TIDMWAND
RNS Number : 4692N
WANdisco Plc
30 September 2021
30 September 2021
WANdisco plc
("WANdisco", the "Company" or the "Group")
Interim unaudited results for the six months ended 30 June
2021
- First commit-to-consume, multi-year contract at a $1m minimum
signed with major US telco post period end
- Strong balance sheet provides platform to accelerate capitalisation of cloud opportunity
WANdisco (LSE: WAND), the LiveData company announces interim
unaudited interim results for the six months ended 30 June
2021.
Financial headlines
-- Revenue for the period $3.4 million (H1 2020: $3.6 million)
-- Cash overheads(1) of $20.1 million (H1 2020: $17.9 million)
-- Adjusted EBITDA(2) loss of $14.2 million (H1 2020: $11.9 million)
-- Statutory loss from operations of $20.3 million (H1 2020: $14.0
million)
-- Cash at 30 June 2021 of $47.7 million (31 December 2020: $21.0
million)
-- No debt as at 30 June 2021 of $nil (31 December 2020: $0.6 million)
-- Raised gross proceeds of $42.4 million through a share placing
and subscription to accelerate the Group's growth ambitions and
to pursue near term opportunities with channel partners
Strategic and operational highlights
-- General Availability of our Azure service expected in the next
few weeks, a critical step in converting pipeline customers
-- Progress in transitioning business model to cloud-centric consumption
basis to increase predictability of revenue (unbilled backlog),
reduced discounting (metered pricing) and easier upsell potential
-- Snowflake partnership complements existing Databricks relationship,
consolidating market position in supporting machine learning
applications
-- Investment into channel and direct sales capacity to further
establish product availability
-- "Commit to Consume" contract structure to become the norm, where
a customer is obligated to move a minimum amount of data over
a given time
o Brings WANdisco in line with cloud platform model aligning
its service to the models of industry leaders such as Databricks
and Snowflake
o Benefits customers through the flexibility expected from cloud-based
solutions
o Provides WANdisco with a stream of committed revenues that
have the potential to increase as customers' data needs expand
Post period end
-- Secured the first commit-to-consume contract, a minimum $1.0M,
5-year contract with an existing major US Telecom customer to
migrate a minimum of 5PB of business-critical analytical data
to the Microsoft Azure cloud, with a significant opportunity
for further consumption growth.
Outlook
-- The disappointing first half performance linked to delays with
general availability with the Microsoft product led to a smaller
volume of consumption deals in H1. As the first Microsoft partner
that has a deeply embedded solution, it remains strategic to
Microsoft given the uniqueness of our technology. The Board now
expects a minimum revenue plus Remaining Performance Obligation
(RPO") target of $18m for FY21. The Board believes this is the
most relevant KPI for a consumption business that is building
long term consumption commitments. RPO is defined as deferred
revenue plus committed, unbilled backlog.
David Richards, Chief Executive Officer and Chairman of
WANdisco, commented:
"The first half of 2021 has been a period of both learning and
tireless execution, as WANdisco laid the groundwork for significant
acceleration in customer wins. Two factors impacted our topline
financial performance in H1.
First, was underestimating the importance and timing of General
Availability for our Azure product. As a business-critical
operation, potential customers wanted the assurance that General
Availability provides. We expect to be able to announce General
Availability shortly, fully opening this pipeline opportunity.
Second, where we had expected an initial wave of smaller volume
projects, demand was in fact led by large scale strategic
migrations. It has now become clear that a data first approach to
this datalake migration movement is the only viable approach for
Bluechip organisations, leading to more complex projects with
longer execution timelines.
With our product now launched on both Azure and AWS, we have
also been focussed on transitioning our business model to a
cloud-centric consumption model to align our revenue streams with
that of our partners. This change will lead to greater
predictability of revenue in the medium to long term, with revenue
phased to align with consumption.
Complementing our existing relationship with Databricks, we have
partnered with Snowflake to accelerate movement of data into their
Data Cloud, consolidating WANdisco's market position in supporting
machine learning.
Post period end, the first significant contract based on
committed consumption of data and customer usage has been closed,
which is typical of the scale of our customers' demand and pipeline
opportunities.
The Board remains confident that the combination of our market
opportunity, product readiness, and deepening commitments from
customers and cloud partners provides a strong platform to deliver
growth in the short and medium term."
1 Operating expenses adjusted for: depreciation, amortisation, capitalisation
of development expenditure and equity-settled share-based payment.
See Note 4 to the condensed consolidated interim financial statements
for a reconciliation.
2 Operating loss adjusted for: depreciation, amortisation and equity-settled
share-based payment. See Note 4 to the condensed consolidated
interim financial statements for a reconciliation.
