Video compression specialist ATEME announced first half 2018 revenue of €23.42 million, an increase of 12% versus the first half of 2017.  On a constant currency basis, revenue would have grown 18%. Revenues in the US in particular were adversely impacted by changes in the Dollar / Euro exchange rate.

Results were in-line with Management’s expectations.  In the release, specific attention was given to the positive revenue impact from ATEME’s Kyrion contribution solutions, which were used by broadcast partners of the FIFA World Cup.

On a quarterly basis, Q1 2018 had revenue €9.5 million, a 10% decrease versus Q1 2017.  Revenues for the second quarter of 2018 were €13.8 million, a 35% year-over-year improvement.  The decline experienced in the first quarter was attributed to the timing of certain large deals.

The first quarter of 2018 is one of the lone, temporary blemishes for ATEME continual growth since its IPO.  This growth is illustrated in the below slide from ATEME’s investor presentation.  Substantially all the growth in the past two years has come through geographic expansion.  Most prominent, revenues from the USA / Canada region have doubled since 2016 (comparing first halves).

Revenue by Geography:

• Revenues for the EMEA region during the first half of 2018 were €8.7 million, a 12% increase over 1H 2017. As a percentage of total sales, EMEA was 37% of revenue during 1H 2018, which is flat with the contribution percentage during 1H 2017.
• The USA / Canada region contributed revenue of €8.6 million, a 43% rise over the year-earlier period. USA / Canada was 37% percent of total sales in the period versus 28% during 1H 2017.
• Latin America was responsible for €3.0 million of revenue during the first half, a decline of -15% versus 1H 2017. For 1H 2017, Latin America accounted for 13% of total sales, compared to 17.0% during 1H 2017.
• Asia Pacific accounted for €2.8 million of revenue, a decline of -16% versus the first half of 2017. The Asia Pacific region contributed 12% of total sales during 1H 2018, versus 16% during 1H 2017.

Management attributed year-over-year softness in Latin America and Asia Pacific to the strength of the precedent comparable periods.  During the 1H of 2017 revenues in Latin America had increased by 147% and Asia Pacific by 175%.

ATEME guided investors to expect weaker operating margins when the Company reports full results in late September.  Softer margins are anticipated because of a less favorable product mix toward lower-margin sales containing larger hardware components.

Business Outlook:
The press release reiterated ATEME’s annual revenue growth target of above 20% in constant currency terms over the next three years.  TITAN software sales are expected to drive growth during the second half of the year.

Commenting on the first half results, ATEME President Michel Artieres stated, “Looking to the rest of the year, we have a very solid pipeline of predominantly large software opportunities, and I am confident that the second half will see a strong rebound in margins and profitability”

One Final Note:
While Paris-headquartered ATEME did manage to keep references to the World Cup outcome out of the prepared comments, the updated investor presentation included the below, unprompted though entirely appropriate image.

Related Content:
Press Release: ATEME 1H 2018 Results

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