Wandisco Share Discussion Threads

[jackdaw4243] 25/9/2018 17:57

Looking at the accounts lodged at companies house they have just moved their registered office to Jersey as have Apple but that seems to be the only thing they have in common. Why did Paul Walker walk.

[knighttokingprawn] 25/9/2018 17:05

It all feels ugly .. but again a low volume day ... 42 million share in issue remember.. so importantly the big stock holders ( today ) at least see nothing new in these numbers ... I am not sure we can make much of this event one way or the other .. other than they are still banging the table on their full year..

There is no doubt that the stock was driven by momentum and the momentum is gone .. but in theory the channel strategy is still moving ahead and one has toanssume if they are comfortable on the full year they must think they have a high probability of converting the pipeline .. I am focussed on bookings .. I know there are are those that are looking for profits .. but ifbtbis isn’t a growth stock then it is overvalued .. and managing the business for profit at this stage in their life cycle would be a bear signal not a bull signal..

So it’s all on DR ,

I hope he is sitting down with the Swedes and giving them reasons to stay in / Average down ...,


;-)

[tickboo] 25/9/2018 14:46

Fair enough and good call. Yeah there's always a few who like to gloat, not pretty! They'll need a storming H2 then although I know a fair number of deals get done before calendar year end. Hope it's the same and IBM get some of those massive ones again.

[nimbo1] 25/9/2018 14:42

I actually sold those 5000 yesterday as recently it hasn't often paid to wait for news and I had a change of heart. Didn't mention it until you did because no one likes the lucky escapes other than the beneficiary. If market really vomits there might be some interesting opportunities ahead here. It's now firmly on my watch list a wait for a bit.

[tickboo] 25/9/2018 14:38

I feel for the Swedish co's fund manager who's call it was to invest. Not looking too good now although I'm sure that will change and hopefully by the end of Jan when the next trading update is. Could have contract news with Alibaba and some more elephants with IBM though.

[tickboo] 25/9/2018 14:35

I saw a 5,000 sell this morning and thought it might be you?!

[nimbo1] 25/9/2018 14:33

looks like the americans woke up and thought yuk

[cp245] 25/9/2018 13:47

Most of the news today was already 'baked in' lets see how the weekly closes.

[tickboo] 25/9/2018 10:50

I hope not as my average is 4.85 or so. I can sell a fair number for a fixed price but buying for one is trickier so perhaps we saw the bottom earlier. Hopefully IBM will get some chunky deals as they've done in the past couple of years in Q4 and Alibaba and Microsoft close many deals. DR needs to deliver and as mentioned it seems the large holders are staying put, for the time being anyway.

[melton john] 25/9/2018 10:39

Certainly seeing DCB here. £4?

[melton john] 25/9/2018 10:38

Exactly ralphmalph. Nutshell got it in.

[tickboo] 25/9/2018 10:34

Cash overheads increased in the period as we made investments in Channel Management and Engineering. This was a little over $3m which is a fair whack. Hopefully the initial investment will yield results in H2. With the closer integration with IBM it required time and money from wand which is why the royalty increased.

[ralphmalph] 25/9/2018 10:21

The question is that the expenses increased by 5mill and the headcount stayed basically constant. What did they spend the money on?

[jackdaw4243] 25/9/2018 10:04

Not much you can add to the hype other than the basics are "you cannot continue to spend over $10 million achieving sales of $6 million for very long"