For further information, please contact:
WANdisco plc via FTI Consulting
David Richards, Chief Executive Officer and Chairman
Erik Miller, Chief Financial Officer
Daud Khan, VP Corporate Development
FTI Consulting +44 (0)20 3727 1137
Matt Dixon / Chris Birt / Kwaku Aning
Stifel (Nomad and Joint Broker) +44 (0)20 7710 7600
Fred Walsh / Richard Short
Panmure Gordon (Joint Broker) +44 (0)20 7886 2500
Erik Anderson / Alina Vaskina
About WANdisco
WANdisco is the LiveData company. WANdisco solutions enable
enterprises to create an environment where data is always
available, accurate and protected, creating a strong backbone for
their IT infrastructure and a bedrock for running consistent,
accurate machine learning applications. With zero downtime and zero
data loss, WANdisco's products keep geographically dispersed data
at any scale consistent between on-premises and cloud environments
allowing businesses to operate seamlessly in a hybrid or
multi-cloud environment. WANdisco has over a hundred customers and
significant go-to-market partnerships with Microsoft Azure, Amazon
Web Services, Google Cloud, Oracle, and others as well as OEM
relationships with IBM and Alibaba. For more information on
WANdisco, visit http://www.wandisco.com.
BUSINESS REVIEW
In H1 FY21, we invested in both our channel and direct sales
capacity to further establish our product availability and robust
partnerships with cloud platform vendors and System Integrators
("SI's"). We continue to see a significant demand for cloud
migration solutions, and many large enterprises are realising that
moving to the cloud is a business imperative for analytics and
elastic compute. Some have tried traditional migration solutions
and have found them to be poorly suited to migrating large amounts
of rapidly changing data with guaranteed consistency. These
enterprises are now turning to WANdisco's suite of LiveData
Migrator solutions that are easy to use and remove complexity
whilst guaranteeing data consistency.
We are starting to see a transition of our business model away
from subscription contracts that required significant upfront
revenue recognition thus giving rise to lumpy and difficult to
predict revenue streams, into a cloud-centric consumption model
that aligns our revenue streams to that of our partners and is
consistent with our customers' expectations. Our enterprise
contracts are structured as "Commit-to-Consume" contracts where a
customer is obligated to move a minimum amount of data over a given
time. This gives our customers the flexibility that they expect
from cloud based solutions and gives WANdisco a stream of committed
predictable revenues that have the potential to increase as our
customers' data needs expand.
As the inflexibility of on-premise analytics platforms becomes a
competitive hinderance for customers, there is an increasing need
to re-platform analytics into the cloud. We already support some of
the major destinations for cloud analytics such as Databricks and
the cloud native platforms. Snowflake is another major destination
for analytical data in the cloud, and we have announced a
partnership with Snowflake to accelerate the movement of data into
their Data Cloud. We also made significant progress towards the
General Availability of our embedded solution for Microsoft Azure,
LiveData Migrator for Azure, and expect to announce General
Availability shortly. During H1 FY21 and ongoing we have entered
into joint marketing agreements with AWS, designed to promote
migration to AWS with our LiveData Migrator for AWS. Our
partnerships with these major cloud vendors and solutions provide
WANdisco with a growing opportunity to become integral to the
entire lifecycle of analytical data and cloud migration.
The Group continues to see the growing need for data consistency
and data availability across the world, and WANdisco's ability to
facilitate cloud migration at scale without business interruption
is becoming a key factor for organisations and their SI partners as
they accelerate their journey to the cloud.
COVID-19 update
The COVID-19 pandemic has led to the implementation of
long-standing business continuity measures, with staff working from
home across the globe. As a predominantly distributed organization
working remotely for most employees is normal, and to date, we have
not seen any negative impact on our productivity. The business
remains well placed to weather a prolonged period of self-isolation
with good teamwork and employee morale. We also believe that the
improvements made to how we operate will continue and evolve
further when the COVID-19 crisis ends.
Outlook
We have signed the first contract for multi-petabyte data
migration spanning multiple years, and we believe we will continue
to have success with similar scale enterprise deals. Our
cloud-centric consumption model and Commit-to-Consume structured
contracts, gives WANdisco predictability over its revenues and the
business confidence we will see a stream of committed revenues in
H2 FY21.
With companies seeking to leverage cloud economics and
scalability and adopting a data first migration approach, there is
a significant opportunity ahead of us. Our native Azure service
takes advantage of billing and technical integrations with
Microsoft Azure. We are also seeing growing demand from our other
cloud partners as the need to capitalise on the cloud and move
on-premises workloads becomes a business imperative. The Board's
confidence in our outlook is built upon the convergence of the
market opportunity, product readiness, and the depth of
relationships with our cloud vendor partners, System Integrators
and Analytic platforms.
