Progress on all fronts

WANdisco 6 September 2017 Update
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WANdisco

Progress on all fronts

Interim results

Software & comp services

6 September 2017

Price

700.50p

Market cap

£264m

US$1.3/£

Net cash ($m) at 30 June 2017

6.9

Shares in issue

37.7m

Free float

88%

Code

WAND

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(3.7)

49.8

259.2

Rel (local)

(2.4)

52.4

232.3

52-week high/low

812.5p

128.5p

Business description

WANdisco is a distributed computing company. It has developed a suite of solutions based around proprietary replication technology, which solve critical data management challenges prevalent across cloud computing, big data and the ALM software markets.

Next events

Investor day

TBA

Analysts

Dan Ridsdale

+44 (0)20 3077 5729

Bridie Barrett

+44 (0)20 3077 5257

WANdisco is a research client of Edison Investment Research Limited

WANdisco delivered 73% growth in bookings in H1 while reducing cash costs by $1.4m and moving close to cash flow break even, highlighting the scalability the company has added to the model. The IBM OEM partnership was key to this acceleration but partnerships with other tier one technology companies are also progressing and could provide a further inflection. We have upgraded our FY17 bookings and revenue estimates by 6% and 9%, respectively, and forecast positive cash flows from here. The addition of more tier one strategic partnerships could be a catalyst for further upgrades.

Year end

Revenue ($m)

EBITDA
($m)

PBT*
($m)

EPS*
(c)

Net cash
($m)

EV/sales
(x)

12/15

11.0

(16.0)

(26.4)

(87.7)

2.6

30.7

12/16

11.4

(7.5)

(16.4)

(46.9)

7.6

29.3

12/17e

17.0

(3.3)

(10.6)

(26.7)

7.1

19.6

12/18e

21.7

(0.7)

(8.3)

(20.6)

10.4

15.3

Note: *PBT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Strong partners key to scalable growth prospects

The IBM partnership moved into a higher gear in H1, delivering $4.2m of revenue, demonstrating the leverage gained from partnerships with tier one technology companies. We believe the strength of WANdisco’s partner base highlights the strength of its core replication IP and it has made good progress in developing these relationships over H1. Compliance with Oracle’s MAA architecture should be a catalyst for sales via Oracle to expand. WANdisco is integrating its Fusion product with Amazon’s Snowball product, for moving massive amounts of data to its public cloud. Partnerships with Google Cloud and Alibaba have potential to progress further. The conversion of one or two of these collaborations into strategic partnerships could lay down a platform for a further acceleration in scalable growth.

Upgrading estimates, expect positive cash generation

We are upgrading our bookings estimates by 6% to $21.7m in FY17 and 4% to $28.0m for FY18. Our FY17 revenues are upgraded by 9%, reflecting the higher bookings and an acceleration in the revenue recognition cycle, due to the increased weighting of royalties and licences coming in via IBM versus annual subscriptions via other channels, while the EBITDA loss estimate reduces to $3.3m from $4.2m. Our FY18 P&L estimates are not significantly changed. We are now forecasting positive cash flows from FY17, with cash building from the $6.9m H117 level.

Valuation: Acceleration priced in; partners key

WANdisco’s investment case has always been predicated on the potential for it to scale into a significantly larger, highly profitable business. We believe that its progress in H1 has significantly strengthened its credentials. The share price performance has reflected this, and with its FY18e EV/sales rating of 15.3x we believe that the shares discount a further acceleration in growth in excess of our forecasts. Further progress with tier one strategic partners will be the key to moving towards more aggressive growth assumptions.

Growth credentials strengthened

WANdisco’s investment case has always been predicated on the potential for the company to scale into a highly profitable business of a significantly larger size. We believe that WANdisco’s operational and financial progress in H1 has strengthened its credentials.

Operating in the crux of a very large, growing market

In terms of market backdrop, WANdisco operates at the crux of one of the key structural growth trends within the technology landscape today. The rate at which data and computing are moving to cloud platforms continues to gather pace. It is also the technology cycle upon which the development of many others such as big data analytics and AI depend, which strengthens the case for enterprises to move data to the cloud. Market analyst Gartner estimates that cloud computing revenues will grow at a CAGR of 19% from $67bn in 2015 to $162bn in 2020. 451 Research estimates that by 2019, 60% of all IT workloads will run in the cloud, up from 45% today.

Exhibit 1: Share of IT environment by storage type

Source: IDG Enterprise: Survey (November 2016) – what percent of your organization’s total IT environment (data, applications, infrastructure etc) presently resides in each of the following and will in 18 months?

