AVG Technologies (AVG, Financial) is a Czech company that specializes in computer security software. The cyber security expert has been on a stunning run over the last few weeks, appreciating close to 20%. The company’s stunning rise isn’t surprising, given that it delivered an excellent quarter.
Revenue and earnings
In Q1 FY15, the company reported earnings per share of $0.46, beating up the analyst estimate of $0.37 by $0.09. Revenue for the quarter was $102.8 million compared to the consensus estimate of $100.24 million.
On a full year basis, AVG Technologies expects earnings per share of $1.80 to $1.90 and revenue of $410 to $430 million, versus the consensus estimate of $1.87 and $100.24 million respectively.
Acquisition of Privax
Through the acquisition of Privax, AVG will add Privax's HMA Pro VPN to its surviving collection of security software and facilities that will be proximately made accessible to AVG's global customer base.
Privax has more than 250,000 paying subscribers globally using its VPN encryption facility, while its popular free web-based browser proxy facility frequently attracts a global audience of over eight million exclusive visitors per month. The acquisition of Privax strengthens AVG's increasing mobile security offerings by presenting a proven, privacy subscription facility that is accessible soon and will also be mingled into future AVG products including AVG Zen.
Outlook
The company launched new versions of its performance products for Windows, Mac OS and Android. The most recent releases of AVG PC TuneUp 2015, AVG Cleaner for Android and AVG Cleaner for Mac help customers clean up, speed up and increase battery life of their devices more efficiently and thoroughly than before.
Internal AVG tests running AVG PC TuneUp on the latest blockbuster games release, Grand Theft Auto V, registered an approximately 20.7% improvement in speed on a typical Windows laptop, and also cleaned up 8 GB of leftover Steam files from a gaming PC using the boosted cleaning engine.
Some risks
The company might have some risks that could cause a spill in AVG Technologies' growth. Most remarkably there has been a marketable drop in successive mobile user growth, only 3% more this quarter over last. The company will need to carry on improving the offerings on the mobile platform on Google Play and the App store to make sure that user growth picks up again. The free download and promotional offerings, too, will certainly lead to lower margins if those mobile users do not translate into superior minimization.
Conclusion
It is true that AVG faces some risks going forward, however the positives far outweigh the negatives. AVG acquisition of Privax will boost its user base and will eventually add to its revenue and earnings. In addition, the company launched various updates over multiple platforms to sustain revenue growth and the stock’s rally may continue in 2015. So, I think AVG deserves a place in your portfolio even after the recent rally.
