Pointerra Ltd: Powering into the Festive Season

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1.4k Views15 Dec 2021 08:00

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SUMMARY

Pointerra Ltd

Powering into the festive season

Pointerra Ltd (ASX:3DP) provides a powerful cloud-based solution (Pointerra3D) for managing, visualising, analysing, using and sharing massive 3D point clouds and datasets. 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 – simplifying the complex. 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 announced material contracts, totalling at least US$3.1m, with new and existing US energy utility customers have been secured by its US operations. New customer Entergy Corporation (NYSE:ETR) has engaged Pointerra for an initial minimum contract of US$2.37m and up to US$4.0m to process and analyse LiDAR data over its service areas and for Pointerra to create a digital twin of Entergy’s network in the Pointerra3D platform. Existing customer Pacific Gas & Energy Corporation (NYSE:PCG) has awarded 3DP an additional US$0.7m contract to commence building a digital twin of its network in the Pointerra3D platform. Gulf Power, a new client but sister company to existing client Florida Power & Light, has awarded 3DP a US$0.05m contract to process LiDAR data using Pointerra3D Core and Analytics. These contracts will add substantially to the Annual Contract Value (ACV) of US$11.7m reported on 29 October. We are comfortable with our ACV forecast of US$15.4m at the end of January. Our 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: Pointerra3D Core, Pointerra3D Analytics and Pointerra3D Answers. Pointerra3D Core 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 and building and/or deploying analytics tools (Pointerra3D Analytics and Pointerra3D Answers) 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 through both subscription and event-based models.

ACV on track to meet our forecast for US$15.4m at January end
Pointerra noted since last reporting its ACV run rate on 29 October, and in addition to the contracts that it announced yesterday, that it had added new customers and generated growth in spend by existing customers across its broad range of target sectors – surveying and mapping, architecture, engineering and construction (AEC), transport, utilities, mining, and oil and gas. Having invested in people, product and capability over the past 18 months, Pointerra expects to see the benefit of this investment in calendar 2022 and 2023 through additional contracts in the AEC, transport, defence, mining, and oil and gas sectors in much the same way it has developed its energy utilities business.

Base-case DCF valuation is A$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 A$0.90/share. Our valuation is predicated on ACV reaching US$50m by H1FY25. We have dimensioned an upside case whereby ACV hits US$50m by H1FY24 and this delivers a valuation of A$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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