At first sight software stockmarket darling WANdisco’s stellar share price looks too good to be true.
The company floated at 180p in June and last night it closed at 442.5p – a staggering 146 per cent increase in value in less than six months.
Yet the Sheffield-based company is forecast to make a modest revenue of £3.4m this year and a pre-tax loss of £2.3m.
This is expected to increase to a turnover of £4.4m in 2013 and £6.3m in 2014.
Losses are expected to improve – down to a loss of £2.1m in 2013 and a loss of £1.1m in 2014 – but these are hardly impressive short-term forecasts for a company that has a market capitalisation of £90m.
The figures will make many observers think of the dot.com boom and bust at the turn of the millennium, which saw hundreds of thousands of investors get their fingers badly burned.
But WANdisco is no flash in the pan.
The company, which upped roots from California to move its head office back to chairman and chief executive David Richards’ home town of Sheffield, has pedigree.
Bookings are up 57 per cent year on year, it has signed up a host of new global Tier 1 customers and the company has achieved a 114 per cent renewal rate.
Yesterday the shares jumped nearly nine per cent, a rise of 35p to 442.5p, on the back of news that it has won a US patent that will protect its groundbreaking technology.
WANdisco, whose software is used by companies such as HP, Intel, Barclays, McAfee, Honda and Wal-Mart, said the patent will commercially protect both its technology and its products.
Analyst Philip Sparks at Broker Profile said the announcement marks the end of a six-year process to assess WANdisco’s technology against all potential competitors.
The US Patent Office has now confirmed that WANdisco’s approach to replicating data servers across long-distances is unique.
WANdisco is currently working on new technology that it believes could protect internet giants such as Amazon and Facebook when disaster strikes.
In the past, electrical storms and vandalism have knocked out these companies for hours, but WANdisco is developing a ‘Big Data’ product at its headquarters in Sheffield that promises to keep the world’s largest social and commercial networks safe.
Mr Richards believes the new product, which he says can safeguard the likes of eBay, Twitter and LinkedIn, will make up a substantial part of the company’s future growth.
Indeed he says it will be “one of the most exciting things” to come out of the group’s Sheffield head office.
“This is a move into Big Data – you may never have heard of it, but it’s guaranteed you’ll need it,” he said.
Big Data refers to the ability to store vast quantities of data with Apache Hadoop, an open source, readily available tool that allows companies like Twitter to store such data.
“It’s one of the fastest growing parts of the computing world,” said Mr Richards.
“EBay, Amazon, a Who’s Who’ of the internet all use Apache Hadoop, it’s massive.”
Travel website expedia.com and supermarket Tesco both use Apache Hadoop to make their services more relevant.
With expedia.com, people who own Macs get shown four star hotels while people with less stylish PCs get offered three star accommodation.
If a mother buys nappies, Tesco will send her beer vouchers as her husband is more likely to drink at home than go to the pub.
The problem with Big Data is it can be knocked out by natural or man-made disasters.
WANdisco believes it can make these companies 100 per cent reliable and available.
In other words they will always be on.
WANdisco is currently working on a prototype, but it isn’t making a commitment on timing.
However market watchers believe it will be available in the first half of next year.
Yesterday analysts said the new US patent should help WANdisco enter the Big Data market.
“The business disruption caused by Hurricane Sandy last week serves as a timely reminder of why WANdisco’s technology could prove extremely valuable to ‘Big Data’ operators,” said Mr Sparks.
“The industry cost of data outages during Hurricane Sandy could prove to be many multiples of WANdisco’s market cap, so the newly-patented technology has the potential to become an extremely valuable component in Big Data systems,” he added.
Like any decent financial journalist, Blackfriar doesn’t buy stocks as it’s unethical to buy shares in a company that you then go on to tip.
But if we could we’d be backing WANdisco all the way.
n If you have a view on this or any other City story please contact Blackfriar at firstname.lastname@example.org