WANdisco’s FY20 trading statement highlights the significant strategic progress made during the year and confirms its expectations for FY21 (revenues of at least $35m). Revenues for FY20 are expected to be at least $10.5m, which is below our $13.0m forecast, but momentum in Q4 is described as encouraging. We estimate Q4 revenues were c $5.0m, implying a significant acceleration in the 9M20 run rate. WANdisco also signed 11 customers (predominantly in Q4) including eight on Azure and three on AWS and has migrated 3PB of data into the Azure cloud so far.
Companies: WANdisco Plc
WANdisco has announced that its LiveData Migrator product will be integrated into IBM’s Big Replicate. This extends its existing relationship with IBM, and IBM’s decision to integrate LiveData Migrator follows similar moves by both Amazon AWS and Microsoft Azure recently. Those moves have seen commercial activity accelerate in the past few months, with more expected in 2021. No comment on the potential commercial impact of this announcement is provided, but we continue to view the current momentum (see $3m LiveData Migrator contract) as very encouraging.
WANdisco has announced a $3m initial contract with a major US telecoms company to migrate a 13PB on-premise Hadoop cluster to the Microsoft Azure cloud using its LiveData Migrator. Most of this will be recognised in 2020 but it also has an opportunity to migrate a further 30PB of data stored by the company in the coming years. We make no change to forecasts, as we believe WANdisco still needs to sign further deals to reach our FY20 estimate, but see the current acceleration in commercial activity as very encouraging.
Microsoft has begun marketing LiveData as its ‘preferred solution’ to migrate Hadoop data into the cloud. The announcement represents a culmination of years of development work from WANdisco and finally proves beyond doubt the capabilities of its technology. As highlighted previously, we expect this launch to drive a significant uptick in financial performance. The exact timing and pace of this uplift is uncertain, but the company has reaffirmed the guidance given to the market at its interims.
WANdisco has announced that its LiveData platform has achieved public preview availability for Microsoft Azure. While both the announcement and the timing were widely trailed at the recent interim results, this is still welcome news. Entering public preview enables ‘metered billing’, effectively allowing Azure customers already trialling LiveData to pay for it as part of their existing Azure service. The company expects this to accelerate customer adoption and drive a sharp uplift in revenues in Q4. The exact timing and pace of this uplift is uncertain, but the announcement confirms that it is on track operationally.
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.
WANdisco has raised $25m (gross) through a placing of 3.1m shares at 650p. The proceeds will cover the investment needed to embed LiveData with other cloud vendors while sales from Microsoft Azure build. The accompanying publication of FY19 results enables us to update forecasts. COVID-19 related delays to the Azure revenue ramp lead us to lower FY20 revenues from $28m to $20m; EBITDA losses widen from $5m to $11m. As our recent update note highlighted, WANdisco still expects to sign more than 50 new customers on this platform over the next 12 months. We will introduce FY21 forecasts as visibility on the growth trajectory emerges.
Launch of public preview confirms WANdisco’s LiveData platform has been successfully integrated at Microsoft Azure and that commercial services can begin. As highlighted previously, we believe this will be a significant financial catalyst. No estimate of the expected revenue contribution is given but the company is aiming to sign 50 new customers over the next 12 months. Our conservative scenario analysis suggests this relationship alone could generate over $80m in annual revenues by 2023.
WANdisco recently confirmed that its Fusion product is on track for full availability with Microsoft ‘in the next few weeks’. In this audio clip CEO David Richards describes the commercial implications of this and how the business is navigating the challenges of COVID-19.
WANdisco’s proprietary replication technology enables its customers to solve critical data management challenges created by the shift to cloud computing. It has established partner relationships with leading players in the cloud ecosystem including Amazon and Microsoft.
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).
Sales of $10m in H219 fell short of the $18m implied by FY19 guidance. WANdisco will now implement large Microsoft co-sell deals via its new integrated platform; these deals are still in the pipeline and it is confident they will be closed in H120. The lower H2 run rate leads us to cut FY20 sales to $28m. However, the commercialisation of the Microsoft platform is on track and should drive a sharp acceleration in growth through the year.