The disappointing first half performance linked to delays with
general availability with the Microsoft product led to a smaller
volume of consumption deals in H1. As the first Microsoft partner
that has a deeply embedded solution, it remains strategic to
Microsoft given the uniqueness of our solution. The Board now
expects a minimum revenue plus RPO target of $18m for FY21. The
Board believes this is the most relevant KPI for a consumption
business that is building long term consumption commitments. RPO is
defined as deferred revenue plus committed, unbilled backlog.
KPIs
Our business continues to evolve and as such, the metrics used
to measure success also change. With the addition of
Commit-to-Consume contracts, we believe KPIs that include remaining
RPO is appropriate in addition to:
-- Consumption based revenue
-- Volume of data migrated
-- Number of customer wins
-- $ Net retention rates ($value of customer contracts in current
period vs.$ value of those customers in the prior period)
The objective of these KPIs is to provide an indication of the
rate of conversion of the cloud migration opportunity ahead, to
account for revenues being recognised later in the sales cycle and
financial year through metered consumption.
FINANCIAL REVIEW
Revenue for the period ended 30 June 2021 was $3.4 million (H1
2020: $3.6 million).
Deferred revenue from sales booked during the first half of 2021
and in previous years, and not yet recognised as revenue, is $2.7
million at 30 June 2021 (H1 2020: $3.2 million). Our deferred
revenue represents future revenue from new and renewed contracts,
many of them spanning multiple years.
Adjusted EBITDA loss(2) was $14.2 million (H1 2020: $11.9
million), due primarily to the strategic investments we made to
strengthen our go-to-market and engineering resources to drive
future growth.
Revenue
Revenue was $3.4 million (H1 2020: $3.6 million). The business
continues to achieve a significant proportion of contracted revenue
through direct sales. In most cases, these direct sales are only
achievable through the close partnerships held with major cloud
vendors. The Group expects over time to increase the contribution
of partner channel sales to direct sales, as the partnerships with
cloud vendors and ISV begin to bear fruit.
As we continue to transition to a recurring revenue model, the
variability in near term revenue decreases as the one-off perpetual
licenses decrease in volume and size, being replaced by smaller but
more repeatable revenue streams with greater forward
visibility.
Operating costs
Cash overheads(1) increased in the period as we made important
investments in Sales and Engineering to capitalise on the
opportunities with our cloud partners, rising to $20.1 million from
$17.9 million in the first half of 2020.
Product development expenditure capitalised in the period was
$2.9 million (H1 2020: $2.6 million). All of this expenditure was
associated with new product features and was capitalised.
Our headcount was 187 as at 30 June 2021 (31 December 2020: 180,
30 June 2020: 174). Headcount increases in the period were
principally in Sales and Marketing and Engineering as we added
capacity to develop new products and service our partner
channel.
Profit and loss
Adjusted EBITDA(2) loss for the period was $14.2 million (H1
2020: $11.9 million).
The loss after tax for the period increased to $20.3 million (H1
2020: $14.0 million), principally as a result of increased
overheads. The finance loss of $1.4 million (H1 2020: $3.9 million
gain), reported within finance costs/income, arose from the
retranslation of intercompany balances at 30 June 2021, reflecting
the increase in Sterling against the US dollar. The impact of FX
rates changes on the financial statements should be restricted to
the retranslation of US dollar denominated intercompany loans, as
opposed to the operating activities of the business. A translation
gain/(loss) respectively arising on the net assets of overseas
subsidiaries in reserves results in a minimal impact on the Group
net assets.
Balance sheet and cash flow
Trade and other receivables at 30 June 2021 were $6.0 million
(31 December 2020: $10.1 million). This includes $1.1 million of
trade receivables (31 December 2020: $5.3 million) and $4.9 million
related to non-trade receivables (31 December 2020: $4.8
million).
Net consumption of cash was $14.4 million before financing (H1
2020: $12.4 million), resulting in a closing cash balance of $47.7
million at 30 June 2021. The consumption of cash was due primarily
to an increase in cash overheads. For the full year, cash
consumption will be a function of the level of revenues achieved
and collection of customer receivables in the period. At 30 June
2021 we had drawings under our revolving credit facility with
Silicon Valley Bank of $nil (31 December 2020: $0.6 million).
On 10 March 2021 the Group announced the subscription and
placing of 6,885,572 new ordinary shares of 10 pence each in the
Company by existing shareholders at a price of 446 pence (a
discount of 0.4% on the closing share price on 9 March 2021)
raising gross proceeds of $42.4 million. The proceeds are being
used to support our relationships with strategic partners and
provide growth working capital.
Post period end
The Group closed its first multi-year Commit to Consume contract
post period end. Commit-to-Consume contracts align revenue to the
consumption of services, as is the standard in the cloud, enhancing
the predictability of future revenues.
