Here’s why Nearmap Ltd shares soared 18% today

Shares in small-cap aerial imaging provider Nearmap Ltd (ASX: NEA) rose 18% to $0.84 cents this morning after the release of a positive first quarter update to the market. Although shares have been rising strongly in recent weeks, with the update seemingly much better than the market was expecting, Nearmap shares might head higher again in the near future.

Here’s what you need to know:

  • Group revenue rose 39% to $9.2 million in the first quarter of Financial Year 2017 (‘Q1 FY17’) compared to $6.6 million in the same quarter in 2016
  • This includes a 50% increase in US revenues from A$0.4 million in the final quarter of 2016 to A$0.6 million in the first quarter of 2017
  • Annualised Contract Value (‘ACV’) of the US sales grew 53% to US$2.3 million
  • Leads are ahead of target and conversion ratio of leads to sales is improving
  • Business growth appears to be primarily due to increased sales to existing customers, with some new customers such as OmniEarth and TomTom
  • Cash balance remains strong with A$10.9 million at 30 September 2016
  • A further update on progress to be provided at Annual General Meeting on 17 November 2016
source: Company presentations

source: Company presentations

Nearmap appears to be executing well and CEO Dr Rob Newman’s comments: “This quarterly result gives us growing confidence in both the size of the opportunity and our ability to compete“.

This may alleviate some investor fears about Nearmap’s ability to take market share from larger competitors. Management also noted that these results came in what is seasonally one of the quietest quarters, which may give the market confidence in 2017 being another year of growth for the company.

Investors should be cautious that the company’s US story is just getting started, although given the company’s success so far Nearmap does not appear to be expensive at today’s prices.

Our Top Dividend Stock for Smart Investors

Our resident dividend expert names his Top Dividend Share. Not only are the shares dirt cheap, the company is trading on a fat fully franked dividend yield. Simply click here to gain access to this comprehensive FREE investment report, including the name of this fast growing ASX dividend share. No credit card required!

Motley Fool contributor Sean O'Neill owns shares of Nearmap Ltd. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.