Consensus community valuation
$0.062
Average Intrinsic Value
41.4%
Undervalued by
Active Member Straws
#FY20 Q2 results
Added 4 months ago

Ok,  cash receipts are very scary, dropping to just $180k.  This was blamed on a delay in payment from Precisionhawk due to an internal restructure, which is now fully resolved, as well as delayed commencment of a US state mapping project.   

I have learnt that there is often a 3-6 month delay in ACV being announced and the cashflow coming in the door.   

I would expect Q3 receipts to be around $600-800k. If it is below this, I will begin to question the validity of the stated ACV.   

There was more colour provided in the result.   Including:

1) ACV from Precisionhawk looks to be around $600-800 k.

2) New US state agency, which is just coming online, has an ACV of  $900k.  This one contract will contribute about $600-800k in ACV over the next 6-9 months.   

3) Major League baseball contract expected to be signed by April, and other US state agency projects have been flagged as in the sales pipeline, along with 5G comms infrastructure.

4)New Florida Light and Power emergency response opportunity flagged as generating significant DPaaS and AaaS revenue, which has not yet been included in ACV.  

With ACV at $2.84 M, it is growing nicely, however, the receipts are not matching ACV.  I am accepting management's explanation, and given there is $2.5 M in the bank, there is time to wait and see.  

I am capping my positon to 2.5-3.0%, which is probably a little too high for such a high risk opportunity....

   

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#Market Update
Added 2 months ago

Ian Olsen, MD, reported:

- Pointerra is on the cusp of cashflow breakeven at the current Annualised Contract Value, with staff costs in AUD, and revenue in USD, currency tailwinds are having a very positive impact in the near term. 

- A captial raise is not anticipated to be needed, and Ian advised management will take a pay haircut if necessary to avoid such a scenario.  

- Ian reports Pointerra will be highly profitable when ACV exceeds $5-10 Million.  

- Accelerating interest from US utilities companies, apparently driven from WFH needs. 

- Major League baseball lead is being delayed by COVID-19, but is looking promising. 

- Florida State Survey is a potential $600 k ACV opportunity.  

- Very little churn reported - only 1 or 2 small customers.  

- Dewberry is their largest mapping customer.  

- Nearmap captures pixels, whereas Pointerra captures points.  

- New recruits are demonstrating the benefits in changing their clients workflows (through Pointerra) to reduce geospatial data storage and analytics costs.  

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#FY20 Q2 results
Last edited 4 months ago

Cash receipts of  only $0.18m, down from $0.31m in first quarter. This was due to their major US customer, PrecisionHawk, working through a restructure and recapitalsiation, which delayed some work for a large mutual client in Florida. 

Cash outflow increased due to added US staff hires. Quarterly costs are just shy of $1m, and the company has only $2.5m in cash. And this is after the capital raise last year. The company is looking at making additional hires in the current quarter, so expect costs to rise again.

Unless cash receipts materially increase, the company will need to pass the hat around again to remian a going concern. I think it very likely we'll see another capital raise or two before breakeven is reached.

To be fair, 3DP has previously advised that cash receitps will be very lumpy in the short to medium term, due to a variety of different payment terms, and as new customers are onboarded.  And that makes sense given how small the business is and the breadth of its client base. But it does make it very difficult for an outsider to gauge the "trend growth" in revenues/cash receipts. It also highlights concentration risks (eg. if precisionhawk go under, they will lose a major source of revenue)

The company reported ACV of $2.84m as of January 31 (although for some reason they always plot the ACV value for the quarter based on what it was a month after each quarter ends. Seems a bit rich..

At any rate, if we assume that's just due to the precisionhawk delay, it's an incremental gain of $430k for the quarter, and has cast doubt on my initial assumption of hitting $5m in ACV by the end of FY20.

Pointerra highlighted some larger contracts. The partnership with precisionhawk to provide inspection services to Florida Power & Light is expected to "significant and incremental" ongoing revenue throughout this year and next, with another 48 inspection task orders contracted. Each of these order total around $1m, but it's not clear what % of this is for pointerra.

The company was also approached by Major League Baseball (MLB) to assist in vizualistion efforts of MLB stadiums. MLB is expected to formerly adopt the pointerra paltform in April/March of this year and is also expected to generate "significant" revenue. Although again, that's very vague.

The deal with an unnamed US mapping customer, announced in Sepetember 2019, has now commenced. It helped contribute to the latest quarters ACV growth, but in total is expected to generate more than $600k in ACV when complete (although when that is likely to be was not disclosed). Pointerra said that there was potential for similar contracts with other US states, and that at least one was expected to commit to the platform in the current quarter.

