The Nearmap Ltd (ASX: NEA) share price printed a record high of $3.19 today and according to the aerial mapping company’s official Twitter feed its next potential growth leg is “well underway”.
At its half-year results in August Nearmap’s management team flagged that Canada was its next global market with the capture program or physical flyovers set to start in April. This is likely because the winter snows that cover much of Canada’s urban and suburban centres for around half the year should be gone by April, although I’m no meteorologist.
Canada is also a logical market for Nearmap as its largely English speaking (on its West coast anyway) and Nearmap’s exisiting operations are largely based on the U.S.’s west coast or mid-west near Denver, Colorado.
For investors the Canadian expansion is likely to bring about not much more than more significant upfront costs to start off with and the market size is nowhere near like that of the U.S.
In fact progress in Australia and the U.S. remain the main game for Nearmap with these two markets alone capable of more than justifying its current valuation assuming the U.S. retains a steady growth rate.
The group has a strong balance sheet to fund its Canadian and U.S. expansion plans with a net cash position of $81.3 million as at December 31 2018.
As if that wasn’t enough its Australian operations are already pumping a lot of free cash flow thanks to its attractive economics.
Nearmap may well deliver a March quarter trading update of sorts this April, which again could move the share price a fair way in one direction or the other.
Another software-as-a-service business on the up today worth a look is sports analytics business Catapult Group Ltd (ASX: CAT), after it announced it has signed an updated deal with Australia’s NRL body.
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Returns as of 6th October 2020
Tom Richardson owns shares of Nearmap Ltd.
You can find Tom on Twitter @tommyr345
The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Catapult Group International Ltd. The Motley Fool Australia owns shares of Nearmap Ltd. 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 Scott Phillips.
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