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Aerometrex share price skyrockets over 100% during today's IPO

With Aerometrex listing on the ASX today, we take a look at five things investors need to know about this high-flying Initial Public Offering.

Aerometrex IPO in focus Source: Bloomberg

Details of the IPO

Aerometrex (ASX: AMX) today announced that it had successfully completed its IPO, raising $25m in fresh funds and issuing 25m shares as a result. The issue price of the IPO shares was set at $1.00 per share.

Aerometrex’s issue price of $1.00 per share was quickly eclipsed when the stock commenced trading, mind you, with the Aerometrex share price racing to an intraday high of $2.070 in short order.

By the late afternoon this bullishness was mostly intact, with Aerometrex trading around the $1.915 mark.

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What does Aerometrex do?

Like market darling and aerial imaging company Nearmap (ASX: NEA) – Aerometrex (ASX: AMX) is centrally involved in the ‘professional aerial mapping business, specialising in aerial photography, photogrammetry, LiDAR, 3D modelling and aerial imagery subscription services.’

Deriving its revenue from a combination of subscription and project-based models, Aerometrex's core operations span four key areas, including: aerial photography and mapping, aerial LiDAR surveys, 3D modelling and MetroMap.

Though the company noted that the majority of its revenue was derived from project-based work in FY19, its 'subscription service is a core focus of the business and a growing revenue stream.'

Aerometrex’s core strategy

Facing competition from the likes of Nearmap, Aerometrex (ASX: AMX) highlighted five key aspects of its current growth strategy.

Specifically, the company will look grow its subscription-based revenue streams, focus on geographic expansion; particularly in the US, pursue acquisitions where appropriate, launch new products when viable and bump up sales and marketing efforts.

In line with the company’s focus on developing New Products, Aerometrex has earmarked $3m of the $25m in funds raised for research and development.

Fundamentals in focus

Besides the buzz around Aerometrex's aerial imaging-tech, the company has seen robust top and bottom-line growth in the last three fiscal years.

On the revenue front, the company has seen its revenue grow from $9.7m to $16.1m – from FY17 to FY19.

On the bottom-line, profits have also seen a strong uptick: rising from just $2,000 (not a typo) in FY17 to $2.57m in FY19.

Looking at the breakdown of sales revenue, we see that Aerometrex's revenue is heavily weighted towards its photo-contracting/ mapping and LiDAR segments, both contributing 40% to the company’s revenue and making up 80% of the firm's revenue in total.

What will Aerometrex use the IPO funds for?

Ultimately, Aerometrex will use the majority (32% or $8m) of the funds raised from today's IPO to expand its MetroMap service (the company's subscription-based web-based application targeted at 'sophisticated geospatial data users' in the corporate market.

$5m or 20% of the new funds will also be used to expand the company's 3D modelling operations.

A further 14% of the IPO funds – or $3.5m, will be put towards US expansion.

Finally, the company noted that the Board may consider further debt or equity funding options to accelerate growth, if it is deemed appropriate.

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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