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Equity Bottom-Up

1Spatial’s trading update confirms that trading has remained robust, with FY23 revenues and EBITDA expected to be no less than £29.8m (+10.3% y o-y) and £4.9m (+17% y-o-y) despite some inflationary pressure. The revenue mix continues to improve, with recurring revenues now c 50% (+c 22% y-o-y) of the total and term licences up c 80% to £5.2m. With momentum continuing into Q1, and a healthy order book and pipeline, the company looks well set to deliver further progress this year. Trials of the company’s SaaS applications are progressing well and strong uptake could drive an acceleration in scalable recurring revenue growth.

1Spatial’s trading update confirms that trading has remained robust, with FY23 revenues and EBITDA expected to be no less than £29.8m (+10.3% y o-y) and £4.9m (+17% y-o-y) despite some inflationary pressure. The revenue mix continues to improve, with recurring revenues now c 50% (+c 22% y-o-y) of the total and term licences up c 80% to £5.2m. With momentum continuing into Q1, and a healthy order book and pipeline, the company looks well set to deliver further progress this year. Trials of the company’s SaaS applications are progressing well and strong uptake could drive an acceleration in scalable recurring revenue growth. 

1Spatial - Encouraging trading and outlook

1Spatial has announced that Andy Fabian will be stepping down as CFO on 19 December, to be replaced by Stuart Ritchie, currently CFO at Fusion Global, an international provider of SaaS workflow software. Mr Fabian has played a key role in putting 1Spatial on a sound financial footing, rebuilding investor confidence in the business and developing the current growth strategy. With these foundations in place, this change is being made to help drive an acceleration in growth and transition to a SaaS/subscription model.

1Spatial has announced that Andy Fabian will be stepping down as CFO on 19 December, to be replaced by Stuart Ritchie, currently CFO at Fusion Global, an international provider of SaaS workflow software. Mr Fabian has played a key role in putting 1Spatial on a sound financial footing, rebuilding investor confidence in the business and developing the current growth strategy. With these foundations in place, this change is being made to help drive an acceleration in growth and transition to a SaaS/subscription model.

1Spatial (SPA) delivered another period of robust results in H123, with annualised recurring revenue (ARR) up 29% y-o-y, revenues growing 11% and EBITDA rising 10%. 1Spatial’s success in driving transformational growth was marked by several contract wins with significant amounts of recurring revenue, the expansion of smart partnerships and further penetration of the US market. We maintain our FY23 and FY24 estimates and watch for catalysts that signal 1Spatial’s plan is continuing to bear fruit. Although 1Spatial trades at a discount to peers, we expect there could be a reduction in the gap if management continues successfully executing its growth strategy.

1Spatial (SPA) delivered another period of robust results in H123, with annualised recurring revenue (ARR) up 29% y-o-y, revenues growing 11% and EBITDA rising 10%. 1Spatial’s success in driving transformational growth was marked by several contract wins with significant amounts of recurring revenue, the expansion of smart partnerships and further penetration of the US market. We maintain our FY23 and FY24 estimates and watch for catalysts that signal 1Spatial’s plan is continuing to bear fruit. Although 1Spatial trades at a discount to peers, we expect there could be a reduction in the gap if management continues successfully executing its growth strategy.

1Spatial - Making GIS data useable for a variety of verticals

Spatial’s two recent wins in the United States highlight the potential for the business to deliver significant, high-margin recurring revenue growth in the world’s largest market. We are not changing our estimates at this stage, but the repeatable nature of both deals indicates there should be more to come and we believe there is upside potential to our estimates for FY23 and FY24. We believe the current ratings of FY23e EV/sales of 1.4x and FY24e P/E of 17x does not reflect the company’s long-term earnings potential or its increasingly strategic position in the geospatial software industry, which is expected to grow at a sustained double-digit rate.

