I bought into NEA shortly after the paywall went up. One thing that attracted my attention was the subscription revenue model. I once worked for IRESS (ASX:IRE) which had a subscription model as well. I see a lot of similarities between the two companies.
|
Column 1 |
Column 2 |
Column 3 |
| 1 |
|
IRE |
NEA |
| 2 |
Head Count |
50-100 (This is a few years ago) |
~50 |
| 3 |
Product |
Software + Data |
Software + Data |
| 4 |
Revenue Model |
Subscription |
Subscription |
| 5 |
Company Name |
Named after the flagship product IRESS |
Named after the flagship product NEARMAP |
| 6 |
Market Position |
Monopoly |
Monopoly - There are no real competitors in the market place. |
| 7 |
Customers |
Institutions |
Corporate + Government |
| 8 |
Why do customers pay when there is a free alternative? |
Real time market data vs 20 minutes delay |
Frequent high res aerial imagery vs Out of date low res satellite imagery |
| 9 |
Sticky Add-Ons |
IOS, IPS, etc. |
Solar, Rail, Property, Insurance, etc |
| 10 |
International Opportunities |
IRESS had real trouble expanding overseas. Picked Canada as the first destination due to similar trading environments. |
Well, can choose to expand into any country really but US is a check-mate move. |
| 11 |
Share Price History |
Went from $1.85 when I joined the company to ~$9 when I left. It was undervalued for a long period of time in the early years. |
The track record is pretty good so far. I am banking on Nearmap repeating the IRESS story. |
Also there are a few strategic assets that are unique to Nearmap. Its patents are most talked about and well understood by investors but there is one aspect of the company I hardly see anyone mention: portability.
I am extremely impressed by the successful outcome of their move from Perth to Sydney. It proved that the company is portable and it is also a reflection of their ability to make tough decisions. This is significant because if you think about it, if they can move from Perth to Sydney and survived, what's stopping them from moving to the Silicon Valley? Remember that their strategic partners such as Amazon and Google are all based in the US. All they have to do is setup a shop and plug everything in, I know I am over simplifying the effort required but you get the picture. Imagine the technical resource pool they can tap into.
What's the next technical leap for the company? (Highly speculative but not impossible)
- Real time streaming image data from helicopter mounted Hyperpods.
- Night time imagery
