The Nearmap Ltd(ASX: NEA) share price rose 1% to $0.94c this morning, after the company announced that it was “positioning for further growth” in its US business.
Nearmap has appointed Patrick Quigley to the role of Executive Vice President and General Manager – International and Partners, which is a straightforward way of saying “Head of Global Sales”. According to his LinkedIn, Mr Quigley has a history of general manager/ vice president of sales roles over the past 10 years at companies such as Symphony and MarkLogic.
At Nearmap he’ll focus on further accelerating sales growth at both large enterprises and small-to-medium sized businesses in the USA. Nearmap has found in Australia that smaller businesses also find niche uses for Nearmap’s content. If this were extrapolated to the USA, the company appears to have a market opportunity that is many times larger. Management also stated that the smaller customer market is ‘largely uncontested.’
Nearmap will be looking to offer ‘global’ customer subscriptions, now that the company’s content covers multiple markets (Australia and the USA). Most investors measure Nearmap’s success by its growth in ‘ACV’ (Annualised Contract Value) which reflects the revenue that would be earned if customers stayed for a full year.
It can be deceptive though, for example a $1 million per month contract that was won in June 2018 would add $12 million to ACV, even though it would contribute only $1 million to revenue in 2018 (because the financial year ends on 30 June).
Still, assuming that customer ‘churn’ (customers dropping Nearmap’s service) stays within reasonable bounds, ACV is a decent proxy for Nearmap’s growth. Nearmap reported in the announcement today that US ACV was above US$10 million at the end of the March quarter, above the US$8.5 million reported in the half year results to December 31.
Nearmap reaffirmed its full year 2018 guidance, with the company expecting to more than double its US ACV (to >$13.8 million), and deliver around 15% growth in Australian ACV (to >$46 million).
