2024-04-25
CFO Abhijit Saha Banik
For those who have not heard of Huddly, could you tell us about your business, what you do, and what markets you’re active in?
Our purpose is to empower human collaboration by crafting intelligent collaboration cameras and tools, enabling productive and inclusive hybrid meetings. We were first in the market with software enabled, intelligent cameras, releasing Huddly IQ in 2018, which has been in market since and is still generating sales. The cameras are unique in using machine learning and AI to understand context and non-verbal communication. 60-70 % of all communication is nonverbal, and competing products in the market doesn’t capture this. Would you have a video meeting where 60-70% of communication is missing?
In terms of market it is global and vast, we primarily target meeting rooms and board rooms of fortune 1 000 companies with our largest geographical markets being the United States and Europe, but we also have presence in APAC.
Can you elaborate a bit about your solutions and how they hold up against competitors?
Broadly defined there is a lot of competition as there are multiple actors that sell cameras used in corporate settings. We differentiate ourselves by having intelligent, software enabled cameras. We focus on monetizing on the value of our software. There is a lot of machine learning required to get your AI to a point where it captures social ques and context in the meeting room.
In Huddly Crew there are 3 cameras, and a lot of software. A few other competitors also have multi camera systems but they use more expensive hardware based on legacy technology, whereas we focus on the software side of the product. In this sense we are disruptive, our system is high-end but still affordable, selling for around 9 500 USD compared to competitors at >30-40 TUSD.
To summarize we have built high barriers to entry by us being years ahead of the nearest competitors, we have good customer reviews and great design, supported by us winning the red dot best of the best award for pioneering product design, and excellence in design and engineering.
Could you describe the AI features in your cameras?
We have three IP-networked cameras in our Huddly Crew system. These cameras have all their intelligence and processing on the camera itself which is important in order to reduce lag. On top of this there is a lot of machine learning to get the AI to learn the different social cues humans use in non-verbal communication. This is important in order for the cameras to know who/what to focus on during a meeting.
The spotlight feature is quite remarkable, the cameras capture body language, and switch to different people that are for example typing or nodding their heads – this is our main difference from competitors and an USP. It works just like a producer directing a movie.
What is the reason for the lower performance of 2023, compared to 2022, and what is your strategy going forward?
Looking at our sales we have two channels, Strategic partners and Channel sales, where in 2022 the former stood for around 80 % of sales and the latter 20 %. The strategic partners are for example Crestron and Google. The partners buy our products and bundle them with other products such as microphones and speakers and sell the complete system to customers Channel is sales to distributors, which sell to resellers, who finally sell to end-customers.
The reason for the financially challenging year of 2023 is primarily due to supply chain bottleneck where one of our partners could not get certain components to complete the entire bundle, hence reducing demand for Huddly cameras. In Q4 we saw an increase in Channel sales which also has higher margins, explaining the higher total gross margin, but it was not enough to offset the decline in strategic partner sales.
Can you elaborate on what you hope to achieve with Huddly Crew?
Huddly Crew was a big launch for us where we are defining a new category with a system that is years ahead of competitors. We are trying to create a whole new standard of video communication. As Huddly Crew is a new product and is different from what people are used to, we need to educate the market a bit. Despite this, we are seeing strong market acceptance, for example getting a Microsoft Teams certification. Teams is the biggest video conference system on the market with a 60-80 % market share so it is a great “stamp of approval” for our product.
The idea behind Crew is that it should do what a TV-producer does for live Production, in for example talkshows, where they switch cameras frequently. So, this is also a potential market in the long run.
Could you elaborate on the cost base stabilization initiatives?
Our number one goal is profitability and cash flow break even. Our cost-base is primarily personnel costs, where we have 120 employees, around 65 of those are highly competent and experienced engineers. We have everything in house and we need to keep our talent in order to continue innovating, so we have not done any structural changes in head count. However, we’ve had a slight reduction of personnel due to natural attrition and we are restrictive to hiring new resources. Additionally, we cut costs everywhere we can, for example we sublet our headquarters by one third.
Which segment or market are you most excited about in the coming years?
We have many interesting markets, but the most important is the fortune 1 000 companies. A lot of these firms have white collar workers that demand hybrid working, and as the employees are critical for these firms, they have bargaining power. Additionally, these firms have a willingness, and capacity, to pay for our products.
We are also looking at other potential markets that could be interesting such as within education. Students that are not at campus should still be able to feel included in the lecture by joining digitally.
Where do you see Huddly in three years?
We want to be the category leader within multicamera systems.
Could you give three reasons as to why Huddly is a good investment today?
- Large and growing market with strong fundamental drivers:
We are well positioned in a vast market with untapped potential. Roughly only 10 % of a hundred million meeting rooms are equipped with video conferencing systems, which gives us large potential for further penetration. In order to capture this market, you need good user experience which also requires great technology, where we are in the forefront.
- The potential for Huddly Crew:
There are deep barriers to entry that we have been developing since 2013, with machine learning and high in-house know how. We have a long lead over competitors, as well as stamps of approval such as that from Microsoft Teams.
- Go-to-market strategy:
We have collaborations with Crestron and Google to build and distribute state-of-the art solutions. Additionally, we have strong end-customer reach through our vast network of global distributors and resellers.
