Blancco Technology Share Discussion Threads

[gorilla36] 14/3/2017 08:11

mmmm - Well that update went down well - NOT !!!

[nurdin] 13/3/2017 19:46

Price at ATH and not a whisper here! You guys are getting too blase...:o)

[nurdin] 12/3/2017 15:34

Thanks Cerrito.Interesting read

[koolio] 09/3/2017 11:07

Nice: Thanks for posting this article Riv.

[hannahh] 09/3/2017 10:59

If you would like to hear management present the half year results for Blancco we will be hosting a webinar on Thursday 16th March at 5.30pm. Patrick Clawson, Chief Executive Officer, and Keith Butcher, Chief Financial Officer, will give a presentation lasting approximately 30 mins and there will then be an opportunity for Q&A.

To join please register at: hxxps://attendee.gotowebinar.com/register/4499460347271578881

If you would like to submit any questions for management ahead of the meeting please send them to [e-mail]

Kind regards,
The Equity Development Team

[rivaldo] 07/3/2017 14:56

Nice summary of - and positive verdict on - BLTG from a couple of weeks ago on the respected Megabuyte site. It's free to view, unusually as their stuff normally costs lots! I'll copy it here in case it disappears...



"Blancco hits the ground running in 2016

We initiate coverage on AIM-listed data erasure specialist Blancco Technology Group, following a busy 18 months of moving away from the old Regenersis mobile phone repair business and towards being a complete data erasure and diagnostics provider. The period was rich with corporate activity, and fiscal 2016 results detail 49% growth in revenues to £22.4m (35% organic) and 62% growth in EBITDA to £6.9m. The future looks positive as Live Environment Erasure (now called Active Erasure) and the US drive growth, while in a conversation with CFO Keith Butcher, it was made clear that GDPR regulation also poses opportunities for the business here in Europe.

Blancco’s life began in Finland in 1997, with its first product, Blancco Data Cleaner, launched in 1999. The company continued to grow, selling primarily in Europe, until it was acquired by Regenersis, a UK-listed, 6,000-man mobile repair business, in April 2014 for €60m. Regenersis continued to operate its core business and Blancco, as well as acquiring active erasure specialist Safe IT in 2014, and Blancco’s US peer Tabernus in 2015. It then sold the original core repair business in February 2016 to CTDI Repair Services for €103.5m and rebranded as Blancco Technology Group. If that wasn’t enough M&A, Blancco then acquired Xcaliber Technologies, a mobile diagnostics specialist, in March 2016, and agreed to sell its Digital Care insurance business for €4.5m in September.

The business as it stands today is a data erasure specialist, bringing in core technology and expertise from its current components, the Blancco, Tabernus and Safe IT erasure solutions and Xcaliber mobile diagnostics. The data erasure arm, the largest segment by far, develops software solutions to help customers securely wipe data from a range of devices as part of the IT Asset Management lifecycle on a Cloud-based or on-premise basis. It also provides an “active erasure” solution that is built into a customer’s system, securely erasing files on an enterprise network, based on pre-configured business rules. The mobile diagnostics arm is still relatively nascent, but offers a does-what-it-says-on-the-tin range of products on an on-device or web portal basis.

Based on our conversation with Butcher, it seems as though Blancco is one of very few players in the data erasure market with a product of scale and, with the acquisition of Tabernus, has given itself geographic scale ahead of its competition. On the mobile diagnostics piece, though, Blancco is one of many players, including a number of vendors that have diagnostics as part of Enterprise Mobility Management suites. Blancco currently operates primarily on a direct sales strategy, with 275 people, of which 85 are in sales, working in 23 offices across the globe, two of which are development centres in Finland and India. It is also developing an indirect channel model and has a dedicated channel team working with resellers, distributors and other channel partners and sees this as the key to accelerated growth.

In the year ended June 2016, Blancco grew revenues by 49% to £22.4m, 35% organically, driven almost solely by Erasure revenues, which increased 45% to £21.7m, while Diagnostics contributed revenues of £0.7m (Xcaliber was only acquired in April 2016). Profit performance also improved, with adjusted EBITDA up 62% to £6.9m, expanding margins from 28.3% to 30.7%. This translated relatively well into cash generation, with operating cash flows more than doubling to £4.9m.

