Monday, March 04, 2013

AVG Technologies 2012 Revenue - View Far From Investment Firms

The below is a quick look at AVG Technologies’ 2012 revenues.  The bulk of the figures below are from AVG Technologies Form 6-K, available on their web site.  Disclosure - I can comfortably talk with the “smartest guys in the room” and even own multiple suits.  This is not a look at the marketing strategy.  Just some bullet point observations from afar about revenue, net income, cash.

March 7 addendum -  CEO JR Smith  resigns -  AVG Technologies N.V. (AVG) said J.R. Smith will step down as chief executive after a six-year tenure at the helm of the Internet and mobile-security provider, which is conducting a search for his successor.  He is remaining  on the board.
  • Overall revenue up 31% to $356 million - Good.  Subscription based revenue was up 12% while platform based revenue was up 65%.  Platform based revenue now comprises  45% of AVG’s revenue (Can you say Google?).  
  • In a Seeking Alpha article - “AVG: Feb 1st Google Policy Updates Threaten AVG's Growth Engine, Signals Steep Downside”.  Google would require companies to make use of “opt-out” instead of having “opt-in” checked automatically on the customer’s behalf.  The author of the article, Eiad Asbahi, is forecasting reduced revenue for AVG because of this.
  • Net income dropped 44% to $46 million in 2012 from 2011.  This usually isn’t a good thing, especially when revenue is up 31%.  Not a sustainable model.
  • Gross profit margin dropped 3% from 89% to 86%.  Most industries would be envious, even with the decline.
  • From Motley Fool. Short shares as a percent of float 18.6%.  For Symantec, the figure is 1.6%.
  • From Motley Fool.  Short shares increase between January 31 and February 15, 278.5%.  Ouch for both of the figures from Motley Fool.  One would like investors to have confidence that the stock will go up.
  • Current ratio Symantec – 1.06.  Current ratio – AVG Technologies  - .54.
  • Happiness is positive cash flow -AVG has been generating cash.
An interesting statement in the notes - "The Company’s profit and loss tax charge varies from period to period and has shown significant variations from its cash tax charge.  In particular, the Company’s entry into an innovation tax regime in the Netherlands resulted in a significant tax credit in June 2011, which will be reversed in future periods.You have to love companies with offices in the Netherlands, and Ireland, and bank in the Cayman Islands.  All legal.  All companies with some combination of these should be required to state the number of square feet dedicated to the company  that they rent in these locations. No counting shared conference rooms. And a picture of the Post Office box.   For a discussion on some of this:  

It should be an interesting year two for AVG Technologies as a public company following their IPO (initial public offering).  They appear to have an increasing reliance on securing mobile devices.  They just announced a deal with Samsung in the UK for purchasers of Samsung mobile users to download AVG’s mobile product for  free .  On the laptop/PC side and  on the free download side, Avast had 1.21 million downloads on  versus 0.87 million for AVG Free Antivirus for the week ending March 3.  However,  CEO JR Smith has stated that AVG has been diversifying their product line. Perhaps this gap compared to Avast  is to be expected. Avast cancelled their IPO over a year ago.

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