[tickboo] 25/9/2018 10:04

Agreed and even Amazon's valuation is crazy given profitability or lack of. Not as good as an example as Tesla though.Next update end of Jan so 4 months. Hopefully IBM close some big deals Q4 which is what they've tended to do. Edison Strong strategic progress set to yield an inflectionWANdisco has taken three significant strategic steps in H1, which we expect to start to bear fruit in H2. In Alibaba Cloud and Microsoft, it has signed OEM and strategic co-sell agreements with two of the largest and fastest growing cloud service providers globally. The company's recently expanded OEM collaboration with IBM to include relational database technology MySQL could significantly expand its addressable market, while the negotiation of royalties of sales through IBM to 50% from 30% should clearly be beneficial.Cloud: Structural growth trends showing no signs of slowingThe market opportunity in cloud is significant. The migration of enterprise data to the cloud is the largest structural shift taking place in the enterprise technology market today. Calendar Q2 results from Amazon and Microsoft confirm the leading players are pulling off the rare achievement of sustaining or accelerating the growth of their cloud businesses even while these businesses get substantially larger.Exhibit 1: Growth rates and market share of leading cloud-platform-as-a-service providersFusion's most obvious cloud application is in enabling enterprises to move large volumes of data from on-premise environments to the cloud. It has been integrated into Amazon's snowball product for this purpose. However, the vast majority of enterprises cannot simply move all their data to the cloud, nor can they rely on one single cloud provider for all their needs. Most are adopting hybrid environments through a mix of on-premises, private cloud and third-party, public cloud services with orchestration between the different platforms. Fusion plays strongly into the hybrid and multi-cloud market by facilitating the movement of workloads between private and public clouds as computing needs and costs change, giving businesses greater flexibility and more data deployment options.Microsoft getting into gearMicrosoft's hybrid cloud capability and focus has been a key factor in its success, due to its ability to cross-sell into its existing customer base. In a recent interview, Judson Althoff, Microsoft's executive vice president of worldwide commercial business, stated that 'about 85% of our enterprise customers are already using one or more of our cloud services'.This market presence, growth and focus on hybrid cloud potentially makes Microsoft a very powerful partner for WANdisco. In March this year, the companies announced their co-sell agreement (which is essentially the same as an OEM other than that Fusion will be branded WANdisco rather than Microsoft). Through this agreement, Fusion will be taken to market by Microsoft as a packaged offering and Microsoft's channels are incentivised to sell the product. Starting late in the period, the partnership yielded three deals in H1: with a major bank to enable hybrid cloud; with a semiconductor company; and with a major retailer that has used Fusion to support a migration from Amazon AWS to Microsoft. A fourth deal, with an Automotive manufacturer was announced with the results. The breadth of vertical markets and use cases demonstrates the broad applicability of Fusion.Driving shift to recurring revenuesWe expect the frequency of deal flow through Microsoft to accelerate in H2. It is important to highlight that unlike IBM, sales via Microsoft and other cloud partners generate recurring subscription revenues, enhancing revenue visibility and requiring little integration, which benefits scalability.Deployments also have the potential to scale significantly.Initial deal sizes through Microsoft are in the low hundreds of thousands of dollars, although management believes all of these deployments have the potential to scale significantly as Fusion is used more extensively throughout the organisations. Management indicates that it sees opportunities to grow the annualised recurring revenue within large global businesses to as much as $5-10m within three to five years as the deployment of Fusion expands to cover more of the company's data footprint.For example, the automotive manufacturer contract win announced with the results has an initial contract has an ARR of $200k to deploy Fusion for the live replication of data between on-premise Hadoop clusters and Microsoft Azure. This initial contract covers only 3% of the client's data, and the customer has identified 20+ projects which would require Fusion technology. As such, WANdisco management expect this contract to turn into a recurring, annualised multi-million dollar contract.IBM: Expanded scope and better termsThe extension of WANdisco's OEM agreement to integrate with IBM BiGSQL extends this partnership to cover another of IBM's key big data products. BigSQL is a hybrid SQL relational database technology designed to run on the Hadoop big data platform to enable querying and analysis of large amounts of data from different sources.Partly to cover the joint engineering work required to achieve this, WANdisco has