DataWalk: big data platform serving law enforcement and insurance sector

DataWalk in 30s: DataWalk is a graph platform able to analyze big set of data. Its software helps to fight financial fraud and is used in law enforcement sector especially in USA. Company is at early stage of development with y/y double digits income growth at expense of positive gross margins and profit. However at this stage DataWalk has already build up big portfolio of clients, which increase on yearly basis. Keeping in mind that market of big data is constantly growing we find this company interesting.

DataWalk

Datawalk is graph platform able to analyze the big set of data. Company product is used mostly in insurance companies, helping with financials frauds and in public sector for law enforcement and intelligence. Datawalk is at early stage of development with double digits income growth Y/Y building up the mark and client base at the expense of not generating profit and positive gross margins. Even being at earlier stage Datawalk has proven track of record and building up the company base, so far more than 50 contracts internationally. The company was raised in 2011, in 2019 they debuted on the Warsaw stock exchange. Company hires about 120 persons (in 2021 they increase the number of employees of 50%) which 20% are in the USA.

Working principle of DataWalk platform, taken from datawalk.com

Platform of DataWalk

As mentioned, Datawalk produces software able to analyze big set of data, this software (platform) serves also as knowledge center, it has abilities of QA. The interface is easy to use. At the end we can easily visualize the results. The advantage of this platform is the ability of integration of new sources this could be done couples of minutes or hours. Here we put  the example  of datawalk platform on the used cases https://datawalk.com/resources/, we can see that platform has been widely used in many fields like:  law enforcement, intelligence, commercial sector which focus on bank, insurance and communication.

The values of implementing the platform may range from couples of thousand till 1 million usd. Strategy of company is aimed at 200k usd , pony contracts, but also elephant contract 5 millions usd every five (pony) contracts are also in mind.  The value of particular contract is not know however according to company they acquired ten of 3mln-5mln contracts and  one of 10mln usd contract.

Example of DataWalk platform in ued for financial crime risk assessment, taken from datawalk.co

Use of DataWalk platform

As mentioned before DataWalk operates mostly in two sectors, the commercial insurance sector, and the public sector.

Insurance sector
As the example of contract with insurance company we have WARTA signed in 2017, thank to DataWalk platform the detection of insurance fraud increased of 60%, which could results of gaining couples millions of pln. The cost for putting data walk into work was about 1mln pln.

Public Sector
In public sector company has/had many contract in USA law enforcement agencies for example with Northern Virginia Gang Grupa Task Force (NVGTF), Liberty Mid Atlantic High Intensity Drug Trafficking Area (LMAHID) and Rhode Island’s Office of the Attorney General purchase order. The values of these projects could range from couple thousand till 10 millions usd. So far company signed 28 agreement in usa which 14 of them concerns full implementation of data walk system.

Numbers of contracts
So far company signed 52 agreement which 34 is the full implementation of Datawlak platform and 17 was the pilot one. The 31 of these contracts was with public sector and 21 with commercial,insurance sector. 
The short term goal is to sign 20 big contract till H1 2022, till now they have 11 of these clients. The biggest client was via consortium  Research Innovation for 5 years with justice department of USA, the budget of this contract is 500mln usd. Here they replace Palantir, this job is done for Money Laundering and Asset Recovery Section Departament.

 

Numbers of client per year
Yearly company income

Company aims and future

These contracts increase company visibility and build up the company portfolio which helps Datawalk to acquire new customers in the future. Here we can name it the Land of expand strategy, for example thanks to success with Warta, DataWalk was able to sign the next contract with other company within the same Talanx Group, HDI Sigorta A.S.
DataWalk is at early stage at, the start up level,  not generating profit and with negative margins and with increased income at double digits Y/Y. Datawalk is at third of five step of evolution of technological start up. In total we have five  steps of start up development the whole process last for 10-15years. Positive cash flow will be attained at the last stage for now external financial aid is needed for this reason DataWalk debuted on Warsaw stock exchange, next stock emission are also planned in the future. The current money should be sufficient for 2 years. The cost structures as follow 52% is mostly B2B then 35% it is salary.

The eventual company buyer should appear when they have 100 clients, this should be done at around 2023-2026.

Right now the company is focused on increasing the company income and acquiring new customers building up the portfolio.   In 2021 contract with  Ally Financial , also important contract with usa defense department. In march 2022 was the contract with ONZ, this is for international safety  was signed. Indicating positive prognostic for the future.

Sales funnel

As to quantify the level of company income generated, company introduce the expression of sales funnel. Lets shave a look how this term is defined and how sales cycle process  looks in datawallk. The sales cycle last from 18 till 30 months.  Full Qualification of the opportunity for sales funnel occurs only when the customer confirms the readiness to purchase and has an approved budget and staffed project team to execute the selection process and the will to continue discussions with Datawlak. Project is taken into account in the sales funnel till execution of implementation, acceptance protocols authorizing the issuing of invoices for licenses and individual stages of implementation.
Sales funnel aggregate, does not take into account the realized sales , this may reduce the funnel in the period of realized sales due to conclusion of a contract, obtaining an acceptance protocol, recognition of all or a major part of the project as revenue This funnel should increase while increase the sales stuffing.

The sales funnel in  started Poland in 2015, whose results begin to materialize with two contacts  signed in  2017 and ministry of finance 2018. Funnel in amid strategy in 2019 with hiring two sales teams

Sales funnel taken from 3Q 2021 company report

Competition

The market at which Datawalk operates is mainly dominated by Palantir and IBM.  The products of Palantir are at different level, they are much more expensive (datawlak product are 3 times cheaper), both on price and implementation however they are comparable at level of managing the data.

Putting Palantir system into work is longer since Palantirs products are  more tailored for particular client. Both systems are comparable at management of big data. In Palantir we have black box environment.  The cost of Palantir Gotham is bigger here we have 140k usd while for data walk we have 30k usd.

Data walk is better then IBM i2 at the level of data available which they can analyze at cost (datawlak product are 2 times cheaper) and at efficiency. IBM i2 is rather old, implementation is highly personal and cost are really high. The most famous product is the Analyst’s Notebook for single user and small data. The IBM i2 in fact is the name of group of system, this system is couples times expensive then the one in datawalk.

The big data market

Global Industry Analysts indicates that big data market is 130 billion usd in 2020 and in 2026 it should be 234 billions usd which with 10.2% CAGR. According to IDC the biggest client for big data would be discrete manufacturing, bank and process manufacturing, next admission and service. The biggest market is in USA then in western Europe.

According to International Data Corporation in 2025 we will produce 160ZB where in 2016 it was 16zb.

Datawalk is specially focused on analyzing the data which helps to fight the crime , here the criminal market makes 3 % of global GDP. According to Ventures the cybersecurity will be worth 6 trillions usd.

Main head winds

  • Company is at early stage of development with income growing double digits Y/Y
  • Growing number of signed contracts
  • Constant increase of big data market

Main tail winds

  • Fast cash burning
  • Long selling cycle
  • Negative sentiment toward growth stock
  • Higher interest which make it more difficult to get the subsidies

DataWalk main company information

  Market Cap: 897 mln PLN(02-04-2022)
 Share Price: 183.6PLN (02-04-2022)
 Business area:  big data, security, law enforcement