Big data pioneer tackles revenue model transition as it looks to US listing

Data software business WANdisco has said it achieved its primary strategic goal for 2020 with the launch of LiveData Platform for Microsoft Azure as a native offering. That’s despite the business seeing revenues drop for the year to 31 December.

The Sheffield-based firm which also launched its LiveData Migrator on Amazon Web Services (AWS) and positioned itself as the global standard for cloud migration on AWS – according to its statement – generated $10.5m of revenue over the year. The fall it says “reflects the ongoing change in revenue mix” as it moves towards the focus on being a “big data business” as well as the shift to cloud-based revenues with recurring annual income.

The business also emphasised it had continued to invest in the business as it prepares for future growth and to capitalise on market opportunities, where it says it is “uniquely positioned to enable the next generation of machine learning and artificial intelligence in the cloud”. It also notably reduced debt by over 70% to $0.6m (2019:$2.2m) in the year.

Going forward the business is moving to a consumption-based revenue model rather than its previous subscription contracts, which has been described as “extremely tricky” by the firms chief executive officer and chairman, David Richards. He explained that many people see the biggest disruption caused by cloud computing as the ability to elastic compute – expand and contract the amount of computing power, but really he see’s the biggest disruption as “consumption versus subscription”. The reason for this is because it shifts the balance of risk from the consumer to the software vendor meaning “it affects the entire culture of the business, it affects pricing, it affects go to market, it affects sales compensation plan and it affects the product you build as it has to be self service and show value to the customer immediately.

As a result of navigating this potential pitfall and achieving more than its prime objective for FY20 the forecast for FY21 is to have minimum revenue more than triple and reach $35m as a result of plans to migrate 100PB of data to the Azure cloud and more than 30PB into AWS.

Richards, added that Covid-19 has also helped drive the change and adoption of cloud computing and he expects to see more opportunities like the one announced last year where WANdisco enabled a telecommunications company to move vast swathes of data – in this case 13 petabytes (13000000gb) – from on premise storage to the cloud.

He added that this will help support the future development of machine learning and said: “I think it’s probably widely known now that building on premises infrastructure for machine learning and artificial intelligence is pretty futile as you just can’t do it.”

Looking ahead to the future WANdisco has spoken previously about a potential US market listing, Richards explains, “I think we’ll be looking at this sometime next year depending on a few factors.”

The factors he mentioned include a move to a consumption model which he states “US investors really value that model very highly”. He added that by moving fully to the consumption model is one of the key factors as it builds a predictable underlying business model that gives investors confidence of the numbers and the future. He also added that other factors include some legal and financial.

Since the year end, the group has completed the subscription and placing of 6,885,572 new ordinary shares by existing shareholders, which raised gross proceeds of $42.5 million. The proceeds will be used to support our relationships with strategic partners and provide growth working capital.

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