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Why the Nearmap (ASX:NEA) share price is flying

The Nearmap (ASX: NEA) share price is flying, it’s up around 15% after giving an update.

What is Nearmap?

Nearmap is a leader of aerial imagery technology and location data, providing frequently-updated, high-resolution aerial imagery. It currently operates in Australia, New Zealand and the United States, and is one of the ten largest aerial survey companies in the world by annual data collection volume.

Why the Nearmap share price is flying

This morning the aerial imaging business gave a trading update, announced the launch of AI content and also gave an update on cost management.

Nearmap said that annualised contract value (ACV) continues to grow, it is now more than $102 million using a foreign exchange rate to the US dollar of $0.70. Management was able to narrow guidance to $103 million to $107 million. At today’s foreign currency exchange, the existing portfolio is above $104 million of ACV.

The company said that the 12-month rolling churn is now below 10%, down from 11.5%.

Nearmap AI has been launched with an initial focus on utility, local government and insurance. The company said this represents another significant milestone.

The aerial imaging business has been implementing a number of initiatives to preserve cash to strengthen its balance sheet without raising capital. The savings amount to 30% of operating and capital costs. It should make Nearmap cashflow breakeven by the end of FY20. There have been job cuts and salary reductions for this year. Nearmap expects to end the period with a cash balance of between $32 million to $35 million.

Can Nearmap keep growing?

Nearmap is aiming for new products with its growing customer base. It’s one of the more exciting growth shares on the ASX, but I’m not sure how large Nearmap can become. For my portfolio I prefer the idea of Bubs (ASX: BUB).

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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned. 

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