Audinate Group (ASX:AD8) reported 12% revenue growth and sustained gross margins in the first half ended 31 December 2025, while outlining increased investment in platform software and the commercial rollout of its newly acquired Iris video control offering. Management said strong first-half bookings support the company’s full-year FY 2026 outlook and pointed to continued expansion of the Dante ecosystem as a key leading indicator for future revenue.
First-half revenue growth and margin performance
On the earnings call, management said U.S. dollar and Australian dollar revenue rose 12% over the prior period, with first-half revenue cited as $21.1 million in one section of the presentation and AUD 32.2 million in the financial statements section (which management noted were presented in Australian dollars). Gross margin remained elevated at about 82.5%–82.6%, which executives attributed to a favorable product mix shift toward higher-margin software products.
Operating expenses rise; cost growth outlook trimmed
Operating expenses increased 26% to AUD 28.8 million for the half, excluding costs related to organizational changes and Iris acquisition-related expenses, which management said were not reflective of underlying performance going forward. Employment expenses rose 29% to AUD 21.5 million, driven primarily by the acquisition of Iris, higher variable incentive costs, and higher headcount added in the second half of FY 2025 to support the Dante ecosystem’s expansion.
The company reported an underlying earnings before interest and tax loss of AUD 2.3 million, compared to a gain of AUD 0.8 million in the prior period.
Audinate also updated its full-year operating cost expectations. Management said it previously indicated FY 2026 operating costs would increase 20%–25% over FY 2025, but following organizational changes in the first half, it now expects operating cost growth of 20% over FY 2025.
Balance sheet, cash flow, and Iris acquisition impact
Chris said cash on hand was AUD 70.9 million at 31 December 2025, down from AUD 109.9 million at 30 June 2025, primarily due to the Iris investment of AUD 31 million (net of cash received as part of the acquisition). Intangible assets increased to AUD 68.7 million from AUD 38.6 million, also driven by the Iris acquisition.
Operating cash flow was an outflow of AUD 0.4 million, compared with an inflow of AUD 1.1 million in the prior corresponding period. After investment in intangibles and fixed costs, free cash flow was negative AUD 8.1 million, compared with negative AUD 9.0 million previously. Management said continued strategic investment in products including Dante Director and Iris contributed to the free cash flow result, and stated it had taken cost actions to create a more sustainable investment run rate going forward.
In response to a question on negative cash flow and the likelihood of a capital raise, management pointed to the company’s cash balance and said the expectation was not to raise capital, describing the first-half actions as positioning the company for a more sustainable cash burn rate into FY 2027 and beyond.
Product portfolio trends and ecosystem metrics
Management highlighted several operating metrics it described as leading indicators of future revenue, including growth in design wins and the number of Dante-enabled products coming to market. Audinate said design wins—manufacturers signing up to use Dante technology for the first time—rose 8% to 66 in the period. The company said 344 new Dante products came to market during the half, bringing the total to 4,947 Dante-enabled products from 516 manufacturers shipping products today, and 723 manufacturers signed up to use some form of Dante technology.
Management also emphasized its training efforts, stating the company trains about 4,000 AV professionals per month and has exceeded 300,000 trained and Dante-certified professionals globally.
In its product breakdown, Audinate reported:
- Adapters: revenue increased 51%, supported by the launch of Dante AVIOs for installation, described as next-generation adapters targeting professional installers.
- Chips, cards, and modules (CCM): revenue fell 4% due to lower demand for Brooklyn and Ultimo, which management attributed to an ongoing transition to embedded software implementations.
- Embedded software: revenue grew 17%, supported by increased OEM adoption of IP core. Management said delivered-on-demand embedded software reduces lead times and provides resilience against channel inventory cycles.
- Platform software: revenue grew 9%, supported by uptake of DVS Pro and early customer wins for Dante Director, the company’s cloud-based AV management tool.
During Q&A, the company was asked about CCM units shipped declining from 243,000 in the second half of 2025 to 205,000 in the first half. Management said it reflected a combination of inventory rundown and the structural shift from chips, cards, and modules toward embedded software, adding that inventory challenges were “very much in the rearview mirror.” Executives also said forward bookings in the first half were strong and provided confidence for the second half, with around three to four months of visibility in the sales pipeline.
Iris launch, platform strategy, and AI commentary
Management framed FY 2026 as a period of strategic execution focused on a broader software platform spanning audio, video, and control. After acquiring Iris, Audinate said it reached a milestone with the commercial launch of the Iris platform in early December 2025. The company described Iris as a cloud-first video camera control platform that is manufacturer-agnostic and includes camera features such as AI auto tracking, color correction, and cloud-based recording, with a roadmap to expand into additional video functions.
Iris contributed AUD 100,000 in revenue in the first half, and management said it will invest in go-to-market and product development through the remainder of FY 2026 to drive adoption. Chris said direct Iris costs were about AUD 800,000 to AUD 900,000 in the first half, and that headcount for Iris was expected to grow from 10 employees to about 15 by year-end as go-to-market efforts build. Management said Iris and Dante Director are intended to be integrated over time into a common cloud platform with multiple modules.
On go-to-market strategy, management said Iris is currently in market with a white-label offering from a manufacturer. Going forward, it expects Iris to be driven primarily through channel or distribution-based models where Iris is bundled with camera purchases, alongside a direct-to-end-user approach. The company said it has seen users sign up for the free tier and begin onboarding cameras through direct marketing.
Management also discussed artificial intelligence and positioned Audinate’s networking and API capabilities as enabling AI-driven workflow automation across AV project phases (design, install, operate). Executives emphasized that much of the company’s revenue is tied to physical devices installed in real-world environments—an infrastructure-oriented model rather than seat-based software—while arguing that as the industry shifts from bespoke hardware and point-to-point cabling to networked, software-driven solutions with APIs, AI use cases become easier to deploy.
For FY 2026, management reiterated an outlook for U.S. dollar gross profit growth of 13%–15%, and said operating cost growth is expected to be 20% over FY 2025 following first-half organizational changes. The company also noted continued softness and uncertainty in the broader market, including ongoing tariff-related uncertainty, which management said can increase equipment costs and contribute to deferred spending decisions.
About Audinate Group (ASX:AD8)
Audinate Group Limited develops and sells digital audio visual (AV) networking solutions in Australia and internationally. It provides Dante, a technology platform that distributes digital audio and video signals over computer networks to original equipment manufacturers. The company also offers software products, such as Dante Controller, a real-time network monitoring device; Dante Virtual Soundcard that provides access to various audio devices on the network; Dante Via, a software that delivers multi-channel routing of computer-based audio; Dante Studio; Dante Connect that delivers in-sync audio directly from Dante networks to cloud services; and Dante Domain Manager, as well as Dante AVIO adapter.