WANdisco secured a $1.0 million, 5-year Commit-to-Consume
contract with an existing major US Telecom customer to migrate
business critical analytical data from an on-premises Vertica
system to the cloud. WANdisco's unique technology was the only
solution capable of moving the live data set to the cloud within
Azure's ecosystem effectively and without disruption. The customer
has committed to a minimum of 5PB over a maximum term of five
years. This represents only a fraction of the customer's data
estate and there is a significant opportunity for further
consumption growth for WANdisco.
Consolidated statement of profit or loss and other comprehensive
income
For the six months ended 30 June 2021
Six months Six months
ended ended
30 June 30 June Year ended
31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
Continuing operations Note $'000 $'000 $'000
--------------------------- ---- ------------ ------------ -------------
Revenue 3 3,354 3,625 10,532
Cost of sales (305) (322) (1,066)
--------------------------- ---- ------------ ------------ -------------
Gross profit 3,049 3,303 9,466
Operating expenses 4 (21,936) (21,043) (43,373)
Operating loss 4 (18,887) (17,740) (33,907)
--------------------------- ---- ------------ ------------ -------------
Finance income 28 3,971 305
Finance costs (1,443) (180) (2,183)
--------------------------- ---- ------------ ------------ -------------
Net finance (costs)/income (1,415) 3,791 (1,878)
--------------------------- ---- ------------ ------------ -------------
2
Loss before tax (20,302) (13,949) (35,785)
Income tax (15) (30) 1,453
Loss for the period (20,317) (13,979) (34,332)
=========================== ==== ============ ============ =============
Other comprehensive income
Items that are or may be reclassified subsequently to profit or
loss:
Foreign operations - foreign currency translation
differences 1,695 (3,969) 3,872
-------------------------------------------------------- -------- -------- --------
Other comprehensive income for the period,
net of tax 1,695 (3,969) 3,872
-------------------------------------------------------- -------- -------- --------
Total comprehensive income for the period attributable
to owners of the parent (18,622) (17,948) (30,460)
======================================================== ======== ======== ========
Loss per share
Basic and diluted loss per share 5($0.36) ($0.29) ($0.68)
================================= ======= ======= =======
The notes form an integral part of these condensed consolidated
interim financial statements.
Consolidated statement of financial position
At 30 June 2021
30 June 30 June 31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
Note $'000 $'000 $'000
------------------------------ ---- ------------ ------------ -----------
Assets
Property, plant and equipment 2,759 3,133 2,895
Intangible assets 5,246 4,962 5,027
Other non-current assets 6 1,131 2,656 2,215
------------------------------ ---- ------------ ------------ -----------
Non-current assets 9,136 10,751 10,137
------------------------------ ---- ------------ ------------ -----------
Trade and other receivables 7 6,038 6,593 10,142
Cash and cash equivalents 47,695 33,634 21,039
------------------------------ ---- ------------ ------------ -----------
Current assets 53,733 40,227 31,181
------------------------------ ---- ------------ ------------ -----------
Total assets 62,869 50,978 41,318
============================== ==== ============ ============ ===========
Equity
Share capital 8,593 7,481 7,641
Share premium 213,741 172,897 172,868
Translation reserve (16) (9,552) (1,711)
Merger reserve 1,247 1,247 1,247
Retained earnings (169,633) (133,237) (150,851)
------------------------------ ---- ------------ ------------ -----------
Total equity 53,932 38,836 29,194
------------------------------ ---- ------------ ------------ -----------
Liabilities
Loans and borrowings 8 1,580 2,028 1,778
Deferred income 9 451 1,075 659
Deferred tax liabilities 4 3 4
------------------------------ ---- ------------ ------------ -----------
Non-current liabilities 2,035 3,106 2,441
------------------------------ ---- ------------ ------------ -----------
Current tax liabilities 5 58 12
Loans and borrowings 8 508 1,907 1,115
Trade and other payables 4,144 4,934 5,462
Deferred income 9 2,245 2,137 3,094
Current liabilities 6,902 9,036 9,683
------------------------------ ---- ------------ ------------ -----------
Total liabilities 8,937 12,142 12,124
------------------------------ ---- ------------ ------------ -----------
Total equity and liabilities 62,869 50,978 41,318
============================== ==== ============ ============ ===========
The notes form an integral part of these condensed consolidated
interim financial statements.
