Nearmap shares surge 16% as ACV exceeds $102 million

Nearmap share price rises, churn comes in lower

Despite challenging trading conditions as a result of the coronavirus pandemic – aerial imaging company Nearmap (NEA) today revealed that its annualised contract value (ACV) has continued to climb, currently sitting above $102 million, on a constant currency basis.

The response to this news was decisively bullish, with the Nearmap share price closing out Thursday's session 16.6% higher, to $2.240 per share.

Ultimately, as FY20 fast draws to a close, Nearmap noted that its full-year ACV guidance has now been narrowed to between $103 million to $107 million. Better still, Nearmap also revealed over the prior 12-month period, its churn levels have moderated and currently sit below 10%. For reference, for the12-months ending December 2019 Nearmap recorded churn levels of 11.5%.

Mind you, although churn has moderated and the company remains confident in its growth trajectory when economic conditions normalise, management did flag that 'There has been some impact on the velocity of the sales cycle as a small number of customers delay their decisions to acquire or upsell but with a strong and growing sales pipeline the fundamentals of the business remain intact.’

Elsewhere, the company also today revealed the launch date for its latest product, Nearmap AI. Speaking to the company’s zeal to remain competitive in a highly-dynamic and technologically focused market-space, it was noted that:

'Following the roll-out of 3D and roof geometry, Nearmap AI represents another significant milestone for Nearmap as it continues to enhance its market-leading technology position in order to penetrate more deeply into the larger and expanding location intelligence market.’

Nearmap AI will officially launch on 1 June, and be available as either a self-service export or through offline channels, in the US and Australia.

The benefits of cash management

Nearmap also announced that it expected to be cash flow break even by the end of fiscal 2020, as a result of cash management initiatives that the company has recently implemented. At the close of FY20, NEA expects to have a cash balance of between $32 million to $35 million.

Looking forward, Nearmap's CEO and MD Dr Rob Newman said:

'As we approach FY21 we look forward to bringing new and innovative products to our growing customer base, which will further enhance our market leadership proposition in our key markets.'

Nearmap currently has a market capitalisation of $869.21 million, according to the ASX.

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