Tech stocks are booming right now.
That should come as no surprise as the sector has been on a tear since the March lows.
But that doesn’t mean individual stocks can’t still come out of the woodwork…
Case in point: Pointerra Ltd [ASX:3DP].
Just shy of two months ago, the stock was trading at 5 cents per share. At of time of writing, the 3DP share price now hovering at 36 cents per share. Trading 33.33% higher for the day, but more incredibly 620% higher since early June.
No one can deny that is a remarkable result.
One that showcases just how far this small-cap has come in such a short period of time.
So let’s explore why, shall we.
Sale, after sale…after sale
The catalyst for Pointerra’s performance is its incredible sales activity.
Nabbing new deals and more revenue left and right.
Back on 30 July, they reported US$2.87 million in annual contract value (ACV). A running tally of total sales from a variety of customers and products/services.
That was for the entire fourth quarter of FY20. Yet another record result, furthering their strong growth strategy and narrative.
Today, one month later, their ACV is now up a further 39%!
Making August one of their most successful and lucrative months yet. Just another indicator that Pointerra is absolutely crushing their sales goals.
Not to mention the fact that these sales are with some prized customers…
Before that though, let me explain what it is they actually sell. Because Pointerra is a data-driven company with a twist.
In their own words, Pointerra sells ‘data as a service’. A jargony way of saying that they manage, store and host a data processing platform. With their niche specifically catering for 3D data.
Typically, this kind of data requires extremely powerful and tailored computing to manage. Which is why it’s not always easy for customers with a need to access 3D data to do it themselves.
That’s where Pointerra comes in. Providing and hosting the data for whatever needs they may have.
Again, currently it is very niche but that doesn’t mean it isn’t a valuable market. As Pointerra notes, the US utilities sector (energy companies) has delivered a huge sales spike in August:
‘Pointerra is now engaged directly and indirectly (through the Company’s mapping and surveying customers) in servicing 6 paying utility customers across the US, with many more currently using and trialling Pointerra’s digital asset management platform as part of the Company’s sales engagement process.’
In other words, they’ve found an addressable market with seemingly strong demand. One that could lead to a surge of new clientele.
And that’s not all.
Pointerra has also flagged potential deals with the US defence sector as well. Noting that they’re seeing ‘immediate renewed interest’ from possible customers in the defence industry.
Meaning that, with a little luck, they may soon crack into this extremely lucrative market.
Either way, the result for shareholders has been astounding.
Data as the new oil
Crucially, the good news from a fundamental point of view is that Pointerra is also making strides towards their bottom line.
They were cash flow-positive in the last quarter of FY20. And now, in first quarter of FY21, they’re sitting in a profitable position on their ACV run-rate. Meaning that they’re well on their way to delivering their first profitable quarterly result if sales hold strong.
That’s a major hurdle for any tech stock to overcome at the moment. With many companies — some of which are far bigger than Pointerra — not even close to being profitable.
Granted, that doesn’t guarantee Pointerra will deliver a profit either.
Like any tech stock, they choose to pump this increased revenue back into the company. Hoping to further their future growth at the expense of immediate returns.
Nevertheless, they are an exciting prospect. Just the latest example of the kind of staggering returns that investors can make right now.
In it we cover some of the most promising trades on the ASX right now. Examining companies that are at the crossroads of potential megatrend breakthroughs.
Because as Pointerra has shown, all it takes is one catalyst to set off a share price explosion…
For Money Morning