Psst! You can profit from the data expert that keeps your text messages private
ABOUT 4.5billion people use the internet every day, almost 60 per cent of the world’s population. Every minute, they send more than 16million text messages, 160million emails and millions of photos. The numbers are mind-boggling and they are growing at a rate of knots. As internet usage soars, data volumes follow suit.
Consumers keep personal information galore on their mobile phones, tablets and laptops. And in the business community, the amount of data stored worldwide is expected to increase by more than 60 per cent a year between now and 2025.
Much of this data is private. And increasingly, there are strict laws to make sure that companies treat this electronic information properly.
Blancco is one of the foremost providers of data erasure software, making sure that data is permanently removed from devices such as smartphones and computers, as well as hard drives and huge servers.
The company appointed new management last year, the business is growing fast and the shares, at £1.32, should do well.
Blancco’s business is divided into three streams. It helps businesses erase old data. It wipes data from mobile phones so they can be used again. And it makes sure that, when companies dispose of electronic equipment, the data on them is permanently and securely removed.
Blancco historically focused on this last area, where it is the global market leader by some margin. The division is still growing fast – with turnover up 18 per cent in the year to June 2019 – but the other two divisions have even more potential.
Companies are more interested today in retaining and reusing computers, servers and other equipment than disposing of them. Reuse is cheaper, easier and more environmentally friendly, but it does mean that businesses have to be cleverer about data storage.
Keeping huge amounts of old information makes computers slower and less efficient. It means that if a firm is hacked, there is more to steal.
Increasingly, too, it is illegal for companies to hold data for long periods of time. Blancco takes these problems away with simple software that removes data safely and permanently.
Blancco’s kit is highly regarded, it is used by some of the biggest companies in the world, and sales from this division grew 20 per cent in the past financial year.
The mobile phone subsidiary is growing more slowly, at just 4 per cent last year, but this is likely to pick up significantly in future. Not that long ago, consumers would be desperate to upgrade to new and better phones as soon as they were launched.
Today, that segment of the market has slowed and, even when people do upgrade to new handsets, they are more likely to trade in old devices at the same time.
In 2017, 146million phones were traded in. By 2022, that is expected to more than double to 293 million. The data from these phones needs to be completely erased and Blancco’s reputation in this area is second to none. The group also provides technology that allows mobile phone groups and retailers to help customers if their phones stop working.
It even lets consumers – and companies – work out how much phones are worth by assessing remotely whether devices are damaged or in perfect working order.
Blancco fell into difficulties in 2017, when previous management overpromised and under-delivered. A new chief executive, Matt Jones, was appointed, and a new finance director, Adam Moloney. Jones has spent most of his professional life in Silicon Valley and is still based in California. Moloney, based in Huntingdon, Cambridgeshire, was previously at Eckoh, a fast-growing call centre technology business (whose shares have more than tripled to 61p since Midas recommended them in 2013).
Jones and Moloney have refocused Blancco on its core business areas, invested heavily in research and strengthened the balance sheet, so the business has cash in the bank. They have also focused on building relationships with big technology firms that can sell Blancco’s products on its behalf.
The group is already a global business, selling its services in 60 countries, with its sales split almost equally between Europe, America and the rest of the world.
Blancco is still relatively small, however, so establishing deals with bigger partners can help Jones punch above his weight.
City brokers are enthusiastic, forecasting that sales will grow 16 per cent to £35 million in the current financial year, rising to £40 million in the year ending June 2021.
Profits are expected to increase at an even faster pace, soaring 30 per cent to £3.9million this year, and to more than £5million in the following 12 months. MIDAS VERDICT: Blancco is a robust business in a fastgrowing industry. The company is also likely to prove resilient whatever the external economic or political conditions. At £1.32, the shares are a buy.