The Atomos Ltd (ASX: AMS) share price is gaining ground, up more than 6% following the release of a positive trading update.
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The Atomos Ltd (ASX: AMS) share price is gaining ground this morning, up by more than 6.3% following the release of a positive trading update for the first-half of FY21. The Atomos share price is trading at $1.01 at the time of writing.
Why did the Atomos share price move higher
Atomos reported that the first-half of FY21 has been a period of continued sales momentum, with return to pre-COVID-19 run-rate revenue levels of $5 million per month.
The company said sales had improved in each of the past four months. Despite growing coronavirus cases and recent lockdown measures in some of its key markets, there has been no impact on the November sales.
Due this momentum, Atomos says that it’s currently on track to deliver a first-half sales result in excess of $28 million. Second-quarter sales are also back to pre-COVID levels, well ahead of the company’s original guidance earlier in the year.
Atomos says it has achieved this result mainly through existing products, with only two new products released during the first five months of FY21.
Cost control measures continue to be in place with fixed costs remaining substantially below pre-COVID levels, with any future increases to be carefully balanced against revenue, the company says.
The company reported a strong cash position of $18.9 million as at the end of November 2020.
Atomos says it is still too early to give any formal guidance for the second-half of FY21.
What does Atomos do
Atomos is involved in manufacture and sale of video equipment. The company’s stated objective is to expand into the ‘social’ and ‘entertainment’ market segments, whilst maintaining a strong position in the ‘pro video’ segment of the market.
The company’s flagship is its 5-inch monitor recorder, Ninja V. The popularity of Ninja V is due to the growing adoption of RAW recording from major global camera makers, with Atomos being the only monitor recorder able to record Apple Inc (NASDAQ: AAPL)’s ProRes RAW format.
RAW is a file format that captures all image data recorded by the sensor when taking a photo. When shooting in a format like JPEG image, information is compressed and lost. Because no information is compressed with RAW, it is able to produce higher quality images.
The company says the global move to online video conferencing driven by COVID-19 lockdowns will present the company with future opportunities to offer improved image and video quality products.
About the Atomos share price in 2020
The Atomos share price has lost 28% of its value in 2020, after its full year revenues dropped by 18% as sluggish demand driven by the pandemic slowed down its business. The Atomos share price enjoyed a 52-week high of $1.67 in February. At the current share price, it commands a market cap of $220 million.
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Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Atomos Ltd. The Motley Fool Australia has recommended Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.