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Nearmap share price: where next following FY21 preliminary report?

‘FY21 has been an unprecedented year with record performance delivered in a challenging economic environment.’

The Nearmap (ASX: NEA) share price opened 9.56% higher on Tuesday after the company released its FY21 preliminary results to the market. By 12:38 PM the stock was up 14.36% to $2.27 per share, as investor enthusiasm continued to grow.

What's behind the gains?

Looking at what drove those share price gains, Nearmap management told the market it expected to close fiscal 2021 with an Annual Contract Value (ACV) of $133.8 million, implying a year-on-year growth rate of 26%, on a constant currency basis.

Those levels would be ahead of where management previously expected the company’s full-year ACV to come in at, with the company in May upgrading its FY21 ACV guidance to between $128 million to $132 million.

Commenting on these expected results, Nearmap MD and CEO, Dr Rob Newman, said:

'FY21 has been an unprecedented year with record performance delivered in a challenging economic environment. The strong growth from new and existing customers across our core industry verticals validates our refined go-to-market strategy in North America and gives us good momentum going into FY22.'

Most of this growth was driven by the company’s North American business, which is expected to report $44.5 million in ACV for the full-year, implying a growth rate of 54%. North America continues to grow in importance for the ASX-listed company, with North American ACV as a proportion of group ACV rising from 39% in 2020 to 46% in 2021.

Management said that 'Strong momentum has continued with new and existing customers across the Company's core industry verticals.'

The Australian market, by comparison, is more stable and stagnant, expected to report FY21 ACV of $69.1 million, implying a year-on-year growth rate of just 7%.

Despite weak growth, management noted that the company was well placed to 'drive renewed growth within [Australian] Enterprise portfolio from FY22.'

Elsewhere, the company highlighted that it had successfully tested one of its next generation cameras in-flight – the HyperCamera3 – as part of a development which management described as ‘a significant technological breakthrough.’ This product is expected to be commercially rolled out in FY22.

'HyperCamera3 offers unparalleled capture efficiency and also enables us to serve use cases requiring higher resolution content at altitudes currently flow with HyperCamera2,' said Dr Rob Newman.

Cash is king

Despite all this, the company continues to burn cash, noting that its cash balance fell from $129.3 million in December 2020, to $123.4 million by June 2021. Jefferies analysts, commenting on Nearmap’s cash position, said:

‘Cash flows would appear to be better than JEF forecast for 2H21 which is supportive of our view that this company will get to cash flow positive towards the back-end of FY23.’

No FY21 earnings guidance was provided as part of today’s market update.

Nearmap's official full-year results are due on 18 August, 2021.

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