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WANdisco (WAND) has reported record bookings of $34m in Q322 and $61.2m YTD (up 1,649% y-o-y and ahead of our FY forecast of $60m), driven by several large contract wins with repeat customers and across multiple use cases. The company’s cash balance strengthened to about $26.3m, reflecting the strong bookings and that a number of contracts had 50% up-front cash payments. The statement confirms management expects to show more progress in client wins and consumption. We raise our FY22 bookings and ending RPO estimates to $70m and $67m, but wait to make P&L and balance sheet changes until we have more information on the rate of consumption. Nevertheless, we see continued upside potential at all KPI levels.
WANdisco |
Momentum in IoT drives bookings upgrade |
Q322 and 2022 YTD update |
Software and comp services |
13 October 2022 |
Share price performance
Business description
Next events
Analysts
WANdiscoWANdisco is a research client of Edison Investment Research Limited |
WANdisco (WAND) has reported record bookings of $34m in Q322 and $61.2m YTD (up 1,649% y-o-y and ahead of our FY forecast of $60m), driven by several large contract wins with repeat customers and across multiple use cases. The company’s cash balance strengthened to about $26.3m, reflecting the strong bookings and that a number of contracts had 50% up-front cash payments. The statement confirms management expects to show more progress in client wins and consumption. We raise our FY22 bookings and ending RPO estimates to $70m and $67m, but wait to make P&L and balance sheet changes until we have more information on the rate of consumption. Nevertheless, we see continued upside potential at all KPI levels.
Year end |
Revenue ($m) |
Bookings |
Ending RPO* ($m) |
EBITDA |
EPS** |
EV/sales |
Net cash ($m) |
12/20 |
10.5 |
10.2 |
4.9 |
(22.2) |
(57.3) |
29.9 |
18.1 |
12/21 |
7.3 |
11.9 |
9.4 |
(29.5) |
(57.9) |
43.0 |
25.9 |
12/22e |
12.0 |
70.0 |
67.4 |
(25.9) |
(48.4) |
26.2 |
21.2 |
12/23e |
25.0 |
70.0 |
112.4 |
(15.3) |
(29.0) |
12.6 |
1.5 |
Note: *Ending RPO = beginning RPO + bookings – revenue. **EPS is normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Demonstrating inherent scalability of CtC model
WAND’s results were driven by large, follow-up contract wins across multiple industries, especially IoT and automotive. First, a $25m agreement with a top 10 global communications customer for IoT and smart-meter use cases marked that customer’s fourth contract, now totalling $39.3m signed in FY22. Second, WAND signed a $7.1m contract with a large European automotive components supplier, following an initial contract on 4 July worth at least $5m. As discussed in our prior note, these results demonstrate the inherent scalability of WAND’s Commit to Consume (CtC) model. As customers collect more data, they can expand the amount of contracted data to be migrated to the cloud. These show how the CtC model provides opportunities for significant expansion and growth.
Increasing bookings and ending RPO forecasts
We raise our bookings estimates to $70.0m for this year and next and boost ending RPO to $67.4m in FY22e and $112.4m in FY23e. The increase in bookings, a key performance indicator we watch closely, is promising and reflects improved visibility for future revenues as customers consume data. We leave our revenue forecast unchanged until we get more information on when customers start consuming data and the rate at which they do so, but see upside potential across all KPI levels.
Plenty of headroom for growth
In the IoT, where applications require continuous movement of very large volumes of data, we are now seeing a use case capable of driving strong, sustainable growth. IDC values the global IoT market at $742bn in 2020, with IoT devices expected to generate 73.1 zettabytes annually by 2025 (1 zettabyte is 1bn terabytes or 1tn gigabytes), leaving significant headroom for growth.