R&D remains a major expense item, with company on an annual run rate of >$1m in related expenses. Partly this seems due to the need to create bespoke solutions at the request of clients, and while these new feautres will have broader appeal, it shows that the offering is still far from comprehensive.  

All told, I remain of the view that this is still an early stage, high risk business. There's definitely huge potential, but how well the opportunity is exploited, and how effectively costs are managed remains to be seen. Even under optimistic assumptions, profitability is a good ways off, so this is very much a story that will take years to play out. In the meantime, expect huge volatility.

4C statement here, Enterprise sales update here

 

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#Bull Case
Added 6 months ago

This extract from their AGM presentation today I think, is a massive opportunity.   This could be a huge cost saver for engineering firms.

This is a future opportunity with a huge TAM.   Something to watch develop going forward.  I think ti woill need a lot of development to get it to integrate with Autodesk packages and the like. 

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#COVID-19 Update
Last edited 2 months ago

Pointerra released an operations and outlook announcement in regard to the COVID-19 outbreak.

Key points:

  • Except for HQ, all staff worked from home previously anyway, and the current lockdowns arent expected to prevent the business from conducting operations.
  • Pointerra has seen an increase in customer numbers and spend (although no specifics given on these numbers)
  • Cash receipts are expected to be "more than double" that of the previous quarter ($0.18m). That being said, last quarters cash flows are a low base for comparison (a major client was forced to defer payment as it recapitalised), as cash receipts were down 42% in Q2 compared to Q1.
  • Due to the increased need to work remotely, Pointerra has said it had "experienced a noticeable acceleration in bith interets and adoption of the company's cloud-based 3D digital asset management platform"
  • In the past week, Pointerra has signed 3 seperate paid proof of concept agreements with existing prospects. These were all large clients and the gareements are intended to "prove-up a rapid enterprise deployment"
  • Over the weekend, the company completed a task order for its major client precision hawk, who has apparently committed to the continuing use of pointerra's platform.
  • The company says cash recipts and cash balance "should remove the requirement for any additional external capital".

The company will be holding a shareholder webinar briefing on March 27. Details in the announcement, here.

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#H1 2020 report
Added 3 months ago

3DP released their HY report. After close - not a great look.  Key takeaways:

1) Revenue of $490k, up from $94 k (or up 413%)  on pcp.

2) R & D costs of $767k, up 37% on pcp.

3) Admin expenses of $605k up 24% on pcp.  

4) operating cashflow of -$726k down from -$641k on pcp. 

5) Cash in bank: $2.5M  

Management reported ACV  at the end of last financial year to be $1.85 million, so it is concerning revenue does not reflect the reported ACV.   Management have advised this  is due to delays in onboarding customers, and have warned revenue and receipts will remain lumpy due to variable payment cycles.    I will give management the benefit of the doubt for the next 1-2 quarters.  

ACV grew up $1 million over the half year.   

3DP report they have a sizable sales pipeline in Austlraian and US, and are as a result, they are recruiting to expand their sales & product development capability.  

Some questions around the business.  We will have an answer by July 30.  

 

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#Bull Case
Last edited 4 months ago

MLB reaching out to Pointerra to help solve some of their data analytics :)

https://twitter.com/3DPointerra/status/1218155132052918273

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#Q3 2020 Update
Added 4 weeks ago

Key highlights:

1) ACV grew 15% ove rthe past three months to $3.32 M.

2) Receipts of $532k fo rthe quarter. Quarterly cash burn falls to $297k, with $2.2M in the bank.

3) Management anticipate Q4 2020 to be cashflow breakeven!

4) Management reported increase in demand in Q3, furthermore, they reported :

"Subsequent to the 23 March 2020 ASX announcement Pointerra has been approached by additional enterprise prospects from the data capture (survey), engineering/construction and asset owner/operator sectors and is presently engaged in numerous additional platform evaluation activities for new enterprise prospects, including formal Requests for Proposal (RFP) and Requests for Quotation (RFQ) responses in Australia and the US."

5) Employee incentive share scheme will issue shares at 6c per share.   I think this is a  shareholder friendly decision, minimises diltution, and sets a higher performance bar.  

I think Pointerra has shown great cost management, and their capital light business is now showing promising operational leverage.    

DISC: Held

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#FY20 Q2 results
Added 4 months ago

In a nutshell disapointing cash receipts compared with ACV essentially in line with guidance (slightly under). Managment stating a promising project pipeline / delayed revenue.

The real question is can we trust managment?

- Cash receipts must be big next quarter at least 600k preferably higher or ACV is essentially a made up number.

 

Thoughts:

- CEO has managed a 100+ employee company and been through the GFC has an accounting background so has the ability and experience to manage costs.

