Pointerra Ltd: Strong First Half Growth with Measured Costs Growth
Pointerra Ltd
Strong first half growth with measured costs growth
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 H1 FY21 revenue growth of 218% to $1.56m and cash receipts growth of 132% to $1.14m. The net loss for the half was $0.94m, down 28% from the same period a year ago and better than our forecast loss of $1.1m. We have made some minor adjustments to our forecasts to reflect timing differences for revenue recognition and the recent strength in the Australian dollar against the USD. Our base case DCF valuation using a WACC of 14% and which is predicated on Pointerra delivering ACV of US$50m by FY25 is $0.75/share.
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.
H1 FY21 result better than forecast
3DP has reported a better than forecast net loss of $0.94m, compared with our forecast for a net loss of $1.1m and the previous corresponding period’s net loss of $1.32m. Revenue for the period was $1.56m, up 218% on the pcp although a little below our forecast for $1.87m, chiefly due to timing differences on revenue recognition from contracts signed in the half. In the near term, the proportion of new contracts recognised in the revenue line will be difficult to predict accurately without having the full contract book available. Over time, as Pointerra’s contract book matures, revenue recognition, cash receipts and Annual Contract Value will be aligned. Importantly, the tight cost control exhibited by management historically remained evident in this result with measured growth in core revenue drivers – head count and research and development. We have made minor adjustments to our forecasts, chiefly reflecting the lower than forecast revenue recognition in H1 and a higher AUD/USD exchange rate ($0.78 vs $0.72 at the beginning of the year).
Base case DCF valuation is $0.75/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 an equity value of $0.75/share. Our base case is predicated on Pointerra delivering ACV of US$50m by FY25. We have dimensioned an upside case whereby ACV hits US$50m by FY24 and this delivers a valuation of $1.47/share. Further earnings upside can be derived from 3DP’s 3D Insights data marketplace.
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- Pointerra Ltd: Strong First Half Growth with Measured Costs Growth01 Mar 2021