Why the Nearmap share price has surged 15% higher today

Nearmap Ltd (ASX: NEA) released a report on business performance with details of its new 'Nearmap AI' product. Its share price is now up 15%.

Phil Harpur

Phil Harpur has been contributing to Motley Fool Australia as a Freelance Writer since late 2019. Phil has spent the last 25 years working as a Senior Technology Analyst for some of the leading global technology research firms. Over the years, his market insights have been quoted in publications such as the AFR, SMH and the Australian, and he has appeared on business TV programs including Bloomberg, CNBC, Fox Business and the ABC. Phil is passionate about the share market and investing. He has post-graduate qualifications in Applied Finance and Investment from the Securities Institute of Australia. In his spare time, Phil likes to chill out listening to his favourite jazz artist or hanging out at the beach.

Published May 28, 2020 1:08 pm AEST

The Nearmap Ltd (ASX: NEA) share price has surged 15% higher in early morning trade today. This comes after Nearmap released a positive trading update on recent business performance and detailed the launch of its new 'Nearmap AI' product.

ASX aerial imaging shares represented by image of a city from above — Image Source: Getty Images

Continued Nearmap growth across key segments

Nearmap informed the market that its overall recent business performance has been relatively strong. It's seen continued month by month growth across its main industry segments despite challenging economic conditions triggered by the coronavirus crisis.

The company reports its actual cash value (ACV) portfolio to be in excess of $102 million. It anticipates a closing FY20 ACV portfolio value of between $103–$107 million, on a constant currency basis.

Sales activity levels were reported to have remained strong since the coronavirus onset and with customer churn to now be below 10% on a 12-month rolling basis. This is a significant reduction from the 11.5% last reported at the end of 2019.

The company did indicate there has been some downward momentum on sales growth. Some customers have delayed their purchasing decisions, however, Nearmap sees minimal overall impact on their expanding sales pipeline.

Cash flow break-even target on track

Back in April, Nearmap announced that a number of cash management initiatives were to be implemented to preserve its cash position and strengthen its balance sheet to avoid the need to raise additional capital. These measures were aimed at reaching breakeven point by the end of FY 2020 through an approximate 30% reduction in operating and capital costs.

Pleasingly, Nearmap reported today that it is currently on track to achieve its cashflow breaking target. The company predicts its cash balance to be between $32–$35 million by the end of this financial year.

Launch of Nearmap AI product

Nearmap announced that its new artificial intelligence (AI) product; Nearmap AI, is scheduled for initial launch on 1 June in both its Australian and United States markets. The launch of this new Nearmap AI product follows recent launches of the 3D and rooftop geometry products.

Nearmap will initially be targeting Nearmap AI in the insurance, utility and local government markets. All three of these markets saw strong demand for the new product while it was still in beta mode.

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