Despite operating on a cash-generative model, large exceptional items from the busy corporate activity schedule and a negative swing in working capital requirements restricted cash conversion to 71%. Operating cash flows were quickly consumed by £0.6m of tax payments, £2.5m of capex, £7.8m in acquisition costs and £3.1m of dividend payments, leaving Blancco with a net cash position down from £7.8m to £1.0m at the close of the year.

Drilling further into revenues, at a product level, Active Erasure (the former Safe IT business) revenues increased from £0.8m to £2.3m driven by two deals worth over $1m, while Mobile sales rose 42% to £3.7m, although the largest component of revenues is still “IT and other” standard erasure products, which grew 44% to £17.4m and benefit from demand for professional services and hardware products. Geographically, Blancco derives the majority of revenues from the US, which was also the primary driver of growth, up 146% to £9.6m, while Europe grew 8% to £8.1m and Asia and the Rest of the World rose 45% to £5.8m.

Now that the worst of the integration is over, Blancco’s main aim is to continue its strong growth trajectory, particularly in Active Erasure products, as well as expanding its presence in the US. Mobile Diagnostics is also of importance although, given the much higher competitive pressures in this area, this will require more time to gain traction. From a regulatory standpoint, GDPR factored into the conversation with Butcher, who sees opportunities for the business as whole, but also in selective and active erasure products. Blancco guided the market for £8m of adjusted operating profit (+31%) on £32m revenues (+43%) for 2017, split £28m:£4m between Erasure and Diagnostics.

Megabuyte view

Blancco seems like an interesting company that looks well positioned in a market with few players that have serious traction. It also has the geographic advantage, having acquired the most prominent player in the US, which will drive the majority of growth going forward. It is not an area we have covered in much detail in the past, but data erasure does have an almost universal reach across all verticals, with Blancco the dominant player. Mobile Diagnostics is less clear, given the large number of competitors in this area, but having already secured a sizeable contract in the US with a large-scale mobile operator, we look forward to seeing how Blancco differentiates itself in this particular market."

[rivaldo] 03/3/2017 10:14

BLTG this week published a report into the health of iPhones and Androids, noting that iPhones had much higher failure rates than Androids.

This independent review of the report sees BLTG coming out well:



"I came away from this report feeling that Blancco had done a pretty good job cataloging the kinds of problems that customers are having when they bring their smartphone in for some problem. And they did a good job comparing the problems across several generations of iPhone models. And against Android for a short period of time."

[nurdin] 02/3/2017 08:42

I guess BLTG must have reasoned from the outset that if they lose the case because there is no infringement, then ITRenews procedure could be declared unreliable,weakening their market position.A win would result in handsome payout both short term and the long term for them.. A win-win situation !

[tournesol] 02/3/2017 08:42

I agree with all of that but I'd still prefer a more gracious announcement.

Perhaps I'm just old fashioned.

[wjccghcc] 02/3/2017 08:23

I suspect it's more about how ITRenew were marketing their erasure product. Now it's clear they use compressible data whereas Blancco views that as more insecure than the uncompressible data method they use - which is what the patent was about.

[nurdin] 02/3/2017 08:19

I am sure it is not just an apology that ITRenew would want now !

[tournesol] 02/3/2017 08:13

Nurdin is correct. Blancco has accepted that its patents were not being infringed by ITRenew.

Shame they were not more gracious about acknowledging their mistake. Never does any harm to apologise when you get it wrong.

[penpont] 02/3/2017 08:07

Yes I shared your interpretation Nurdin though the jargon used makes it clear as mud.
Anyway, +ve share price reaction so as you say rivaldo probably just good to get it resolved.

[rivaldo] 02/3/2017 07:56

Re-reading it you may well be right nurdin - very difficult to judge for a thicko non-legal mind like mine at this time in the morning! The quote at the end makes it somewhat of a pyrrhic victory.....if that.

The good news I suppose is that at least it's out of the way now.

[nurdin] 02/3/2017 07:35

The other way round I think Riv. Blanccos claim of patent infringement was found to be not valid and hence they withdrew. Atleast that is my reading....and I could well be wrong !

[rivaldo] 02/3/2017 07:16

Good news - looks like ITRenew's litigation was completely spurious and has been dismissed:

[rivaldo] 20/2/2017 12:17

Indeed. And one would hope that BLTG might earn ahead of expectations given the global potential.

