Pointerra Ltd: Annual Contract Value Doubles Year-On-Year

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1.2k Views02 Feb 2022 08:00

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SUMMARY

Pointerra Ltd

Annual Contract Value doubles year-on-year

Pointerra Ltd (ASX:3DP) provides an end-to-end, cloud-based Data-as-a-Service (DaaS) solution for capturing, storing, manipulating and analysing massive 3D datasets in the geospatial sector. It has taken what has been a highly manual, slow and cost-prohibitive process and turned it into a fast, efficient workflow solution for 3D data, enabling digital asset management from any device in any location. Its customer base spans pole and power companies, resources companies, construction companies, government agencies, data capture companies, and surveying and mapping companies. Pointerra has reported Annual Contract Value (ACV) of US$14.4m at 31 January, up 109% year-on-year and 23% ahead of the ACV reported on 29 October 2021. Additional ACV added in the quarter was US$2.7m, the single largest jump in ACV recorded by Pointerra. This reflects the momentum the company is generating with existing and new customers, across its key target markets of surveying and mapping, architecture, engineering and construction (AEC), utilities, transport, and mining, oil and gas. Pointerra3D, in particular, is rapidly gathering pace in the US energy utility sector, with Entergy, PG&E and NextEra Energy’s Gulf Power expanding their spend with Pointerra in the last quarter. This gives us confidence that Pointerra will match our forecast for ACV of US$21m in late July. We have left our forecasts unchanged ahead of the company’s interim results in late February. Our base-case DCF valuation of $0.90/share is predicated on Pointerra getting to ACV of US$50m by December 2024.

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 recently soft-launched its 3D data marketplace which aims to sell insights into assets’ condition though subscription- and event-based models.

ACV momentum now firmly established
Pointerra has recorded its biggest-ever jump in quarterly ACV, up US$2.7m from October end to US$14.4m at January end. The result compares with our forecast for US$15.4m for the same period. The company noted the growth in ACV had been driven by both new and existing customers across its broad range of key sectors, with significant upscale of contracts from US energy utility companies which are deploying Pointerra3D at scale. Pointerra noted that Pointerra3D had become the “must-have” platform for the US energy utility sector with existing customers advocating adoption of its digital-twin solution among peer utilities. This is expected to further drive contract growth in this sector.

Base-case DCF valuation is $0.90/share
We use the discounted cashflow methodology to value Pointerra, using a WACC of 14.0% (beta 1.8, terminal growth rate of 2.2%), and this derives a base-case valuation of 0.90/share. Our valuation is predicated on ACV reaching US$50m by H1 FY25. We have dimensioned an upside case whereby ACV hits US$50m by H1 FY24 and this delivers a valuation of $1.81/share. Further earnings upside can be derived from 3DP’s 3Dinsight.ai data marketplace which we have not yet included in our modelling, being very early stage.

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