Pointerra Ltd: Q2 Cash Receipts Accelerate, Record Cashflows

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1.3k Views20 Jan 2022 08:00

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SUMMARY

Pointerra Ltd

Q2 cash receipts accelerate, record cashflows

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 Q2 FY22 operating cashflows of $2.85m, an increase of almost 350% on Q2 FY21, and has delivered record operating cashflows of $0.8m compared with an operating cashflow loss of $0.23m in Q2 FY21. Free cashflow for the period was $0.75m, well ahead of our forecast for $0.56m. Pointerra ended the quarter with almost $5.0m in net cash. Cash receipts were a little lower than our forecast for $3.15m, however, operating cashflows were ahead and demonstrate that Pointerra continues on the growth trajectory on which we have mapped our forecasts. We have left our forecasts unchanged ahead of the company’s market update on Annual Contract Value (ACV) on 31 January and its interim result 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.

Q2 Results Commentary
Pointerra noted that in addition to the growth in cash receipts, it had been awarded material contracts worth from $4.33m to $6.6m in the US energy utilities sector which it previously announced in December 2021. These contracts will be included in the company’s ACV announcement due by the end of January. We are forecasting ACV of US$15.4m at that point. Pointerra also noted that it had added new customers across its target sectors of surveying and mapping, transport, mining, oil and gas, and architecture, engineering and construction, and that these had all contributed to ACV growth.

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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