Spatial’s two recent wins in the United States highlight the potential for the business to deliver significant, high-margin recurring revenue growth in the world’s largest market. We are not changing our estimates at this stage, but the repeatable nature of both deals indicates there should be more to come and we believe there is upside potential to our estimates for FY23 and FY24. We believe the current ratings of FY23e EV/sales of 1.4x and FY24e P/E of 17x does not reflect the company’s long-term earnings potential or its increasingly strategic position in the geospatial software industry, which is expected to grow at a sustained double-digit rate.

1Spatial - Two recent wins highlight US potential

1Spatial has announced a sizeable contract with a major European aerospace company worth circa €3m over five years. Notably, the deal is the first major win for the company’s new 1Telecomms solution (together with 1Integrate) supporting a win in the aerospace industry, a new vertical for the business. We believe that this provides evidence that the company’s development of app solutions can broaden the company’s addressable market. We believe that the broader market for geospatial solutions is set to deliver sustained double-digit growth and that 1Spatial’s is carving out an increasingly strong position within the market. We believe that the company’s current valuation (FY23e EV/sales 1.8x) does not reflect 1Spatial’s potential.

1Spatial has announced a sizeable contract with a major European aerospace company worth circa €3m over five years. Notably, the deal is the first major win for the company’s new 1Telecomms solution (together with 1Integrate) supporting a win in the aerospace industry, a new vertical for the business. We believe that this provides evidence that the company’s development of app solutions can broaden the company’s addressable market. We believe that the broader market for geospatial solutions is set to deliver sustained double-digit growth and that 1Spatial’s is carving out an increasingly strong position within the market. We believe that the company’s current valuation (FY23e EV/sales 1.8x) does not reflect 1Spatial’s potential.

1Spatial - Flying high with a major EU aerospace company

United Kingdom

D4t4 Solutions Plc engages in the distribution, design, installation, and support of computer hardware and software systems in the United Kingdom. The company focuses on data solutions for its clients to provide end-to-end management of the entire data lifecycle, from its initial creation through the manipulation, analysis and management of the data, and eventual retirement into industry-compliant archives. It operates through three segments: License Sales, Project Work, and Recurring Revenues. The company offers data collection solutions, including digital data and document capture solutions; and data management solutions, such as cloud, secure data, application, content, and document management, as well as data storage and information archiving solutions. It also provides data analysis solutions comprising data insight, customer intelligence, integrated marketing management, data visualization, marketing automation, and search-driven analytics; and data solutions, including analytics-as-a-service, software-as-a-service, fraud solutions, platform modernization, migration and upgrades, and Web and mobile applications. The company was formerly known as IS Solutions plc and changed its name to D4t4 Solutions Plc in July 2016. D4t4 Solutions Plc was founded in 1985 and is headquartered in Sunbury-on-Thames, United Kingdom.

Eckoh plc provides secure payment products and customer service solutions for customer contact centers in the United Kingdom, the United States, and internationally. It provides HALOH, a suite of secure payments products that address concerns around the receipt, transmission, and storage of sensitive card information, insider and external fraud, and payment card industry data security standards compliance. The company?s HALOH product suite includes CallGuard solutions that can be deployed on the customer?s site, midcall, or hosted in the cloud, which allow contact center agents to take customer telephone payments without being exposed to card details; DataGuard, a hosted solution for e-commerce payments that prevents card data from entering organization and networks, as well as secures Web/mobile payments and batch files transfers; and EckohPAY, which enables customers to make automated secure self-service payments through phone, Web, or mobile devices. Eckoh plc was incorporated in 1997 and is headquartered in Hemel Hempstead, the United Kingdom.

