Losses double at tech firm WANdisco after year of rapid growth

 
Adam Hignett
WANdisco chief executive David Richards
SHARES in tech firm WANdisco crashed yesterday, closing down 12.39 per cent after preliminary results revealed an almost doubling of losses last year to $39m (£26m) from $20m the year before.

The firm’s pre-tax profit was hit despite the company recording a 40 per cent increase in revenue, from $8m to $11.2m in the year ending 31 December 2014.

WANdisco said the loss resulted from significant expansion to address high growth markets, with $9m invested in product development and a large increase in headcount.

“We have a strong balance sheet,” said Paul Harrison, the firm’s finance chief. “Cert­ainly one that will sustain us for the fore­seeable future.”

WANdisco chief executive David Richards said: “As 2014 progressed, we achieved a marked increase in momentum in our big data business, as successful production trials led into some significant contract wins. “We look forward to reporting more customer successes as the year progresses.”

The Aim-listed company was founded in 2005 and is a high-profile member of the British tech scene, with offices in Sheffield and Silicon Valley in California.

After successfully floating in 2012, the firm saw its share price peak in December 2013 at 1,520p, before experiencing a sharp decline during the tech rout last year.

According to WANdisco, its goal is to become a large global business that can dominate the multibillion-dollar market in big data.

Analysts have expressed concern in recent months about cash burn at the group, with Megabuyte describing the situation as “really quite scary” in a note released last autumn.

Finncap analysts said the preliminary results were “less relevant” than the strong quarter re­sults released in January, but added that the group’s application lifecycle management business is expected to move become profitable in 2015.

“Investment in the big data opportunity and product set is merited,” the broker said.

“The share price will continue to respond to big data contract win announcements, which will reassure us of our expectations of a continuation of the momentum of the fourth quarter of 2014 and first quarter of 2015.”

And Investec said that, while losses were “behind expectation”, the “real story” was the momentum being generated by the company’s efforts in big data “alongside evidence of tight cost control”.

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