Audinate Group Limited

Recording in progress.

My name is Aidan Williams. I'm co-founder and CEO at Ordinate. With me is Chris Rollinson, our Chief Financial Officer. In the first part of the call today, we'll be talking through the investor presentation that accompanied our financial statements, both of which were lodged with the ASX earlier today. You may ask questions at any time by typing them into the Q&A box. Hopefully you can see that in your Zoom application. At the end of the presentation we'll collate your questions and answer as many as possible in the time we have available. I'd like to start by recapping Audinate's first half highlights before we move on to covering key operational and financial metrics and then look ahead for the remainder of the financial year. Later in the presentation, I'll be briefly covering the relationship between AI, Ordnance Products and Technology, and the broader AV industry as a whole. Turning to slide three, it's pleasing to see 12% growth in US and Australian dollar revenue over the prior period. We've seen strong bookings in the first half, supporting achievement of our full year FY26 outlook. We've also continued to maintain strong gross margin percentage of 82.6% and that's consistent and it's been driven by favourable product mix shift between hardware and high margin software products. Operationally, we've continued to execute with strong results in key operating metrics. Design wins, that is the number of manufacturers signing up to use Dante technology for the first time. is up 8% over the prior period with 66 design wins over that period. The Dante product ecosystem continues to grow with a further 344 Dante products coming to market during the half. This brings the total of Dante enabled products on the market to just under 5,000 and that's coming from over 516 manufacturers. Each new design win and product coming to market is a leading indicator of future revenue for Ordinate. Training for AV professionals is key to increasing the usage of Dante Networking and AV projects and installations. We continue to train 4,000 AV professionals per month in our certification programs and training courses. with a total exceeding 300,000 trained and Dante certified professionals globally. After the acquisition of IRIS this year, we have achieved a key milestone with the commercial launch of the IRIS platform in early December 2025. IRIS is a cloud-first video camera control platform which expands our ecosystem of video products and extends our product portfolio with deep camera control functionality. In the remainder of FY26, we will be investing in go-to-market and driving the adoption of IRIS. Strategically, it has been a big year for Audinate. To briefly summarise, our long-term strategy remains to capitalise on the growing installed base of networked AV devices and provide the software platform used by the industry to deliver projects globally. AV installations are generally understood to require three kinds of functions – audio, video and control. Today, including the Iris acquisition, more than 8 million audio and video devices are potentially available in our product ecosystem. Therefore, the time has come for us to invest in the third leg of the stool, that control function, and this has financial and organisational implications for Audinate. Over the last half, Audinate has made organisational changes to better align our cost base with our strategic objectives for the Dante platform. These changes reflect the natural progression of the product investment cycle with several major initiatives now complete. Operating costs for FY26 were previously indicated to increase by 25% over FY25 and that was reflecting continued investment in strategic initiatives including IRIS, Dante Director and the broader Dante platform. Following the organisational changes made in the first half, operating cost growth is now expected to be 20% over FY25. With the completion of the IRIS acquisition and the appointment of an industry veteran, TJ Adams, as Chief Product Officer, we have in place key capabilities and talent that will advance our long-term vision of providing an interoperable audio, video and control platform for the AV industry. Turning to slide five, you can see key financial metrics for the first half. Revenue for the half was US$21.1 million, growing 12% over the prior period. In this context, this is around three times the underlying growth rate of the AV industry, according to Avixa, which has slowed with the abatement of COVID and return to office tailwinds and also tariff uncertainty. Gross margin percentage has increased slightly to 82.6% due to an ongoing favourable product mix shift toward higher margin software solutions. Post the acquisition of Iris, we have 70 million Australian dollars remaining on the balance sheet, which enables us to prudently invest in our platform strategy. Slide six breaks down our product portfolio into four categories. Adapters are hardware products sold to end users and AV projects. Adapters revenue increased 51% supported by the launch of Dante AVOs for installation. These are a next generation Pro S1 based adapter targeting the professional installer market. Embedded chips, cards and modules are electronic components sold to AV equipment manufacturers to connect their products with Dante Networking. CCM revenue reduced 4% due to lower demand for Brooklyn and Ultimo, and this is driven by the continued transition to embedded software implementations. Embedded software is royalty-bearing software used by AV equipment manufacturers to connect their products to Dante networks. Embedded software grew by 17%, underpinned by increased OEM adoption of IP core. Delivered on demand, this embedded software reduces lead times and provides resilience against channel inventory cycles. Finally, platform software includes a range of PC and Mac desktop software and infrastructure products for AV installations. Platform software grew 9%, supported by the growing uptake of DVS Pro and early customer wins for Dante Director, our cloud-based AV management tool. IRIS contributed US$100,000 in the first half. Slide 7 shows continued strength in key operating metrics, each of which are leading indicators of future revenue. Ordinates sales cycle to manufacturers of AV equipment involves an initial design win, followed by a period of 12 to 24 months for product design to be completed. followed by repeat revenue derived from the ongoing purchase of chips or royalties as each new physical unit is manufactured. And that continues over the sales lifetime of the AV product. Design wins are the earliest indicator and they represent manufacturers signing up to use Dante technology in their products. 66 design wins was a good and consistent result with prior periods, as you can see on the left-hand side of the slide. In the middle column, the number of manufacturer brands with Dante products in the market, and importantly, the number of manufacturers developing their first Dante product continues to grow. There are now 723 AB manufacturers signed up to use some form of Dante technology in their products, with 516 manufacturers shipping one or more Dante-enabled products today. The right hand column contains a key indicator, which is the number of Dante Enable products available on the market. During the half, an additional 344 new products came to market, making a total of 4,947 Dante Enable products on the market. Since the Dante technology provides interoperability between competitive brands, The growing product ecosystem continues to strengthen the economic network effect of the Dante technology and its competitive moat. And I'll now hand over to Chris to talk through the financial.