- If ACV stalls or is revised down in the next few months (likely blamed on factors external to the company) I wouldn't be surprised. I would be more impressed if managment put their hand up and simply state that they were being too optimistic with their predictions.

- If cash receipts are less than 600k or there is a material revision or slowdown in ACV over this next 3months I will seriously be questioning whether the thesis is broken.

- I have heard rumours that the company worked in tandem with a fund (canary capital) to spike the share price in early 2018 to release managment performance options. I have no more information about this but if anyone knows more about this I would like to hear it.

 

For growth companies I like to see the thesis playing out and am happy to average up as  in my opinion the risk reduces (despite price appreciation). Unlike value propositions where the risk profile improves as the price drops and increases with the price. I wont be adding any more capital to this company until I see more evidence the story is playing out the way managment would like us to believe.

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#Q3 2020 Results & Update
Last edited 4 weeks ago

Pointerra have reported results for the 3 months ending March 31, 2020.

  • Record quarter of cash receipts, which came in at $530k
  • ACV grew 17% to $3.32m
    • (there was a 4.6% FX boost here due to a more favourable exchange rate. On a constant currency basis, ACV would have grown 11.7%)
  • If ACV growth continues, the company should be cash flow positive by Q4 2020 
  • COVID-19 has accelerated inquiries and accelerated adoption from existing customers
  • COVID-19 has had no impact on service delivery
  • Cash balance is $2.2m at quarter's end (compared with $2.5m three months ago)

As @Rapstar has noted, there is a real disconnect between the quoted ACV figure and quarterly cash from customers. It's understandable that there would be a delay as customers are onboarded, invoiced and paid, and different payment cycles can make it difficult too -- but the lag is meaningful. For example, the ACV from Q1 (Sep 30 2020)  would suggest cash receipts of $0.6m for the latest quarter (6 months later), 13% above the reported figure.

All in all, a decent result. And very encouraging that cash flow breakeven is on the horizon. If they can sustain sales momentum, the current share price will be looked back on as quite cheap. 

You can read the quarterly 4C here, and the Enterprise sales update here

 

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#Overview
Last edited 7 months ago

Pointera allows customers to store, manages, analyse and share their 3D geospatial data.

As with the scan images that ProMedicus (ASX:PME) handle, the data sets can be very large and cumbersome. Pointera's product stores and processes this data in the cloud which enables users to access and use it without requiring a lot of processing power and bandwidth.

Technologies like laser scanning, which have dramatically fallen in price, is underpinning an explosion of 3D data sets, so there appears to be a solid tailwind.

The company reverse listed on the ASX in April 2016 (prospectus is here), following around 3 years of development as a private company. Shares were issued at 3c, and the company has undergone a couple of capital raisings since then.

Dr Rob Newman, the CEO of Nearmap, helped float the company and only recetly stepped down as Chairman due to the increasing time commitments of running Nearmap. As at the last notice, he had 13m shares and 5m options.

Pointera is unprofitable and burning through cash -- around $1.3m based on the latest quarter. It has around $1.4m of cash, enough to sustain operations for approx. a year. So it's reasonable to expect a capital raising.

That being said, the company is generating sales, and these are growing exceptionally well. As of May 2019, its annualised contract value (ACV) was $1.32m, which had grown 42% in the previous 3 months. In the most recent quarter, customer receipts were up $350%.

The company has 521m shares on issue, and 16m options. So on a fully diluted basis, at the current market price, the market capitalisation is ~$30m. That's about 17x the ACV, which is fairly high (although we must remember sales are growing very fast off a low base, so such metrics are not always helpful).

Overall, I like that Pointera appears to be fast approaching a break-even inflection point in the coming year or two, has all the lovely attributes of a SaaS business, a strong tailwind, patented tech and first mover advantage. Good to see managamenet with a very large shareholding too.

On the other hand, they are burning cash and could well need more capital in future years. Not sure of the counter-party risk, or how well they can scale without seeing a blow-out in costs.

Hard to value, but will be watching closely.

You can get a good overview from last year's AGM presentation here

 

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#Industry/competitors
Last edited 5 months ago

From latest investor presentation:

•Pointerra has patent-pending, world-class, disruptive 3D data technology: 3D Data Solved

•Pointerra does not compete with existing market participants in the 3D data sector. The Company’s solution solves entrenched, inefficient and expensive work flow problems

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#Management
Last edited 5 months ago

Management hold 38% of shares

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#Business Model/Strategy
Last edited 5 months ago

From the latest investor presentation:

Pointerra is a globally disruptive, world-first cloud technology solution that transforms the management and use of 3D data.

Pointerra enables actionable 3D information to power digital asset management solutions from any device, anywhere, anytime.

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