renegotiated its royalty rate from this agreement. It will now receive a 50% royalty on IBM's Fusion sales, up from 30% previously, and a guaranteed annual royalty commitment highlighting the strategic importance of this partnership to IBM and the strength of WANdisco's IP.WANdisco's deals through IBM have been large (two $4m+ deals so far) and the timing unpredictable, with no large deals in H1 this year. The guaranteed royalty commitment will at least give visibility on a certain level of sales through this channel and it is possible the broader integration will support more frequent deal flow. Timing is likely to remain unpredictable although we highlight that calendar Q4 is typically IBM's strongest for closing deals.Other partnershipsThe technical integration with Alibaba, with which WANdisco signed an OEM agreement in March, was completed in early H2, with the first deals expected to come through before the end of the year. The partnership with Oracle remains active with a healthy pipeline while we have no update on the collaborations with Amazon AWS or Dell/Virtustream, so we believe it is unlikely they will contribute significantly during FY19.BlockchainWANdisco formalised its entry into the blockchain arena with the announcement of a patent filing in August. The aim is to leverage its core replication technology to significantly improve the scalability and performance of private (permissioned) blockchain networks. To retain integrity, permissioned block chain implementations require each block to reach consensus with all the other blocks in the chain. This requires significant computing resources and significantly slows down performance, which is an obstacle to deployment in large-scale, high-throughput applications.Through applying DConE's replication technology, the overheads required to achieve consensus are significantly reduced. The alleviation of these capacity/performance constraints has the potential to enable the uptake of blockchain applications for uses ranging from financial services to supply chain management.Partnerships with major blockchain developers the key next stepAlthough it is still early stages and it is difficult to quantify the opportunity, we understand the blockchain technology is substantially built. The company is now engaging with the key blockchain technology developers and the first commercial engagements are expected over the next 12 months. We highlight that many of WANdisco's major partners (eg IBM, Microsoft, Oracle) are among the most active and serious protagonists within in the blockchain arena.ALMRevenues at the non-core ALM business continued to drift, with bookings of $2.8m (vs $3.2m in FY17) and revenues of $3.3m (H117 $4.6m). This operation is essentially run as a cash cow. It uses an annual subscription revenue model and is mainly a renewal business, with good renewal rates. Consequently, we continue to forecast a continued drift over our forecast period.ForecastsWANdisco has been making strong strategic progress over a number of years. In H2 we believe this will start converting into a sustained inflection in operationally geared growth.The Microsoft partnership yielded four deals late in H1, with average deal sizes of c $100-200,000. Whilst we expect the contract sizes to remain broadly similar in H2, we anticipate that the number of deals will increase. We also expect the value of each individual contract should show uplift over time, with the possibility of each becoming multi-million dollar recurring revenue contracts. In theory, the expanded deal with IBM should support more frequent and larger deal flow. Judging by last year's figures, we would expect IBM deal flow to be heavily Q4 weighted again which should help underpin the forecast sequential booking growth of 139%. The Alibaba technical integration was completed in early H2 and should add incremental bookings. We also expect that Oracle may soon start to provide deal flow.Our estimates are essentially unchanged. Our FY18 bookings forecast of $30.5m implies a very significant uplift in H2 ($21.5m bookings in H2 vs $9m in H1). Achieving this will require the company to close some large scale deals, but we understand that there is sufficient depth of pipeline to deliver upside to this figure, though we also note the possibility of downside risk due to contract slippage.Given the shift to recurring subscriptions, our FY19 estimates of 30% bookings growth will start to look conservative once we have better visibility the H2 inflection is taking place.The implementation of IFRS 15 will reduce the lag between bookings and revenue as the licensing element (80%) of annual subscriptions is now recognised on signing the contract (previously it was drawn down over the term). We will adjust our estimates to reflect this once we have more visibility on the mix of bookings revenue in H2.Costs are tracking to plan, with total cash costs (COGS, OPEX and capitalised R&D) of $15m, up by $1m on H2 last year and on track for our c $30m estimate.Net cash at end June 2018 was $13m, down from $23.1m at end FY17, but the forecast strong bookings performance in H2 should support positive cash generation. However, the year-end balance depends on the timing of closing deals and collecting cash.

