Last November, Canada-based surveillance solutions manufacturer Avigilon went public on the Toronto Stock Exchange and raised $20 million. In the year since, the company has implemented a three-fold strategy of expanding its sales efforts, increasing brand awareness and accelerating product development with tremendous results.
According to third quarter financial results released last week by the company, revenues in the first nine months of 2012 were $67.6 million, a 64 percent increase from same time period the year before. In addition, gross margin, EBITDA (earnings before interest, taxes, depreciation and amortization) and net income were all up substantially during the first nine months of 2012. In fact, the company was recognized this week as the fastest growing technology company in Canada by the Deloitte Technology Fast 50 program.
Avigilon President and CEO Alexander Fernandes credits the execution of the aforementioned strategy for the company’s continued growth.
"The whole motivation behind the IPO was really to inject some cash into the business to fuel continued growth," he explained. "On the sales front, there were really three things within that; expanding into new, untapped markets, which for us were China, Asia-Pacific and Eastern Europe. Secondly, increasing coverage in existing domestic markets like North America, the U.S., Western Europe, and some parts of Latin America where we always had a footprint, but we carved up the territory into smaller chunks and put more people to get greater coverage. And, the third thing is we created a new sales department within the company called the business development group and their mandate is to, rather than be deployed on a geographic basis like our main sales force, they go after opportunities by verticals."
The company recently closed a $26 million follow-on investment to the IPO through a bought deal, according to Fernandes. Bought deals allow public companies to raise money quickly without having to do a full prospectus. Fernandes said this additional investment will further strengthen the company’s balance sheet and increase their working capital, which sets them up for further growth.
Despite looming economic concerns in the U.S. and the potential for a double-dip recession if Congress fails to come to an agreement over the much ballyhooed "fiscal cliff," Fernandes said that Avigilon launched its’ product line at a time of widespread financial hardship in 2008 and has grown each and every year since.
"I’m not really overly concerned. I mean obviously it’s concerning just from a social, economic standpoint, but as far as our business is concerned, there is a few things that happen," Fernandes said. "First of all, the market is very large. When you’re running a nuclear power plant or a prison or an airport, a lot of these installations are mission critical and the spending on security doesn’t ever really come to a grinding halt. In uncertain times, essentially the need for security in many cases actually increases because what you end up with is higher incidents of theft and vandalism and that in turn stimulates often high net worth people and governments to spend more money to protect their assets or protect the public. The other issue is recessions tend to negatively impact weaker companies more than stronger companies, so in some ways, it actually culls the herd."
While the company has made its name in the industry with high-end cameras that feature resolutions as high as 29 megapixels, Fernandes said that the bulk of their business consists of selling lower megapixel cameras (1 to 5-megapixel), as well as analog encoders.
Although he said that Avigilon will primarily grow organically, Fernandes didn’t rule out the possibility of "opportunistic acquisitions" when it comes to video analytics or other technology along those lines.