WANdisco a 'buy' after narrowing full year loss

WANdisco’s ‘buy’ rating and target price at 245p were left unchanged by Investec after the software developer reported a narrower loss in 2015.

Losses before interest, tax, depreciation and amortisation (EBTIDA) were narrowed to $16m from $17.9m

Revenues were down very slightly to $11m from $11.2m, with a loss before tax trimmed to $31m from $39.4m.

The AIM-listed group’s cash burn of $34.6m saw the $26m cash call in January last year dwindle to a year-end bank balance of $2.6m.

Since then, though the company said it has slashed annual run-rate costs as of this month to roughly $25m, it revealed it has made the first drawings on its $10m revolving bank facility in recent weeks.

The company continued to strike a confident tone, having more than doubled its customer base from 10 to 26 and enjoying improved sales bookings in its application lifecycle management (ALM) business towards the end of the year.

“Full year revenue, EBITDA loss and net cash are all in line versus our estimates revised at the trading update stage,” said Investec analyst Roger Phillips.

“The incremental news in the statement is positive, in that run-rate costs have been reduced to around $25m as at the end of March. For full year 2016 estimates, we leave revenue unchanged, but upgrade EBITDA loss (now $10m loss versus $13.6m before). Net debt improves to $8.1m ($9.0m), with the group’s $10m debt facility being utilised as of the first quarter 2016.”

Investec sees the company’s public cloud migration as potentially a major driver.

The group is now layering hyperscale public cloud providers such as Amazon Web Services, IBM, Microsoft and Google.

WANdisco’s Fusion product speeds up and protects transactional data replication during and after cloud migrations, Investec said.

Shares plunged 17.81% to 115.06p at 1027 GMT.