1Spatial - Record contract wins fuel recurring revenue

1Spatial’s (SPA) FY22 trading statement suggests the momentum we recently highlighted continues. Management expects revenues to grow at least 7% for FY22 and exceed £26.4m, and recurring revenues to enjoy double-digit growth. This growth is driven by several recent record contract wins, the accelerating pace of new business and what we estimate is the transition to a higher-margin SaaS business. In our view, this progress demonstrates the benefits of 1Spatial’s ‘Land and Expand’ strategy and the long-term potential of the geospatial industry. While the company trades at a sizable discount to its software peers, we see opportunities for the gap to be reduced if it continues to execute on its growth strategy.