New Zealand-based Endace is increasingly finding its unique hardware technology a 'must-have', particularly in the US and EMEA, in a market driven by the need to monitor network activity at the highest network speeds.

Results for the year to March revealed a 42% revenue rise to US$24.2m (£12.3m), and pre-tax profits increased 15% to £2.3m, driven by the launch of Endace's more efficient and higher-value 'NinjaProbe' technology last year as well as the £4.6m acquisition of Applied Watch Technologies, a US-based provider of online security and management tools.

More than half of Endace's clients are based in the US and EMEA where traffic and regulation are both high. Key clients tend to be 'tier 1' organisations such as financial services firms, network providers and government agencies. The increasing security monitoring demands on these groups will be a growing feature of growth, according to CEO Neil Rodford.

Last year's results revealed good gross margins of almost 71% and operating margins of 22%, despite investment in engineering staff in New Zealand and in sales teams worldwide, as well as new senior management in Europe.

House broker Panmure Gordon is forecasting revenue of £17.7m ($35m) for March 2009 and a strong pre-tax push to more than £3m, translating into EPS of 14.5p. Those estimates place the shares on a lofty price-to-earnings ratio of more than 30 times, understandable given growth rates and the brokers' upgraded price target of 630p, but rather pricey nonetheless. Speculative buy.

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Endace	AIM	£55.79m	372.50p	0.00p
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