Joy of Techs
21 Nov 16
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
Business moving forward after the turmoil
11 Oct 16
WANdisco’s announcement that it has signed two of its largest ever deals provides support for our full year estimates, which assume a strong uptick in H2 bookings. It also provides a welcome opportunity to focus on the business following the boardroom battle that has dominated recent headlines. We maintain our view that, from a commercial and market development perspective, things appear to be coming together for WANdisco. We believe that improved financial performance should follow and that the company is building a platform for scalable growth.
The Joy of Techs
15 Aug 16
Mobile money has been an awkward area for investors and industry alike. There have been too many new arrivals offering too many new solutions, leading to a confusing plethora of payment methods for both consumers and retailers, championed by varying stakeholders: banks, credit card suppliers or mobile network operators (MNOs). In this, the mobile money industry has ignored the key element of currency – that it is universally recognised and accepted. The confusion of competing payment methods inevitably led to numerous failures. The industry has promised much: a total technological revamping of the monetary systems in place since ancient times, in a short space of time, but has delivered little to date. However, that is not to say changes aren’t happening.
Smart City win – a sign of things to come?
04 Aug 16
WANdisco has delivered a solid set of H1 numbers which, although we do not provide formal forecasts at this stage, appear to materially underpin full-year consensus estimates. Revenues should continue to build as the group benefits from ongoing Cloud adoption, from the recently-announced IBM relationship and from the underlying operational gearing that Fusion can offer. We shall return with further notes on these various topics in due course, but for now take comfort in what appears to be a steadied ship, with clear direction.
And in the Blue corner…
08 Jul 16
WANdisco last week announced that its data replication platform, Fusion, now has “general availability” status within IBM’s product offerings, under the IBM name “Big Replicate 2.0”. IBM’s considerable marketing muscle is now behind the product, which sits alongside and enhances IBM’s other “big data” offerings. This note describes some elements of the big data market, highlights IBM’s position and strength within that market, and finally focuses on the WANdisco Fusion platform and the attributes which make it attractive to both IBM and end customers.
Stronger financial footing
29 Jun 16
WANdisco’s raise of $15m net (c £10.1m) at 160p/share should support the business through to cash flow break-even in all but a bearish scenario. Equally, we believe lead indicators to support an inflection in bookings are strengthening: bookings recovered in Q1, the number of live deployments more than doubled, the first royalties from IBM are expected this year and enterprise adoption of cloud and big data appear to be accelerating.
The Joy of Techs
04 May 16
This quarter's topic: Feasting on Red Tape. 2016 harbours every chance of being a stultifying year, given the imminent local and London mayoral elections, the looming hurdle of Brexit, the summer doldrums, the bizarre potential outcome of the US presidential election and then the home strait to Christmas. Excuses for inactivity abound with regard to spending IT capex budgets.
IBM to embed Fusion
28 Apr 16
WANdisco has announced an OEM agreement with IBM, whereby IBM will embed an IBM-branded, customised version of Fusion into its BigInsights solution set. This is an important step as the company executes its indirect sales strategy, enabling WANdisco to leverage IBM’s global sales footprint and installed base. Our estimates do not change, but financials will be supported near term by IBM-funded development work, while royalties should start to support scalable growth from H2 onwards.
Does the cloud have a silver lining?
07 Apr 16
WANdisco’s results were as expected, with long decision cycles affecting the big data business and ALM only picking up late in the year. Ultimately, deal flow and cash flow will be the key metrics on which to measure progress over the course of 2016. However, there are indications that a recovery is due. In particular, Fusion’s ability to accelerate data migrations to the cloud and partnerships with leading cloud players such as Amazon, Microsoft and IBM could provide the blend of compelling use case and strong channel partners to accelerate adoption.
Prelims and prospects
21 Mar 16
WANdisco’s prelims were in line with the 10 February trading update with EBITDA losses of $16.0m (vs $16.5mE) from revenue of $11.0m (vs $12.5mE). 2H15 cost-saving initiatives will have a full-year effect in FY16E, with the company aiming to drive growth from both the ALM and Big Data divisions at the same time, a task which has so far proved elusive but about which management remains confident. With the refocus of the ALM business and development of channel sales for Big Data, the restoration of order book momentum is key to ensuring cash flow improvement in FY16, a challenge which the market is observing closely. We reset our forecasts and target price to more appropriate levels. 200p target.
Long decision cycles still hurting
12 Feb 16
Long customer decision cycles for WANdisco's Fusion big data product is still affecting bookings and revenues, although the ALM business did pick up in Q4. Cost reductions are helping to mitigate the impact on profitability and cash burn, although unless bookings accelerate, further funds may need to be raised in FY16. The company’s co-marketing with major partners such as IBM, Oracle and Amazon has visibly increased over the past few months, and while timing is difficult to gauge, converting this activity to new customer wins will be key to achieving an uptick in growth.