Exhibit 1: Financial summary
$m |
2020 |
2021 |
2022e |
2023e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|
|||||
Revenue |
|
|
10.5 |
7.3 |
12.0 |
25.0 |
Cost of Sales |
(1.1) |
(0.7) |
(1.2) |
(2.5) |
||
Gross Profit |
9.5 |
6.6 |
10.8 |
22.5 |
||
EBITDA |
|
|
(22.2) |
(29.5) |
(25.9) |
(15.3) |
Operating Profit (before amort. and except.) |
|
|
(28.5) |
(35.7) |
(32.1) |
(21.5) |
Acquired Intangible Amortisation |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
(2.1) |
0.0 |
0.0 |
||
Share based payments |
(5.4) |
(2.0) |
(3.1) |
(4.0) |
||
Operating Profit |
(33.9) |
(39.8) |
(35.2) |
(25.5) |
||
Net Interest |
(1.9) |
1.0 |
0.7 |
0.7 |
||
Profit Before Tax (norm) |
|
|
(30.4) |
(34.7) |
(31.4) |
(20.8) |
Profit Before Tax (FRS 3) |
|
|
(35.8) |
(38.8) |
(34.5) |
(24.8) |
Tax |
1.5 |
1.2 |
1.3 |
1.4 |
||
Profit After Tax (norm) |
(28.9) |
(33.5) |
(30.1) |
(19.4) |
||
Profit After Tax (FRS 3) |
(34.3) |
(37.6) |
(33.2) |
(23.4) |
||
Average Number of Shares Outstanding (m) |
50.5 |
57.8 |
62.2 |
66.9 |
||
EPS - normalised basic |
|
|
(57.3) |
(57.9) |
(48.4) |
(29.0) |
EPS - normalised fully diluted (c) |
|
|
(57.3) |
(57.9) |
(48.4) |
(29.0) |
EPS - (IFRS) (c) |
|
|
(68.0) |
(65.0) |
(53.4) |
(35.0) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
89.9 |
91.0 |
90.0 |
90.0 |
||
KEY PERFORMANCE INDICATORS |
||||||
Bookings |
10.2 |
11.9 |
70.0 |
70.0 |
||
Ending RPO |
4.9 |
9.4 |
67.4 |
112.4 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
10.1 |
8.7 |
8.5 |
8.6 |
Intangible Assets |
5.0 |
5.3 |
5.6 |
6.0 |
||
Tangible Assets |
2.9 |
2.2 |
1.7 |
1.4 |
||
Investments |
2.2 |
1.2 |
1.2 |
1.2 |
||
Current Assets |
|
|
31.2 |
33.5 |
30.6 |
14.5 |
Stocks |
0.0 |
0.0 |
0.0 |
0.0 |
||
Debtors |
10.1 |
5.7 |
7.0 |
10.0 |
||
Cash |
21.0 |
27.8 |
23.6 |
4.5 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(9.7) |
(6.2) |
(11.6) |
(14.6) |
Creditors & Deferred Income |
(8.6) |
(5.6) |
(11.0) |
(14.0) |
||
Short term borrowings |
(1.1) |
(0.6) |
(0.6) |
(0.6) |
||
Long Term Liabilities |
|
|
(2.4) |
(1.6) |
(4.8) |
(6.4) |
Long term borrowings |
(1.8) |
(1.2) |
(1.8) |
(2.4) |
||
Deferred Income |
(0.7) |
(0.3) |
(3.0) |
(4.0) |
||
Net Assets |
|
|
29.2 |
34.5 |
22.7 |
2.1 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(19.1) |
(29.1) |
(19.1) |
(14.3) |
Net Interest |
(0.3) |
(0.2) |
0.7 |
0.7 |
||
Tax |
0.7 |
1.0 |
1.3 |
1.4 |
||
Capex (inc capitalised R&D) |
(5.5) |
(5.8) |
(6.0) |
(6.3) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
||
Financing (net) |
24.1 |
41.9 |
19.5 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
(0.1) |
7.9 |
(3.6) |
(18.5) |
||
Opening net debt/(cash) |
|
|
(18.3) |
(18.1) |
(25.9) |
(21.2) |
HP finance leases initiated |
0.0 |
(0.1) |
(1.2) |
(1.2) |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
(18.1) |
(25.9) |
(21.2) |
(1.5) |
Source: WANdisco, Edison Investment Research
|
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