Presenters will be speaking for Haivision.
Hey, everyone. Glad to be here with you today for the Fireside Chat. I'm joined by CEO of Haivision, Mirko Wicha. Glad to have him here with us today. Just in terms of a quick overview from my background, I've been on the street for about six years. I spent the last two years on the buy-side or the first two years on the buy-side, last four years on the sell-side at Beacon Securities. I was an associate for the first two years. Now I'm currently an analyst covering special situations. So just in terms of Haivision, they're a global leader in mission-critical real-time streaming and networking solutions for the media and entertainment enterprise, military, and defense markets. Since its founding, Haivision has developed more or deployed more than 6,100 video management solutions to global blue-chip clients. Currently, about two-thirds of their revenue is derived from mission-based customers.
These include the U.S. Air Force, the Navy, Army, and the Department of Homeland Security, whereas one-third of their revenue is derived from broadcast-based customers, which include the NFL, MLB, NBA, NHL, ESPN, Warner Bros., and Sony, just to name a couple. The company currently, on a fully diluted market cap, has about $150 million fully diluted market cap. They got cash of about $11 million, debt and leases of about $15 million, so about a $155 million fully diluted EV. We initiated coverage on Haivision last week. We have a $7 price target and a buy rating that's based on a 10 and a half times fiscal 26 Adjusted EBITDA multiple. And the company's currently trading at about one-time sales and seven and a half times EBITDA based on our fiscal 26 estimates. We believe that Haivision represents an excellent risk-reward opportunity for investors.
The current valuation is extremely attractive given its potential for double-digit growth over the next couple of years. They have a robust margin profile with about 70% plus gross margins and potential to hit 20%+ EBITDA margins with scale. Peers currently trade at about 2.7 times sales and 11.7 times EBITDA based on consensus estimates for fiscal 2026. That's about a 40% discount to its peers. And following a series of strategic initiatives that did result in short-term headwinds but sharpened the company's focus on mission-critical solutions, we believe that Haivision is set for double-digit growth over the next couple of years. In our eyes, the recent Q3 results reflected an inflection point. It delivered double-digit top-line growth, solid recurring revenue expansion, and they stabilized their OPEX. And with that momentum, they returned to double-digit adjusted EBITDA margins.
Just for color, our fiscal 2026 estimates currently imply about 14% revenue growth for the next coming year and about double on the Adjusted EBITDA margin profile or Adjusted EBITDA profile. With that, I would like to hand it over to Mirko. I would like him to discuss his background, what got him towards Haivision, and hopefully provide a little bit of an overview on the company.
Thanks, D'Angelo. That's quite the start. I don't know what to say. Not much to say after that. Welcome, everybody. And Dan, I think I see Dan over there. He's going to have to come up here as well, right? Don't go hiding. So just, I'm going to try to give a quick five-minute overview, so try to stay focused. As D'Angelo mentioned, we sell solutions. We manufacture, we build, design solutions, hardware, software, and services for mission-critical live video, real-time video, low-latency applications. I know it's a mouthful, but we focus on not only these critical applications, but our customers that he mentioned already, which are all the top Fortune 500 customers, require quality, reliability, performance, and security. And if you don't need any of that, you don't really need Haivision.
There's a lot of encoder vendors out there, streaming vendors out there, video distribution vendors out there that can do a lot of stuff. But if you need mission criticality, you need quality, you need high performance, you need reliability and security, then usually you deal with Haivision. Our technology is used behind the scenes. You don't really see us most of the places because we sell through partners, through channel partners. But if you watch NFL games, all the replay systems, we've been doing that for years for the NFL. We pretty much do in every other major league from hockey, from baseball, from tennis. I could go on and on and on. Our systems are used for all mission-critical activities where people need to get information now. They can't wait. And that's what we're all about.
In the military, in defense, in video distribution for NASA, SpaceX, Pentagon, I mean, I could go on and on and on. People depend on Haivision hardware, software, and service solutions. Some people might have heard the SRT before. Most people don't know that Haivision invented it. Haivision actually invented the most widely used protocol for streaming video and data in the world. We gave it to the world. We open-sourced it in 2017, and we became a de facto standard, fastest growth of any protocol that's ever hit the planet. Today, we're really seen as a disrupter, innovator, technology leader, and we're having conversations with the Googles and AWSs and Microsofts. They're all of our partners because of SRT, and that's something that really has positioned us in a very different level in the industry.
