As previously mentioned here on the blog last August, I bought some shares in Windward (WNWD) which at the time stood around 47p.
Although, It was only last month that I once again caught up with CEO Ami Daniel, given that the company has just delivered its H1 results for the full year 2024, I felt it worthwhile speaking once more.
First though, a quick recap on what the business is about and its markets, for anyone taking a look at WNWD for the first time.
The company is an AI-based risk management SaaS platform for the global shipping, energy and related maritime logistics and trade finance ecosystems. The software allows customers to monitor, assess & predict trade vessel compliance with sanctions and track individual sea cargo containers in real-time and predict ETA and delays.
Amongst its suite, WNWD provides real-time information and key insights on the maritime sector, where as a specialized data provider, it enables intelligence-driven decisions to manage risk and achieve business and operational efficiencies.
Although many investors are understandably wary of businesses jumping on the AI theme, it is worth noting and stating that WNWD has been focused on this area for a considerable time and was first to market with specialized generative AI solutions embedded in its platform.
The market in which it operates is vast with many facets that provides for a significant opportunity going forward and long-term sustainable profitability, which is now within touching distance.
The shares, as I write, are now standing at £1.26p each which values the business at £112m, although speaking with Daniel earlier today, he stressed that he is firmly focused on driving the business as opposed to looking at the share price performance.
And on the business front he is clearly positive on the first half performance, which saw extremely impressive organic growth of 30%, whilst churn was at a record low coming in at 3%.
Importantly, the CEO pointed out that in relation to the churn figure business that had been lost or wasn’t renewed was very much at the smaller end in both customer size and monetary terms.
Indeed, WNWD continues to win new business where it boasts a wealth of major blue chip customer names, which not only provides for a significant endorsement of its offerings, but also signals the potential for ongoing growth.
Broker Canaccord which has upped its target price to £2.00 from £1.37, sounds bullish on the full year prospects, following the delivery of $17.6m in revenues at the halfway stage.
The broker also highlights that it believes the performance from the company is the fastest organic ARR growth among UK-listed enterprise software businesses, thus further highlighting the prospects going forwards.
Although for now WNWD does remain loss making, the much desired and all-important move into profit is very much in sight and Daniel sounds a confident note on both that and cash generation.
For now, Canaccord is forecasting full year 2024 revenue of $36.2m with an EBITDA loss of $1.8m, whilst net cash is expected to stand at $16m. For next year, the same broker is looking for $43.5m which in turn paves the way for positive EBITDA at $400k.
Whilst in isolation the latter figure may not sound particularly earth shattering, it will nevertheless prove to be pivotal and an inflexion point for the business regarding the longer-term journey for the sustainable and growing profits.
Whilst WNWD’s customer base is still led by Government related contracts, the progress across the massive commercial space has been impressive and has been gathering momentum, where it now accounts for 33% of revenue.
Daniel acknowledges the continuing opportunities across this space and told me that the goal is to continue that acceleration and get the numbers up to 50% of total sales.
Although the net cash position looks adequate, I asked the question as to whether a raise might not be a bad thing, given the recent uplift and performance on the share price front, which if implemented would result in an acceptable level of dilution.
However, Daniel dismissed the notion, where he reiterated that they were comfortable on the cash front and that there was absolutely no need to raise further money.
If, he pointed out, that there was a suitable acquisition on which to move for, then certainly it would be something to consider, but that isn’t the case at present and there are no plans for any equity raise as the cash position is seen as comfortable as profit is within touching distance.
Clearly, the organic growth opportunity remains large and ongoing where the CEO stressed it was all about a combination of continuing to win new customers, whilst also selling more to those already on board, as the company continues to evolve and expand its product set.
Some investors have pointed out that with the company being Israel based, there are fears of what effect an escalation of the Middle East troubles could have on the business, so Daniel was happy to address this.
Having relocated to London himself, he explained that London is effectively the HQ of the business now, where it also has operations elsewhere such as the US which currently accounts for almost 40% of total revenue.
He added that they have looked very closely at the potential risks relating to its operation in Israel, but there appears to be very little to be concerned about, particularly on the operations of the business, should hostilities escalate.
Away from that, one thing that others will have noted is that a major holder and long- term investor recently exited on the stock, a move that can unnerve investors.
Daniel was happy to explain that the fund in question, Maritime Invest, had been on board from the early days and that as one investor exits and takes its profit, another is prepared to buy into the story. That is something he views as healthy and occurs across the market, so it isn’t something to be concerned about.
Particularly as in this case, a new investor has emerged in the form of Atlanta based West Elk Capital which now sits on 4.9% stake in the company.
This fund apparently looks to identify businesses that it believes have large addressable markets, recurring or repeating revenue models with a stable customer base.
Given WNWD’s significant exposure to the US, it is good to see such an investor coming on board and it will be interesting to see if it adds to the holding in due course.
With current trading remaining strong, Canaccord states that its current estimate for full year 2025 is likely conservative, where with strong visibility and demand momentum WNWD can become sustainably profitable in 2025.
Further news flow is likely in the coming months and in late Autumn there are multiple government renewals due in the US to look out for. This process appears to be on track, where Daniel said that they haven’t seen any red flags in relation to that.
Canaccord assumes that should these be at least flat/in line, a likely conservative assumption in itself, any revenue contribution from new deal wins in the second half could create scope for further upside potential to our forecasts.
To my eye, Windward continues to look like a class offering, hence my holding and the potential for further growth and a scaling up on profits in the medium term, suggests that the broker target price could well be achievable.
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