Watchstone Group Plc provides technology and other services to the insurance, automotive, and healthcare industries in the United Kingdom, Canada, the United States, and internationally. It operates through Hubio, Ingenie, Healthcare Services, and Other segments. The company offers solutions to organizations in the insurance and automotive sectors to reduce claims, build customer engagement, and enable usage-based personalization. It also owns and operates physical rehabilitation clinics; and provides software platform, and call center and customer services. In addition, the company operates as an insurance broker; and offers feedback and advice for young drivers to improve their driving skills and stay safe. Further, it provides energy services, including procurement, energy audit, monitoring and targeting, and data sampling; and sells life, critical illness, and income protection insurance policies to customers and businesses, as well as operates QuoteSupermarket.com that enable customers to find the best quotes from a range of insurance providers. The company was formerly known as Quindell Plc and changed its name to Watchstone Group Plc in November 2015. Watchstone Group Plc was founded in 2000 and is based in Fareham, the United Kingdom.

Redcentric plc provides IT managed services in the United Kingdom. The company offers applications consulting, including database readiness, database and data optimization, and risk and compliance management services; managed database and application services; and on-premise services, such as application acceleration, as well as building resilient data management and analytics infrastructure services. It also provides collaboration services comprising IP telephony, SIP trunk, unified communications, video conferencing, calls and lines, and inbound services; and infrastructure services consisting of disaster recovery as a service, hosting and collocation, data management, infrastructure as a service, software as a service, hosted desktop, server load balancing, managed exchange, and virtualization services. In addition, the company offers network services, including multiprotocol label switching, metro network, business Internet access, connectivity, high capacity, Ethernet fabric, LAN and WAN, VPN, N3 network access, wireless network, secure remote access, and network monitoring services. Further, it provides security services comprising encryption, firewall, and network security; and mobile services consisting of mobile device, data, minutes, device management, device recycling, and messaging services. Additionally, the company operates and manages data centers. Redcentric plc was founded in 1997 and is headquartered in Harrogate, the United Kingdom.

Quartix Holdings plc designs, develops, and markets vehicle tracking devices; and provides related data services to the fleet and insurance sectors in the United Kingdom, France, the Republic of Ireland, and the United States. The company offers an integrated tracking and telematics data analysis solution for fleets of commercial vehicles and pay as you drive motor insurance providers. Its proprietary software system provides business critical reporting and analysis of vehicle and driver data, including timesheets and other customer key performance indicators to customers through any Internet-enabled devices. The company was founded in 2001 and is based in Cambridge, the United Kingdom.

Frontier Developments plc, a software technology company, develops and sells non-game applications and video games for the interactive entertainment sector. It focuses on videogame development across various genres and platforms. The company serves clients in the United Kingdom, the United States, Canada, and internationally. Frontier Developments plc was founded in 1994 and is headquartered in Cambridge, the United Kingdom.

Intercede Group plc, together with its subsidiaries, develops and supplies identity and credential management software in the United Kingdom, rest of Europe, North America, and internationally. The company offers MyID identity and credential management software system, which enables governments and enterprises to provide secure access to services, facilities, information, and networks by creating trusted digital identities to the employees, citizens, and machines. It also provides MyTAM, a cloud-based service enabling Android app developers and service providers to deploy trusted applications to the trusted execution environment; and RapID, a cloud-based solution that offers the ability for app developers to build authentication into their applications, using a few lines of code available via a self-service SDK. The company delivers solutions to customers in the United States and the United Kingdom governments, corporations, telecommunication providers, and information technology firms. Intercede Group plc was founded in 1992 and is based in Lutterworth, the United Kingdom.

WANdisco plc engages in the development and provision of collaboration software worldwide. The company provides data replication technology for the storage, scalability, performance, and availability of data and applications for organizations. It offers WANdisco Fusion platform that delivers continuous availability and performance with data consistency across data clusters any distance apart. The company?s patented active-active data replication technology serves high availability requirements, including Hadoop big data and application lifecycle management, including Apache Subversion and Git. It also offers cloud services, such as Amazon S3 active migrator, Google cloud active migrator, and Fusion hybrid cloud services, as well as provides software maintenance services. WANdisco plc was founded in 2005 and is based in Sheffield, the United Kingdom.

