On track for another strong year
Blancco is the world’s leading developer of ‘data erasure’ software, used to protect governments and corporates from ID/data theft and cyber-crime, along with being a pioneer in smartphone diagnostics (Xcaliber). It is roughly 7x larger than its closest competitor, and led by CEO Pat Clawson, who has 20 years’ experience in technology/IT security.
Once again, like clockwork, came positive news this morning that Blancco continues to deliver strong top line growth on the back of a buoyant data erasure market, excellent customer retention rates and increasing ARPUs. Here, we anticipate FY17 revenues will jump 25% organically, generating adjusted EBIT margins of 25.5%
This has been achieved despite investing heavily in product development, sales heads and brand recognition. Furthermore, given Sterling’s weakness against the $ (circa 40% of sales from the US) following the BREXIT vote, we suspect that there may even be some scope for upgrades in due course.
The stock at 215p appears lowly rated compared to other cyber-security peers, particularly in light of its top quartile growth rates, EBIT margins and FY17 PEG ratio of 0.44x.Indeed, although we make no change to our forecasts, the sum of the parts (SOTP) does rise to 255p/share from 245p , reflecting the group’s strong start to the year, updated sector comparatives and ongoing momentum.
Finally, after 6 transformative years at the helm, Non-Exec Chairman and turnaround specialist, Matthew Peacock, has decided to step down (probably sometime in Q1’17) - and will be officially replaced after an orderly handover. We see this as a logical move given the €103.5m disposal of the Repair Services division in April and the firm’s successful transition into a pure-play software developer.
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