Enabling the movement of big data

The amount of data being stored across all formats is increasing at a very rapid rate. Companies now need to interrogate, analyse, archive, migrate and protect terabytes, petabytes or exabytes of data, much of which is mission critical. All of these functions require data to be migrated from one place to another, but legacy technologies are increasingly unable to cope, due to the downtime involved in moving large amounts of data, or the inability to maintain consistency between two data sources.

WANdisco’s Fusion platform, based around its core DConE replication IP, enables data to be continually synchronised in real time across a wide area network. This enables data to be replicated between data sources without incurring downtime and while ensuring data consistency. The technology can be used to replicate data from one data centre to another, from a data centre to the cloud and back, from one cloud platform to another or to a mobile data centre – such as Amazon’s Snowball solution for large-scale cloud migrations.

Exhibit 2: Data can be stored and moved across multiple clouds and locations

Source: Edison Investment Research

The March launch of Fusion 2.10 extended the platform’s ability beyond Hadoop (for big data analytics) and cloud object storage to support Network File System (NFS) servers, extending the company’s capability to the mainstream file storage market.

Large and growing addressable market

WANdisco estimates the total addressable market for its technology in cloud deployments to be worth around $1.6bn, growing to circa $7bn by 2020. The addition of NFS capability should extend this by over $1bn. While growth of the NFS market is expected to be marginal, at best, the vast majority of enterprises will continue to store data in multiple locations and across multiple formats. The addition of NFS capability should thus strengthen WANdisco’s proposition through giving customers the ability to apply the benefits of Fusion across more of their data infrastructure.

Exhibit 3: Estimated addressable market for WANdisco’s product

Source: WANdisco

Credentials with tier one partners and customers strengthened

While the potential for WANdisco’s technology has always looked compelling, one can generally get a much better gauge of a company’s prospects by looking at who they work with and how much they spend. We believe that WANdisco’s credentials have significantly strengthened in this regard over the past six months.

Scale and diversity of deals highlights growth potential

We believe that the broad addressable market for WANdisco’s technology is highlighted by the diverse spread of verticals for its last three announced big data deals, which span retail ($2.0m), financial services ($4.1m in April) and automotive manufacture (c $650k in December). Retail and healthcare are both new verticals for the company. We see the scale of these deals as a good indication of both the uniqueness of the company’s IP and the return on investment customers are able to generate from deploying it.

Partnerships key to driving scalable growth

WANdisco’s roster of partnerships with major technology companies is also impressive. This includes embracing major vendors of enterprise software/hardware that are now moving aggressively into cloud and hybrid solutions, such as IBM, Oracle, Microsoft, HP and Dell, and also the largest pure cloud solution providers, such as Amazon, Google Cloud and Alibaba. Combined, WANdisco estimates that these companies hold over 60% of the total cloud computing market share, with cloud service revenues growing at a healthy double-digit rate.

Exhibit 4: LTM revenue growth and market share of key partners

Source: WANdisco, Edison Investment Research, company reports

The IBM partnership is clearly the most advanced of these relationships. Having initially established the OEM agreement in H116, the collaboration moved up a gear in H117, with a $4.1m contract with a major financial institution brought in via the partnership as well as $1.1m of royalty revenues carried over from 2016. We expect the partnership to generate more leads in H2.

Looking at WANdisco’s other partnerships, its relationship with Oracle has already demonstrated its ability to generate $1m+ deals and WANdisco’s compliance with Oracle’s MAA architecture should be a catalyst for sales via Oracle to expand. WANdisco is also integrating its Fusion product with Amazon’s Snowball product, for moving massive amounts of data to its public cloud. We do not have detailed insight into the company’s partnerships with Microsoft, Google Cloud and Alibaba, but we believe that these have potential to progress further.

The conversion of one or two of these collaborations into strategic partnerships could lay down a platform for a further acceleration in scalable growth.

Financials

H117 results review

Fusion/IBM drives 73% bookings growth

H1 bookings of $10.2m grew by 73% y-o-y, driven solely by the core Fusion business, where bookings were $7.0m, up 173% from $2.6m last year. Bookings for the Source Code Management business were essentially flat at $3.2m vs $3.3m in H1 last year.

IBM accelerates revenue recognition profile

Revenues grew 71% to $9.7m, which reflects the strong bookings momentum but also a faster revenue recognition cycle. This is due to the upfront contribution of royalties from IBM and a $3.1m perpetual licence (also with IBM) versus the more drawn out profile from the company’s subscription model deployed elsewhere. We understand that subscription-based charging remains the company’s preferred revenue model, but management will retain a flexible approach to secure large deals, such as the IBM OEM agreement and the large perpetual licence deal, which influenced the H1 numbers.

