We expect Wandisco's (LON:WAND) strong H1 commercial progress to translate into an inflection in growth in H2. Cloud partners Microsoft (NASDAQ:MSFT) and Alibaba (NYSE:BABA) are likely to be key drivers of this, where revenues are recurring with good potential to scale-up. We leave our estimates unchanged and believe that achieving the required inflection in H2 could be a watershed for the perception of this business’s growth fundamentals.
Strategic progress set to bear fruit in H2
Strategic progress so far in FY18 includes agreements with Microsoft and Alibaba and an expanded collaboration with IBM (NYSE:IBM) to include BigSQL relational database technology, with royalty rates expanded from 30% to 50%. The Microsoft partnership yielded has four deals year to date YTD starting late in H1 and the pace should gather from here. Average deal size was in the low $100s of thousands but scale up potential of each is said to be good – for example the $200k Automotive contract win announced today covers less than 3% of the client data and the customer has identified over 20 projects where it can use Fusion. The expanded deal with IBM should support more frequent and larger deal flow with Q4 their peak quarter for closing business. The Alibaba technical integration was completed in early H2 and should add incremental bookings/revenues this year.
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