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This week’s domestic stock deep dive is on Pointerra (ASX:3DP), one of the ASX’s few data analytics company. It has been an eventful few years for 3DP, skyrocketing from 4c to 84c in less than 12 months after Bevan Slattery bought into the company. But ever since, it has lost most of that ground. Are things going as badly as the share price plunge would suggest?
Pointerra’s bread and butter
Pointerra is named after so-called pointclouds, sets of data points that can represent anything that is scanned in 3D. The data is collected using Lidar (Light Detection and Ranging), which can be captured in the air or on the ground. Pointcloud users include surveyors, engineers, asset managers and city planners, just to name a few. The company’s solution enables users of pointclouds to work with their datasets in a smooth and seamless fashion – storing, managing, visualising, analysing and sharing point clouds and data sets.
Amazon as a Big Tech client
The data can be collected either aerially or on the ground, for instance by surveyors. It can be analysed to provide answers to complex business problems. One of Pointerra’s most prominent clients is Amazon, which has used Pointerra to develop a scalable yard mapping and analytics methodology for Amazon’s distribution centres. A successful 12-month pilot project is expanding to 200 sites in the USA with the potential to grow to over 1,000 sites in North America and Europe.
Pointerra sells its products via a subscription model. A typical utility customer pays $5,000-$15,000 per month, but fees vary dependent on the size of the customer and the amount of data stored on Pointerra’s services. Although the company has its origins in Australia, the company is focused on the US market, particularly the utilities sector.
Strong ACV growth
Pointerra has measured its success in Annual Contract Value (ACV), which is the annualised value of all current contracts combined. It is seeking to move to Annualised Recurring Revenue (ARR) and so has not reported ACV in a year. Yet on October 31 2022, this was US$20.1m, a figure that had grown from US$11.7m just 12 months earlier. This was not just because of new clients, but also because existing clients were increasing their spending on the platform.
One reason for this was the Hurricane Ian storm in the USA because the company supported Florida’s state-owned utility company with its Hurricane Ian response. Its profile was raised globally among utilities companies that are anticipating an impact by similar extreme weather events. Also helping the company was the return to in-person trade shows in Australia and the USA.
In FY23, Pointerra recorded $9.4m in cash receipts and $8.3m in reported revenue, both up over 20% from the year before.
A good FY24?
Although the company did not provide specific guidance for FY24, it told shareholders its growth trajectory had resumed. Program delays that ate into FY23 results were being resolved. It expected enhancements to the platform to help customers grow their spend. And it expected to return to cash flow positivity.
The company has raised $3.5m in capital in August, but was cash flow positive in the early weeks, even without the capital raising.
We mentioned earlier that the company rose to prominence when Bevan Slattery invested $2.5m in the company in mid-2020. Slattery ceased to be a substantial (over 5%) shareholder in March, but did not appear to have sold all his shares at the time. Although the company has made progress since 2020, we don’t take confidence in Slattery selling shares in the company.
Our valuation of Pointerra, using a DCF model based on consensus estimates, is 11.2c per share. This is a good premium to the current share price (9c) per share, but only 24%. We would rather sit out of Pointerra until it becomes profitable, or shows signs of getting close to that point.
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