AIM-listed ANT who provides embedded software and services for the delivery of digital TV is inching its way towards a firmer financial position on the back of a modified business model which is helping it broaden its portfolio.
For the full year to December 31 2011, revenue rose a marginal 2% to £4.45m, but that was a vastly better than the 7% fall in the previous year (see ANT holding out for the future of TV). Loss before tax reduced by 42% to £0.34m, and operating costs were down from £4.43m to £4.04m.
The business is making progress financially. As well as taking down losses, it signed 14 new deals during the year vs 10 in the previous year. Three significant projects are scheduled for deployment during 2012. It is moving deeper into the set top box area and into connected devices like tablets. Licence and royalty revenue was up 5% which was good to see as previously professional services had been growing quicker than licenses. However, it looks like royalties grew more than licences.
ANTs decisions to move to customer funded product integration and to incorporate third party IP into its products is having the effect of reducing margins, indeed the gross margin was down from 87% to 82% during the year. The company believes this new business model will provide it with the ability to invest in future IP and drive portfolio expansion, while minimising direct overheads. This strategy may be effective in the short term but it needs to maintain its own R&D programme and be careful not to lose or share too much IP.