Consolidated statement of changes in equity
For the six months ended 30 June 2021
Attributable to owners of the Company
--------------------------------------------------------------
Share Share Translation Merger Retained Total
capital premium reserve reserve earnings equity
Six months ended 30 June 2021
(Unaudited) $'000 $'000 $'000 $'000 $'000 $'000
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 1 January 2021 7,641 172,868 (1,711) 1,247 (150,851) 29,194
Total comprehensive income
for the period
Loss for the period - - - - (20,317) (20,317)
Other comprehensive income
for the period - - 1,695 - - 1,695
-------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive income
for the period - - 1,695 - (20,317) (18,622)
-------------------------------- -------- -------- ----------- -------- --------- --------
Transactions with owners of
the Company
Contributions and distributions
Equity-settled share-based
payment - - - - 1,535 1,535
Proceeds from share placing
net of issue costs 952 40,873 - - - 41,825
Total transactions with owners
of the Company 952 40,873 - - 1,535 43,360
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 30 June 2021 8,593 213,741 (16) 1,247 (169,633) 53,932
================================ ======== ======== =========== ======== ========= ========
Six months ended 30 June 2020
(Unaudited)
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 1 January 2020 7,097 149,336 (5,583) 1,247 (121,922) 30,175
Total comprehensive income
for the period
Loss for the period - - - - (13,979) (13,979)
Other comprehensive income
for the period - - (3,969) - - (3,969)
-------------------------------- -------- -------- ----------- -------- --------- --------
Total comprehensive income
for the period - - (3,969) - (13,979) (17,948)
-------------------------------- -------- -------- ----------- -------- --------- --------
Transactions with owners of
the Company
Contributions and distributions
Equity-settled share-based
payment - - - - 2,664 2,664
Proceeds from share placing
net of issue costs 383 23,510 - - - 23,893
Share options exercised 1 51 - - - 52
Total transactions with owners
of the Company 384 23,561 - - 2,664 26,609
-------------------------------- -------- -------- ----------- -------- --------- --------
Balance at 30 June 2020 7,481 172,897 (9,552) 1,247 (133,237) 38,836
================================ ======== ======== =========== ======== ========= ========
The notes form an integral part of these condensed consolidated
interim financial statements.
Consolidated statement of cash flows
For the six months ended 30 June 2021
Six months Six months
ended ended
30 June 30 June Year ended
31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
Note $'000 $'000 $'000
----------------------------------------------------- ---- ------------ ------------ -------------
Cash flows from operating activities
Loss for the period (20,317) (13,979) (34,332)
Adjustments for:
* Depreciation of property, plant and equipment 536 601 1,203
* Amortisation of intangible assets 2,634 2,531 5,070
* Net finance costs 65 148 69
* Income tax 15 30 (1,453)
* Foreign exchange 1,137 (3,870) 3,773
* Equity-settled share-based payment 10 1,535 2,664 5,403
----------------------------------------------------- ---- ------------ ------------ -------------
(14,395) (11,875) (20,267)
----------------------------------------------------- ---- ------------ ------------ -------------
Changes in:
* Trade and other receivables 4,707 1,530 339
* Trade and other payables (1,266) 712 910
* Deferred income (1,050) (598) (57)
Net working capital change 2,391 1,644 1,192
----------------------------------------------------- ---- ------------ ------------ -------------
Cash used in operating activities (12,004) (10,231) (19,075)
Interest paid (91) (157) (294)
Income tax received 956 672 662
----------------------------------------------------- ---- ------------ ------------ -------------
Net cash used in operating activities (11,139) (9,716) (18,707)
----------------------------------------------------- ---- ------------ ------------ -------------
Cash flows from investing activities
Interest received 1 15 21
Acquisition of property, plant and equipment (362) (36) (307)
Development expenditure (2,853) (2,616) (5,220)
Net cash used in investing activities (3,214) (2,637) (5,506)
----------------------------------------------------- ---- ------------ ------------ -------------
Cash flows from financing activities
Proceeds from issue of share capital net
of issue costs 41,825 23,945 24,076
Repayment of bank loan (556) (833) (1,666)
Payment of lease liabilities (288) (349) (595)
----------------------------------------------------- ---- ------------ ------------ -------------
Net cash from financing activities 40,981 22,763 21,815
----------------------------------------------------- ---- ------------ ------------ -------------
Net increase/(decrease) in cash and cash
equivalents 26,628 10,410 (2,398)
Cash and cash equivalents at 1 January 21,039 23,354 23,354
Effect of movements in exchange rates on
cash and cash equivalents 28 (130) 83
----------------------------------------------------- ---- ------------ ------------ -------------
Cash and cash equivalents at the end of
the period 47,695 33,634 21,039
===================================================== ==== ============ ============ =============
The notes form an integral part of these condensed consolidated
interim financial statements.
Notes to the condensed consolidated interim financial
statements
For the six months ended 30 June 2021
1. Reporting entity
WANdisco plc (the "Company") is a public limited company
incorporated and domiciled in Jersey. The Company's ordinary shares
are traded on AIM. These condensed consolidated interim financial
statements ("Interim financial statements") as at and for the six
months ended 30 June 2021 comprise the Company and its subsidiaries
(together referred to as the "Group"). The Group is primarily
involved in the development and provision of global collaboration
software.