Last year, we actually won a huge deal, an $80 million US Navy deal when you think about it. Pretty impressive for, I would say, a small Canadian company that really deals with some mission-critical stuff, especially for the US military. But every ship of the US Navy is going to be deploying Haivision Command 360 video control systems, combatant for all their combatant fleet. And we're already doing all of the normal non-combatant video of the US Navy for the last 15 years. So we've got a pretty good pedigree in mission-critical applications throughout the military. And I think, as D'Angelo mentioned, I think we are at an inflection point at this point. We've disbanded our low-margin businesses. We used to be in the house of worship market, if some of you remember that. We got rid of that. So we actually gave up a lot of revenue.
We also got into the control room market, where it was an integrator market. We got rid of the integration part to become a manufacturer, which is not easy to do, never been done before. We also gave up revenue. So the last couple of years, it's been really getting rid of the low-margin business at the expense of better margin business. We've seen our gross margins go from 66% to now 72% to 73%. We're actually now doing more revenue with our control rooms, with our own products than with third-party products that we did two years ago. So something to be very proud of. We're also very well-positioned to exploit next-generation 5G networks from our 5G technology, cellular bonded. We're also the only vendor on the planet that has the best low-latency line fixed line encoding and 5G cellular bonded technology.
It's a pretty unique combination where today RF is being replaced, remote production is all going through 5G, and we are one of the world's top leaders in 5G private networking, which I think is going to be a huge boost in the next five to 10 years. Talk a little bit about numbers. Company's on about $135 million. We're just actually this week finishing our fiscal year 2025, so we haven't announced those numbers yet. 384 people. We've got five R&D offices: Canada, U.S., Germany, Spain, France. One of the things that's interesting is when I founded the company back in 2004, and we had 16+ years as a private company. We've done six acquisitions, which we funded ourselves. One of the things that I'm actually very proud of is that we actually raised CAD 8.25 million in equity.
When we went IPO in 2020, we were already over $80 million in revenue. I'd like to see another tech company that can say that same thing. Usually, they raise $80 million. They do $8 million in revenue. So I think it's pretty impressive. We're excellent stewards of capital. Our CAGR growth rate from that beginning has been at 22.7%. We're great stewards of capital. We have a great executive management team. 21 years, 18 years EBITDA positive. So cash flow positive. We're making money. Well, practically, we're debt-free. We've got over $60 million worth of unused credit available to us. Best balance sheet ever. So we're already in an interesting inflection point where we're seeing right now, and we've already told the street, being public, we've already told them that next year, which starts in 10 days, that we're going to be double-digit revenue growth. This is organic.
We're going to be double-digit EBITDA, and that's going to continue for the next foreseeable three-to-four years because we have very good predictability, backed also by the interesting three pillars, right? The live sports, which is the exciting part of broadcast, the security concerns, cybersecurity concerns of the control room market within enterprises, within financial markets, within public safety, police departments, emergency response, and the military and defense and security. I don't think any of those things are going away, and those are our three areas that we focus on, so we feel pretty pumped and very excited about what's happening, and I believe that delivering the double-digit EBITDA, double-digit growth, if that doesn't wake up our stock, I don't know what will because for some reason, I don't know why we're still trading at 50% average to our industry. It just doesn't make any sense.
Maybe it's because we're micro-cap, nano-cap. I don't even know what cap we are anymore, but it's clear that our stock is undervalued. And by the way, we're cash flow positive. We're using our cash to buy back our own shares. So it's actually a pretty good deal. I can't think of a better use of our cash. But I think that we're at an inflection point. Now, I guess I had to make a list of things you guys should just remember because I didn't want to put it up. But it's important. We have an experienced, proven executive team. We've been together for 15-20 years. We've been in the video business for 30+ years. We've done eight successful acquisitions. And if you know acquisitions, 80% fail. We've done eight amazing acquisitions. We know what we're doing. We've been EBITDA positive 18 years out of 21.
Not too many tech companies can say that. We're generating cash. In fact, next year, we should generate, my CFO is looking at me, between $15 million-$20 million of cash. Amazing strong balance sheet, and now we're delivering double-digit revenue growth. Last quarter we did, and we're going to continue. We're delivering double-digit EBITDA growth already, and we're going to continue, and our fiscal 2026, which is starting very shortly, is set to deliver. If you ever heard of the Rule 30 or Rule 40, that's our target, and I think, from my experience, any company I've seen, especially in tech, that hits those targets, usually valuations should go exponential, so I'd be happy if it just doubled to be where it should be today, so I think we're at that inflection point. We're actually pretty pumped and excited.
