Nearmap share price collapses as company issues downgrade
We examine Nearmap’s just released Market Update – covering the first-half of FY20.
Nearmap share price dives on Market Update
Small stocks tend to be more volatile than their large-cap counterparts – especially when it comes to news – good or bad.
Maybe such a phenomenon is no better illustrated than by Nearmap’s (ASX: NEA) price action today. Here, the company’s share price collapsed as much as 24.69% – to $1.84 per share – after management downgraded its Group Annualised Contract Value (ACV) forecasts for FY20.
Though a negative trading day, Nearmap's Chief Executive Officer and Managing Director, Dr Rob Newman remained upbeat, maintaining that:
'Nearmap has established a unique position in the location intelligence market and we will continue to build our leadership position through innovation and world-leading technology that addresses a diverse range of customer needs.’
Do you own Nearmap shares? You can hedge your downside risk by trading CFDs now.
Contract figures in focus
Nearmap (ASX: NEA) today reported Annualised Contract Value (ACV) for the group of $96.6 million, across the first-half of FY20 – representing a 23% increase on the previous corresponding period.
Looking at the breakdown of these top-line figures, we see that Nearmap's North American (NA) segment continues to tout robust growth, contributing US$24.9 million to the group’s overall ACV figures – and representing a 41% uptick on the previous corresponding period.
Though exhibiting slower growth, the ANZ region continues to be the largest contributor to NEA's ACV – contributing $61.0 million in the first-half – equating to an increase of 14% on the previous corresponding period.
Finally, the company argued that its first-half results were 'impacted by the inability to close an expected significant partnership deal due to the partner's budget constraints.'
A weaker outlook
Ultimately, it was likely Nearmap’s revised ACV guidance that contributed to today’s pessimistic sell-down.
Here, the company noted that it now expected a FY20 group Annualised Contract Value of between $102 million to $110 million. The company had previously guided for full-year ACV figures of $116 million to $120 million.
Though the market reacted negatively to today’s business update, the company attempted to reassure investors, arguing that it still expects to deliver ACV growth in the 20-40% range – on a year-over-year basis. Not only that, but Nearmap noted that it expects ‘churn’ to 'be managed below 10%, outside of the one-off events outlined previously.'
Speaking of the broader outlook, Nearmap’s CEO, Dr Newman argued that:
'The fundamentals of our business model remain firmly intact and we are confident on the outlook for the medium to long-term, notwithstanding that performance in 1H20 showed that at our current scale, our performance can be impacted by a small number of larger customers.'
Positively at least, Nearmap's CEO noted that as the company scales, 'the potential for a small number of customers to impact our results will become less as we grow.'
Ready to start hedging? Open an account with IG today to get started.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.