Pointerra Ltd - Maiden 2H Normalised EBITDA, Ahead of Forecast

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667 Views08 Sep 2022 08:00

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SUMMARY

Pointerra Ltd

Maiden 2H normalised EBITDA, ahead of forecast

Pointerra Ltd (ASX:3DP) provides a powerful cloud-based solution (Pointerra3D) for managing, visualising, analysing, using and sharing massive 3D point clouds and datasets. The company has taken 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. The Pointerra3D suite of solutions spans target sectors including survey and mapping; architecture, engineering and construction (AEC); utilities; transport; resources and defence and intelligence. Pointerra has delivered its maiden half-year EBITDA profit, with H2 FY22 normalised EBITDA of $0.78m, well ahead of our forecast for an operating loss of $1.8m. Sales revenue for the half was up 167% to just under $6.5m, again ahead of our forecast for $4.2m, and well ahead of the $3.2m in sales revenue delivered in H1 FY22. FY22 revenue increased 142% to $9.66m on the previous corresponding period (pcp) and the underlying EBITDA loss narrowed to $0.4m, from a $1.27m EBITDA loss in FY21 and well below the $2.97m loss we had forecast. The second half operating profit was delivered while absorbing additional costs in growing the business. The operating cost base in the half was $5.7m, up from $4.4m in H1 FY22 and $2.7m in H2 FY21. It was, however, lower than we had factored in and we have adjusted our forward estimates accordingly. We have also rolled the financial model for the new year, resulting in our base case valuation increasing to $0.91/share (previously $0.72/share).

Business model

Pointerra’s patented, cloud-deployed technology and AI-driven algorithms solve a long- standing problem of efficiently, effectively and rapidly converting massive 3D datasets into analytics and insights to provide definitive answers. Its technology essentially creates a digital twin to manage the physical world. The Pointerra3D product has three key components each with different features and capabilities: Core, Analytics and Answers. Core provides the processing, storage and sharing, visualisation and management of data while Analytics creates the digital twin for the physical world, analysis and classifies the data while Answers creates predictive insights and delivers business intelligence, risk mitigation and ESG improvement suggestions to users. Pointerra charges its clients on the amount of data (in terabytes), the number of users and the analytic tools that clients use.

Maiden normalised H2 NPAT and EBITDA, profitable outlook

Pointerra delivered normalised H2 EBITDA of $0.78m and normalised NPAT of $0.9m (including an income tax gain). As a consequence, losses for the full year narrowed significantly. FY22 normalised EBITDA was a loss of $0.4m and normalised NPAT was $0.44m. The reported loss for the year was $3.1m and included $1.3m in non-cash, share-based payments and a $1.36m impairment expense on the US$1m in shares outlaid to acquire US drone-based digital asset management business Airovant in FY21. We understand that for conservatism and costs associated with the annual impairment test, the company decided to write down the investment. Pointerra pointed to multiple pathways to profitability in FY23 including margin expansion from further R&D investment in AI approaches to Pointerra3D analytics and answers products, known opportunities and tenders lodged in the US utilities sector, and a return to in-person trade shows in Australia and the US.

Base-case DCF valuation is $0.91/share (previously $0.72)

We use the discounted cashflow methodology to value Pointerra, using a WACC of 14.7% and terminal growth rate of 2.2% and this derives a base-case valuation of $0.91/share (previously $0.72/share). Our valuation is predicated on ACV surpassing US$50m by H1 FY25.

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