WANdisco has raised $16.5m by issuing 3m shares at 425p, a 23% premium to Friday's 350p closing price. The issue was supported by existing tech-focused investors including Davis, Global Frontier, Ross Creek and Acacia from the US and Herald from the UK. The company has reaffirmed FY19 revenue guidance of $24m, implying $18m in H2. We see this as a positive indicator that the inflection in financial performance we anticipated in our report On the cusp? is on track.
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Sumo is trading strongly, with several drivers that could lead the company to outperform 2021 earnings expectations, in our view. Even based on conservative earnings expectations, we believe shares offer attractive value to growth.
Companies: Sumo Group Plc
IQE has announced it expects FY20 revenues to be c £178m. This is ahead of our estimates, which we revised upwards in November, reflecting outperformance in both the wireless and photonics segments. We have updated our FY20 forecasts. Given IQE’s leveraged business model, this results in a 64% uplift in EPS. Noting the uncertainty about the effect of a pandemic-related recession on the rate of smartphone sales growth, we leave our FY21 estimates unchanged for the time being.
Companies: IQE plc
As a nation, we love knocking ourselves. However in truth, we’re actually a pretty pioneering bunch. For instance, the experts at Oxford University & AstraZeneca have developed one of the world’s 3 most important vaccines in double quick time. Plus, many other British firms are creating similar breakthrough Covid inventions, such as Kromek.
Companies: Kromek Group Plc
Synairgen (SNG.L): Completion of recruitment for at home trial | Sensyne Health (SENS.L): Research agreement with The Royal Wolverhampton NHS Trust
Companies: Synairgen plc (SNG:LON)Sensyne Health Plc (SENS:LON)
Sopheon’s trading update for the end of 2020 shows that the historical weighting to Q4 for revenues again produced a strong end to the year, ahead of Q4 2019. Revenue is expected to total around $30.0m with Adjusted EBITDA of c. $5.6m. We reintroduce estimates for FY 2020E which reflect those numbers. The proportion of recurring revenue increased again during FY 2020E. That mix shift within strong sales bookings growth of 23% during the year means that much of the associated revenue will be recognised future years. With ongoing sales traction, we continue to see Sopheon as well-positioned with highly appropriate solutions which meet the needs of businesses to innovate and digitalise at a faster pace. Sopheon is proving itself highly capable of selling despite the Covid-19 challenges, and we believe the group’s products will become more relevant and more in demand precisely because of the race to digitalisation that Covid has so clearly accelerated.
Companies: Sopheon plc
MySale has delivered a striking turnaround in profitability with H1 FY21 EBITDA of A$2.5m up an impressive A$6.1m YOY. We believe this marked turnaround validates its AZN First strategy and signals the Group now has a robust and cash generative operating platform on which it can scale.
Companies: MySale Group plc
The Panoply has reported a very positive trading update for the Q3 to December and indicates that full year results for the year to March will be significantly ahead of expectations. The group won £15m of new contracts in Q3, including the significant assignment from the Planning Inspectorate announced at the November interims. This further demonstrates the successful development of the group, notably its expansion into healthcare and establishment of FutureGov and Foundry4 as full-service brands. In November we raised our FY21 Revenue and PBT forecasts by +5%/+10% to £44.5m/£4.9m and we further raise by +8% to £48.0m/£5.3m this morning. We choose to leave our FY22 estimates unchanged at this stage, but clearly the group has very strong momentum and we see clear scope to raise our forecasts as we progress through the year. We continue to view The Panoply as ideally placed to benefit from the structural tailwinds in digital transformation and, underpinned by our increased forecasts, raise our target price to 235p (was 220p).
