Nearmap Share Price Spikes on FY21 Guidance Beat (ASX:NEA)

The Nearmap Ltd [ASX:NEA] share price surged 15.5% today after FY21 preliminary results exceeded guidance.

Preliminary results for the year ended 30 June 2021 (FY21) show Nearmap’s annual contract value (ACV) portfolio growing 26% to $133.8 million.

The company also revealed it completed the design of its next-gen proprietary camera system, HyperCamera3, with a prototype tested in flight.

NEA gained more than 15% on the announcement, trading for $2.29 per share at time of writing.

The positive result contributed to NEA’s recent recovery from a drop precipitated by an intellectual property infringement complaint lodged by US rival EagleView.

Nearmap shares have rebounded 35% since plummeting to $1.65 a share in mid-May.

Despite the recent bounce, the NEA stock is still down 2.5% over the last 12 months, underperforming the ASX 200 benchmark by 25%.

ASX NEA - Nearmap Share Price ChartSource: Tradingview.com

Preliminary FY21 results beat guidance

Here are the key highlights from Nearmap’s FY21 preliminary results:

  • NEA’s annual contract value (ACV) portfolio expected to close FY21 at $133.8 million on a constant currency basis (CC), beating recently upgraded guidance of $128–132 million.
  • ACV growth driven by ‘another record performance in North America.’

Company PresentationSource: Company presentation

Australia and New Zealand remain NEA’s biggest market, with the ANZ AVC portfolio at 30 June 2021 comprising 54% of the company’s total portfolio.

However, the ANZ portfolio grew by 7% over the period, potentially implying Nearmap is reaching saturation in that market.

In contrast, Nearmap’s North America ACV portfolio grew by 54%, comprising 46% of the firm’s entire portfolio.

NEA finished FY21 with a cash balance of $123.4 million.

Some caveats, however.

Today’s results were unaudited and preliminary. Nearmap intends to release its full FY21 results on 18 August 2021.

Nearmap updates market on US court proceedings

In a brief paragraph attached to today’s preliminary FY21 results release, Nearmap divulged some further information regarding pending patent infringement litigation launched by its rival.

NEA revealed it engaged patent litigators of its own to represent it in court, maintaining the allegations are ‘fundamentally without merit.

Nearmap believes it is ‘well prepared to vigorously defend against the claims.

Pre-empting further queries, the company signalled future reticence on the matter ‘as a process is now underway and this matter is subject to litigation, the Company is unable to comment on any specific details related to the case.

HyperCamera3 prototype tested in flight

Speaking of patents, Nearmap today also announced the prototype of its next-generation camera system — HyperCamera3 — was tested in flight.

The camera’s captured content was successfully integrated within NEA’s existing operating capabilities, the aerial imaging firm said.

No doubt reminded of the importance of safeguarding intellectual property, Nearmap stated it filed patent applications for HyperCamera3 in national and international markets.

What does the new camera offer?

Nearmap CEO Dr Rob Newman described HyperCamera3 as a piece of imaging technology offering ‘unparalleled capture efficiency [which] also enables us to serve use cases requiring higher resolution content at altitudes currently flown with HyperCamera3.

NEA ASX outlook

Today’s guidance beat by Nearmap elicited a strong market reaction.

With the stock trading well off its 52-week high of $3.22, some investors may have seen today’s results as a sign there’s potential under-priced value there.

While today’s results are encouraging, they do not dispel the uncertainty regarding Nearmap’s upcoming legal battle.

Today’s jump in NEA’s share price may suggest the market is optimistic the legal challenge won’t be deleterious.

But with little detail provided on the dispute, it is hard to be sure.

And as investment bank RBC Capital Markets warned earlier this year, ‘undefined but potentially material impacts on Nearmap’s business will likely weigh on investor sentiment until resolved.

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Regards,

Lachlann Tierney,

For Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here


Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:


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