Endace earnings beat guidance, strategy still under review

Wednesday 23rd May 2012

Endace, which commercialised cyber-security research done by Waikato University, has beaten the earnings guidance in March when British government austerity measures squeezed the Auckland company's revenue stream.

Net profit was US$1.8 million, or 10.5 US cents per share, in the 12 months ended March 31, down from US$2.2 million, or 12.95 cents, a year earlier.

Pretax earnings of US$2.2 million were more than twice the US$1 million flagged in March, and just ahead of the US$2 million forecast in October. The pretax profit included the recovery of US$720,000 owed to Endace that the company had previously taken as a provision for bad debt.

"We are confident of our competitive technology strength in the market and remain committed to increasing our focus on growth in the enterprise data centre," chief executive Mike Riley said in a statement. "Our sales pipeline is healthy and we remain very excited about the opportunities for Endace."

The stock rose 1.2 percent to 410 pence on the London stock exchange, having shed 27 percent since it issued its profit warning in March. That values it at 68.3 million pounds, some 25.8 million pounds less than before the warning.

That warning prompted the company to appoint Deutsche Bank to review its future options, a task that is still underway.

Chairman Ian Graham said the process isn't complete, but the company has "achieved greater clarity around our strategic options, our strengths and weaknesses and our focus on Endace as a global network monitoring company with development based in New Zealand, but with a growing US presence."

Endace's revenue grew 7.3 percent to US$41.2 million with wider gross margins at 73.1 percent from 66.5 percent a year earlier. It didn't burn through as much cash as expected, holding US$5.4 million in cash and equivalents as at March 31, more than the US$4 million flagged in its profit warning.

The company provides high-performance traffic analysis, latency measurement, network security and application acceleration solutions that capture, inspect and report on every single data packet, according to its website.

BusinessDesk.co.nz

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