Stockdale Securities also had this to say last week whilst I was on hols:

"Blancco Technology Group 296p; Mkt cap: £172m

Blancco Technology is a software company focused on mobile device diagnostics and secure data erasure solutions.

The company hosted a Capital Markets Day on 9 February, which was well attended by both the buy and sell side. Positive highlights included:

(i) Blancco’s data erasure solutions, which accounted for 97% of FY 16 revenue (30 June YE), which we believe will continue to see strong demand driven by increased regulation and an increased awareness amongst corporates about end of life data permanent data erasure.

(ii) The high barriers of entry both with regards to the core IP of Blancco’s data erasure solutions, which have been developed over the course of over a decade, combined with 18 governmental agency standards that Blancco’s has managed to get certified for, including the United States Department of Defense, which is the platinum standard of data erasure.

(iii) The foray into indirect sales, which was launched in July 2016 to complement its existing sales channel, could be a game-changer for Blancco in the next 3-5 years. Tie-ups with large IT services’ businesses liked HP Enterprise and Wipro, along with Blancco coming pre-installed on devices by OEM’s like HP, Dell, EMC and Western Digital, could possibly dwarf revenue from the direct sales
channel.

Blancco’s IP rich data erasure software, with high barriers to entry, a large addressable market which will continue to grow due to regulation and increased number of devices, have led its share price to increase by almost 25% since the start of the year."

[nurdin] 20/2/2017 09:00

Thanks Riv,very interesting.So based on their estimates of revenues and profit margins, a rough estimate suggests BLTG are trading at around 14-15x estimated 2020 earnings.A multiple of 25x looks more reasonable which leaves a lot of room for the share price to grow to a target price of perhaps 516p.

Edit: In above I have taken their 25% margin to mean net profit margin which of course may not be true.The company is forecast to achieve 15% on that measure for the next two years.which would yield a different and much lower price target if maintained till 2020.

[rivaldo] 20/2/2017 08:27

Interesting article including this section on how BLTG is an early stage growth company:



"Blancco is, by some margin, the market leader in data erasure services. It is 7x the size of its nearest competitor according to Equity Development and has been around and growing nicely for some years. However, there are long-awaited regulatory changes now just around the corner that should be a boon for the sector.

The new EU data protection law is coming into effect in May 2018. Aside from the regulatory tailwind, the data erasure market is a growing and Blancco has grown revenues 50% pa over the last two years.

To get comfortable with whether or not the shares offer an attractive opportunity, you need to build an impression of how big the market could get, and over what timescale. You will need to gauge competitive threats and barriers to entry to ascertain how wide Blancco’s moat is. Finally, this should allow you to build a picture of Blancco’s future earnings and therefore value.

Based on the latest Trading Update and broker forecasts, 2016 revenues look like they will come in around £23m, 50% up on 2015. Brokers brave enough to forecast to 2020 are estimating growth to take revenues to over £50m which considering current organic growth and regulatory tailwinds doesn’t seem too far-fetched. Applying a 25% margin to this, and a reasonable multiple can easily get you to an attractive premium over the current market cap.

These assumptions may well prove hopelessly wrong, to the good or bad, so that’s why you then need to build in a safety buffer. Whatever your view of the company, it, and the industry it leads, faces a fascinating 24 months."

[nurdin] 12/2/2017 16:18

hi tour..you could be right judging by the email I got from Pat Clawson. The relevant bit says

"I needed to liquidate a small portion of my equity appreciation for very personal reasons, but I thought it was equally important to purchase some shares as well as a sign of commitment."

Note that he says 'equity appreciation' which supports what you say.They must be using some formula to decide how that equity appreciation translates in to number of shares.

By the way I did not write to him directly and was somewhat surprised to get a response from him...... on a Sunday!

[nurdin] 12/2/2017 13:29

Wow...just finished listening to the presentation...very impressive indeed! What caught my ear was the statement that Dell (and one other Company whose name I missed) are proposing to embed Blancco erasure software in their every device ! That could be massive.Expect to see a Blancco button on every Dell laptop! :o)

Very impressed with Patrick Clawson, as I was with the rest of the team.

More the puzzle then that Clawson decided to sell quite a fair chunk of his share holding as per Fridays announcement.He must have some serious finanacial issues to deal with !

[mfhmfh] 12/2/2017 07:58

Thanks for the link to the presentation. Sounds very bullish to me. Size of the market we operate in is huge. Sp has a long way to go IMHO.