Pointerra Ltd - US Energy Utilities Drive ACV Growth in Q4

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620 Views01 Aug 2022 08:00

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SUMMARY

Pointerra Ltd

US energy utilities drive ACV growth in Q4

Pointerra Ltd (ASX:3DP) provides a powerful cloud-based solution (Pointerra3D) for managing, visualising, analysing, using and sharing massive 3D point clouds and datasets. The company has taken 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. 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 Annual Contract Value (ACV) totalled US$18.2m on July 29, up US$1.94m from 29 April and 86% ahead of ACV reported a year ago. Growth in the quarter was driven by two new contracts from existing clients in the US Energy Utilities sector: a minimum US$250,000 a year contract with Florida Power and Light for the deployment and ongoing development of the Pointerra3D Answers storm response solution; and an enterprise subscription agreement for a minimum US$250,000 a year to use Pointerra3D Analytics to support NextEra Energy’s multi-billion- dollar greenfield solar energy project sites across the US. Pointerra also reported Q4 FY22 cash receipts of $1.66m which brought full year cash receipts to $7.9m, an increase of 93% over FY21. We have tempered our FY22 and FY23 forecasts to reflect the company’s Q4 results. Our modelling still has Pointerra surpassing US$50m ACV by the end of CY2024 but we have adjusted this near-term. Our base case valuation is now $0.72/share (previously $0.82/share) and this incorporates a higher risk-free rate to reflect recent moves in the 10- year Treasury rate.

Business model

Pointerra’s patented, cloud-deployed technology and AI-driven algorithms solve a long- standing problem of efficiently, effectively and rapidly converting massive 3D datasets into analytics and insights to provide definitive answers. Its technology essentially creates a digital twin to manage the physical world. The Pointerra3D product has three key components each with different features and capabilities: Core, Analytics and Answers. Core provides the processing, storage and sharing, visualisation and management of data while Analytics creates the digital twin for the physical world, analysis and classifies the data while Answers creates predictive insights and delivers business intelligence, risk mitigation and ESG improvement suggestions to users. Pointerra charges its clients on the amount of data (in terabytes), the number of users and the analytic tools that clients use.

Record Q4 invoicing, Pointerra is now self-funding

Pointerra delivered a 93% in cash receipts in FY22 to $7.9m and ended the year with another $2.54m invoiced but not paid. Q4 cash receipts increased 14.3% year on year to $1.66m and the company invoiced a record $4.2m in the quarter. Importantly, including these unpaid invoices, Pointerra’s operations are now self-funding from the cash being generated. The company ended the year with $3.6m in cash and highlighted that it anticipated any M&A activity would largely scrip-funded to ensure alignment of interest for incoming teams.

Base-case DCF valuation is $0.72/share

We use the discounted cashflow methodology to value Pointerra, using a WACC of 14.7% (previously 14.0%) after incorporating a higher risk-free rate of 3.5% (previously 2.0%). This derives a base-case valuation of 0.72/share (previously $0.82/share). Our valuation is predicated on ACV surpassing US$50m by H1 FY25.

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