That is the best scenario for Nearmap shareholders. You need to...

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RonW90

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111

10/07/22

13:46

Post #: 62463057
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Originally posted by Roy2U: ↑

"anything under $30M loss needs to be seen as a positive as this year is the first profit year if I remember correctly"

It's best not to get our profit and cash flow hopes up too high before the FY22 results in August. Rob Newman has been saying for some time that NEA will be consuming cash throughout FY22 and FY23, with a turn towards cash generation in FY24. He also said that NEA will consume up to $30M from the capital raise in FY22 for growth initiatives.

These growth initiatives are working very well, with North American ACV growth of 57% in NA in H1 FY22. Some of this expenditure will also reduce NEA's costs and improve its competitive position through HyperCamera 3 and better solutions for major customer groups such as insurance and government.

If NEA is turning cash flow positive in FY24, with around $80-90M of surplus cash and growing from there, then FY24 is the perfect time to either expand into other territories or to undertake a buyback of shares at these low prices (much lower than the big capital raising in October 2020 at $2.30 per share). A mix of both would be best IMO.

The future for NEA shareholders looks bright to me over the next few years. I expect ACV to easily exceed $200M by the end of FY23 (>$40M higher than the likely ACV in FY22). That means that in FY24, NEA can expect around $40M of additional cash inflow. No wonder they expect cash flow surplus in FY24.

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That is the best scenario for Nearmap shareholders.
You need to remember those shareholders paid about $2.75 per share to raise $110M cash for Nearmap's balance sheet.

With costs remaining higher than revenue so far, I don't think you would see positive cashflow anytime soon. Also litigation costs of $10M year which might go for another few years, good luck.

NEA Price at posting: $1.32 Sentiment: Sell Disclosure: Not Held
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0 Great analysis

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