2. Basis of preparation
a Basis of accounting
These interim financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting" and should be
read in conjunction with the Group's last annual consolidated
financial statements as at and for the year ended 31 December 2020
("last annual financial statements"). They do not include all of
the information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual financial statements.
These interim financial statements were authorised for issue by
the Company's board of directors on 29 September 2021.
b Going concern
These interim financial statements have been prepared on a going
concern basis.
As at 30 June 2021 the Group had net assets of $53.9m (31
December 2020: $29.2m), including cash of $47.7m (31 December 2020:
$21.0m) as set out in the interim consolidated statement of
financial position, with a debt facility drawn of $nil (31 December
2020: debt facilities drawn of $0.6m). In the six months ended 30
June 2021, the Group incurred a loss before tax of $20.3m (H1 2020:
$13.9m) and net cash outflows before financing of $14.4m (H1 2020:
$12.4m).
Revenue for H1 2021 was $3.4m (H1 2020: $3.6m), with an
operating loss of $18.9m (H1 2020: $17.7m), mainly due to reduced
revenue and increased operating expenses.
The Directors have prepared a detailed budget and forecast of
the Group's expected performance over a period covering at least
the next twelve months from the date of the approval of these
unaudited interim financial statements. As well as modelling the
realisation of the sales pipeline, these forecasts also cover a
number of scenarios and sensitivities in order for the Board to
satisfy itself that the Group remains within its current cash
facilities.
Whilst the Directors are confident in the Group's ability to
grow revenue, the Board's sensitivity modelling (which considered
the impact of Brexit and COVID-19) shows that the Group can remain
within its facilities in the event that revenue growth is delayed
(i.e. revenues do not increase from the level reported in 2020) for
a period in excess of twelve months. The Directors' financial
forecasts and operational planning and modelling also include the
actions, under the control of the Group, that they could take to
further significantly reduce the cost base during the coming year
in the event that longer-term revenues were set to remain
consistent with the level reported in 2020. On the basis of this
financial and operational modelling, the Directors believe that the
Group has the capability and the operational agility to react
quickly, cut further costs from the business and ensure that the
cost base of the business is aligned with its revenue and funding
scale.
As a consequence, the Directors have a reasonable expectation
that the Group can continue to operate within its existing
facilities and be able to meet its commitments and discharge its
liabilities in the normal course of business for a period not less
than twelve months from the date of approval of these interim
financial statements. Accordingly, they continue to adopt the going
concern basis in preparing the Group financial statements.
c Functional and presentational currency
The interim consolidated financial statements are presented in
US dollars, as the revenue for the Group is predominately derived
in this currency. Billings to the Group's customers during the
period by WANdisco, Inc. were all in US dollars with certain costs
being incurred by WANdisco International Limited in sterling and
WANdisco, Pty Ltd in Australian dollars. All financial information
has been rounded to the nearest thousand US dollars unless
otherwise stated.
d Alternative performance measures
The Group uses a number of alternative performance measures
("APMs") which are non-IFRS measures to monitor the performance of
its operations. The Group believes these APMs provide useful
historical financial information to help investors and other
stakeholders evaluate the performance of the business and are
measures commonly used by certain investors for evaluating the
performance of the Group. In particular, the Group uses APMs which
reflect the underlying performance on the basis that this provides
a more relevant focus on the core business performance of the Group
and aligns with our KPIs. Adjusted results exclude certain items
because if included, these items could distort the understanding of
our performance for the period and the comparability between
periods. The Group has been using the following APMs on a
consistent basis and they are defined and reconciled as
follows:
2. Basis of preparation (continued)
d Alternative performance measures (continued)
- Cash overheads: Operating expenses adjusted for: depreciation,
amortisation, capitalisation of development expenditure and equity
-- settled share-based payment. See Note 4 for a reconciliation.
- Adjusted EBITDA: Operating loss adjusted for: depreciation, amortisation
and equity -- settled share-based payment. See Note 4 for a reconciliation.
e Use of judgements and estimates
In preparing these Financial statements, management has made
judgements and estimates that affect the application of the Group's
accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from
these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those described in the last annual
financial statements.
