Endace profit dip less than expected

22:35, May 22 2012

Waikato University spin-off Endace, which is listed on the junior Aim share market in London but employs 100 New Zealand staff, appears back on track after reporting a smaller-than-expected US$400,000 fall in its annual pre-tax profit to US$2.5 million.

Revenues rose by 7.3 per cent to US$41.2m.

The company's shares slid 13 per cent in a single day in March after it warned its profit might fall as low as US$1m and its sales could fall 10 per cent short of analysts' expectations  and that it had appointed Deutsche Bank to review its future options.

Chief executive Mike Riley said the Deutsche Bank review, which was still under way, had "clearly validated our market focus and competitive technology position and confirmed the wisdom of our investment in a strengthened market presence in North America".

"We are confident our recent hiring successes, bringing key executive talent into our marketing, corporate and channel development functions, will help to extend our reach within the industry, customer and partner base," he said.

Endace carries out most of its research and development in Auckland and Hamilton and manufactures in Christchurch.

The March sales warning had been a rare big blip for the company, which has enjoyed stellar growth in a white-hot market selling software and hardware that help telcos, government agencies and large corporates monitor vast amounts network traffic so they can spot irregularities as they occur. Endace said its actual pre-tax profit included a recovered debt of US$720,000, for which it had made a provision.

Endace founder and chairman Ian Graham was named entrepreneur of the year at the New Zealand Engineering Excellence awards in Wellington in December, capping off a year in which the share price climbed 50 per cent.