Gaming Realms plc develops, publishes, and licenses mobile gaming content in the United Kingdom, the United States, Canada, and internationally. The company operates in two segments, Real Money Gambling and Marketing Services, and Social Gaming and Licensing. Its mobile technology engages in content distribution and monetization across real money and social gaming markets. The company provides various Slingo, bingo, slots, and other casual games; real-money mobile gambling games through Grizzly gaming platform; and free-to-play real money and social games for iOS, Android, and Facebook platforms. In addition, it licenses IP and game content across various gaming and merchandise categories, including lotteries, gaming machines, social slots, and casual game Web portals to third-party operators. Further, the company provides digital marketing services to gaming and non-gaming clients. It has strategic partnerships with Fremantle, Zynga, Ainsworth, NetEnt, Pala Interactive, and Scientific Games. Gaming Realms plc was incorporated in 2001 and is based in London, the United Kingdom.

FDM Group (Holdings) PLC offers IT services in the form of project management, business analysis, data operations, and product and employee support and development.

HIMACS, Ltd. designs, develops, and implements computer systems and system infrastructure.  The Company also provides improvement and maintenance services.

Cube System Inc preliminary provides system solution services for businesses. The main services include system development & construction and consulting services.  The Company also provides system management and maintenance services for database.  Cube System's customers are financial institutions, distributors, and industrial companies.

Tecnos Japan Inc offers support services to implement Enterprise Resource Planning (ERP) Package.  ERP system modules include features and functions for accounting and logistics.

Forth Smart Service PCL develops and manufactures online top-up machines for service providers. The company offers its products for topping-up the prepaid mobile phones and online games, as well as for credit card payment.

Nippon Computer Dynamics Co., Ltd. has three business segments. The System Development segment provides system development services such as consulting, system integration, and maintenance. The Support and Service segment offers tech nical support, help desk services, and outsourcing services. The Parking System segment operates and sells bicycle parking systems.

Hakim Information Technology Company Limited involves in the pre-consultation, program design, software development, construction, integrated debugging, maintenance and upgrades of intelligent engineering. The Company's main products are integrated intelligent solutions.

AGS Corporation is a total information services provider.  The Company provides IT services such as mainframe-based calculation, data entry, and Internet data center (IDC).  AGS also offers system consulting services and designs, develops software for enterprises.

Poletowin Pitcrew Holdings,Inc. provides software and hardware debug and testing services for video games, mobile phone contents, and PC games. The company also offers Internet security and localization services.

Shinsegae Information & Communication Co., Ltd. provides systems integration services. The Company offers solutions to help companies manage customer relationships, operational efficiencies, and financial performance. Shinsegae is also a software distributor such as games and 3D animations as well as application service and e-business solution provider.

Shinsegae Information & Communication Co (035510 KS)

Bright Oceans Inter-Telecom Corporation develops computer application software for telecommunication industry, as well as provides system integration services. The Company also offers technology consulting services.

1Spatial Plc is a business and technology consultant. The Company provides advisory services and distributes software solutions in the corporate performance management market.

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1Spatial Plc (SPA LN)

1Spatial - Encouraging trading and outlook

1Spatial’s trading update confirms that trading has remained robust, with FY23 revenues and EBITDA expected to be no less than £29.8m (+10.3% y...

Edison Investment Research

1Spatial - Change of CFO

1Spatial has announced that Andy Fabian will be stepping down as CFO on 19 December, to be replaced by Stuart Ritchie, currently CFO at Fusion...

Edison Investment Research

1Spatial - Making GIS data useable for a variety of verticals

1Spatial (SPA) delivered another period of robust results in H123, with annualised recurring revenue (ARR) up 29% y-o-y, revenues growing 11% and...

Edison Investment Research

1Spatial - Two recent wins highlight US potential

Spatial’s two recent wins in the United States highlight the potential for the business to deliver significant, high-margin recurring revenue...

Edison Investment Research

1Spatial - Flying high with a major EU aerospace company

1Spatial has announced a sizeable contract with a major European aerospace company worth circa €3m over five years. Notably, the deal is the first...

Edison Investment Research

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