The Nearmap Ltd (ASX: NEA) share price has somewhat stabilised over the last few months. Can this upgrade in guidance lift the Nearmap share price?
Nearmap develops aerial imagery technology to provide accurate and high-resolution aerial imagery.
Some key competitors include Aerometrex Ltd (ASX: AMX) and Pointerra Ltd (ASX: 3DP).
NEA share price
Momentum in growth
The company has upgraded its guidance on its FY21 annual contract value (ACV) from $120 million – $128 million to $128 million – $132 million.
This was driven by continual growth across Nearmap’s core industry verticals from both new and existing customers.
Future growth
Nearmap continues to invest capital into the development of HyperCamera3, which looks set to launch in FY22.
In light of allocation of capital to key growth initiatives and continual growth in ACV, Nearmap expects net cash outflows to be below $10 million for FY21.
The CEO and Managing Director of Nearmap, Rob Newman remains upbeat about being on track to deliver 20-40% ACV growth targets from FY22 onwards.
Rob Newman believes the company is on track as it focuses on core growth verticals of insurance, government and roofing.
My thoughts
It’s encouraging to see upgraded guidance since releasing its HY21 results earlier this year.
It appears Nearmap is close to reaching free cash flow positive, which could be an inflection point.
There is a lot to like about Nearmap given its operating in a structurally growing industry and has substantial capital to reinvest into the business.
However, investors should bear in mind that there is a lot of optimism priced into Nearmap. I’ll be monitoring this one from the sidelines.
If you are interested in a further breakdown of Nearmap’s HY21 results, click here.
