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.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
