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Listed network monitoring hardware maker Endace has finished its financial year on a high with a pretax profit of US$4.3 million ($5.4 million) and a 40 per cent increase in revenue.
The results for the year to March 31 cap a period of intensive development for the company,
which makes 80 per cent of its sales in the US and Europe and has sought to beef up its local research and development capability and bolster its overseas sales force.
Based in Auckland but listed on the London's Stock Exchange's AIM small-cap board, Endace plans to open an R&D centre in central Auckland to be closer to the universities and complement its 50-strong facility in Hamilton. It will also seek to take advantage of the Government's 15 per cent tax credit on research and development spending that began this month.
Endace's chief executive, Mike Riley, who took over from founder Selwyn Pellet nearly a year ago, said gaining news giant Reuters as a client last month was a major step forward as the financial services market was the fastest-growing sector for Endace.
"You hear a lot about the doom and gloom in the financial markets but they need our products more than ever," said Riley.
Endace sells network devices that monitor response times across networks and report on the flows of data going to and from companies. Financial traders were prime targets for Endace, which has access to 3000 of Reuters' clients through the deal.
"The algorithmic trading guys are all about electronic trading because they all rely on real-time access to fresh data."
The profit was made on revenue of US$24 million and came in a year when Endace bought US security hardware specialist Applied Watch Technologies for US$4.5 million.
While the financial sector was booming for Endace, growth was also coming from telecoms operators seeking to run real-time network services.
"What's doing it is internet TV, 3G wireless and social networking. It all means more bandwidth," said Riley.
Endace's share price has tumbled from a high of 4.85 ($12) in November to around 3.07 yesterday, tracking lower than the AIM index since late January.
"No doubt they've dropped. I hope any doubts about Endace will be allayed by this result," said Riley.
Endace has a market capitalisation of 45.8 million and has become one of the few profitable players in network hardware.
