Why the Nearmap Ltd share price soared today

The Nearmap Ltd (ASX: NEA) share price has risen 10.7% today to trade at 41.5 cents following an upbeat trading update. The strong jump in Nearmap’s share price compares to a 1.6% rise for the ALL ORDINARIES (Index: ^AORD) (ASX: XAO) benchmark.

So What: Nearmap provides ultra-high resolution aerial photographs and data visualisation tools to business, enterprise and government customers, assisting them with their operations and saving them both time and money. It found its initial success in Australia while it is currently in the process of rolling out its services in the much larger United States market.

Following what was a magnificent run-up in share price between the beginning of 2013 and November 2014, the shares have come under intense pressure over the last 12 months or so.

However, the shares have risen strongly again today after the group said it had achieved $28 million of Australian run rate revenue by December 2015, which was at the low end of its guidance of between $28 million and $32 million. Notably, however, that was down from its initial “aspirational” run rate guidance of $30 million to $50 million (highlighting why some investors may be concerned).

Notably, the revenue run rate confirmed today does not include a contribution from the new major customer win announced to investors earlier this month.

Now What: In addition to confirming its performance to date, Nearmap also provided guidance for the first half of financial year 2016. It said subscription revenues for the Australian business are expected to be between $13.3 million and $13.7 million, representing growth of between 19% and 22% on the prior corresponding period.

Even at its current share price, Nearmap remains a risky and speculative company but with strong growth prospects – both in Australia and the US, as well as the potential entry into new markets – it could well be worth a closer look.

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Motley Fool contributor Ryan Newman owns shares of Nearmap Ltd.. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

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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