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Here’s why the Nearmap Ltd share price is soaring

The Nearmap Ltd (ASX: NEA) share price soared more than 8% today, on the back of a positive market update this morning.

In an announcement to the ASX, Nearmap said it secured a “major customer” within its Australian business. The customer was not named.

Nearmap provides high-resolution imagery and data visualisation tools for customers from many industries.

“Having one of our customers further increase their investment in nearmap’s services is testament to the value and competitive advantage nearmap offers our clients,” Nearmap Vice President and Managing Director of Australia, John Biviano, said.

The meaningful contract win comes despite a slowdown in the mining sector and follows Nearmap’s announcement of its first meaningful sales in its US business last fortnight.

We have made a positive and encouraging start to FY16 and this significant contract adds to our momentum,” Nearmap CEO, Ross Newman, said. “We will continue to grow our Australian business.”

“This new contract is a good example of the successful model we have developed in Australia that we are also applying to our US operation,” Newman added.

Pleasingly, the company reaffirmed its Australian revenue guidance of between $28 million and $32 million by December 2015.

Time to buy Nearmap shares?

Today’s positive news comes as Nearmap’s share price has taken a dive. In the past six months, Nearmap’s share price fell from over 60 cents to a low of 33 cents before recovering to trade slightly below 40 cents today.

In my opinion, if Nearmap achieves the same or similar success in the US market that it has locally, its share price will look very cheap in hindsight.

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Motley Fool writer/analyst Owen Raszkiewicz owns shares of Nearmap.

Owen welcomes your feedback on Google plus (see below), LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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