Pointerra Ltd: Sales up 224%, Losses Narrow, Step-Change for FY22

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790 Views01 Sep 2021 08:00

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SUMMARY

Pointerra Ltd

Sales up 224%, losses narrow, step-change for 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. 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 surveyor and mapping companies. Pointerra has reported FY21 sales revenue of $3.98m, an increase of 224% on FY20 and on the back of Annual Contract Value (ACV) growth of 242% to US$9.8m. Revenues were below our forecast for $4.98m. Pointerra reported an underlying EBITDA loss of $1.15m, which was a 32.5% improvement on the $1.7m underlying EBITDA loss reported in FY20. Costs for the year were well contained at $5.1m and better than our forecast for costs of $5.6m with the increase in costs from FY20 almost entirely human costs as Pointerra’s head count grew from 12 to 29. While the result was a little below our estimates we are confident that Pointerra continues on the growth trajectory we have mapped our forecasts. We have made some adjustments to our FY22 and FY23 forecasts mostly related to the weaker AUD against the USD where the bulk of Pointerra’s revenues are generated and some non-cash charge adjustments. Our base case DCF valuation is $0.90/share (previously $0.94/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.

H2 FY21 showed marked improvement, set up for FY22
Second half revenues grew 229% over the same corresponding period in FY20 and 56% on H1 FY21 to $2.43m. The underlying EBITDA loss for the half was $0.19m, down from a loss of $0.41m in H2 FY20. Costs were well contained, apart from employment costs which increased to $2.2m in H2 FY21, almost $1m more on H2 FY20 and up from H1 FY21 employee costs of $1.7m. Pointerra has invested in human capital in the past year with the headcount rising to 29 from 12 a year before. The company noted that early activity in FY22 was seeing an acceleration of opportunities with several paid proof of concept (POC) projects for enhanced platform analytics for US utilities and autonomous vehicle navigation for a global warehousing and logistics group

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 (previously $0.94). 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 $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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