After surging 900% to reach $1B market cap, Israeli drone camera company sets sights on accelerated growth
After surging 900% to reach $1B market cap, Israeli drone camera company sets sights on accelerated growth
"Our efficiency allows us not to increase product prices and still maintain high profitability," says Chen Golan, chairman of NextVision, which manufactures cameras for aircraft. NextVision doubled its revenue to $52 million last year, with net profit jumping 250%. The company is expecting 70% growth in 2024.
Wars and security crises benefit manufacturers of weapons and means of warfare, and the case of NextVision, a manufacturer of cameras for drones, demonstrates this well. The war between Russia and Ukraine, Israel’s war against Hamas, and the tensions between the U.S. and China have led to an increasing demand for the company's products, resulting in a sharp increase in revenues and profits and a meteoric jump in its stock price on the Tel Aviv Stock Exchange (TASE).
In 2023, the company had the best performing stock on TASE, registering an increase of 302%, a trend that continued in 2024 with an increase of 60% since the beginning of the year. As a result, NextVision's value currently stands at NIS 3.6 billion ($1B), less than three years since it was issued in June 2021 at a valuation of NIS 400 million ($110M).
NextVision's annual report for 2023 revealed impressive results: revenues doubled from $26 million in 2022 to $52 million in 2023, gross profit doubled to $35 million, and operating profit jumped from $12.8 million to $28.7 million. In the bottom line, the company recorded a 2.5-fold increase in net profit to $27.5 million. At the end of 2023, the company had $68.6 million in cash.
NextVision forecasts that business will only improve from here, expecting annual growth of approximately 70% in sales in 2024 by increasing the company's activities and acquiring synergistic activities. That is, it expects revenues of about $88 million in 2024.
This target is based, among other things, on the potential of the market. According to research cited in the report, the global market for drone cameras is expected to grow from $7.5 billion in 2022 to $60 billion in 2030, at an annual growth rate of about 30%.
Most of NextVision's sales are for unmanned aerial vehicles (UAV). This is a market that, according to another study, generated around $30 billion globally in 2023. The company states that the field is expected to generate around $81 billion by 2030, with an annual growth of 15%.
The company also maintains very high profitability rates - 68% gross profitability rate and 55% operating profitability rate, out of the revenues in 2023. The company states that it intends to maintain a gross profit rate of no less than 50% in the years to come.
"The profitability rates we manage to maintain over time are thanks to the fact that in our DNA we are a lean and efficient company," chairman Chen Golan told Calcalist. "Our efficiency allows us not to increase the prices of the products and still maintain these margins. In addition, we are constantly working on new technological developments to maintain the relative advantage in the market and to respond to the real problems of the customers in the field, and we make sure to release new products every year."
Golan founded NextVision in 2009 together with Boris Kipnis (CTO) and Michael Grossman (CEO), and today it is one of the leading companies in the world in the development, production and marketing of stabilized day and night photography solutions for moving vessels - ground and air. The company currenty markets 11 camera models and several sub-models.
The company states that since the beginning of the war in Gaza there has been an increase in orders for cameras and other products from its Israeli customers. In total, the company recorded an increase in sales in Israel from $7.4 million in 2022 to $13.6 million in 2023. Israel's share of all sales last year was 26.3%.
NextVision's main market is Europe, with a share of 52.7% of sales in 2023 (a sharp increase compared to 37.3% in 2022). Sales in Europe last year amounted to $27.3 million, three times more than in 2022, where most of the growth took place. The reason is the Russia-Ukraine war that began in 2022 and is still ongoing, and the fear in Europe of Vladimir Putin's next move. The company states that the rising tensions between European countries and Russia are resulting in European countries and the rest of the world diverting large budgets to acquiring defense equipment. "The war in Ukraine, like the war with Hamas, highlighted the acceleration in the use of suicide weapons, drones and small observation drones for use by the forces in the field," the report states. "In light of this trend, the company is actually experiencing an increase in demand for the solution it provides to its customers in all fields and even expects increased interest in its products."
The company's third largest market is the United States, which holds a 15% share of sales in 2023, with an increase from $5 million to $7.8 million in 2023. The company notes that in light of the tensions between the United States and China, the Americans are working to push out Chinese companies from the U.S. market, and exert pressure on other countries to act in this way. NextVision sees this as a potential for growth and notes that "removing the Chinese companies from the market creates opportunities and increases the market for Western companies".
The technological developments and the decrease in the cost of the cameras and the tools on which they are installed made the company's systems more accessible, including for non-military uses. Thus, for example, infrastructure companies use aircraft with cameras for mapping and scanning. The company anticipates, alongside accelerated growth in the military market, an expansion in the civilian market, such as aerial transport by drones.
Most of the company's customers are the manufacturers of the systems on which the cameras are installed. In 2023, the company had 183 active customers (of which 31 are in Israel), a sharp increase compared to 75 customers in 2020. This increase is reflected in the order backlog, which stands at $71.3 million, seven times from the end of 2022. According to the company, these are orders for up to the next three years, with approximately 60% of them for 2024. The production capacity of NextVision at its factory in Ra'anana is about 400 to 600 cameras per month.
NextVision states that all of its military-standard products have received an export license from the Israeli Defense Export Controls Agency of the Ministry of Defense (DECA). However, "there are a negligible number of transactions" for which it did not receive marketing licenses due to security considerations by the State of Israel, which prohibits sales to customers in some countries.
The company currently employs about 75 people and according to Golan, "We are recruiting people and looking for engineers, technicians and the right human capital to jump on the bandwagon with us to continue growing."
