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NEA

Nearmap LTD - FY19 results.

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Nearmap LTD (ASX: NEA) is a geospatial mapping technology company that produces aerial data that is reliable and up to date for businesses use. Nearmap publishes updated coverage of key areas multiple times a year whilst maintaining growing archives that offer deep insights into industry and business operations.

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What are the FY19 results for NEA?

  • Annualised contract value grew by 36% to $90.2m
  • Statutory revenue growth of 45% to $77.6m
  • Global subscription growth up 11% to 9800 customers.
  • Net loss after tax grew by 35% to $14.9m

 

What are the key drivers of the result?

Nearmap’s revenue growth was supported by additional customers as $6.2m worth of new business was gained in FY19, the Company was also able to upsell existing customers to more extensive services generating $5.6m in revenue. Whilst customer churn also dropped to 5.6% for FY19 from 7.3% in FY18 representing improved customer experiences. Margins have remained consistent for NEA at 91% whilst development costs have risen to $6.1m as NEA invests in new camera technology.

The Company’s 35% increase in net loss after tax is a result of depreciation and amortisation costs that have grown by 101% representing a decrease in value of the Company’s assets. Furthermore, NEA has faced a 42% cost increase in scaling expenses that will allow it to take advantage of continued demand.

 

What is the outlook for Nearmap?

As the Company continues to invest in its North American operations that produced a 76% return on annualised contract value in FY19, Nearmap will be well positioned to increase its revenue as it services a much larger consumer base. NEA is also developing artificial intelligence services which will increases its product range, the Company remains a global leader in aerial mapping and will continue to benefit from its first mover advantage.

 

How has the market reacted?

The share price of NEA has dropped sharply in response to the increased loss Nearmap’s reported for FY19, dropping 9.24% to a share price of $2.85. The Company has a market cap of $1,408m and has the ability to generate substantial returns if more businesses recognise the benefit its mapping technology can offer them.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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