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Nearmap Ltd - HY20 Report – Down 5% On Worrying Result

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities 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$852 million.




What are the key features of Nearmap’s HY20 report?

  • Revenue for HY20 is A$46.3 million, up 31% compared with the corresponding period.
  • Loss from ordinary activities after tax attributable to members is (A$18.6 milion), up 843% compared with the corresponding period.
  • Operating cost base is up 61% compared with the corresponding period.
  • Global subscriptions for HY20 is 10,081, up 8% compared with the corresponding period.
  • Net tangible assets per share for HY20 is A6.4 cents, down 53% compared with the corresponding period.
  • No dividend to be paid in FY20.


What are the drivers of this result?

The key reason for Nearmap suffering a substantial loss in HY20 is due to a 61% increase in operating cost base and the acceleration of capture cost amortisation.

Chief Financial Officer, Mr Andy Watt said:

1H20 represented the largest period of investment into the business post the capital raise, with all areas scaling to a critical mass in support of sustainable future growth. With this period of investment largely complete, cash consumption in the second half will be reduced as we focus on driving business performance and leveraging the investments made.


What is the outlook for Nearmap?

The outlook for Nearmap could be positive if several factors falls into line. Nearmap could become the global leader within the market of location intelligence. There are two positives from the HY20 result. Firstly, revenue and subscriptions are increasing strongly. Secondly, Nearmap has a solid balance sheet with no debt and a closing cash balance at 31 December 2019 of A$49.6 million.

Nearmap’s North American business is performing strongly, with a 41% increase in annualised contract value (ACV). The North American core business delivered a strong and improved performance in its second quarter, validating the sales and marketing investment and giving further confidence in the scalability of the North American business. The Australian and New Zealand ACV increased by 14%, which again is showing signs of growth within the business.

However, it is important to note that on 30 January 2020, Nearmap announced an updated and revised guidance for FY20. Group ACV portfolio has been revised to be in the range of A$102 million – A$110 million (previous guidance was ACV to be in the range of A$116 million – A$120 million).

CEO Dr Newman said on Nearmap’s outlook that:

the fundamentals of the Company’s business model and the nature of the opportunity are unchanged, and Nearmap continues to be well positioned to deliver on the Company’s growth strategy over the medium to long term.


What is the market reaction to Nearmap HY20 result?

The market initial market reaction to Nearmap’s HY20 report is negative. Nearmap’s share price is down 5% and is currently trading at A$1.78.




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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