Atomos Shares Crash 45% on Trading Update (ASX:AMS)

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Video equipment manufacturer Atomos’s [ASX:AMS] share price fell 45% on Friday on the release of its latest trading update.

AMS has suffered a gradual slump since 2021, down 65.46% in the last month alone:

ASX:AMS stock prices chart


AMS update includes new guidance

Atomos announced a ‘strong medium-term outlook’ today despite revenue and EBITDA changes in its new guidance report.

The company commented that it’s chosen to update the market despite acceleration in promotional activities that might ‘see Atomos outperform new guidance’.

Revenue guidance has changed since the company’s announcement last month, which was estimated to reach $95 million.

Now revenue guidance has dropped to around $80–90 million.

Likewise, EBITDA margins were in the range of 12–15%. However, the new EBITDA margin has entered the 6–8% range.

Sales were reported to have been slower than the company expected, with changes implemented in April so that marketing approach and lower promotional activity might improve sales performance.

EBITDA may be impacted by an increase in optimising the company’s cloud-based services, a decision that was influenced by feedback provided by the National Association of Broadcasters (NAB).

Atomos believes this impact to be short term, that this strategy should ‘increase the installed base of its hero product, Ninja, by 15% by the beginning of FY23’.

ARR guidance hasn’t changed with the company anticipating $3 million for 2023 and $6 million in 2024 with EBITDA expected to reach double digits next year.

AMS’s connect product’s short-term production schedule has been revised due to COVID lockdowns in Shanghai.

AMS share price outlook

Trevor Elbourne, Interim CEO, admitted it was ‘disappointing’ to revise FY22 guidance, commenting:

The reception we have received to our recent product launches is a strong endorsement of the technology roadmap we have been executing for the last couple of years…

At the same time, it is extremely disappointing to be revising our FY22 guidance, particularly considering the strong sales results achieved during 1H FY22.

However, with new products in market, and the appropriate promotional levers reactivated, we expect a strong Q4 which will ensure that we maximise the sales of our physical devices and in turn, adoption of the new connected ecosystem.’

Investors are certainly sharing in the disappointment with the guidance downgrade, sending AMS shares lower on Friday.

Investors may be wondering why the good reception Atomos is purportedly receiving for its products is still leading to downgrades in guidance.

Going forward, AMS will need to find the right strategy for reaching more consumers.

But while the tech sector is sustaining selling pressure, there’s another sector that our experts believe is due for a positive reassessment, especially now that Europe is pulling away from Russian energy suppliers.

If you’d like to learn about an Aussie small-cap that could have a hand in helping Europe resolve its energy crisis, click here and read on.


Kiryll Prakapenka,
For Money Morning

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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