The launch of LiveData Migrator with AWS represents another big step forward for WANdisco. Aside from diversifying the sales base, it suggests that the company’s technology is becoming the established way to migrate large, active datasets to the cloud. Disappointing H1 financials and a delay in the ramp of Azure revenue from Q3 to Q4 leads us to cut our FY20 forecasts. However, Q4 should see a big uplift in financial performance and our newly introduced FY21 forecasts see sales rising to $37m.
The launch of LiveData Migrator with AWS is another significant milestone for WANdisco. It means the product is now incorporated in the migration offerings of both the two largest cloud providers (c 50% of the market). GoDaddy was also announced as the first AWS customer and further customers are expected in Q4. The company aims to migrate at least 30 petabytes (PB) to AWS in FY21.
Financial performance in H1 was disappointing, with revenues of just $3.6m, down 39% y-o-y, and an $11.9m EBITDA loss. In addition, the Microsoft Azure product is now not expected to reach public preview (where customers can ‘pay as you go’ as part of their existing service) until early Q4, delaying the ramp in sales. The company currently has 46 registrations, up from 28 in July. The focus for Q4 will be converting these registrations into paying customers.
The combination of a disappointing H1 and the Azure delay leads us to cut our FY20 revenue forecasts to $13m (35%). With little sequential increase anticipated in Q3, this implies Q4 revenues jumping to c $7.6m driven by the conversion of Azure registrations into customers plus some (subscription) licence sales. We introduce an FY21 forecast of $37m (vs company guidance of ‘at least $35m’), which assumes 52 customers migrating 100PB (see Exhibit 2). We hope to update this analysis in Q4 as better visibility on the growth trajectory emerges.
Our previous analysis (see Launches LiveData with Microsoft Azure) highlighted the significant value WANdisco’s deal with Microsoft could generate (annual revenues of at least $81m by 2023). A deal with AWS could create similar value. We estimate that the current 418p price requires revenues to reach $192m by 2030 and a 40% EBIT margin. Gauging longer-term prospects will become much easier as evidence of the LiveData adoption rate emerges during Q420 and Q121.