WANdisco slides lower on cash worries

Shares in WANdisco have given up most of the bounce since January's all-time lows as the 'big data' software developer continues to gobble cash.

In calendar 2015, the AIM-listed company's cash burn of $34.6m saw the $26m cash call in January last year dwindle to a year-end bank balance of $2.6m.

Since then, though the company said it has slashed annual run-rate costs as of this month to roughly $25m, it revealed it has made the first drawings on its $10m revolving bank facility in recent weeks.

Having sprung the January 2015 fundraising on investors shortly after a positive trading update, investors could be fearing a similar surprise.

WANdisco, which has a huge helter-skelter installed to amuse staff in its Sheffield offices, continued to strike a confident tone, having more than doubled its customer base from 10 to 26 and enjoying improved sales bookings in its application lifecycle management (ALM) business towards the end of the year.

For 2015, revenues were down very slightly to $11m from $11.2m, with a loss before tax trimmed to $31m from $39.4m.

Losses before interest, tax, depreciation and amortisation (EBTIDA) were narrowed to $16m from $17.9m

Chief executive David Richards was upbeat: "Our presence in the Big Data market has taken a big step forward, with our live customers demonstrating that our Fusion product for Big Data, in on-premise, cloud or hybrid environments, is highly relevant in its marketplace."

He said that Fusion was increasingly being viewed as a "crucial technology" to enable big data users to migrate onto the cloud data platforms offered by its partners, which include IBM, Amazon, Google and Microsoft.

Though costs have been trimmed, the market remains in its infancy and the timing of contract wins remains variable.

Nevertheless, Richards stated he was confident in the company beginning 2016 on a strengthened operational footing and "moving significantly closer to cash flow break-even".

The company's shares meanwhile moved significantly closer to their lows, falling 16% to 117.25p by 0945 on Wednesday.

Based on unchanged revenue forecasts of $11.2m, analyst Roger Phillips at house broker Investec upgraded his estimate for EBITDA losses to $10m versus $13.6m before. His expectations for net debt improved to $8.1m from $9.0m.

"While FY15 bookings performance was disappointing, [the second half] at least suggested ALM performance had bottomed, cost discipline has been demonstrated, and the Fusion product still has potential to scale materially through the theme of enterprise data storage shifting to hyperscale public cloud," he said.

Full year results at revenue, EBITDA loss and net cash level are in line with

our estimates revised in February. News that the cash cost base is reduced

further as at the end of March shows cost discipline.