In 2015, Audience (ADNC, Financial) has appreciated impressively. The company has diversified itself within the Samsung universe, it has landed design wins at several Chinese smartphone companies, and has converted itself into a multisensory processing technology supplier by acquiring Sensor Platforms.
Now, it looks like Audience is set for growth in the long-term, as the company has found a footing in several growth markets, has strong product development, and possesses strong fundamentals.
Diversification into VoIP will drive growth
Going forward, I believe Audience will continue getting better, as its products are finding adoption in several end markets. For instance, the company's Audience S1.0 platform will help it record growth across a variety of devices. This platform is Audience's first software solution that will help its customers process VoIP and speech recognition in x86-based PCs and tablets.
In fact, this year itself, the VoIP market is expected to be worth $76 billion. Now, the spurt in VoIP adoption will lead to an increase in demand for speech recognition capabilities, and this is where Audience's latest platform will come into play. As such, it is not surprising to see that the software is currently being assessed by a number of OEMs for their forthcoming devices, since it will enable them implement click elimination and use innovative features such as 360 Voice.
China: Another key growth driver
Meanwhile, in China, Audience is gaining traction at key smartphone players. Its codec is being used by the likes of Meizu's MX4 Pro, Coolpad Bodun, and ZTE Star 2, which are using its eS704 always-on voice processor. This processor comes equipped with a voice technology that leads to an instant wake-up of the phone once the keyword is spoken.
To enhance its prospects in this region, Audience has entered into a Smart Voice Alliance in China with key players such as Nuance (NUAN), Baidu (BIDU), AutoNavi, and ZTE to consolidate and support the current resources and voice technologies. Audience will be applying its natural voice experience throughout the cloud, network, and device verticals, opening up another potential area for growth.
Audience is doing the right thing by tapping the Chinese market, as it has strong potential for growth going forward. In fact, China accounts for 10% of the global speech recognition industry.
Hence, the use of voice recognition in China is growing at a tremendous pace, and Audience has made a smart move by entering into a strategic alliance with key players in the region.
Conclusion
Apart from strong prospects, Audience also has an impressive balance sheet. In fact, it is a debt-free company with $55 million in cash and a current ratio of 6.5. As a result, it can continue investing in product development going forward without any constraints, and even take on debt in order to fund its long-term expansion. All in all, Audience seems to be on the right path and it is not surprising to see why its bottom line is slated to improve almost 39% next year. Thus, given the company's strong prospects, I am changing my stance from bearish to bullish on Audience.
