Nearmap - First Half Result (First Impressions)
Looking at the anaylist pack and comparing to my expectations (I own and follow NEA) I think the result is solid, nothing to get exited about but a better than the short report would have you expect. My take on the KPI's I watch for NEA:
1. ACV growth of $11.1m at constant currency (CC) up 21% on pcp. ACV now at $112.2m ($116.7m at CC) I had expected a soft half due to economic conditions and this came in up $0.5m on my expectations with FX headwind.
2. Retention % up 5.4% from pcp to 93.9% - this is massive, I had hoped it would get back to a 92% run rate so a plesant surprise. Retention was looking to be a worry and this is a very strong recovery - assuming it isn't artificiarly driven...
3. LTV up 148% from pcp to $1.45b or 154% in CC - the retention improvement will be the main driver of this.
4. US market growth (critical for value upside) growth of 41% in ACV, retetention up to 93.5% from 79.4%, sales team contribution ratio up from 34% to 110%.
5. Profitability improvements - cost controls and top line growth have reduced NPAT loss 50% increased EBITDA 321% and there is a lot of cash on hand due to the capital raise ($129m)
The Not so Good:
1. ACV growth was dominated by upsell rather than new business which is a change. Previously about 2/3 ACV additions have been new business and 1/3 upsell, now it is reversed. It may be a sign of maturity or competition pressure as new business ACV addition was 43% down on pcp.
2. FX headwind - ACV growth would have been $4.6m higher but for FX, I see this as a tempory issue and tend to look through FX.
3. I am concerned that they have switched from growth to cash generation. Operating cash is strongly positive and even FCF is positive and improvements in cost to income ratios as well as the switch to growth from existing rather than new customers could all indicate such a shift.
Lots more details to go through and I will review my IV calculation this week, which sits at $2.54 before the results, but first impressions are that it isn't going to move a hell of a lot.