Aerial mapping company Aerometrex Ltd [ASX:AMX] is on the up today. AMX Share Price is currently trading 5.33% higher as the release of its full-year result impresses the market.
As management boasts, strong subscription growth has dramatically strengthened Aerometrex’s balance sheet. Delivering a solid foundation from which the stock can grow.
This is important as the small-cap is down 36.8% year to date. Having endured steady share price pressure for much of the year.
So, perhaps this result could be the catalyst to turn things around…
Stronger revenue, and a big stockpile of cash
The highlight, as with most small-caps, was the fantastic sales growth that Aerometrex managed to capture. Increasing their annual recurring revenue (ARR) by 189% during FY21.
And while ARR only accounted for $4.8 million out of the total revenue pool of $20.9 million, it is an important metric because these recurring subscription sales are likely to be the key driver of Aerometrex’s future growth.
On top of that, a positive operating cash flow result of $5.1 million was a decent result. But it was notably down from the $8.2 million achieves this time last year.
With $16.5 million cash on hand and a further $3.8 million in undrawn debt, though, Aerometrex certainly has some capital it can spend. Money that could help it fund further takeovers or acquisitions, like the Spookfish deal they finalised in early 2020.
As Managing Director Mark Deuter comments:
‘During the year we successfully executed on our MetroMap growth strategy, underpinning a strong increase in the Company’s Annual Recurring Revenue that grew 189% to $4.8 million. MetroMap’s statutory subscription revenue grew by $2.9 million, or 416%, on the same time last year.
‘The strength of our business, and demand for our product, can be seen in the continued growth in revenue of 4% for the year, albeit less than previous growth rates, despite the impact from COVID-19 lockdowns. Importantly, revenue grew strongly in the second half of FY21, up 44% on the first half of FY21.’
What’s next for the Aerometrex Share Price?
Looking ahead, the future for Aerometrex has a variety of directions.
As I’ve already noted, the subscription services and ARR model is clearly managements preferred growth method. Utilising MetroMap’s increasing popularity as the core for their operational aspirations.
But, as they’ve also shown via the Spookfish acquisition, there is room for some diversity too. Perhaps exploring new sales channels or services that could add further value to their software packages and subscriptions.
Either way, all that investors will likely care about is finding a strategy that works. Because while the stock is up today, it is down dramatically compared to a year ago.
So, for that reason, Aerometrex simply needs to find a means to seize growth quickly. As for whether they can do that in a timely fashion, only time will tell…
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