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...

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