RBC - Reason for revision• Revising our estimates to account for decelerating revenue growth:
AVO’s Q3 revenue growth of +34% y/y was bolstered by material FX
tailwinds (i.e. USD vs. CAD reporting currency). In constant currency,
however, revenue growth was more modest at +16% y/y – a slower
pace vs the +26% y/y pace seen earlier this year and the +50% y/
y rate realized last year. Enterprise sales also represented 27% of Q3
revenues, or $26MM, an unusually high level. Excluding enterprise sales,
revenues grew +19% y/y, or ~10-11% y/y in constant currency. This is
marginally above the 10% 5Y CAGR market growth forecasted by IHS
and implies our prior revenue growth assumptions were too aggressive
(see adjacent table). We temper our growth and margin assumptions
to reflect the slower +22% y/y constant currency YTD and now forecast
20% revenue CAGR 2015E-2017E (from 29%).