[knighttokingprawn] 25/9/2018 09:55

Tesla $60bn valuation ? Is that justified ?

Just asking ...

The only thing that matters here is that wand commentary about full year expectations.. the pipeline is strong but the risk is conversion...

Numbers today are not the issue we had those last month ... it’s important that he carries his major shareholders to the 2nd half .. the full year is where the rubber hits the road .. it will be either £10 or a zero past that .. for now the major shareholders appear to be holding .. the fluff we are seeing is momentum money no size no conviction .. we should flush out here and not do much until we hear again in 6 months ...

[tickboo] 25/9/2018 09:49

Agreed. Worth reading the Edison note in its entirety but re the valuation -WANdisco's rating stands at 14x FY18e EV/sales, dropping to 11x for FY19e. This is a premium to peers (a diverse range from c 2x to 11x), although the recent share price fall has narrowed the premium substantially. WANdisco's investment case has always been predicated on the potential for it to scale into a significantly larger, highly profitable business. We believe that progress in H2 should provide a watershed moment for these credentials.Our DCF suggests the current share price requires sustained bookings growth of c 30% (ie a similar rate to FY18 and FY19) through 2025 with EBITDAC margins growing to over 25%. In practice, we believe that if WANdisco continues to strengthen its platform of tier one channel partners, it should be well placed to grow faster than this. Most of the company's partners are growing their cloud revenues at significantly faster rates. With a broad addressable market, a strong IP position and an indirect sales model, healthy 30%+ margins should be readily achievable if execution remains good, although we expect the emphasis to remain on growth over margins in the near to medium term. The company's potential strategic attractiveness should also not be ignored.

[tickboo] 25/9/2018 09:29

Edison (paid for research) note Strategic progress set to bear fruit in H2Strategic progress so far in FY18 includes agreements with Microsoft and Alibaba and an expanded collaboration with IBM to include BigSQL relational database technology, with royalty rates expanded from 30% to 50%. The Microsoft partnership yielded has four deals year to date YTD starting late in H1 and the pace should gather from here. Average deal size was in the low $100s of thousands but scale up potential of each is said to be good – for example the $200k Automotive contract win announced today covers less than 3% of the client data and the customer has identified over 20 projects where it can use Fusion. The expanded deal with IBM should support more frequent and larger deal flow with Q4 their peak quarter for closing business. The Alibaba technical integration was completed in early H2 and should add incremental bookings/revenues this year.Inflection in recurring subscription revenues in H2The H1 drop in bookings to $9m (vs $10.2m in H117) was as flagged at the trading update and not unexpected expected, given that H117 included a $4.1m IBM deal that did not repeat. Net cash stood at $13m, down from $23.1m at end FY17, but the forecast strong bookings in H2 should support positive cash generation in H2. Our forecasts demand bookings of $21.5m in H2, up 75% y-o-y, but with the company reporting a very strong pipeline we are leaving our estimates essentially unchanged. We also highlight that as cloud deals through Microsoft and Alibaba are based on an annual subscription model (versus perpetual licensing through IBM), a high proportion of revenues through these channels will reoccur and show uplift over time, supporting future growth.Valuation: H2 inflection an upside catalystWANdisco's shares have lost 45% of their value since the start of September, but we believe that achieving the required inflection in H2 could be a watershed for the perception of this business's growth fundamentals. Our reverse DCF suggests the company needs to sustain growth of c 30%+ and achieve EBITDA margins of 25%+ to deliver upside. WANdisco's cloud partners are growing revenues at substantially higher levels than this from much higher bases, while successful delivery of the company's IP based, indirect model should support these higher margins.

[owenski] 25/9/2018 09:10

250m M.cap not currently justified.

[vanadiumx] 25/9/2018 09:03

Well I'm not disappointed with these results as this was already known. Looking forward I want to see more announcements like today's automotive deal donee get more running commentary on progress. Eg want an announcement when first Alibaba client goes live. WAND need to break out of their bubble and up the PR ante.

[tickboo] 25/9/2018 08:26

DR or the CFO need to explain where the increase in spend has gone. They said they needed to spend more to accelerate growth and exploit the opportunities so last chance saloon for H2 to deliver. Sure he'll get some tricky questions after the presentation today.

[jackdaw4243] 25/9/2018 08:23

How can cash consumption be caused by lower sales revenue, cash consumption is caused by spending more than you are earning. Who are these guys that write this.

[hamidahamida] 25/9/2018 08:11

Interested at 2 pounds

[losses] 25/9/2018 08:11

Glad I resisted buying these.. might be interested around 300-400 if they get there