Pointerra: Airovant Acquisition Completed, EPS Accretive in FY22
Pointerra
Airovant acquisition completed, EPS accretive in FY22
Pointerra Ltd (ASX:3DP) provides an end to end, cloud-based data as a service solution for capturing, storing, manipulating and analysing massive 3D datasets in the geospatial sector. Its customer base spans companies across the pole and power sector, resources, construction, data capture and surveyor and mapping, as well as government agencies. Pointerra has announced that it has now completed the Airovant acquisition and based on the closing price ($0.505) and USD/AUD exchange rate (US$0.77/A$1) on June 4, 2.58m shares will be issued to the Airovant founders. Of these shares, 1.29m will be held in voluntary escrow for 12 months. We have already incorporated the transaction in our forecasts and found it to be 12.9% accretive to our FY22 forecasts with Airovant forecast to deliver US$2m in additional Annual Contract Value and A$0.75m in EBITDA. Pointerra confirmed today that the four founders of Airovant, Jonathan Montague, Matthew Boyd, Logan McConnell, and Ori Paamoni, have joined Pointerra’s US sales and development teams and under their employment agreements will each earn up to 2m shares in Pointerra vesting over three years of continuous employment with Pointerra. Airovant numbers several US poles and wire companies as clients and we expect it will help compress the sales cycle for Pointerra.
Business model
Pointerra offers a suite of Software as a Service (SaaS) products to its clients: Data as a Service (DaaS), Analytics as a Service (AaaS), and Data Processing as a Service (DPaaS). Pointerra’s DaaS offering manages 3D data using its digital management platform and is priced according to the amount of data (in terabytes) that Pointerra hosts on behalf of the client, and the number of users required. Additional revenue is generated from processing client data (DPaaS) and building and/or deploying analytics tools (AaaS) to interpret the client’s 3D data. Pointerra has also soft-launched its 3D data marketplace, 3Dinsight.ai, which sells insights into assets condition though subscription- and event-based models.
Expanded US footprint
The acquisition of Airovant and employment of its four founders expands the scale and dimension of Pointerra’s US business by adding 3D digital asset management technology to Pointerra’s product suite. We see this strengthening Pointerra’s competitive leverage to the COVID economic recovery and stimulus investment in local infrastructure being made by US local, state and federal government agencies. We have already incorporated the acquisition in our forecasts (refer to our report Pointerra RaaS Update Report 4 May 2021). We also have recently interviewed Pointerra Managing Director Ian Olson and Airovant Co-Founder Jonathan Montague which can be accessed here Pointerra Airovant RaaS interview May 5 2021.
Base case valuation is $0.94/share (fully diluted)
Our base case DCF valuation of $0.94/share (fully diluted for all employee options) is based on Pointerra achieving US$50m ACV by H1FY25. We are expecting the Airovant acquisition to customer takeup and have factored in that Pointerra will achieve US$50m ACV six months earlier than our previous forecasts. We see this transaction as a significant step forward for ACV growth and expect market acknowledgement to be reflected in the share price as the team delivers.
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- Pointerra: Airovant Acquisition Completed, EPS Accretive in FY2207 Jun 2021