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Envivio picks up steam in 2010, readies IPO

Tiny US encoder specialist, once an orphan of France Telecom in-house codec technology, has finally mustered a profitable enough year to IPO on the ba

By PETER WHITE

Published: 21 April, 2011

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Tiny US encoder specialist, once an orphan of France Telecom in-house codec technology, has finally mustered a profitable enough year to IPO on the back of. Well if not a profit, then not such a bad loss.

The company has filed an outline prospectus, what is called an S1 (registration document), which is the first glimpse that outsiders have of a private company’s accounts, and it turns out to be quite a checkered past. Back in 2007 executives there told us it was approaching $20 million – well it was and it hit $17 million, then fell back somewhat and has been up and down since, until almost doubling its revenues in the year to end of January 2011 to around $30 million, which seems to be the magic mark at which it can almost make money. To date Envivio claims to have 220 customers in 50 countries.

The thing is that during those years it toyed with two very different things, offering codecs for the mobile TV broadcast industry, in which it was dominant, in an industry that never really took off outside of Japan and Korea. Since then it has focused on three screen encoding, and runs its latest encoding systems on general purpose multi-core chip sets. Envivio has landed deals with major cable operators in the US and it has at least one major win in China with the AVS locally designed codec, which it has now delivered to PCs, TVs and handsests. At IBC last year it was part of a triumvirate of suppliers – Envivio, Verimatrix and Edgeware, to demonstrate and propose a TV Everywhere architecture for pay TV operators.

One of Envivio’s innovations has been to come up with a kind of “lingua franca” between different three screen resolutions, so that a single stream can be sent over the network and which can easily be turned into a lower bit rate at the network edge – it calls this Envivio Genesis.

The loss for the prior years has been getting smaller, first $15 million in 2009, $9 million in 2010 and just $2.5 million in the year just gone. It hasn’t said how many shares and at what price it is offering its IPO, but that it wants to raise $69 million. It already has $10 million in the bank from venture investments and on its balance sheet it says it has had an accumulated deficit of $79 million, so it must have had more cash put in it than the single $25 million injection in 2008, and the $15 million round that it did last year, which its web site admits to.

Envivio says that it has changed its sales channels recently so that 70% of bookings come through partners like Ericsson, Huawei and SeaChange. Well given that during the bad old years when it was making losses, Nokia was installing its encoders left right and center (given them away to prospective DVB-H clients but paying Envivio for them) it doesn’t sound like its changed its route to market so much as changed its partners for more successful ones.

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