July 25, 2013 Aerial maps provider's subscription surges MANY...

July 25, 2013

Aerial maps provider's subscription surges



MANY pundits reckon this aerial maps provider will become the local version of Google Earth, albeit with a subscription-based model users pay for.
The burning question is whether Nearmap's $103 million market cap more than accounts for the potential of an entity that was a basket case a year ago.

Nearmap (NEA, 31c) yesterday disclosed June-quarter customer receipts of $4.95m and net operating cash inflows of $3.18m.

The debt-free outfit's cash balance stands at $13.4m.

The 183 per cent year-on-year revenue surge followed Nearmap's decision last November to abandon free content in favour of annual subs to businesses with five or more users.

Given Google offers a free alternative -- and bear in mind that the US makes its money from stimulating internet searches -- that was a bold move.

But lots of parents send their kids to private schools because they're better than the free product. Likewise, Nearmap claims its pictures have higher clarity and are updated more regularly.

...Nearmap's focus is now moving from larger enterprises to "single seat" small-enterprise deals and prepaid arrangements not involving a contract.

Nearmap chief Simon Crowther says the subs growth to date has been achieved with a narrow customer and product base and with negligible marketing spend.

"We are at an early stage of monetising our IP (intellectual property) and broadening our product base," Crowther says.

Fuelled by a zealous cohort of supporters, Nearmap shares have surged from a low of 3c in October.

In our view, the present valuation perhaps stretches things, but not by much.

Given Nearmap's business plan remains somewhat sketchy, we will avoid the stock in favour of a lower entry point.


From, via Google.:

http://www.theaustralian.com.au/business/opinion/aerial-maps-providers-subscription-surges/story-e6frg9lo-1226684611783