WANDisco shares dive helter-skelter despite positive profit guidance

Shares in WANDisco gave up most of their strong gains from last week after the Big Data software specialist reported that revenues would be below the level expected though losses will be better than forecast.

The AIM-listed company, which has a huge helter-skelter installed to amuse staff in its Sheffield offices, said revenues for the calendar year were hit by lumpy new sales bookings, though revenue benefitted from deferred earnings released from the prior year.

However, on the upside, the company's self-help measures have seen strong cost controls and cash overheads cut further in the second half of the year so that such that adjusted EBITDA losses will be better than analyst forecasts and 2016 will benefit from a much lower cost base.

As such, joint house broker Investec calculated that 2015 revenues will be 8% below its expectations but EBITDA losses at least 10% better than original forecasts of $18.5m.

The broker added that cuts were mostly to non-front line staff and non-key members of back office or product development, "therefore not materially affecting the group’s ability to scale".

Net cash was roughly $3m at the year end, with a $10m credit facility with HSBC remaining undrawn, and with strong cash collection and further cost reductions so far in 2016, management said it had moved significantly closer to cash break-even.

Investec cut its revenue forecast for 2016 to $11.3m from $16.6m on more conservative bookings assumptions but that cost self-help means that estimated EBITDA loss is upgraded to $13.6m from $15.5m.

"Longer term, the success of public cloud vendors such as Amazon Web Services could act both as a driver for WANdisco adoption, and potentially also as a significant go-to-market channel alongside the likes of Oracle," analyst Roger Phillips wrote.

"With strategic IP supporting the investment case, and both product strategy and go-to-market now in place, we continue to see potential for big data bookings to dramatically scale from here in excess of our forecasts."