Companies: Panoply Holdings Plc
ZOO’s trading update in advance of its March year-end suggests that visibility continues to improve, and major new client projects have continued to deliver. A combination of a material back-catalogue focus across the industry, a growing acceptance of cloud-based dubbing, and a very modest return to new content production have combined to produce a robust outcome for FY21E, and we upgrade estimates. Just as importantly, the outlook for FY22 and beyond continues to improve, giving management confidence to invest in expanding ZOO’s dubbing service into new markets.
Companies: ZOO Digital Group plc
GB Group (GBG) has sold its marketing services business to HH Global Group for an undisclosed amount. This was not an area of focus for GBG and has been in managed decline for several years. Just before Christmas, GBG boosted its Fraud business with the acquisition of fraud investigation automation software from HooYu for £4m in equity. We have revised our forecasts to reflect the disposal and acquisition, leading to small upgrades to our EPS forecasts. Both deals emphasise the company’s strategy to focus on Identity, Location and Fraud.
Companies: GB Group PLC
FY20E order intake growth of 61% means Corero's revenue for last year of $16.8m will exceed our prior forecast. The trading update confirms c73% annual growth in revenues and further expansion of the annualised recurring revenue base. This performance highlights the increasing prioritisation of protecting networks against cyber and DDoS attacks. Buy.
Companies: Corero Network Security plc
EMIS saw trading gradually improve through H220 to finish the year slightly ahead of expectations. The company continued to support customers in dealing with the pandemic, with the recently acquired Pinnacle Systems’ software now being used in the nationwide vaccination programme. Progress was also made in product development with the launch of the first EMIS-X analytics product. We maintain our forecasts.
Companies: EMIS Group plc
Strong Q4 performance from Audioboom plc, the leading global podcast company, as it continues to outpace the global podcasting market. Audioboom bounced back from the Q2 CV-19 lull in Q3 and growth accelerated in the final quarter. Q4 revenue of c. $8.5m was a record, up 25% on the same period last year and the previous record, and FY20 revenue of c. $26.8m (+20%) was comfortably ahead of forecast (ACLe: $25.5m). There were also record KPI performances (brand count, eCPM and available ad inventory). Coupled with continued cost control, adj. EBITDA loss fell to c. $0.2m in Q4 and c. $1.8m for FY20 (FY19: $2.9m, ACLe: $1.9m). The company has good access to capital ($6.6m at year end) and management expects to achieve a maiden positive adj. EBITDA for FY21. We introduce FY21 forecasts and set a fair value of 420p/share, equivalent to an FY20 EV/Revenue of 3.3x and 2.5x FY21. Although a premium to the current price, this still represents a significant discount to recent industry transaction multiples.
Companies: Audioboom Group PLC
Sage Group released a good set of Q1 20/21 figures with organic recurring revenue growth of 4.7% in line with the full-year guidance (+3-5%). This performance was spread out across various cloud native software and essentially driven by the gain of new customers. Lastly, no deterioration in the churn rate is reassuring considering the continuing tough market conditions. All in all, Sage Group confirmed FY2020/21 guidance.
Companies: Sage Group plc
ZOO’s H1 FY21 included a tumultuous few months as COVID-19 effectively shut off work on new media content production which impacted subtitling projects, but studios rapidly adopted Cloud-based dubbing and the group’s digital packaging business enjoyed a dramatic rebound in fortunes. We note the positive commentary in today’s RNS and upgrade our FY21E and FY22E estimates to reflect the recent performance and, in particular, the exceptionally strong H2 trading that the group is enjoying.
The Panoply’s update on trading for the three months ending 31 December 2020 confirms the group has enjoyed a successful third quarter and continues the trend of positive news flow from the group. Against the backdrop of COVID-19 driven macro-economic challenges, The Panoply has reported an acceleration of new business wins. In our view this further validates both the Panoply’s innovative business model and with operations now focussed on two full-stack brands, demonstrates the strategic value of the acquisitions made to date. Management has increased guidance on FY 21E performance, and we take the company’s cue and revise our revenue and adjusted EBITDA forecasts upwards by 8% and 10% respectively.