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Nearmap on track for strong 2019, shares up on preliminary results
By Yolanda Redrup
Updated 10 Jan 2019 — 4:36 PM,
first published at 1:45 PM


Nearmap chief executive Rob Newman is leading the company through a growth spurt. Ross Swanborough

Already one of the top performing small caps of 2018, aerial photography company Nearmap is already impressing investors in 2019, with the value of its imaging contracts for customers in fields like telecommunications and utilities coming in ahead of expectations.

The business, which provides 2D and 3D imaging of buildings and infrastructure in urban areas, was one of the strongest performing small caps in 2018, going from about60¢ to almost $2 at its peak in September, a jump of 233.3 per cent.

Having been caught up in the tech sell-off in October, it declined to around $1.30, but rebounded to $1.60 by the end of the year.


Nearmap chief executive Rob Newman is leading the company through a growth spurt. Ross Swanborough

On Thursday the company announced that its annualised contract value (its key growth metric) had grown 42 per cent in the first half compared to the previous corresponding period, hitting $78.3 million.

The result, which exceeded RBC Capital Markets executive director of equity research Garry Sherriff's estimate by 5 per cent, had investors pushing the stock up 9.4 per cent to $1.75.

Nearmap chief executive Dr Rob Newman, who has been involved with the business since it was founded in 2008 when he came on board as an investor, reaffirmed the company's guidance that in 2018-19 sales would exceed costs, known as reaching cash flow break-even. The guidance excludes the $70 million in capital it raised in September.

"Our Australian business is building on its market leadership and our US business is gaining significant market traction," he said.

"We are well placed to deliver ongoing growth as new product enhancements add functionality, and our markets continue to develop and expand."

Nearmap's Australian business had a 23 per cent jump in annualised contract value to $53.3 million, making up the bulk of its business, while its fast-growing US division had a 107 per cent increase to $17.6 million for the six months to December 31. The US market exceeded RBC's forecasts by 12 per cent.


Nearmap's Australian business had a 23 per cent jump in annualised contract value to $53.3 million. nearmap

Outperform rating
The company, which cracked the ASX top 300 in 2018 and is valued at $771.3 million, was started in Perth by entrepreneur Stuart Nixon and expanded to the US in 2014. Its major shareholders are founding chairman Ross Norgard, who remains on the board and owns more than 11 per cent of the company, and Dr Newman with 2 per cent.

Mr Sherriff has an outperform rating on the stock and has set a $2.10 price target, while the average 12-month price target from analysts surveyed by Bloomberg was $2.06.

He said Nearmap could also have scope for further price growth if it decided to expand into other geographies.

"Nearmap's scalable software-as-a-service model is well suited to roll-outs into new geographies over time. Either way we analyse Nearmap implies material upside to the current share price," he said.


"We believe Nearmap's best-in-class aerial mapping software can continue to penetrate Australia, New Zealand and the large US market.

"The US market is 10x larger than Australia and is forecast to grow at higher growth rates. Although international markets have additional complexities, we are confident Nearmap can leverage its learnings in Australia and grow rapidly in the US."

Mr Sherriff said Nearmap's big advantages were its advanced camera system and its proprietary software that stitches images together to provide multiple viewpoints, while it's "capture once, sell multiple times" customer acquisition business model was generating high returns on investment.

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