Reasons they use
Competition and new technologies
The industry in which Nearmap operates is competitive and includes companies with significantly greater financial, technical, human, research and development and marketing resources than currently available to Nearmap. Numerous companies around the world may counter Nearmap’s efforts to develop and commercialise products that may compete with their own offerings. Those companies may develop products in advance of Nearmap and more effectively than those developed by Nearmap given their resources and may have greater market acceptance if they are well established within the market in comparison to Nearmap. As a result, Nearmap’s current and future technologies and products may become obsolete or uncompetitive, which may result in adverse effects on revenue, margins and profitability of the Company.
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Loss of major client contracts
Significant customer contracts are frequently up for renewal and there can be no guarantee that Nearmap will be successful in future renewal processes, or that Nearmap will be able to renew these client contracts on similar or more favourable terms. Some customers, particularly in the government sector may also opt not to renew their contracts and instead put out to tender the services which Nearmap would need to respond to. While Nearmap may be the incumbent service provider, it does not necessarily guarantee that Nearmap would be successful under the tender. One of Nearmap’s top 10 customer contracts will expire in the year ending 31 December 2016. Negotiations have already taken place with this customer and a draft renewal contract has been issued. The loss of a major contract if a client terminates a contract where a breach occurs, does not renew their contract at the end of the contract term, or renews the contract on materially different terms, would have a material adverse effect on Nearmap’s business, operations and financial performance.
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Regulatory and legislative change While currently not exposed to privacy laws in Australia and the United States, the provision of aerial images may in the future pose legal and regulatory risks for all image providers, including Nearmap. In addition, Nearmap is exposed to the legal and regulatory frameworks of Australia and the United States. Any change in their laws or regulations may impact Nearmap’s ability to sell our product.
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Loss of key management personnel and ability to access quality staff
The loss of any of Nearmap’s key management personnel or a delay in their replacement could impact Nearmap’s business. Due to a shortage of appropriately skilled workers in the software and technology industry, Nearmap may not be able to find appropriate replacements for departing staff members or effectively expand its workforce to support growth. This may impact the quality of services Nearmap provides, the value of its business and Nearmap’s ability to compete with its competitors in enhancing and developing its product.
