AIM-quoted WANdisco (WAND:AIM) has struck a new debt deal, which to us looks like another positive step towards a more reliable, grown-up business plan.
WANdisco is the Sheffield and Silicon Valley-based technology firm which has developed a clever way of instantly replicating digital content across many computer servers. That’s regardless of where in the world the data is stored.
Its process means IT projects can be worked on simultaneously from anywhere (helping organisations lower development costs). It also provides instant back-up if servers go down.
That last bit is particularly useful for big, high volume online transaction operators, such as supermarkets, which stand to lose millions if their internet sales platforms go down.
The new agreement is with facility with Silicon Valley Bank and is made up of a $5m term debt facility plus an additional $3m in revolving credit. This replaces its old borrowing facility with HSBC, which was due to expire at the end of June 2017.
Net cash at the end of 2016 was $7.2m. ‘We suspect (the new debt facility) is primarily a working capital buffer as the company moves towards cash generation,’ says Indraneel Arampatta, an analyst at IT consultant Megabuyte.
Positive sign of the times
‘The announcement is interesting as WANdisco has recently shifted strategy towards profitability and cash generation, evidenced by a significant reduction in operating cash outflows during 2016 and generating a cash breakeven first quarter of 2017,’ adds Arampatta.
One of the chief reasons behind this ongoing operational and financial improvement is WANdisco’s growing partner network with several impressive big names reselling its technology including IBM, Oracle and Amazon Web Service.
Even more importantly, we have seen new business flow through as a result.
No more cash calls?
The company last had to tap investors for more money a year ago (10 June 2016) when it raised $15m at 160p per share.
The stock now trades at 575p, a significantly higher figure that illustrates just how much progress WANdisco has made in the past 12 months.