Wandisco Plc (LON:WAND)’s trading update confirms the positive start to the year, with bookings ($10.2m, + 73% y-o-y) and cash burn ($0.6m) significantly better than the run rate implied by our FY estimates. We believe that positive momentum should continue into H2 both financially and from a strategic perspective, with the addition of other tier one strategic partners being a key milestone to look for.
73% bookings growth, cash burn minimal
H1 bookings of $10.2m are up 73% y-o-y, driven solely by the core Fusion business, where bookings were $7.0m, up 173% from $2.6m last year. Bookings for the Source Code Management business were essentially flat at $3.2m vs $3.3m in H1 last year. Cash burn in H1 was $600k, down from $5.3m in H1 last year reflecting the strong bookings progress, the company’s positive working capital profile and substantially reduced overheads.
In this context both our FY bookings ($20.4m) and year end net cash ($4.2m – assuming $3.4m burn) look overly conservative. P&L estimates may turn out to be more so, given the likely faster revenue recognition cycle of bookings from IBM (NYSE:IBM) versus the company’s traditional subscription model. Nevertheless, we leave our estimates unchanged pending more granular information at the interims, expected in early September.
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