Windward (WNWD), a leader in the emerging field of AI-enabled maritime domain awareness (MDA), saw revenues jump 18% in the first half of 2023 to $12.8m as it lifted its customer count to 174, a 67% increase on the previous year.
It added 48 new commercial customers in the period, almost matching the 53 signed across the entirety of 2022 and lifting the company’s annual contract value (ACV) to $27.6m, a 23% jump.
Alongside tight cost control, that growth helped it boost its gross margin to 78% - from 72% last year – and slash its adjusted Ebitda loss from $5.4m to $3.8m. Costs increased by just 5.8% to $18.3m, a demonstration of the operational gearing inherent in the business which also enabled it to more than halve cash burn to $4m.
With $17.9m of cash, which should see the company through to forecast Ebitda profitability in 2025. However, supportive market conditions may help it reach that milestone more quickly.
In particular, the company pointed to the EU’s 11th package of sanctions as a key driver of growth. Notably, the Ukraine conflict has increased awareness of the need for closer monitoring of shipping traffic to identify sanctions violations, with the EU’s latest sanctions now allows ports to deny entry to vessels utilising deceptive shipping tactics to circumvent sanctions.
That means demonstrating compliance is now hugely important for commercial shipping companies, with Windward’s AI-based technology allowing companies like Peninsula Petroleum – which recently signed a deal with Windward - to manage such risks in real time. On signing the contract, Peninsula described Windward’s technology as “the clear best in class solution to provide us with a thorough and accurate view of maritime risk.”
A recently signed partnership deal with the London Stock Exchange to integrate Windward’s AI into its Workspace platform for trading and chartering customers should also drive further commercial deals, and help the company continue to grow its non-government revenues, which rose to 32% of its total ACV in the half from 23% last year.
Although the company’s strategic target is to grow commercial accounts further, government revenues continue to grow quickly, up 28.7% in the USA and 26.1% across the rest of the world as existing customers expanded their usage under its “land and expand” strategy. US revenues are expected to grow further in the second half as a result of the federal budget cycle.
Continued product development is also driving growth, with the launch of its Shipments Analytics Dashboard and additional capabilities on its supply chain solutions, expansion of which is a key strategic focus.
Ami Daniel, CEO and Co-Founder of Windward commented: "The backdrop of the war in Ukraine, increasing regulations and the market-wide drive for efficiencies and cost reductions continues to underline the need for Windward's solution. These drivers give us confidence in a strong second half, and our ability to deliver the roadmap to positive EBITDA run rate exiting FY2024.”
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These results are a clear demonstration that Windward is quickly establishing itself as a technology leader in the Maritime Domain Awareness market, which is still in its early stages of growth.
Changes in maritime regulation and the scale of the monitoring challenge will require migrations to digital systems, not unlike the development of air traffic control in previous decades.
That leaves Windward much space to grow into, as MDA uptake increases to tackle national security, law enforcement, vessel safety, and environmental protection, as well as improving the efficiency of seaborne trade.
What’s more, and as Windward’s ACV growth also demonstrates, contracts in the MDA space tend to be long, with predictable follow-ons and long-term revenue visibility.