Wynyard full year loss doubles as drive for growth pushes sales up 62%

Wynyard Group [NZX: WYN], the security software firm, reported a near-doubling in its annual loss as its push for large global contracts helped boost revenue 62 percent in its first full year as a listed company.

The net loss widened to $22.3 million, or 19 cents per share, in calendar 2014, more than twice the level forecast in its share float prospectus, although the result was in line with market expectations, owing to subsequent guidance from the company. The loss compares with a pro-forma $11.2 million loss a year earlier, and more than the $10.2 million flagged in its 2013 prospectus, the Auckland-based company said. Revenue rose to $26 million, just below its $27 million prospect forecast, and below Forsyth Barr's estimate of $27.5 million.

Last month, Wynyard said it missed its upgraded sales guidance for revenue of between $29 million to $32 million as negotiations for some key contracts dragged into the new year.

"In the middle of 2014 we made the strategic decision to focus on larger contracts and expand Wynyard's government business," chief executive Craig Richardson said. "These decisions are aligned with demand we see for our solutions to address global growing serious crime problems. These decisions are starting to deliver the uplift and higher quality of revenue we expected."

Wynyard is one of a number of recently listed companies that are foregoing short-term profitability with the goal of achieving rapid global growth. The company raised $35 million in the year through a placement and share purchase plan to help fund those aspirations.

Its operating cash outflow rose to $14.9 million in the six months ended Dec. 31 from $5.3 million a year earlier, as Wynyard expanded its global workforce to 228 from 151. The capital-raising meant Wynyard had cash and equivalents of $23.4 million as at Dec. 31.

The company didn't offer guidance for the 2015 year, saying it would update investors after the end of the first quarter.

"Wynyard has a strong sales pipeline across all regions," it said. "The continued focus on larger corporate and government contracts, however, introduces contract execution and revenue recognition timing risk."

The software developer's recurring software revenue rose 7 percent to $13.7 million in the year, while software licence revenue rose 62 percent to $8.1 million. Professional services revenue was unchanged at $3.3 million.

Sales to New Zealand customers rose 22 percent to $12.9 million in the year, while UK sales more than doubled to $8.2 million, and Australian revenue climbed 41 percent to $3.1 million.

The shares last traded at $2.05, and have increased 5.1 percent this year.

(BusinessDesk)