AVG Technologies released their financial results in February. As usual, the focus was on revenue. Per their announcement, “Subscription revenue increased 12% to
$281.6 million from $250.8 million year over year. Our consumer subscription
business grew 11% to $223.1 million and our small business segment by 18.7% to
$58.5 million. For the fiscal year 2014, total revenue was $374.1 million”
Looking at the
numbers versus fiscal 2013 and Q4 2013 versus 2014 is a little troubling, as a lot of red is
involved in the changes.
With the exception of Subscription Revenue, all other
figures above were lower in Q4 and for 2014 overall versus 2013. Much of the drop in platform derived revenue
was expected, however. The increase in
subscription revenue didn’t make up for the decline in platform derived
revenue. AVG’s focus is going to be on
subscription revenue.
In the transcript to the press conference, CEO Kovacs
commented that, “We have also exceeded a very important user
count milestone, as we came in at over 101 million mobile users, to give a
total user count reached of 197 million. Both of these are well on our way to
the important milestones
Two potential red flags with this. There may be double counting of users, if a
user has AVG product installed on both a smart phone and a laptop. Also, several years ago, AVG promoted that they had on the
order of 130 million users. This was before they acquired their way into the
mobile business (Israeli based company acquisition). Doing the math, they may have lost, market
share on the order of 34 million
desktop users. That’s quite a bit. How user is/was defined may have changed
over the years. 5 million of the
additional users were through the acquisition of Location Labs.
Paid user count for 2014 on the desktop was approximately 19
million. The means the majority of the
consumer base was free, which means zero switching costs and the possibility
for churn.
2014 acquisitions by AVG included acquisitions of Locations
Labs, Norman Safeground and Winco. Revenue
from these were not broken out separately.
Some Threats for 2015
SMB
In 2014, AVG’s SMB revenue grew by an impressive 18.7% to
$58.5 million. On February 24th, AVG competitor Avast announced
their free Avast for Business. This product
is designed to protect small and medium-sized businesses (SMBs) against viruses
and cyber attacks.
Avast pointed out as part of the introduction that it plans to introduce
programs for MSPs and resellers that enable them "to benefit from the
power of free." This could pose a risk to AVG’s growth with their SMB product. To build their presence in the business marketplace,
Avast recruited AVG’s VP of Sales and Operations in June, 2014.
In the Desktop and
Android Market
- AVG has not tested well in some product tests by well known vendors. This could impact market share growth.
- AV-Test (www.av-test.org) released a report in December on “The best antivirus software for Windows Home Users”. AVG’s products tested came in 18 and 22 out of the 27 tested.
- AV-Comparatives (www.av-comparatives.org ) - In AV-Comparatives’ September “File Detection Test”, AVG was awarded 1 star. 18 products were awarded 2 or 3 stars.
- However, in the AV-Compararatives.org summary report for 2014, AVG was one of nine vendors to receive a Top Rated designation. Bitdefender won Product of the Year.
- Av-Test (www.av-test.org ) released a report on “The Best Antivirus SW for Android”. 31 products are in the report. 28 products scored higher the free AVG offering that was tested.
- AVG was not part of the AV-Compasrative September “Mobile Security Review”.
To jump start even further installations on mobiles, AVG may
need to do something like they did with Huawei and
give away paid AVG product. They did this with Huawei mobiles in the India market, and with Samsung
phones in the UK market. This was a couple of years ago.
AVG ME
The rumor mill has AVG Introducing “AVG ME” sometime in the first ½ of this year ,
potentially as soon as March. With this
product, AVG ME will be providing publishers and advertisers access to validated
user data (gathered with customer permission).
Revenue from this is TBD.
The Usual Acquisition
Stories
In November, the Wall Street Journal reported that AVG Technologies
had been approached by potential buyers.
Nothing has really been in the press about this since then.
Posts
