WANdisco has issued preliminary 2022 accounts and they are as bad as expected, with the company taking steps to get recapitalized and move its sales strategy onto a sustainable footing.
The company, well-known for accepting “potentially fraudulent” sales orders and reporting 2022 revenues of $24 million that should have been $9.7 million, came crashing to Earth on March 9 this year. Its shares were suspended, its chairman and CFO left and then the incoming chairman, CEO and CFO found it would run out of cash by mid-July unless it raised $30 million.
The preliminary 2022 accounts show 2022 revenues were $9.7 million with a statutory loss of $28.2 million, comparing to a loss of $47.6 million the year before. CEO Stephen Kelly said: “I am a shareholder in WANdisco so I share many of the same sentiments, surprise and disappointments as other shareholders. What I can say is that 2022 in many respects turned out to be a wasted year. Having got off to a bad start, FY23 will be different. I am determined that it will serve as a real transition year towards a sustainable, growth-focused future for our business.”
The recapitalization process is underway, after Kelly gained shareholder approval. That should achieve two immediate things: the relisting of the company’s shares and its ability to continue operations for a good few months. This will give it time to rebuild its sales pipeline and become, hopefully and eventually, profitable.
Kelly has set about having the firm recognize that it is in the mire because of past bad decisions and processes. He said: “The irregularities which came to light in March 2023 shattered the view that the Company had passed an inflection point and secured significant orders from large corporate companies in some of our chosen market segments. In reality, in 2022 we achieved little growth in sales bookings and revenue as compared to 2021.”
Costs had risen, he added. “We pivoted some functions within the company towards supporting prospective customers, who failed to materialize. It also meant that as 2022 progressed, we invested in significant costs in preparation for the new order intake only to find that the breakeven point for the business had receded once it was discovered the orders were false.”
Overall the sales department came in for some flak. “The belief that the group had secured significant new orders led to some complacency amongst the sales and business development resources such that there was a failure to develop a significant pipeline believing that the substantial orders that had been placed would provide an opportunity to achieve the required sales growth in an orderly fashion.”
Kelly said: “It is pointless dwelling on the past. We can only learn from the mistakes and strive towards excellence in governance as a platform to build a sustainable, high quality, profitable growth technology company.”
Does WANdisco have technology and the market fit that it can use to do this? Kelly thinks it does. “The market opportunity for WANdisco is huge. Put very simply, the rapid expansion of data from the growth in digitalisation and greater use of technology has led to a need to transfer large amounts of data between physical locations and from physical locations to the cloud providers.”
OK, customers want to buy. Does WANdisco have product to sell to them?
Kelly again: “Not only is our technology real but it is differentiated. Of course, there are alternative ways of doing what we can do and there are competing technologies. For example, there are open-source offerings to extract, transfer and load data. There are also data ingestion offerings from all the cloud providers; these are unique to the cloud providers. There are custom offerings often promoted by the data integrators.
“Often they can be expensive to develop reliably and time consuming to deploy. Our technology is different because it has the capability to seamlessly move large amounts of data, at speed with zero downtime or business disruption. It is cloud-agnostic, offering our customers the choice of multiple cloud providers, for hybrid and multi-cloud environments and live data can be moved even whilst it is changing.”
So there is a market and WANdisco’s software meets a need. Can the firm sell it?
Kelly asks: “Why have [we] failed repeatedly to take advantage of the market opportunity with differentiated technology?”
The CEO answers his own question: “We have been shown to be severely inadequate as a sales organisation to develop and convert sales opportunities despite the obvious needs of the prospective customers and the obvious growing demand for our offering.”
He is going to get this fixed by developing “a sales, partner and business development organisation that can better articulate the use cases and prove value to new and existing customers.”
Partnering has to improve. “We must work more effectively alongside our existing partner relationships with the cloud providers such as AWS, Google, Microsoft, Oracle, the OEM relationship with IBM and the analytics partnerships with Databricks and Snowflake as well as other alliance relationships.”
Direct sales have to improve as well. “Our strategy must be to grow direct sales alongside these partner relationships with a growing emphasis on subscription sales rather than a ‘commit to consume’ model.”
Services has been a neglected opportunity. “We can also do a better job at selling services alongside the software sales. Strong account management will also be used to ensure the demands of our customers can be reliably and effectively met. We must ensure ease of implementation and deployment which we can achieve using the strong technical support that we have in our business.”
Subscription brings in regular revenue whereas a “commit to consume” deal brings in revenue when the consumption happens.
Kelly says he wants to achieve “target run-rate cash flow breakeven some time during the latter half of FY24 followed by EBITDA breakeven and ultimately to move towards profitability. We can achieve this by driving sales growth and by ensuring better cost management.”
B&F thinks WANdisco is going to have Frank Moser, its CRO who joined in May 2021, prove he can get sales organized to fulfill Kelly’s ambition. Business development is also set for a rigorous inspection and potential shake-up, as is marketing.