“Great confidence†in the future
In today’s digital world, confidential information is under attack from cyber-criminals. Worse still the battlefield is vast, and sometimes in uncharted waters. Especially given data is often stored on multiple devices (eg mobile, laptop, hard-drive, tablet, cloud server, IoT gadget, car, smart watch, home speaker & wearable) and by numerous organisations (eg social media, healthcare, tax, utility, insurer, credit card, holiday, AdTech, education, car hire, bank & broadband providers).So what’s the answer? Well one solution being increasingly adopted by governments worldwide, is to beef up existing data privacy laws, introduce new ones and slap eye-watering fines on any offenders (eg £183.4m on British Airways & £99.2m for Marriott Hotels). Indeed there are now 108 countries who have passed some form of such legislation. With the latest being Ecuador, who rushed through a bill last weekend in response to a massive data breach involving 20m people - more than its entire population.
Hence going forward, we see continued robust secular demand for Blancco’s data erasure software. In fact, consultants Transparency Market Research, predict the market will climb by 19.6% CAGR between 2018 to 2026.
In terms of the FY19 numbers, turnover rose 13.4% LFL (12.2% constant currency) to £30.5m (vs £26.9m LY), with adjusted (post SBPs) EBITDA, EBITA and EPS coming in at £5.2m, £2.5m and 2.47p respectively. Net cash closed Jun’19 at £0.1m (conversion 114%), even after investing in both headcount (June 272 vs 243 LY) and new product development (split £0.9m opex & £4.4m capex vs £2.5m amortisation of internal R&D).
All 3 regions delivered 13%-14% LFL growth, with standout performances from Data Centres / Enterprise (+20% to £10.4m) and ITAD (+18%, £10.2m). Driven by increased channel sales, macro data/cyber concerns, tightening regulation, the re-provisioning of 100ms of smartphones/servers every year and the desire to reduce client IT costs without compromising security.
Our FY20 estimates and 175p/share valuation remain unchanged, with net cash anticipated to close Jun’20 at £7.1m, following the recent £10m placing (£6.3m net proceeds, post acqn & fees). CEO Matt Jones adding “we have great confidence in another period of strong progress, operationally and financially, in line with expectations.â€
Blancco Technology Group provides data erasure software. Co.'s segments are: Erasure, which enables customers to erase and repurpose IT devices with certified software; and Diagnostics, which provides diagnostics of smartphones and tablets, as well as new diagnostics tools. The erasure division focuses on development and delivery of solutions, includes: Blancco, a provider of data erasure software; SafeIT, which involved in cloud and networked data erasure; and Tabernus, which provides software erasure products. The diagnostics division consists of the Mobile Diagnostics business, comprising Xcaliber Technologies, a smartphone diagnostics software business and its SmartChk solution.
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