Is Atomos Australia’s Next Big Tech Stock?

Is 2019 set to be the year of the tech stock in Australia? The first half of the year has certainly felt that way. The information technology sector on the ASX has produced a 24.3% return in the last 12 months, making it the second best performing sector.

Melbourne-based Atomos Ltd [ASX:AMS] is among the top performing stocks this morning, soaring 23.21%, to trade at $1.29 per share. Atomos is a global software and hardware technology company that creates, develops and commercialises products for the rapidly growing content creation market. The company’s share price has produced an impressive 158% return since it made its debut on the ASX in December 2018.

What’s Atomos all about?

AMS was founded in 2010 when it created the world’s first video monitor-recorder. The monitor-recorder converged separate existing and more expensive products and allowed users to transform the quality of the editing and production output of their video camera for a fraction of the cost.

In the US, digital content creation generated around US$4.3 billion in 2018 and is expected to grow 16.8% over the next seven years. Atomos targets users from social media content creators to professional production companies.

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This morning, AMS announced an upgrade to its FY19 guidance in relation to its prospectus forecast. AMS said it now expected revenue to be in excess of $50 million, up from the prospectus forecast of $42.2 million. Revenue for FY18 was $35.6 million.

Subsequently, FY19 EBITDA is anticipated to be ahead of expectations and broadly in line with the first half EBITDA of $0.7 million. This compares to the prospectus forecast of $0.3 million for the full year. EBITDA was $0.2 million for FY18.

Atomos has attributed the revenue upgrade to stronger than expected sales for ‘Ninja’ and ‘Shinobi’ devices, which target the rapidly growing social segment of the content creation market.

Commenting on the upgrades, Atomos CEO Jeromy Young said:

The improved revenue and Pro Forma EBITDA expectations reflect the strong customer response to both existing and new Atomos products and we are particularly pleased to exceed expectations in our first year as a public company as we seek to deliver shareholder value.

What’s next for Atomos?

Atomos has entered the market at a time of rapid growth driven by a surging demand in video streaming and video focused marketing and advertising.

AMS’s main markets of social content, pro video content and entertainment content are forecast to continue their upwards trajectory, as more and more people abandon tradition media channels.

The company has already recorded strong short-term success with the launch of its Ninja platform in September 2018, which will underpin a suite of new products over the coming years.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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