Atomos shares fall 50 per cent as content creator tech outfit slashes earnings guidance

Update (2pm AEST): Atomos shares have risen slightly since this story was originally published, but are still down 43 per cent at $0.34.

Just three weeks after removing its CEO because she hadn't yet moved from Silicon Valley to Melbourne despite seven months on the job, content creation video technology group Atomos (ASX: AMS) has today surprised the market again with a significant downgrade to sales and earnings forecasts.

AMS shares opened at just over $0.30 each, representing a 49.67 per cent drop to levels not seen the COVID crash in February-March 2020.

The company received multiple awards and "exceptional reviews" at the National Association of Broadcasters (NAB) trade show in Las Vegas, and its board is upbeat about the medium-term prospects of Atomos' new cloud-enabled products, but sales in the first four months of this year have fallen short of expectations.

Atomos had previously provided guidance of more than $95 million in revenue and a 12-15 per cent EBITDA margin for FY22, but today those forecasts have been cut to $80-90 million and 6-8 per cent.

The slower sales are attributed to a change in marketing approach and less promotional activity, which the group claims was "corrected" in mid-April with the implementation of an enhanced marketing and promotional schedule.

The revised approach, involving accelerated discounting, is based on feedback from partners and distributors at the Las Vegas show.

"The reception we have received to our recent product launches is a strong endorsement of the technology roadmap we have been executing for the last couple of years," says interim CEO and former chief technology officer Trevor Elbourne.

"Whilst we were confident that the approach we were taking would resonate with our customers and the industry, it is gratifying to have that validated so strongly at NAB.

"The response we’ve had at NAB this year from all quarters has been so positive that I would mark this the most successful NAB for Atomos that I can recall."

However, he says it is "extremely disappointing" to be revising Atomos' FY22 guidance, particularly considering strong sales achieved in the first half which were up 25 per cent year-on-year.

"However, with these new products in market, and the appropriate promotional levers reactivated, we expect a strong Q4 which will ensure that we maximise the sales of our physical devices and in turn, adoption of the new connected ecosystem," adds Elbourne, a founding employee who oversaw the successful development of Atomos’ flagship Ninja V and Shinobi products.

He took the interim role after Atomos announced on 14 April its then CEO Estelle McGechie would 'conclude' her appointment, "primarily because she has not yet relocated to Australia".

"The Company has always indicated that it requires the CEO to be based in its Melbourne headquarters," Atomos reported at the time.

McGechie was propelled into the role in September after becoming Atomos' chief product officer three months prior, following a role as vice president of marketing at Frame.io. 

In announcing her appointment, Atomos stated the Australian-born executive would return to Melbourne with her family after a successful career in the United States with global technology and entertainment brands that also included The Walt Disney Company, Apple and Logitech.

Atomos was founded in 2010 by technology expert Jeromy Young, who had cut his teeth in the industry in Japan with companies such as Canopus Co and Grass Valley. He made headlines in July last year for breaching COVID restrictions by leaving locked-down Sydney in his superyacht and docking at the Gold Coast.

According to the company's most recent annual report, the Young Family Trust still has more than 7.7 million shares in the company, or around 3.6 per cent of holdings.