Scalability of model demonstrated

This improvement in top-line performance was achieved with a substantially reduced cost base, highlighting the scalability that WANdisco has added to its model through its indirect partner-driven model. Total cash costs, including capitalised development costs, were $10.8m down from $14.9m in H1 last year, and as a result EBITDAC (EBITDA treating capitalised R&D as expensed) loss dropped to $2.1m from $9.7m last year. EBITDA was a $0.96m profit from a $5.3m loss last year.

Closing in on cash flow break-even; balance sheet strong

Cash burn in H1 reduced to $600k, down from $5.3m in H1 last year, reflecting the strong bookings progress, the company’s positive working capital profile and substantially reduced overheads. Net cash stood at $6.9m, comprising of $9.9m cash and $3.0m debt through an $8m facility ($5m debt, $3m revolving credit) secured with Silicon Valley Bank in June.

Estimates upgraded, scope for more

We are upgrading our bookings estimates by 6% to $21.7m for FY17 and 4% to $28.0m in FY18, respectively. Our FY17 revenues are upgraded by 9%, reflecting the acceleration in the revenue recognition cycle, brought about by the increased weighting of royalties and licences coming in via IBM, while the EBITDA loss estimate reduces to $3.3m from $4.2m. Our FY18 P&L estimates are not significantly changed.

Due to the company’s positive working capital model and lower cost base, we are now forecasting positive cash flows from FY17, building from the $6.9m H117 level.

Further strategic partnerships the key catalyst for upside

We believe that these estimates remain cautious, but at this stage we only have a short period of improved trading data, and the company’s results can still be highly influenced by the timing of large deals. We believe that the securing of one or more additional strategic partnerships would be the key catalyst for upgrading growth forecasts. Given the company’s operationally geared model, any increase in bookings or revenue should translate strongly into cash generation and profit.

Exhibit 5: Estimate changes

$000s

2015

2016

2017e

2018e

Yea-end 31 December

Actual

Actual

Old

New

% change

Old

New

% change

Bookings Big Data

2,500

7,100

11,000

13,000

18%

16,000

18,500

16%

Bookings SCM

6,500

8,400

9,500

8,700

-8%

11,000

9,500

-14%

Total Bookings

9,000

15,500

20,500

21,700

6%

27,000

28,000

4%

Revenue

10,994

11,379

15,674

17,029

9%

21,616

21,748

1%

Cost of Sales

(749)

(1,349)

(1,784)

(1,784)

0%

(2,349)

(2,349)

0%

Gross Profit

10,245

10,030

13,891

15,246

10%

19,267

19,399

1%

EBITDA

(15,988)

(7,464)

(4,211)

(3,254)

-23%

(644)

(655)

2%

Capitalised development cost

(8,369)

(5,860)

(6,497)

(6,497)

0%

(6,952)

(6,952)

0%

EBITDAC (adjusted for capitalised development)

(24,357)

(13,324)

(10,707)

(9,751)

-9%

(7,595)

(7,607)

0%

Operating Profit (before amort and except)

(25,858)

(16,104)

(13,151)

(10,374)

-21%

(9,884)

(8,075)

-18%

Exceptionals

(614)

(32)

0

0

 

0

0

 

Share based payments

(4,057)

(1,787)

(1,787)

(1,400)

-22%

(1,787)

(1,400)

-22%

Operating Profit

(30,529)

(17,923)

(14,938)

(11,774)

-21%

(11,671)

(9,475)

-19%

Net Interest

(506)

(268)

(268)

(268)

0%

(268)

(268)

0%

Profit Before Tax (norm)

(26,364)

(16,372)

(13,419)

(10,642)

-21%

(10,152)

(8,343)

-18%

EPS - (IFRS) (c)

(103.9)

(27.9)

(39.3)

(36.7)

-6%

(30.5)

(24.8)

-18%

Closing net debt/(cash)

(2,555)

(7,558)

(4,156)

(7,071)

70%

(8,389)

(10,376)

24%

Source: WANdisco data, Edison Investment Research

Successful execution should support continued strong growth and strong margins

Looking to the longer term, we believe that the company’s market opportunity and IP underpinned, partnership-driven business model have the potential to support a business of substantially larger scale and very healthy margins. The extent to which margins can scale will hinge upon the breadth of applicability and the defensibility of the company’s IP, and as ARM demonstrated with 50%+ operating margins there is no particular cap for companies who get both of these ingredients right. More realistically, we believe that with sustained successful execution, 25-30% operating margins should be achievable.

