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CIRATA PLC Interim / Quarterly Report 2021
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Interim / Quarterly Report
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National Storage Mechanism | Additional information 
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 overheads1 of $20.1 million (H1 2020: $17.9 million) |
| · | Adjusted EBITDA2 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 loss2 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 overheads1 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 EBITDA2 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 ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (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 2021 (Unaudited) |
30 June 2020 (Unaudited) |
31 December 2020 (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 capital |
Share premium | Translation reserve | Merger reserve | Retained earnings | Total 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 ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (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:
| Revenue | Six months ended 30 June 2021 (Unaudited) $'000 |
Six months ended 30 June 2020 (Unaudited) $'000 |
Year ended 31 December 2020 (Audited) $'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 ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (Audited) | Year ended 31 December 2020 (Audited) | |
| % of revenue |
Revenue $'000 | % of Revenue |
Revenue $'000 |
% of revenue |
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
| Revenue | Six months ended 30 June 2021 (Unaudited) $'000 |
Six months ended 30 June 2020 (Unaudited) $'000 |
Year ended 31 December 2020 (Audited) $'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 ended 30 June 2021 (Unaudited) $'000 |
Six months ended 30 June 2020 (Unaudited) $'000 |
Year ended 31 December 2020 (Audited) $'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 ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (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 ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (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 ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (Audited) |
|
| $'000 | $'000 | $'000 | |
| Loss for the period attributable to ordinary shareholders | 20,317 | 13,979 | 34,332 |
| Weighted average number of ordinary shares | Number of shares '000s |
Number of shares '000s |
Number of shares '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 ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (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 2021 (Unaudited) |
30 June 2020 (Unaudited) |
31 December 2020 (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 2021 (Unaudited) |
30 June 2020 (Unaudited) |
31 December 2020 (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 2021 (Unaudited) |
30 June 2020 (Unaudited) |
31 December 2020 (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 2021 (Unaudited) |
30 June 2020 (Unaudited) |
31 December 2020 (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 ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (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 ended 30 June 2021 (Unaudited) |
Six months ended 30 June 2020 (Unaudited) |
Year ended 31 December 2020 (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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