David Hernandez
Long/short equity, medium-term horizon, growth at reasonable price, ETF investing

AVG's Rapidly Growing User Base Isn't Translating Into Revenue Growth

AVG Technologies NV (NYSE:AVG) is a software solutions provider specializing in the detection and removal of computer viruses and malware. The company generates revenue through software sales, subscriptions, and their search platform. Although mobile users represent 46% of active users, AVG's revenue is still predominately generated by PC users. AVG's over reliance on PC users has caused profitability issues. From 2009-2013, revenue grew at a CAGR of 22.3%. Although revenue was growing, the company's profitability was declining. Operating margin steadily declined from 33.3% in 2009 to 27.0% in 2013. Along with declining profitability, the company's annual growth rate has started to slow. Revenue growth in 2012 was 30.7% but slowed to 14.4% in 2013. These two trends have...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details