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Nearmap Ltd FY20 Results – Share Price Down 12%

Timothy Anderson

Timothy Anderson is a contributor with the Australian Stock Report and is currently in his final year of studying a Bachelor of Applied Economics and a Bachelor of International Relations and Politics at the University of Canberra. Tim has a genuine passion for economics, specifically in macroeconomic analysis including how certain macroeconomic policies and indicators affect financial markets and the economy, as well as how these factors affect personal investment strategies. Tim currently holds RG146 Tier 1 Generic Knowledge qualifications.

Nearmap Ltd (ASX: NEA) is a technological company that specialises in high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. Nearmap has a market capitalisation of A$1.1 billion.

 

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What are the key features of Nearmap FY20 result?

Nearmap reported Group Annualised Contract Value (AVC) portfolio at 30 June 2020 of $106.4 million, up 18% from FY19. Nearmap’s earnings before interest, taxes, depreciation and amortization for FY20 is $9.1 million, down 41% from FY19. Statutory loss after tax for FY20 is $36.7 million, up 25% from FY19. Group customer churn (number of customers who did not renew subscriptions) increased to 9.9%, this compares to FY19 churn of 5.3%.

Regarding Nearmap’s operation performance, North America observed a 27% increase in ACV and a 30% increase in subscriptions. This was driven by a strong performance from insurance, roofing and government industry verticals mitigated the unforeseen enterprise churn events in 1H20. 12-month churn fell to 16.7% at the end of FY20 from 20.6% in 1H20. This compares to churn of 4.4% in FY19.

Australian and New Zealand observed a 11% increase in ACV and a 3% increase in subscription growth. This result was mainly driven by Nearmap’s re-focus on sales leadership that improved ACV in the second half of the year. 12-month churn fell to 5.9% at the end of FY20, down from 7.2% in 1H20.

Nearmap group cash balance at 30 June 2020 is $33.8 million, down 55% from FY19. Group cash is down due to Nearmap’s stepped up investment across all areas of the business to build saleable foundations for future growth. Importantly, in April, Nearmap deployed prudent cost management to preserve cash, maintain a strong balance sheet and maximise flexibility for the future. The cost management initiatives include reduction of board and chief executive officer compensation of 25%, reduction of all other employee remuneration of 20% and deferral of FY20 short-term inventive bonus schemes and reductions in permanent headcount equivalent to 10% of the company’s cost base. As of today, Nearmap has not announced any capital raising plans.

What is the outlook for Nearmap?

The outlook for Nearmap is potentially positive as Nearmap could become the global leader within the market of location intelligence.

Nearmap’s Chief Executive and Managing Director Dr Newman mentioned that Nearmap is still in a strong position to maintain growth and is remained focused on its customers and core growth verticals in FY21. It is also noted that Nearmap’s cash management initiatives announced in April should not impact the company’s key growth initiatives.

What is the market’s reaction to Nearmap FY20 result?

The market reaction to Nearmap’s FY20 result is very negative. Nearmap is down around 12% and is currently trading at A$2.34. Nearmap is down heavily as the market was expecting a stronger result.


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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