And I didn't think if we were excited, we wouldn't be here in our last week of our fiscal year. Okay. So I think that we got a good story. We know our stock is undervalued. And thank you for your coverage. You just started, but we're happy to take questions.
Yeah, so we've done a good job of discussing kind of the double-digit growth that's coming over the next couple of years with 2026 representing a pivotal year. Could you just explain some of the growth factors you're most excited about, both across the mission segment and broadcast segment? Which segment do you expect to outperform the other over the coming years, or do you expect them to kind of move in conjunction?
It's actually a great question. I mean, it's the first time that I'm seeing that kind of excitement about all three of our markets, which is unusual. Usually, it's one or two. But right now, if you look at it, my personal feeling is that the mission side, which is two-thirds of our business, is by far the largest monster potential growth. There's no question. Security is an issue. Unfortunately, the world is a mess. Every country is increasing their defense spending. We are the gold standard for all mission-critical video from the U.S. And guess what? Every other country is using the same technology. We're already working with all of them anyways, all the NATO's, Five Eyes. So we're already seeing that. We're seeing the forecast. We're seeing the pipeline growing. That's not going to stop anytime soon.
We're also seeing on the other side is our control room business for mission operations, for control room operations, for monitoring assets, fraud detection from cybersecurity, you name it, in banking. Half of our control room business, believe it or not, now is in banks. JP Morgan, Barclays, Citibank, they're installing massive multimillion-dollar operations to monitor real-time all of their assets, and so that's not going anywhere. Security is becoming the biggest problem, so that's the other factor that's taken off, and these are long-term, huge deployments, repeat business. Once you put in an operational center, you're going to be opening up more and more centers. Give you an example. Facebook has 60 operational centers in the world. Massive. They have three global centers that all these feed into, so these things grow like little puppies, and I think that's a huge market.
And then at the other spectrum, you've got the fun part of broadcast, which is the live sports, live news, which draws all the money. This is what's driving actually what we call live broadcast. And they're all depending on the next-gen 5G, private 5G networks, the spectrums that are going to change the dynamics of actual cost of broadcasting. So we're already seeing that, and we're actually leading in the 5G space. So all three, actually, I'm pretty excited, but I think the largest by far growth is the mission control center and the military defense and ISR, which we're a big player in.
Then we discussed some of the excellent track record through M&A. I just wanted to discuss two of the most recent acquisitions of CineMassive and Aviwest. I just wanted to discuss kind of some of the realized synergies that you guys are expecting over the next couple of years, if you could highlight some of the transitions that you made across both of the businesses, and if you could kind of discuss two of the most recent contract wins across both of those acquisitions.
Yeah. No, actually, now the acquisitions are actually starting to bear fruit. When we acquired CineMassive, the American company in Atlanta for the control room business, which was an integrator business, which we now transformed to a manufacturing business, which was a lot of work, it actually opened up another opportunity for us to really double down on the U.S. government, U.S. military, and classified projects because of our security facility status there. And as a result, we actually won the $80 million U.S. Navy contract directly with the U.S. Navy. They wanted to deal with us, not through a partner. So we took that on. It's been a lot of work, but I think it's the beginning of something that's going to grow dramatically for us to go after other classified projects. So that's pretty cool. But we're taking that technology as well and moving it internationally.
That was part of the thesis when we bought the company. They were heavily U.S.-focused. We are now taking it internationally, training partners, integrators all over the world. In fact, we've already installed, I mentioned, Barclays. That was a big, huge win in the U.K. for us. We're in Singapore, in the Middle East, all throughout Europe. So we're taking that synergy and mapping it with our staff internationally. Interesting enough, the other acquisition, which is Aviwest, is a French company for the 5G technology, cellular bonded technology. And predominantly, their business was in Europe. Guess what? We've got a massive U.S.-based sales force. So we wanted to take that and bring it over to the U.S. It's taken some time, not easy to do because there's some incumbents. And guess what?
This year, we just won a massive deal with Warner Bros., and we basically replaced an 18-year veteran at CNN for their electronic news gathering all over the world. Massive opportunity, but that was a big win for us into the U.S. So we're actually getting synergy, not only growing in the regions, but we're cross-geographical synergies, and that's huge. And that's going to continue.
Then, just focusing on kind of the margin profile right now, so solid margin profile, 70% plus gross, achievable target of 20% Adjusted EBITDA margins. I was just wondering what kind of advantages that your current product offering have compared to the competition and what really allows you to maintain a solid margin profile, and additionally, if there are any ways to kind of improve this margin profile in the coming quarters ahead, what would those growth drivers be?