3. Revenue and segmental analysis
a Operating segments
The Directors consider there to be one operating segment, being
that of development and sale of licences for software and related
maintenance and support.
b Geographical segments
The Group recognises revenue in three geographical regions based
on the location of customers, as set out in the following
table:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
Revenue $'000 $'000 $'000
North America - USA 2,133 2,571 8,635
North America - other 21 36 34
Europe 647 715 1,096
Rest of the world - China 350 201 412
Rest of the world - other 203 102 355
-------------------------- ------------ ------------ ------------
3,354 3,625 10,532
========================== ============ ============ ============
Management makes no allocation of costs, assets or liabilities
between these segments since all trading activities are operated as
a single business unit.
c Major products
The Group's core patented technology, Distributed Coordinated
Engine "DConE", enables the replication of data. This core
technology is contained in all the Group's products.
d Major customers
Six months Six months Six months Six months Year ended Year ended
ended ended 31 December 31 December
30 June 30 June 2020 (Audited) 2020 (Audited)
2021 2021
(Unaudited) (Unaudited) ended ended
30 June 30 June
2020 2020
(Unaudited) (Unaudited)
% of Revenue % of Revenue % of Revenue
revenue $'000 Revenue $'000 revenue $'000
----------- ------------ ------------ ------------ ------------ --------------- ---------------
Customer 1 5% 163 4% 128 10% 1,070
Customer 2 3% 93 - - 24% 2,515
Customer 3 1% 42 14% 508 5% 558
Customer 4 1% 21 21% 770 8% 792
=========== ============ ============ ============ ============ =============== ===============
No other single customers contributed 10% or more to the Group's
revenue (2020: $nil).
3. Revenue and segmental analysis (continued)
e Split of revenue by timing of revenue recognition
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
Revenue $'000 $'000 $'000
Licences and services transferred at a point in
time 1,905 2,168 7,607
Services transferred over time 1,449 1,457 2,925
------------------------------------------------ ------------ ------------ ------------
3,354 3,625 10,532
================================================ ============ ============ ============
f Contract balances
The following table provides information about receivables,
contract assets and liabilities from contracts with customers.
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Receivables, which are included in "Other non-current
assets - accrued income" 1,072 2,508 2,124
Receivables, which are included in "Trade and other
receivables - accrued income" 2,213 3,172 1,480
Contract liabilities, which are included in "Deferred
income - non-current" (451) (1,075) (659)
Contract liabilities, which are included in "Deferred
income - current " (2,245) (2,137) (3,094)
====================================================== ============ ============ ============
4. Cash overheads and Adjusted EBITDA
Six months Six months
ended ended
30 June 30 June Year ended
31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
a Reconciliation of operating expenses to
"Cash overheads": Note $'000 $'000 $'000
------------------------------------------ ---- ------------ ------------ -------------
Operating expenses (21,936) (21,043) (43,373)
Adjusted for:
Amortisation and depreciation 3,170 3,132 6,273
Equity-settled share-based payment 10 1,535 2,664 5,403
Development expenditure capitalised (2,853) (2,616) (5,220)
Cash overheads (20,084) (17,863) (36,917)
========================================== ==== ============ ============ =============
Six months Six months
ended ended
30 June 30 June Year ended
31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
b Reconciliation of operating loss to "Adjusted
EBITDA": Note $'000 $'000 $'000
-------------------------------------------------- ---- ------------ ------------ -------------
Operating loss (18,887) (17,740) (33,907)
Adjusted for:
Amortisation and depreciation 3,170 3,132 6,273
Equity-settled share-based payment 10 1,535 2,664 5,403
-------------------------------------------------- ---- ------------ ------------ -------------
Adjusted EBITDA (14,182) (11,944) (22,231)
Development expenditure capitalised (2,853) (2,616) (5,220)
Adjusted EBITDA including development expenditure (17,035) (14,560) (27,451)
================================================== ==== ============ ============ =============
5. Loss per share
a Basic loss per share
The calculation of basic loss per share has been based on the
following loss attributable to ordinary shareholders and weighted
average number of ordinary shares outstanding:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
---------------------------------------------------------- ------------ ------------ ------------
Loss for the period attributable to ordinary shareholders 20,317 13,979 34,332
========================================================== ============ ============ ============
Number Number Number
of shares of shares of shares
Weighted average number of ordinary shares '000s '000s '000s
---------------------------------------------------------- ------------ ------------ ------------
Issued ordinary shares at 1 January 52,613 48,241 48,241
Effect of shares issued in the period 3,849 307 2,251
---------------------------------------------------------- ------------ ------------ ------------
Weighted average number of ordinary shares during
the period 56,462 48,548 50,492
========================================================== ============ ============ ============
Basic loss per share $0.36 $0.29 $0.68
===================== ===== ===== =====
b Adjusted loss per share
Adjusted loss per share is calculated based on the loss
attributable to ordinary shareholders before net foreign exchange
loss/(gain), acquisition-related items and the cost of
equity-settled share-based payment, and the weighted average number
of ordinary shares outstanding:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
Adjusted loss for the period: Note $'000 $'000 $'000
--------------------------------------------- ---- ------------ ------------ ------------
Loss for the period attributable to ordinary
shareholders 20,317 13,979 34,332
Adjusted for:
Net foreign exchange loss/(gain) (1,350) 3,939 (1,809)
Equity-settled share-based payment 10 (1,535) (2,664) (5,403)
--------------------------------------------- ---- ------------ ------------ ------------
Adjusted loss for the period 17,432 15,254 27,120
============================================= ==== ============ ============ ============
Adjusted loss per share $0.31 $0.31 $0.54
======================== ===== ===== =====
c Diluted loss per share
Due to the Group having losses in all years presented, the fully
diluted loss per share for disclosure purposes, as shown in the
consolidated statement of profit or loss and other comprehensive
income, is the same as for the basic loss per share.
