Continued strong demand for Avid Technology’s MediaCentral cloud-enabled media workflow platform provided a lift for the company’s results in the third quarter (ended Sept. 30), according to CEO Louis Hernandez, Jr.
“Enterprise customers continue to embrace MediaCentral as the industry’s only cloud-enabled enterprise platform for media,” he told analysts in an earnings call Nov. 9.
Avid signed several large enterprise deals in Q3, “further validating our strategy,” he noted, adding those MediaCentral enterprise deals are “typically bundled with a handful of applications and, over time, our account management team works to increase the lifetime value of these accounts by cross-selling additional modules and services.”
One day before the call, Avid said it signed a multiyear enterprise deal that will allow Viacom to enhance its global production infrastructure on the MediaCentral platform.
In the individual customer market, Avid was “seeing broad adoption” of its cloud-enabled creative tools offering with “successful pricing,” Hernandez said on the call. In Q3, Avid “saw a surge in paid subscriptions and digital sales” that he said was “driven by increased digital marketing efforts.” The company has seen “hundreds of thousands of aspiring artists that have taken advantage of our introductory first offerings, which have been converting to paid sales,” he said.
Avid’s cloud alliance with Microsoft, meanwhile, continued to perform well and “we remain very excited about the long-term possibilities of this relationship,” he told analysts. In April, Avid said it signed a strategic alliance agreement with Microsoft to cooperatively develop and market cloud-based solutions and cloud services aimed at the media and entertainment industry.
As part of the deal, Avid selected Microsoft Azure as its preferred cloud hosting platform, and said it would develop and launch a range of Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) offerings powered by the MediaCentral Platform.
Avid’s “transition to a more recurring business with a leaner, more direct cost structure is yielding a more stable and predictable revenue and earnings model,” Hernandez said on the call, adding that also “positions us well for future profitable growth.” The company’s Q3 recurring revenue booking accounted for 41% of total bookings and grew 15% from a year ago, he said.
New technologies including 4K Ultra High-Def and augmented reality are offering new opportunities for Avid, he went on to note, explaining: “We can accommodate these technologies much more efficiently than the legacy way of combining individual proprietary technologies that are much more expensive and complicated to maintain. And this also provides a good environment for account managers, who then go cross-sell additional products and services, thereby increasing the lifetime value of these relationships.” The company believes there’s “significant market penetration ahead of us in this segment,” he added.
The company ended the quarter with more than 50,000 licensed MediaCentral users, up 27% from a year ago, he said. Paying subscribers grew 69%, while digital sales increased 35%, according to Avid.
Avid shares were trading nearly 28% higher at $5.16 the afternoon of Nov. 10. Q3 revenue came in at $105.3 million, above the upper end of its forecast, it said. But that was down from $119 million a year ago. Profit fell to $72,000 from $9.1 million.