I'll give it a go. So we do have opportunities for expanding our margins here, particularly let's start with the EBITDA margins. If you're thinking about our OPEX, it's stabilized over the last year. And we don't expect to have to invest incrementally in 2026 and beyond to the same degree that we've invested in 2025. We signaled to the street that we're going to make significant investments in 2025 to exploit some of the opportunities we had in front of us. Many of those opportunities were related to the next generation of products that are coming out of the oven right now. So we're going to be able to see our EBITDA margins expand in 2026 and beyond. The other part of it is that we do have opportunities to expand our gross margins on the top line.
As we're coming out with some new products, particularly in the transmitter space, that manufacturing is going to take place in the U.S., or I should say it's in Canada, and we are able to build those products much more efficiently than Aviwest was able to produce them when they were doing it on their own, so that's going to take a lower margin product and increase the margins, and that should be able to bring our gross margins up a little bit as we go forward.
And final one for me, and then I'll open it up for Q&A. But we've discussed the impressive customer base that you guys have right now across both the mission and broadcast segments. Just wondering how sticky the customer base is. What does customer concentration look like, and how tedious is it to win over a new customer?
We really don't have any customer concentration. If you look at our top five customers in aggregate, they make up less than 20% of our business, but if you think about what our customers are, we sell through channels. So our customers are these channel partners, and these channel partners will have many different end users. We're not really dependent on any end user or, for that matter, any channel partner to be a significant part of our business, so it's a very disparate kind of business. Now, I keep quoting a specific statistic to give you a sense for how our business operates. 70% of our revenue in any given year comes from customers who purchased from us in the prior year, either that's the expansion of their existing workflows, perhaps they're bringing us in for new workflows.
Perhaps they're bringing us in as a technology replacement for existing technology. It's sticky in that respect. In terms of getting new customers, our products really speak for themselves. If you're looking for low-latency mission-critical applications, you're coming to Haivision. We're going to be competing for that business. And because of the nature of our products, we tend to be winners when it comes to the most sophisticated workflows out there.
I'd like to open it up for Q&A if anyone has any questions.
Was there any pickup from the Olympics in the winter or summer Olympics?
So the question was if there was any pickup from the Winter or Summer Olympics.
Yes. No, we actually have been involved with the Olympics a lot going quite far back. And we tend to work very closely with OBS as a strategic partner out of Spain and Switzerland. And we are the vendor that tests all next-generation new technology all the time. And in fact, in every Olympics, we break some new grounds. And in fact, that Paris was pretty cool. I don't know if anybody had a chance to watch the opening ceremony. Unfortunately, it rained, which kind of was awful. But we tried something that no one has ever done, which was the largest mobile 5G experience live streaming to the networks in HD, actually UHD. And people thought it couldn't be done. So even the tier one broadcasters kind of, yeah, we'll watch it, but ignored it. And then they were happy that they saw what we could do.
And switching in real-time UHD between cell towers and 5G over on boats, not to mention rain, using Samsung phones was pretty challenging. It might sound simple. It's not simple. So we broke ground on that one. We broke the latency records in Japan, in China. We're improving our 5G transmitter. Nobody can touch our low latency in 5G transmission, period. So yeah, so it's pretty cool. We're in the winter as well. In fact, if you saw in the Summer Olympics, in the previous actually Winter Olympics, the guys with backpacks going around and curling, believe it or not, they tested like three different venues. They were going around using all of our transmitters. They were testing some next-generation 5G stuff. So yeah, so Olympics is always a big testing ground for us. And yeah, we did obviously get a pickup of revenue.
But again, that's a third part, a third of our business, and that's sports, which is pretty cool. But that technology is going to be huge in public safety and military and defense. And that's another reason why we acquired it. And that's yet to come.
Running tight on time, so we'll be able to ask one more question.
Yeah, sorry. I think government shut down, like you guys signing government contracts.
Very interesting point. The government shut down. I hate the government shut down. Yes, it killed us 13 years ago, whatever it was, 2013, 12 years ago, and ironically, we're having a pretty good quarter, a lot of our business with the government. Surprisingly, we're still here, and I don't actually feel the government shut down, so yeah, normally it would affect, and it does affect contracts, but at the moment, I think a lot of our projects are pretty mission-critical, funded. These are projects that have already money has been flowed, appropriated, and so for our business, we tend to do pretty well, but in general, if this goes on for a long term, yeah, you never know what's going to happen, but we're pretty optimistic at the moment. I think we're out of time, right?
We're out of time. I did forget to disclose at the start. I do not own the stock. I wish I did, but I currently do not.