It Looks Like Avid’s Financial Health Is Better

Avid looking better image

Avid didn’t increase it’s earnings much, but the company appears to be in much better shape financially according to its second quarter report. That’s good news if you’re a Pro Tools user.

The report stated that revenue for the quarter was $98.7 million, up slightly year-over-year from $98.6 million. The operating expenses had dropped by 7% though, which meant that the EBITDA (earnings before interest, tax, depreciation and amortization) increased by 78% over last year at this time.

Avid’s financials are being dictated by its conversion to a subscription model, which will provide more stability in earnings, but usually grows slowly. The report stated that software revenue from subscriptions increased 17% year-over-year with approximately 147,000 cloud-enabled software subscriptions at the end of Q2 2019.

If you’re used to buying and owning, like we all did with Pro Tools for many years, having to subscribe is somewhat of a shock. Subscription is the new model for software companies (yes, I know Avid makes hardware too, and it’s been the traditional money maker for the company) however, and as much as I hate to say it, you really can’t blame them.

There’s only a finite pool of customers, and after a while, there are fewer and fewer people to sell to, yet the demands for fixes and upgrades still remains. Subscription allows a developer to maintain an upgrade cycle without having to worry about where the next dollar is coming from. You’ll notice that the Plugin Alliance has recently adopted this model as well.

Plus, if you’re in business, this is just another cost, and it’s a write-off as well.

The point here is that Avid as a company appears to be getting healthier, and that’s good news for all its users.

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