Thank you. Thank you very much, Aidan. So what we're looking at, turning the financial results for the first six months of the year, and so the year ended 31 December 2025. So for the first time, our results consolidate the performance not only of Ordinate, but also of RSU years after the completion of the acquisition in the first half of the year. So all numbers in this section are presented in Australian dollars. So firstly, if we look at the income statement, for the first half, revenue was $32.2 million. Gross profit at $26.6 million. and that represents for both of those key measures 12% growth on the prior period. So revenue again was delivered at a strong operating margin of 82.5% and this is really driven by the product mix between our Chips, Cards and Modules and our higher margin software products. If we look at our operating expenses, this has increased by 26% to $28.8 million for the first half. Now, this reflects the ongoing investment in core capabilities, but also product innovation in products such as Iris, Dante Director, and also the wider Dante platform. These operating costs in the presentation are excluding costs associated with organisational changes that were made, and also IRS acquisition-related expenses. Both of these elements not reflective of underlying performance going forward. If we look at operating expenses and employment expenses, they've increased to $21.5 million for the period, and this compares to $16.6 million in the prior period, representing an increase of $29 million. Now the increase in the underlying employment expenses is primarily reflected by the acquisition of a virus. We've got higher variable performance-related incentive costs and also the increase in headcount in the second half of financial year 25, which helps support the further expansion of the Dante ecosystem. So what this translates to is underlying earnings before interest and tax into a loss of $2.3 million and that compares to a gain of $0.8 million in the prior period. If we turn to the balance sheet, there's two key items to discuss on the balance sheet which relate to our access to cash and also intangible assets. So a key item in the balance sheet that Ordinate had access to is cash on the hand of $70.9 million. Now that compares to 109.9 at 30 June 2025. The change between the periods is driven by the investment in IRIS, consisting of $31 million, which is a net of cash received as part of the acquisition of IRIS. And secondly, intangible assets have increased to $68.7 million, which is up from 38.6, and the key driver of that has been the acquisition of IRIS in the first half of the year. And then finally to the cash flow statement. Coordinates delivered operating cash outflow of $0.4 million in the period compared to $1.1 million. cash inflow in the prior corresponding period. After investment in intangibles and fixed costs, our free cash flow for the period was negative 8.1 and that compares to negative 9 in the prior corresponding period. So the choice to continue our strategic investment in new products, specifically Dante, Director and Iris, is there to drive our long-term performance and growth and this has clearly impacted free cash flow in the current period. But as Adam's outlined, the action's taken certainly on costs and the first half of the year gives us a much better balance of the investment run rate going forward. I hand you back to Adam. Thank you.