6. Other non-current assets
30 June 30 June
2021 2020
31 December
2020
(Unaudited) (Unaudited) (Audited)
Due in more than a year: $'000 $'000 $'000
------------------------------- --- ------------ ------------ -----------
Other receivables 59 148 91
Accrued income 1,072 2,508 2,124
------------------------------------ ------------ ------------ -----------
Total other non-current assets 1,131 2,656 2,215
==================================== ============ ============ ===========
7. Trade and other receivables
30 June 30 June
2021 2020
31 December
2020
(Unaudited) (Unaudited) (Audited)
Due within a year: $'000 $'000 $'000
----------------------------------- --- ------------ ------------ -----------
Trade receivables 1,086 741 5,319
Other receivables 371 1,160 411
Accrued income 2,213 3,172 1,480
Corporation tax 1,299 731 2,277
Prepayments 1,069 789 655
----------------------------------- --- ------------ ------------ -----------
Total trade and other receivables 6,038 6,593 10,142
=================================== === ============ ============ ===========
8. Loans and borrowings
30 June 30 June
2021 2020
31 December
2020
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
------------------------------------- --- ------------ ------------ -----------
Non-current liabilities
Lease liabilities 1,580 2,028 1,778
------------------------------------------ ------------ ------------ -----------
1,580 2,028 1,778
----------------------------------------- ------------ ------------ -----------
Current liabilities
Current portion of secured bank loan - 1,389 556
Current portion of lease liabilities 508 518 559
------------------------------------------ ------------ ------------ -----------
508 1,907 1,115
----------------------------------------- ------------ ------------ -----------
Total loans and borrowings 2,088 3,935 2,893
========================================== ============ ============ ===========
At 30 June 2021, the $nil of bank loan (31 December 2020: $0.6m)
represented term debt drawn down with Silicon Valley Bank. The
facility comprised $nil term debt (31 December 2020: $0.6m), with
an interest-only period to 31 May 2018, followed by a three-year
maturity at a floating interest rate charged at 1.5% above the US
prime rate. The final bank loan payment was made in April 2021 when
the agreement ended.
9. Deferred income
Deferred income represents contracted sales for which services
to customers will be provided in future periods.
30 June 30 June
2021 2020
31 December
2020
(Unaudited) (Unaudited) (Audited)
Deferred income which falls due: $'000 $'000 $'000
--------------------------------- --- ------------ ------------ -----------
Within a year 2,245 2,137 3,094
In more than a year 451 1,075 659
Total deferred income 2,696 3,212 3,753
====================================== ============ ============ ===========
10. Share-based payment
The Group operates share option plans for employees of the
Group. Options in the plans are settled in equity in the Company
and are normally subject to a vesting schedule but not conditional
on any performance criteria being achieved.
The terms and conditions of the share option grants are detailed
in the Group annual financial statements for the year ended 31
December 2020.
a Expense recognised in profit or loss
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
------------------------------------------------ --- ------------ ------------ ------------
Total equity-settled share-based payment charge 1,535 2,664 5,403
===================================================== ============ ============ ============
b Summary of share options outstanding
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
Number of share options outstanding: Number Number Number
--------------------------------------- ------------ ------------ ------------
Outstanding at the start of the period 4,271,684 5,028,157 5,028,157
Granted - - 674,860
Forfeited (116,232) (68,566) (159,190)
Exercised - (1,444) (1,272,143)
--------------------------------------- ------------ ------------ ------------
Outstanding at the end of the period 4,155,452 4,958,147 4,271,684
--------------------------------------- ------------ ------------ ------------
Exercisable at the end of the period 3,370,593 3,750,873 2,784,861
--------------------------------------- ------------ ------------ ------------
Vested at the end of the period 3,370,593 3,750,873 2,784,861
======================================= ============ ============ ============
11. Contingent liabilities
The Group had no contingent liabilities at 30 June 2021 (30 June
2020: None, 31 December 2020: None).
12. Subsequent events
There are no significant or disclosable post-balance sheet
events.
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END
IR ZZGFLGGNGMZG
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