Shares of Montreal-based real-time video streaming solutions provider Haivision hit a record high on the stock market Tuesday after the announcement of a major contract with the U.S. Navy.
This is a five-year agreement worth US$61.2 million (CAN$83 million) for “next-generation” combat display and video distribution systems for various US Navy vessels.
Specifically, Haivision will provide “ultra-high performance” video processing solutions, as well as video transcoding, storage and distribution components.
The company says the systems to be delivered are to be an integral part of the Navy’s combat information centers on various ships to improve situational awareness and mission planning capabilities.
The visualization technology is designed to support future Navy combat systems for, among other things, destroyers, aircraft carriers, amphibious ships, frigates, littoral combat ships and coast guards.
“This contract is a window into the enormous opportunity that the U.S. federal government represents for Haivision,” comments Haivision founder and CEO Mirko Wicha.
It’s always difficult to get the first big contract, but it should be much easier now to go after other multi-year contracts.
Mirko Wicha, Founder and CEO of Haivision
This is the largest military contract Haivision has landed to date, said analyst Nick Corcoran of Acumen Capital. “It’s important to note that this is the first direct contract with the U.S. Navy,” he said.
This pact could allow Haivision to win other contracts with the American armed forces, this expert believes.
The announcement certainly bolsters the company’s revenue outlook. “This deal is expected to boost annual revenue by approximately C$16.5 million assuming consistent revenue recognition over the term of the deal,” said analyst Venkata Velagapudi of Research Capital.
It clarifies that the timing of recognition of such revenue may vary depending on specific contract conditions, such as milestone achievement or delivery timing, which may affect when such revenue is recognized in the financial statements.
“This new contract significantly strengthens Haivision’s reputation for technological excellence,” he said.
Haivision shares rose 7% Tuesday to close at $5.83 on the Toronto Stock Exchange. During the session, the stock hit its highest level since 2022. The current share price gives the company a market value of nearly $170 million.
Haivision is due to release its quarterly financial performance for May, June and July on September 11. Analysts expect revenue of $34.4 million and earnings before interest, taxes, depreciation and amortization of $4.9 million.