Valuation: Acceleration demanded – partners key

WANdisco’s investment case has always been predicated on the potential for the company to scale into a significantly larger, highly profitable business. We believe that the company’s progress in H1 has significantly strengthened its credentials. The share price performance has reflected this, and with WANdisco’s FY18e EV/sales rating of 15.3x we believe that the shares discount a further acceleration in growth in excess of our forecasts. We believe that further progress with tier one strategic partners will be the key to moving towards more aggressive growth assumptions. The company’s strategic attractiveness should also factor into the valuation equation.

Fundamental valuation highlights the degree of acceleration required

A DCF scenario analysis supports this view, suggesting that a 700.5p share price requires the company to deliver sustained bookings growth of c 40% with EBITDAC (EBITDA + capitalised R&D) margins expanding to above 20%. We believe that the opportunity, IP and business model should support achieving such figures, but it will require strong execution on the indirect model, with strategic partnerships driving rapid, operationally geared growth.

Exhibit 6: DCF sensitivity analysis

Bookings growth FY18

30%

40%

50%

60%

70%

Bookings CAGR FY16-25

22%

31%

39%

47%

55%

Revenues 2020, $’000

35,607

41,965

49,057

56,925

65,615

Implied share price (p)

Matured EBITDAC margin

15%

139

281

517

911

1,562

20%

185

359

644

1,128

1,900

25%

229

433

774

1,335

2,246

30%

271

504

895

1,547

2,580

35%

310

580

1,023

1,749

2,921

Source: Edison Investment Research. Note: WACC = 10%, reduced from 12.5% previously as the business is approaching cash flow break-even; TGR = 2%. Assumes a progressive nine-year fade in growth rate from 2018.

Growth prospects justify a premium rating to peers

On a relative basis, WANdisco’s FY18e EV/sales ratio of 15.3x is a premium to its data infrastructure and cloud software peer group, albeit the range within this peer group is wide (Exhibit 7). WANdisco’s FY17 and FY18 forecast growth rates are towards the upper end of this peer group and, equally, we believe there is scope for upside, particularly if other tier one partners are secured.

Exhibit 7: Peer valuations

Name

Ytd perf
(%)

Current price (ccy value)

Quoted ccy

Market cap ($m)

EV/ sales 1FY (x)

EV/ sales 2FY (x)

EV/ EBITDA 1FY (x)

EV/ EBITDA 2FY (x)

P/E 1FY (x)

P/E 2FY (x)

Sales growth 1FY (%)

Sales growth 2FY (%)

WANdisco

WAND LN equity

248

720

GBp

271

19.6

15.3

nm

nm

nm

nm

50

28

Infrastructure software

Nutanix Inc - A

NTNX US equity

(20)

21

US$

3,211

3.7

2.7

(17.9)

(19.1)

(14.6)

(16.1)

73.0

35.5

Servicenow

NOW US equity

44

107

US$

18,206

9.3

7.1

42.2

28.8

91.7

60.4

37.0

30.5

Nice

NICE IT equity

1

26,600

ILs

4,477

3.4

3.1

10.6

10.2

18.7

16.8

32.3

7.2

Hortonworks

HDP US equity

54

13

US$

817

3.1

2.4

(64.4)

12.9

(7.1)

(10.0)

29.8

27.0

Attunity

ATTU US equity

17

7

US$

120

1.8

1.5

20.2

17.2

233.7

28.0

13.0

17.9

Mobileiron

MOBL US equity

21

5

US$

428

1.9

1.7

(25.4)

(85.6)

(24.3)

(64.1)

10.0

11.6

Commvault Systems

CVLT US equity

17

60

US$

2,736

3.2

2.9

21.8

17.9

49.5

41.6

9.0

9.1

Vmware Inc -
Class A

VMW US equity

17

92

US$

37,620

4.0

3.8

12.3

11.5

18.5

17.3

8.2

5.2

Citrix Systems

CTXS US equity

11

79

US$

11,957

4.2

4.1

12.7

11.4

17.1

15.5

(17.4)

4.1

High-growth UK software

Blue Prism Group

PRSM LN equity

95

867

GBp

717

25.5

19.6

(66.4)

(96.6)

(78.8)

(111.1)

115.7

30.5

First Derivatives

FDP LN equity

33

2,821

GBp

941

4.3

3.9

23.6

21.5

44.5

41.4

11.6

11.0

Loopup Group

LOOP LN equity

61

194

GBp

105

4.4

3.4

24.9

13.2

120.1

28.1

43.1

32.0

Sophos Group

SOPH LN equity

79

469

GBp

2,874

5.0

4.3

48.5

36.6

117.1

73.9

19.0

16.9

Source: Edison Investment Research, Bloomberg consensus. Note: Prices as at 5 September 2017.


