WANdisco PLC (LON:WAND) was looking less groovy for investors on Wednesday after posting a wider loss in its latest full year.
The AIM-listed IT firm, which specialises in cloud-based data solutions, reported a pre-tax loss for the year ended 31 December 2018 of US$19.4mln, wider than the US$14mln loss the year before, while revenue fell to US$17mln from US$19.6mln.
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The company’s adjusted (EBITDA) loss for the year also widened to US$9.4mln from US$600,000 in 2017, with the company blaming the fall on strategic investments in its “channel partner relationships and engineering capabilities” to help drive long-term growth.
The wider losses appeared to have spooked investors, with the shares sliding 4.2% to 565p.
Post-period end, the company said its revenues in the first quarter of the new year were 38% higher at US$4mln, adding that it had also raised US$17.5mln from existing shareholders at a premium in February.
Looking ahead, WANdisco said it was seeing “increasingly strong market traction” for its products amid increased global demand for Big Data and cloud migration services.
The group added that it had a “strong pipeline of deals” and that it was confident of achieving its forecasts.
David Richards, chief executive and chairman, added that the company had begun to see a “significant structural shift” in its revenue base from “large, difficult-to-forecast on-premises transactions toward more predictable, annual recurring cloud revenues”.
“We see significant opportunities to expand our addressable market in cloud and as annual recurring revenues increase over time, develop a smoother, increasing revenue profile for our firm."
Speed of cloud evolution key, says broker
In a note to clients, analysts at WANdisco’s house broker Peel Hunt maintained their ‘buy’ rating and 1,000p target price on the stock, saying there was “no reason” why the company’s opportunity to solve consistency and reliability issues for cloud-based databases would be “any smaller in magnitude”.
“We are, after all, still at the foothills of this opportunity with 80% ... of the workloads still not in the cloud. The question is one of speed of market evolution.”
The broker added that with recent announcements by tech giant Google Inc (NASDAQ:GOOG) that it was launching a multi-cloud strategy to join the likes of Microsoft Inc (NASDAQ:MSFT) and Amazon Inc (NASDAQ:AMZN), with which WANdisco has a co-sell relationship and top tier partner status respectively, the market allocating over US$110mln to the company, its medium-term revenue opportunity, was “well within the realm of possibilities”.