Professional AV Industry Sees Robust Growth with AR and AI Innovations: Solomon Partners Report
The professional AV (audiovisual) industry is experiencing significant growth and evolution, driven by advances in augmented reality (AR) and artificial intelligence (AI). These technologies are transforming live events and immersive experiences, enhancing audience engagement, and streamlining content delivery.
Solomon Partners and the Report
Solomon Partners, a leading financial advisory firm, prepared this comprehensive AV Action Report for June 2024. As one of the oldest independent investment banks, Solomon Partners advises clients on mergers, acquisitions, divestitures, restructurings, recapitalizations, capital markets solutions, and activism defense across various sectors. The firm prides itself on unmatched industry knowledge and comprehensive strategic solutions tailored to generate long-term shareholder value.
Augmented Reality (AR) in AV
AR is increasingly being integrated into AV solutions, overlaying digital content onto the real world to provide interactive features such as live polls, 3D visualizations, and product demonstrations. Despite its potential, AR adoption faces challenges related to the need for robust infrastructure and powerful computing resources.
Artificial Intelligence (AI) in AV
AI’s impact on the AV industry is substantial. AI-powered systems automate tasks like scene analysis, audio adjustments, and content creation, streamlining workflows and offering tailored audience experiences. AI-driven analytical tools are crucial for data collection and providing insights, enabling organizations to make informed, data-driven decisions. The AV Sales Index indicates strong growth, with a significant rise since February 2024, and a narrowing gap between North America and other global regions.
Digital Signage Evolution
Digital signage is undergoing a transformation, with a growing emphasis on integrating software and subscription services. Leading electronics companies such as Samsung and LG are at the forefront of this shift, offering comprehensive digital signage solutions. Samsung’s B2B platform, VXT, and LG’s Business Cloud are examples of solutions that combine displays with content management systems, remote device management, and subscription services. This trend is driven by the need to find profitability beyond the low margins on consumer TVs.
Retail Media Trends
Retail media is emerging as a key growth driver in the AV industry. Retail media networks, which incorporate digital out-of-home (DOOH) advertising within physical stores, are expanding. This trend is exemplified by Walmart Connect, Walmart’s retail media network, which showed substantial growth in Q1 2024. Retail media now represents a significant portion of global digital ad spend, underscoring the potential for in-store advertising.
Industry Consolidation
The AV industry is experiencing significant consolidation, with numerous key acquisitions reshaping the market landscape. Notable transactions include AVI-SPL’s acquisition of ICAP Global, Stratacache’s acquisition of MasterPoint, and Kramer Electronics’ acquisition of Ashton Bentley. The Midwich Group has been particularly active, acquiring companies such as prodyTel Distribution GMBH and SF Marketing. These acquisitions reflect strategic moves to enhance service offerings, expand market presence, and integrate complementary technologies.
Major Industry Events
Key industry events like Integrated Systems Europe (ISE) and InfoComm 2024 have showcased significant technological advancements and trends. ISE 2024 focused on transparent signage, AI-driven digital displays, and sustainable ePaper displays, attracting over 1,400 exhibitors and 74,000 attendees from 162 countries. InfoComm 2024 emphasized machine learning in audio integration and AI for content creation, with 800 exhibitors and 36,900 attendees from 125 countries.
Financial Performance Highlights
The report highlights the recent financial performance of key AV industry players. Daktronics reported Q3 2024 sales of $170.3 million, with improved gross margins despite a slight year-over-year decline. Creative Realities saw significant year-over-year sales growth in Q1 2024, reaching $12.3 million. DCC reported FY 2024 sales of £19,859 million, showing a decline in revenue but improved operating profit and dividend growth.
Valuation and Trading Metrics
The report provides detailed valuation metrics and trading multiples for various AV companies. The median EV/EBITDA multiples for different sectors are as follows: audio at 9.3x, visual at 8.5x, diversified AV at 7.2x, and digital signage at 6.9x. These metrics offer valuable insights into the financial health and market performance of companies within the AV industry.
Sector News and Upcoming Events
Recent developments in AV technology and digital signage include LG’s partnership with ChargePoint for EV charging stations, Samsung’s display solutions for St. Louis CITY SC, and Zoom’s immersive Experience Centre in London. Upcoming events such as Out of Home New York, Digital Signage Experience, and Integrated Systems Europe are expected to continue shaping the industry’s future.
Download the full report at: https://solomonpartners.com/2024/06/25/av-action-report-june-2024/