Exhibit 8: Financial summary

$000s

2014

2015

2016

2017e

2018e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

11,218

10,994

11,379

17,029

21,748

Cost of Sales

(2,165)

(749)

(1,349)

(1,784)

(2,349)

Gross Profit

9,053

10,245

10,030

15,246

19,399

EBITDA

 

 

(17,874)

(15,988)

(7,464)

(3,254)

(655)

Operating Profit (before amort and except)

 

 

(26,424)

(25,858)

(16,104)

(10,374)

(8,075)

Acquired Intangible Amortisation

0

0

0

0

0

Exceptionals

(1,586)

(614)

(32)

0

0

Share based payments

(11,907)

(4,057)

(1,787)

(1,400)

(1,400)

Operating Profit

(39,917)

(30,529)

(17,923)

(11,774)

(9,475)

Net Interest

557

(506)

(268)

(268)

(268)

Profit Before Tax (norm)

 

 

(25,867)

(26,364)

(16,372)

(10,642)

(8,343)

Profit Before Tax (FRS 3)

 

 

(39,360)

(31,035)

(10,047)

(14,339)

(9,743)

Tax

1,053

1,129

772

522

354

Profit After Tax (norm)

(24,814)

(25,235)

(15,600)

(10,121)

(7,989)

Profit After Tax (FRS 3)

(38,307)

(29,906)

(9,275)

(13,818)

(9,389)

Average Number of Shares Outstanding (m)

24.0

28.8

33.3

37.6

37.8

EPS - normalised (c)

 

 

(103.3)

(87.7)

(46.9)

(26.9)

(21.1)

EPS - normalised fully diluted (c)

 

 

(103.3)

(87.7)

(46.9)

(26.7)

(20.6)

EPS - (IFRS) (c)

 

 

(159.5)

(103.9)

(27.9)

(36.7)

(24.8)

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

80.7

93.2

88.1

89.5

89.2

EBITDA Margin (%)

N/A

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

10,224

8,813

6,253

5,930

5,761

Intangible Assets

9,814

8,583

5,977

5,574

5,325

Tangible Assets

410

230

276

356

436

Investments

0

0

0

0

0

Current Assets

 

 

16,933

9,283

13,703

14,429

20,085

Stocks

0

0

0

0

0

Debtors

14,452

6,728

6,145

7,358

9,709

Cash

2,481

2,555

7,558

7,071

10,376

Other

0

0

0

0

0

Current Liabilities

 

 

(8,474)

(6,439)

(9,409)

(11,467)

(12,342)

Creditors & Deferred Income

(8,474)

(6,439)

(9,409)

(11,467)

(12,342)

Short term borrowings

0

0

0

0

0

Long Term Liabilities

 

 

(6,067)

(6,060)

(6,980)

(11,557)

(15,201)

Long term borrowings

0

0

0

0

0

Deferred Income

(6,067)

(6,060)

(6,980)

(11,557)

(15,201)

Net Assets

 

 

12,616

5,597

3,567

(2,665)

(1,697)

CASH FLOW

Operating Cash Flow

 

 

(13,509)

(18,138)

(2,955)

6,056

10,470

Net Interest

58

59

(161)

(268)

(268)

Tax

(3)

552

690

522

354

Capex (inc capitalised R&D)

(9,515)

(8,464)

(5,924)

(6,797)

(7,252)

Acquisitions/disposals

0

0

0

0

0

Financing (net)

465

26,175

13,523

0

0

Dividends

0

0

0

0

0

Net Cash Flow

(22,504)

184

5,173

(487)

3,305

Opening net debt/(cash)

 

 

(25,673)

(2,481)

(2,555)

(7,558)

(7,071)

HP finance leases initiated

0

0

0

0

0

Other

(661)

(43)

(175)

0

0

Closing net debt/(cash)

 

 

(2,481)

(2,555)

(7,558)

(7,071)

(10,376)

Source: Edison Investment Research, WANdisco data

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

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Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by WANdisco and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers’ exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by WANdisco and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers’ exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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