Avid had a slower-than-expected third quarter, the company said yesterday, blaming a shortfall in hardware production that left it with a backlog of about $8.1 million in unfulfilled orders.
Those orders are expected to ship in the fourth quarter, as Avid finishes implementing a plan to outsource hardware production and reduce its costs and inventory.
Also impacting the quarter were sales of fewer storage and media-management products to the company’s enterprise clients, Avid said.
Third-revenue is now expected to be between $92.5 and $94.5 million, down from previous guidance indicating $101.0 million to $109.0 million, the company said — and down from $104.0 million the company posted in Q3 last year. Avid also adjusted year-end guidance, revising revenue expectations for fiscal 2019 down to between $405 million and $415 million and adjusted EBITDA down to between $55 million and $60 million.
As expected, subscription software and maintenance revenue was strong, the company noted, partially offsetting the revenue shortfall. Avid paid software subscriptions grew by 46% to approximately 170,000 paid software subscriptions as of September 30. With 23,000 subscriptions added during the quarter, this was Avid’s largest quarterly increase in subscriptions to date, the company said. Maintenance revenue grew to between $32.8 and $33.8, up from the second quarter but down approximately $2.2 million year on year.
“Although we are disappointed with our performance during the third quarter, we remain enthusiastic about the long-term trajectory of the Company and the opportunity for improving growth and profitability,” said Avid CEO and President Jeff Rosica in a prepared statement. “We expect to report strong growth in our subscription software business and sequentially higher maintenance revenue for the third quarter.”
Also announced yesterday was the addition of Christian Asmar, co-founder and managing partner at Avid’s second-largest shareholder, Impactive Capital, to the company’s board of directors.
Q3 earnings results will be announced after markets close on November 7.
