Pointerra Ltd: Sky’s the Limit
Pointerra Ltd
Sky’s the limit
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. It generates income from subscriptions to host and provide access to data (data as a service), to process the huge data sets (data processing as a service) and increasingly from analysing the data (analytics as a service). With expanded datasets on its platform, Pointerra is now partnering with its customers to create a data marketplace which delivers additional revenue and customer opportunities to the group. We initiate coverage with a base case DCF valuation of $0.75/share, which is predicated on Pointerra growing its Annual Contract Value (ACV) to US$50m by FY25.
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.
Positive cashflow in sight, Annual Contract Value almost A$7m
Pointerra reported positive operating cashflow in Q4 FY20 and, but for a delay in cash receipts in September, would have done the same in Q1 FY21. The company reported that at 30 September, annual contract value (ACV) stood at US$4.93m (A$6.8m), up from US$3.98m on 1 September and up 72% from the ACV reported on 30 July (US$2.06m). On an ACV run-rate basis, the company is profitable and exceeding recurring operating cost levels. We are forecasting that Pointerra ends H1 FY21 with ACV of US$6.37m and US$10.22m for FY21. On our estimates we are expecting 3DP to deliver H2 positive EBITDA of $0.6m following negative EBITDA of $1.2m in H1FY21.
Base case DCF valuation is $0.75/share
We have used the discounted cashflow methodology to value Pointerra using a WACC of 14.0% (beta 1.9, terminal growth rate of 2.2%) and this derives an equity value of $0.75/share. Our terminal value is $0.45/share within this valuation. Our valuation implies a compound annual growth rate (CAGR) in free cashflows 51.9% from FY22-FY30. As a sense check, the current share price of $0.50/share implies a CAGR in FCF of 45.1% for the same period. Having examined comparable business models, we are of the view that our forecasts are entirely achievable.
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- Pointerra Ltd: Sky’s the Limit25 Nov 2020