WANdisco’s brief update states that momentum in the business since the trading update (4 February) has been ‘very encouraging’. The company has secured a $1m contract with a large media and telecoms company and (more significantly) confirms that its Fusion product is on track for full availability with Microsoft ‘in the next few weeks’. As previously highlighted (see our last update note), we believe this will be a catalyst for a sharp acceleration in growth. CEO David Richards describes this impact in detail here and further details will be provided at the results (21 April) and a capital markets day (date to be confirmed).
Achieving full public availability of Fusion with Microsoft in the next few weeks means this product becomes revenue generating and the timescale is in line with the schedule set out in February (general availability in Q2). In the current disrupted market, we believe this represents both a big technical and strategic achievement.
In addition, demand remains healthy. Despite the impact of COVID-19, WANdisco indicates that companies are continuing to implement business continuity measures and move data to the cloud. Aside from the $1m deal announced today, it sees additional near-term opportunities with both this customer and Microsoft.
We continue to believe that achieving full public availability with Microsoft could prove a significant financial catalyst. While predicting the precise sales trajectory at this point is difficult, we would expect Microsoft-driven deals to make a large contribution to total estimated FY20 revenues ($28m). Our forecasts are unchanged as they factor in our estimate of this growth already. We see the addition of this scalable, recurring revenue stream enhancing visibility and accelerating the path towards profitability and cash generation. The company had $23.3m of gross cash ($18.3m net) at the end of 2019.