Nearmap charts its way past COVID threat

A stumble in the autonomous vehicle sector earlier this year has proven to be more of a challenge than COVID-19 for aerial mapping provider Nearmap.

The company confirmed on Thursday that it is on track to deliver on the reduced guidance it gave in January despite the macroeconomic fallout from the pandemic.

“Over a five-month period we have looked very closely at the data, who’s consuming what, what kind of interaction do they have with our content, and what impact the virus had," Nearmap chief executive Rob Newman said.

"I would say that, other than an initial reaction when COVID first hit, we have seen the use of our content and our business continue to grow.”

Nearmap’s aerial mapping captures Bondi Beach cleared by COVID restrictions.

The company's classification as an essential service has meant that it has been able to continue to generate fresh 2D and 3D mapping data and deliver it to customers – most of which are relatively immune to the economic tumult.

"Some of our customers are very much non-cyclical businesses so these are business like local governments, insurance companies, major construction companies and those businesses that have to continue to operate in an environment like this," Mr Newman said.

In January the stock plunged after the company said a slowdown in the autonomous vehicle sector was among the factors that forced it to cut revenue targets. The slowdown meant companies cut spending on areas such as aerial mapping which they use extensively.

However, some customers have become more reliant on Nearmap's service in circumstances where COVID has reduced access to work sites.

According to data from RBC Capital markets, architecture, construction and engineering accounts for 27 per cent of Nearmap's annualised contract value (ACV), followed by the government and insurance sector with 17 per cent each.

In May the company said it would be cash flow break-even for the year ending June 30, 2020 and tightened the range of its ACV forecast to between $103 million and $107 million.

RBC is forecasting $104.5 million and has a price target of $2.75 compared to the stock's trading price of $2.32 on Thursday afternoon.

The stock traded as high as $3.78 last June.

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