Endace rally values company at $137 million

UK AIM listing finally seems to be working for Kiwi company

What a difference a few months can make in IT.

Earlier this year, New Zealand network appliance company Endace was still questioning its decision to list on the UK’s alternative AIM sharemarket as its shareprice languished.

But after beating expectations to report nearly US$17 million in revenue to 31 March 2007, and after a successful UK investor briefing tour, the market seems to have got the message.

Until March, Endace’s shareprice lingered around the £1.50 mark, but by mid-year it had surged to a high of £4.80 before settling back last Thursday to £3.50.

Mike Riley, the company’s new chief executive, says a huge US$2 million deal in March with a “North American telco” kicked the rally along.

“It gave us instant traction and was a huge contribution to the end-of-year result,” he says.

Profits of US$3.9 million, up from US$1.5 million in 2006, didn’t hurt either.

The rally in Endace’s share price has also had a dramatic effect on the company’s market valuation. At £1.50 the company would be valued at £21 million, or NZ$55 million. At £3.50 it is now valued at NZ$137 million.

Riley says during his briefing tour of the UK with chairman Selwyn Pellett there was a lot of excitement about Endace being a real company producing real revenues and profits. Riley’s history with UK listed companies such as Newbridge was also well received.

Endace remains focused on its core telecommunications and government market, but is also targetting opportunities in the financial services sector for its network probe appliances. He says with more and more electronic, or “black box” trading, where trades occur without human intervention, the performance of networks can have a direct impact on trading success.

Endace’s technology, developed at Waikato University, timestamps packets accurately to within 60 nanoseconds. This means the performance of trading systems can be much more easily analysed and optimised, Riley says.

“Microseconds could mean the difference between a deal or no deal,” he says.

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