Server replication specialist WANdisco (WAND:AIM) remains a rising star of the UK technology space yet faces stiff challenges ahead, judging by its latest full-year results. The figures appear impressive. Headline revenue is up 33% to $8 million while bookings (future revenues) jumped 86% to $14.8 million. Interestingly, deferred revenue more than doubled to a forecast-busting $13.1 million, far outstripping the $8 million estimate of house broker Panmure Gordon.


Much of the talk over the past year has been around big data, where WANdisco has unique tools and technology capable of making sense of the vast volumes of data we're creating, and keeping it 'always-on' and available to clients.


The company flags IT researcher Wikibon's estimate of a big data market worth $16 billion last year, and set to hit $50 billion by 2016. Yet critics might reasonably wonder why WANdisco's big data revenues remain so modest, just $200,000 last year, the rest coming from its long tail application lifecycle management (ALM) side.

WANDISCO - Comparison Line Chart (Rebased to first)

One reason is that substantial market infrastructure groundwork has needed to be done over the past year to meet the needs of current and future customers. As with most future IT projects, this tends to be a costly yet unavoidable part of new market development.


Operational progress has included distribution partnerships with key Hadoop (the technology platform on which big data runs) suppliers, including Cloudera and Hortonworks. Several early wins in the big data space included a major telecoms supplier while post year end it has won two more including British Gas announced today, most likely to help manage a growing smart metering network.


New staff have needed to be recruited. A rise in the headcount from 90 to 147 means underlying operating costs have more than doubled to $23.4 million.


Ongoing hefty research and development adds to the cashflow strain, where the company burned through $19 million last year or, as IT consultancy Megabuyte's Ian Spence pits it, 'WANdisco is burning through £2 of cash for every £1 of revenue.' Net cash stands at $25.7 million after last year's $30.2 million fund raising.


WANdisco, which has seen its share price rise roughly six-fold since joining Aim back in June 2012 at 180p, is valued at circa £300 million based on today's 1.5% rise to £12.925. That means that there is already enormous big data expectation laced into the valuation. Balancing the new business opportunities with better costs and cashflow management remains WANdisco's big challenge.

Issue Date: 20 Mar 2014