Saturday, August 02, 2014
An Alternative Look at AVG Technologies’ Q2 Earnings Report
AVG Technologies accounted their Q2 earnings report on July 30. The stock fell about 13% as the company missed the Q2 revenue consensus of $91 M with revenues of $88 million. The stock proceeded to drop from $19.65 to $17.10 and they closed the week at $17.05. To put a long-term perspective on this, AVG went public at around $16 in February 2002, and had a pop. A negative pop. Closing the day at just over $13.
Nonetheless, CEO Gary Kovacs stated, "I am pleased with our continued execution against our long term strategy toward becoming the online security company.”
One problem with the press is that they will often only look at the company’s most recent earnings report and compare revenue figures to target and nothing else. Some will do a comparison to the most current quarter versus the same quarter last quarter. What they should do is a deeper dive into income, cash flow, margins, etc. The table below compares the first six-month’s figures for AVG, versus the same time frame last year. They should also look at test results from firm's like AV-Comparatives.org av-test.org and Virus Bulletin. But that's potential material for another blog.
Subscription revenue and SMB revenue for AVG Technologies is up over that period. Everything else is down. Even though SMB revenue increased, income decreased. Revenue decreased across all regions of the world. Revenue from Google dropped precipitously. That may be why on August 1, AVG announced that they were extending their partnership with Yahoo.
For those who want to look at cash flow to do their analysis - net cash provided by operations dropped by 37%.
There is a lot of red in financial trends for AVG year over year. Pdf’s of AVG Technologies financial results are available at www.investors.avg.com