WanDisco steps up its bookings

WanDisco (WAND) brings data from the 'edge' to the 'cloud'. This means helping customers centralise the data generate across their organisations in real time. For a manufacturing plant, this could be tracking the age and wear on its machinery. When this data is transferred to the cloud it can then be used to generate insight into when this machinery might fail ahead of time.

The rise of 5G and the Internet of Things should have been a tailwind. More data being generated on the periphery of organisations means more demand for WanDisco’s services, but the past few years' progress has been slow.

However, things seem to be changing. Record bookings of $27.3mn (£23.5mn) in the six months to June, up from $2.1mn in HY 2021, suggest WanDisco and the Internet of Things are starting to hit their stride. The contracts included a major telecoms providers and an automotive sensor analytics supplier. Management has also credited investment into the sales team for the bookings boost.

Despite investing in sales capacity, operating costs actually fell slightly to $19.8mn from $20.1mn. This helped the cash profit loss narrow 18 per cent to $11.7mn. When the booking turns into revenue this loss will narrow further. FactSet consensus expects revenue to rise to $32.5mn up from $6.1mn last year.

As a lossmaking software company, WanDisco’s share price has taken a bit of battering this year. At a 2022 price to sales ratio of 11.9 it still looks expensive but the step change this year in bookings is promising. Cloud computing and the Internet of Things are structural tailwinds but at this price investors would probably be hoping for a takeover offer from a bigger cloud player. Hold.

Last IC View: Hold, 460p, 25 Sep 2019