The Joy of Techs
03 Feb 16
This quarter’s topic: Automotive Technology. With the Mobile World Congress approaching at the end of this month and likely to feature so many automotive applications to the extent it should perhaps be renamed the Mobile World of Cars, we examine the growing impact of technology in the automotive industry, from telematics to connected cars and autonomous vehicles.
Happy Birthday AIM: it’s tough being the middle child
02 Dec 15
Going into 2015, AIM had monumental expectations. 2014 was a record breaking year for London’s junior market with IPOs across the year raising £2.4bn (the largest since AIM’s inception). AIM’s 20th year made for a perfect battle ground between the bull and bear camps once more. The bulls, hailing the success of the world’s most successful growth market referencing Big Yellow, IP Group, Domino’s Pizza and of course ASOS. The bears, swiftly retorting back sending shudders down the spines of investors everywhere with the sounds of Quindell, Globo, Adgorithms, and of course where would they be without the mention of a handful of China frauds.
Fusion the cornerstone for growth
29 Oct 15
A substantial shift in the Hadoop supply landscape and sales execution issues in ALM held up progress in H115. However, with the launch of Fusion we believe the company is strongly positioned within an evolved big data market place. Limited visibility prompts a substantial cut to our booking and revenues estimates, as well as costs, but while the timing is difficult to gauge, we still expect a sustainable acceleration in operationally geared growth. Visibility of this is the key catalyst for upside.
Technology Review - FinTech: The Second Mouse Gets the Cheese...
08 Oct 15
The FinTech market is a vast and still largely uncharted ocean of opportunity. Trillions of dollars move around hundreds of countries every day; and that is just between banks, never mind individual customer transactions. The banking systems that facilitate this activity are by and large 30 to 40 years old and have evolved from multiple systems developed in many different countries. The opportunities to improve the systems are equally as vast as the market, though by necessity it will be a process of evolution rather than revolution, as no one company is going to persuade all the banks to change all the systems in one go. There is therefore plenty of market to go for. The first wave of “FinTech” companies has now blazed the trail. Some have succeeded and some have fallen over. Most have had to re-think and re-invent their models many times. In all respects the big prizes are still there, but there is now much more information on how best to access them.
Looking for full ahead, both
24 Sep 15
Interims reveal 1H sales ($5.7m) and bookings ($4.4m) in line with the 1Q and 2Q updates. The Big Data business won eight customers for the new Fusion product, all large enterprises in key target sectors and all achieved in 2Q, illustrating momentum. The ALM business is proving slower than expected to benefit from the reorganisation of the sales force, with 1H bookings falling to $3.0m (1H14: $7.1m). Group gross margin improved with lower bookings (to 93%, from 79% in 1H14), complemented by cash-cost saving initiatives, which are expected to benefit 2H15: while we review revenue to acknowledge bookings volatility, adjusted EBIT losses ameliorate. Target reviewed to 375p (700p) as we look forward to bookings improvement in both product sets in order to regain upward share price momentum.
23 Sep 15
Vmoto*: Operational update (CORP) | WANdisco*: Looking for full ahead, both (CORP) | eg solutions*: Strong sales growth delivered at lower cost (CORP) | Chariot Oil & Gas*: FY 2015 interim results (CORP) | Gemfields*: New mine plan for Kagem (CORP) | Wolf Minerals: Hemerdon commissioning complete (BUY)
Big data expansion, stall in ALM
31 Jul 15
WANdisco’s eight big data customer wins in Q2 indicate that Fusion is broadening the appeal of its offering and facilitating customer deployment. ALM bookings stalled abruptly, although the company has seen a more recent recovery in new customer wins and with the sales force restructuring now complete, management expects a substantial recovery in H2. We reduce our FY15 bookings and revenues by 19% and 16% respectively to reflect the disruption to ALM in H1.
UK Tech Sector: Sleeping giant or hibernating bear?
21 Apr 15
Investors can be forgiven for getting excited about the global tech sector with the recent news from the NYSE that another company has gone flying out the tech IPO gates; this time it was internet domain behemoth, GoDaddy. The company raised $460 million as part of the IPO and with the shares rallying more than 30% on their first day, reached a valuation of around $6 billion. Considering the company lost $143 million last year it shows us the US tech boom is far from over.
Hybridan - Small Cap Wrap
17 Mar 15
ALBA Placing, BOOM AUPEO Deal, BEM Placing, CLIN Agreement, FIPP Development, GLIF Invests, MDZ* Contract Extension, MSG* Letter of Intent and Business Solutions to be used by GSP, NIPT Collaboration, OPTI* Contract Signed, PEG* Final Results, RCN Trading Update, SVR Contract Signed, SRT Acquisition, UKOG Acquisition, WAND Joins Open Data Platform