, including the Dante Director management tool and the newer Iris video platform, make up the rest. Audinate does not manufacture speakers or amplifiers; it licenses the plumbing that connects them, earning royalties from 542 OEM partners rather than competing on hardware.

Recent Performance

FY26 revenue grew 9% to $67.8 million, recovering from FY25's OEM destocking collapse. That growth did not translate into profit: underlying costs rose faster than revenue, and EBITDA margin fell from a slim positive 1.0% to negative 4.9%. Gross margin held at 82%, showing pricing power in the core protocol business remains intact even as the bottom line worsened. The share price has re-rated sharply from its earlier peak as the market weighs strong technology against unproven cost control.

Outlook

Revenue is expected to keep growing at a double-digit annual rate over the next several years, driven by the ongoing shift from analogue to IP-based audio networking, a transition currently only around 35% penetrated. Margins are expected to recover from FY26's loss, contingent on management holding FY27 operating costs flat, as guided, after a 10% headcount reduction. A return to full-year net profit is not expected in the near term. That timeline assumes no repeat of FY26's cost overrun.

Key Risks

The most consequential risk is that operating leverage simply fails to show up: costs grew 17% against 9% revenue growth in FY26, and if management's flat-opex guidance for FY27 is missed again, the path to profitability pushes out further. A second risk sits in the Iris video platform, which has produced negligible revenue against a $31 million investment and where continued spending without traction would keep draining cash and management attention. A third, slower-moving risk is that open, royalty-free protocols such as AES67 gradually erode Dante's pricing power, though a decade of sub-7% adoption suggests this threat remains distant rather than imminent.

What to Watch

The thesis-defining event is Audinate's first-half FY27 result in February 2027, which will show whether flat opex guidance is holding or whether costs are again outrunning revenue.

• Feb 2027 1H FY27 results — confirms whether opex discipline is real or aspirational.
• Aug 2027 FY27 full-year result — first test of full-year profitability since FY24.

Latest Developments

FY26 results included a 10% headcount reduction and a write-down of the Iris contingent payment to nil, an unusually candid admission that the video acquisition is underperforming.

Company Description

Audinate builds and licenses Dante, the dominant protocol for networking professional audio and video equipment. Embedded Components, the protocol embedded directly into OEM hardware such as mixing consoles and amplifiers, generates 69% of revenue. Adaptors, standalone devices that bring Dante connectivity to equipment without native support, form a smaller, more cyclical segment tied to installation activity. Platform Software, including the Dante Director network management tool and the newer Iris video and control platform, is the fastest-growing but smallest segment. Audinate does not make speakers, amplifiers, or cameras. It licenses the networking layer that connects them, collecting royalties and licence fees from 542 OEM partners across the professional audio-visual industry.

Where the Growth Is

Embedded Components is the growth engine, contributing 69% of revenue and riding the shift from analogue to IP-based audio networking, a transition still only around 35% complete. Audinate signs roughly 137 new design wins a year, each taking 18-24 months to convert into shipping product. That pipeline supports continued double-digit revenue growth and underpins an expected EBITDA margin recovery from negative territory currently to a mid-teens terminal level, as fixed development costs are spread across a larger revenue base.

Competitive Position

Audinate holds roughly 80% share of the networked professional audio market, with an installed base 14 times larger than its nearest rival across 8 million devices and 542 OEM partners. Every new device added to that base increases the value of staying on Dante and raises the cost of switching away from it, a self-reinforcing dynamic that has held for more than a decade. The open, royalty-free alternative, AES67, has been available for ten years and still holds less than 7% share, evidence that switching costs and integration effort outweigh the appeal of a free protocol. That advantage is durable in audio, likely for seven or more years on current evidence, but does not yet extend to video and control, where Audinate has no comparable installed base.

Management & Capital Discipline

The clearest data point on capital allocation is the Iris acquisition: $31 million spent on a video and control platform that has generated negligible revenue, with the contingent earnout payment already written down to nil. That write-down is, in fact, the most candid statement in the company's recent disclosures, effectively conceding the deal will underperform. On cost control, management cut headcount by 10% in FY26, but only after underlying employee costs had already grown faster than revenue for a full year, a correction that came roughly twelve months later than the numbers suggested it should have.

Financial Position

Audinate carries no debt and holds a substantial cash position, giving it several years of runway at the current burn rate even before accounting for any improvement in operating performance. Free cash outflow is expected to narrow steadily over the next few years as revenue scales against a largely fixed cost base. The balance sheet can comfortably absorb a slower path to profitability than currently guided, but continued cash burn without a clear turn to positive free cash flow would eventually require either further cost cuts or external funding.