Envivio Plays for a Small Portion of Video Infrastructure Market

Researcher Synergy Research Group estimates that the video infrastructure market will grow 7% annually from $32 billion in 2011 to $45 billion by 2016. The most growth is projected in the content management and distribution segment, which is estimated to be worth $23 billion by 2016. San Francisco–based Envivio is one player trying to make it big in this market.

Envivio’s Financials
Recently listed Envivio (ENVI) is a comparatively smaller player. Envivio was founded in 2000 by a group of software and electrical engineers from France Telecom and was a spin-off of France Telecom in the video space. Envivio’s objective is to be able to provide video content to all viewers, on any device, across any network, at any time.

The company began as a pioneer in video encoding technology and today has several patents and video-over-IP methods that help deliver premium TV services to multiple devices. Through its offerings, live and on-demand video services can be provided to viewers across mobile phones, set-top boxes, and PC platforms. Its customers include content owners that want to reach audiences over the Internet and service providers such as telecom operators, cable and satellite companies, and mobile service providers that want to deliver live streaming and on-demand viewing options to their consumers.

Although Envivio is headquartered in South San Francisco, California, the company has an international presence in England, France, China, and Japan. Its customer list includes the likes of Motorola Mobility and Ericsson, which have their products integrated into some of Envivio’s systems.

For the year ended January 2012, Envivio saw revenues grow 70% over the year to $51 million. Last year, it earned marginal profits of $138,000. A year ago, it recorded a loss of $2.5 million on revenues of $30 million. Envivio earns more than 70% of its revenues from international customers. It claims to have more than 320 customers spread across 50 countries.

The company has received venture funding of $40 million from HarbourVest Partners, Atlantic Bridge, Samsung Ventures, Credit Agricole Private Equity, Crescendo Ventures, Innovacom, Harbinger Ventures, Intel Capital, NTT, Saints Capital, and Solidarity Fund QFL. After filing for an IPO in April 2011, it finally went public this year on the Nasdaq under the ticker ENVI. It raised more than $70 million through the sale of 7.8 million shares at a price of $9.00 each.

Envivio recently announced its Q2 performance and saw revenues fall 6% over the year to $10.8 million. Non-GAAP net loss of $0.13 per share was also worse than previous year’s net income of $0.03 per share. Envivio attributed the disappointing performance to project delays by its service provider customers and the macroeconomic environment.

For the current quarter, Envivio projects revenues to be in the range of $10 million-$11 million, with a non-GAAP net loss per share of $0.16-$0.12.

Envivio’s Product Expansion
Meanwhile, Envivio continues to expand its product offerings. Recently it introduced 4Caster G4, a new encoding appliance that will improve density and video quality in its existing solutions. It also launched new TV Anytime capabilities for its network media processor that will help it to support time-shifted multiscreen applications such as catch-up TV, start over, and network PVR. As part of its on-demand solutions, Envivio introduced version 3.5 of its on-demand transcoding software. The upgraded version comes with features such as a 35% faster file-to-file transcoding speed.

The enhanced product offerings have helped Envivio to win additional international customers. Last quarter, it was selected by A1 Telekom in Austria, WealthTV in the United States, StarHub in Singapore, and Chunghwa Telecom in Taiwan.

Yet current market conditions and disappointing quarterly results have sent the stock into a bear run. It is trading at $2.22 with a market capitalization of $59.74 million. The stock had touched a high of $9.88 soon after listing in April of this year.