Avid Q1 2019: 137,000+ subscribers and the migration to the cloud
On Monday Avid announced their Q1 2019 results. Here are some tid-bits from their investor call – as transcribed by The Motley Fool.
- 137,000+ paying subscribers of Pro Tools, Media Composer, and Sibelius
- Income $103.3m:
– Software licenses and maintenance, $49.4m
– Hardware and integrated software, $46.3m
– Professional services, $7.6m
- 1.4m users between Pro Tools | First, Sibelius | First, and Media Composer | First
- 2,500 NEXIS installations
Comments from Jeff Rosica, Avid’s CEO:
On how customers are moving from perpetual to subscription licenses:
As products age, there’s always churn because people stop using products 7 or 10 years later and they stop doing support, and so there’s always a bit of churn as products age out. So, there’s always going to be some of that within the noise of the numbers. And then there’s also move from perpetual to subscription, a lot more people, a lot of their perpetual revenues, where everything from individual creative professionals, all the way up to enterprises, who bought their software as a perpetual license and now they’re moving to subscription. So, you just see a lot of movement over to the subscription line from the perpetual licensing line.
On converting ‘| First’ users to paid options:
Our paid conversion is, I would say, almost at best practice, industry standard, which is great because I don’t think we’re yet at best practice from a marketing standpoint. […] But it shows the passion of the customer base, that even with the efforts that we make today, that we’re able to get really top-industry averages for our conversions today. But there’s a big opportunity there that we already are going after and will be going after even more aggressively later this year and in next year.
On the speed of migration to cloud services:
It’s not going to be explosive. This industry will migrate gradually, and they will, I think, largely be a hybrid, multi-cloud approach for most of these customers. It will take time to migrate over, which, to be honest, is a good thing because if they went too fast, you could see too aggressive of a hit to the cash flows of the company. Because they are doing it gradually, you kind of avoid that kind of massive J curve kind of impact to the businesses’ cash flows. So, I think the industry will go hybrid and will go gradually. And for us, I’ll remind you, Orin, also, a lot of our early SaaS offerings, we’re looking to add on services not take away from stuff that we do today. Even though there are some ways you can deploy in the cloud different than we do on-prem. We’re really focused on, especially in the early days, adding complementary SaaS services to the business.
On how they will move on from relying on selling storage to cloud-based storage:
This was the strategy behind what we call Cloudspaces. The best way I could explain this, Michael, is Avid’s a collaborative storage tool, and it works in what they call workspaces. And so, you assign workspaces to groups and they do their work, and you give them bandwidth and you give them storage capacity, et cetera, you assign capability to them. We’re basically allowing that in a cloud so that what we’ve done with NEXIS Cloudspaces is that every customer who already bought a NEXIS, that’s why I mentioned the more than 2,500 customer installations we have to date, all those customers, when they download, because most storage customers have not, almost all run a maintenance plan, they get to download the software update as a part of their maintenance program. And that software update immediately lights up the Cloudspaces, which basically is additional workspaces in the Microsoft Azure environment and allows them to start to try the cloud for their storage expansion. And it’s meant for near line and archives. So, it is the first step for us as a company beyond the near line product we have available today to really show people how they can park and archive stuff in the cloud very easily and efficiently. And it literally lights up when they download the software, then they just decide what they want to do.
And with the help our partnership with Microsoft Azure team, they actually have given a free use of 2 terabytes of storage for people to get started in the first 90 days. So really, our strategy is to get people to try it and try it for free, love it, hopefully, and then start consuming the NEXIS Cloudspaces, which will give us an additional revenue stream for the archive piece.
You can take a look at the Q1 2009 Avid Technology results press release, presentation and listen to the conference call at ir.avid.com.