Aerial imagery business, Nearmap Ltd (ASX: NEA) today reported a 44% jump in revenue, but a net profit of just $0.3 million, compared to $0.8 million in the first half of 2014.
Following the earnings release its shares dropped sharply lower, down 10% in early trade, however it's important to remember where Nearmap lies in terms of its growth runway.
Indeed whilst earnings per share fell from 0.24 cents per share to just 0.09 cents per share, the company has been investing heavily in its key growth market, the USA, throughout the past year.
Gross profit within the Australian business rose 51% over the prior period to $10.1 million, whilst $4.4 million has been spent on US operations. Impressively, a gross profit margin of 89% was achieved in the local market, with new analytics such as Nearmap Construction and Nearmap Insurance being launched.
Nearmap CEO, Simon Crowther said, "We have reported pleasing growth in Australia in the period, and we made significant progress in building a new business in the US. Whilst FY14 was all about verifying our opportunity, setting the strategy and creating the business plan, FY15 is about execution and on the ground activity."
Mr Crowther continued, "We have a wonderful opportunity and much to do." He said, "We reaffirm our aspirational revenue run rate targets both for Australia at $30m – $50m by December 2015 and the same rate in the US by December 2017. When we are proven and established in the US we can assess other new markets, several of which look highly suitable for nearmap to enter. While the investments in growth have and will impact our reported profits, we are a growth company firmly in growth mode."
"While this is a year of investment and building I am confident the decisions we make today will generate strong sustainable returns in the future," he said.
Given its healthy cash balance of $21.8 million and expectations of an $8 million spend in the US this year, Nearmap looks to be in a good position. Investors who chose to sell today may end up kicking themselves in years to come.
This is a better stock idea than Nearmap…
