1spatial Share Discussion Threads

[mwaller] 03/11/2014 12:06

No. The tech is good, so is the timing. This is a real business not a high tech start up flash in the pan. Here today gone tomorrow. Their traditional target market are national infrastructure providers with lots of legacy. They do have real problems to solve and SPA can address them. Organic Growth will accelerate as core customer adoption takes up and private sector responds to the spatial data opportunities. They now have the platform built to service that demand. Spatial data is not new - it's older than the first scouts charting the waterways to the promised land, as road markers for cart and oxen existed before TOMTOM and cars. The spatial data universe has been in equilibrium for years. What's now different is the disruption that every player (supplier and customer) in the industry must now come to terms with. As I described for TOMTOM it's just starting to play out now for all of them. The timing for SPA is perfect. This is what 1Spatial has been preparing for the past years. 7pc organic growth while working through their own not insignificant transition I think is both respectable and a positive indicator of a turning point. It will take time to reach an industry tipping point and rapid growth especially with this traditional type of business and customer. The management knew that - which is why the placing plan reflects as is and is still on track. The growth accelerator for me is SPA have now just signed with Esri. A channel to the whole spatial market of established relationships. That means access to those early customers who have the biggest pain and realisation need. They couldn't do that even a year ago because they were still developing their Esri integration. The Esri partnership will certainly bring value to each organisation and their respective customers by addressing this space together - and it will lead to organic growth in the core business. That couldn't have happened before this partnership. Esri can now start to have real conversations with their customers about their unique solution roadmap and offerings bringing their customers the best of both worlds. Neither business has now to compete with each other where they shared an account and SPA can benefit from Esri reach and relationships where they are not yet present. For those organisations that like TOMTOM due to market forces are struggling to come to terms with meeting the NEW reality - its music to their ears. It's hard to imagine this won't bring additional accelerated growth.

[fgump] 03/11/2014 11:23

The chairman is the CEO of Wandisco which is experiencing the same issues - hot technology but little or no growth. Perhaps they are too early or maybe their tech isn't the right stuff.

[yump] 03/11/2014 08:33

Yeeees,

What about the key issue that 1 Spatial talk about a rapidly growing spatial big data market, but they've only posted 7% growth ?

The use of spatial big data is not that new anyway. If the expected growth is due to new demands, then you would expect the early growth to be rapid, as its from a low starting point.

Doesn't add up, especially as SPA apparently have the bee-knees tech. and significant mass after buying Star-Apic.

[mwaller] 03/11/2014 07:56

Yump - Sure, It's a real business with cast iron clients with a pressing headache to solve. Both these things take time to work through. I think SPA are there now. From the business perspective they had to lay the foundation: organisation, people, product, partnerships, which they have now done. They also had to keep the wheels turning whilst working this transition, and they have. From a customer perspective 1Spatial customers - the supranational, national, military, city, and key infrastructure players like all Utilities, and increasingly commercial enterprises, are also adapting with the Spatial market as it evolves. They must respond to pressures on them to service their customers better as the Spatial data and consumption types expand and the spatial applications and relative importance grows.They have to publish more diverse more accurate data more quickly. Updated reliable trustworthy Content is therefore essential for these organisations to remain mission able and ready to serve. These organisations are not known for their technical prowess or speed of execution BUT they do need to do something, and they start to realise that. SPA has an answer for them as they can automate the Spatial Data curation and publication cycle - using their Intellectual Property 1SMS. It saves customers from having to hire more highly skilled expensive people, learn build and maintain highly specialised capabilities and technologies themselves. They realise that even if they could do it themselves the in-house solutions become unique and a management headache, forces the organisations to do non core work they are not geared up for, and crucially they still risk failing to meet demanding quality and refresh targets their spatial customers are placing upon them. These organisations - many with whom Esri has established relationships can now engage both Esri and 1Spatial in partnership and have the fastest possible response to their end to end spatial big data curation and publication headache.Esri that traditionally services the Spatial market globally over the past decades is also aware of this shift in the market and growing need for processing large volumes of new spatial data types more frequently quickly reliably and accurately. In the old world their engines sufficed for the majority of their customers needs. Their customers are now however looking for answers to today's and tomorrow's Spatial problems. Esri's decision to partner at this early stage with SPA in response to market demands is significant because they would not partner if they didn't have to (like up to now) - if there was nothing in it for them and they could address this themselves... Think about it. This is what has changed in the Market, this is what SPA and institutional's saw with the placing and this is now how it's playing out. This is why I think we can expect a lot more organic growth. An interesting commercial example I can give you that I picked up from a conference recently highlights the market forces that everyone should be able to identify with by way of example. TOMTOM the SatNav specialists have shifted their business model from hardware to content. Maps is their only product and way to differentiate themselves in the market. Until fairly recently they published maps every 6 months, now it's a new map every quarter. They are soon aiming to shifting updates to every month, then they target in 2016 48 hour update cycles! Then beyond. In addition, they also have to manage new types of data being transmitted from and via Cars - their millions of users subscribing to live updates as the road and traffic geometry changes. So the input data from car sensors and on roads is massive and almost realtime. Sitting on this input data to process it semi manually to publish updates every quarter is clearly something unacceptable. They have to publish reliable updates quickly as a business imperative to remain current and useful to customers and not be outgunned by competitors with faster more reliable refresh cycles and broader relevant content. Their goal is 48hrs and once they achieve that, it will already be too slow. Their whole business will have to go through s massive shift to oscillate on that cycle - and anything they can do by way of content automation is essential to consider. This is the end to end process that 1SPA engines support. But also for an even more demanding customer base. The ones lives depend upon. The time pressures to deliver on these organisations if they are to remain relevant are however no less. If anything greater. This is why growth prospects for SPA are good and will ramp up from here. Especially with a new strategic Esri partnership. Together they can address the end to end needs of all these organisations - public sector and commercial alike. It will take time to build the partnership as its in its infancy, but the addressable market is there as is the growing demand for a world class Spatial Data automation solution.

[yump] 02/11/2014 16:14

That reminds me I must start a blog to record my own anonymous thoughts.

[hastings] 02/11/2014 14:44

A few thoughts that may be of interest.

[yump] 01/11/2014 12:08

All very interesting words, but why is there tiny organic growth ?
Its easy to issue a shed load of shares and go and buy some revenue.
Then you can say 'look at our jump in revenue'.

Given that the underlying business has not grown much, why can anything else be expected from the various partnerships ?

mwaller
Care to comment ?

[estienne] 01/11/2014 09:18

The share price is rock bottom and with a solid performance like this, they can only go up.

[mwaller] 31/10/2014 16:27

These interim results are very good as it shows the business (and leadership team) is executing against the plan set out in the Placing - and crucially now has the capability foundation and channel vehicles in place to accelerate its growth into the plan. Whats of particular note and cannot be underestimated is the new ESRI Partnership.

This partnership has only just been crystallised, and will take a short while to filter through into business. The ESRI Channel is huge - they are the market leaders, and have global coverage. They are best seen as the “Microsoft Office” of GeoSpatial data. This should immediately enable a raft of conversations that were previously closed to 1SPA as they were formally competing and at best arms length partners. This will inevitably lead to business as there are an increasing amount of firms who are struggling with Spatial data volumes and Spatial data management processes that 1SPA is uniquely placed to address. (Hence the ESRI Partnership).

Other Analysts are also confident:


1Spatial – Investing for growth
Peter Roe, 09:41, 31 October 2014
1Spatial, the AIM-listed provider of “software and solutions that manage Spatial Big Data” has returned first-half figures (to end-July) showing revenue up 33% to £10.1m and adjusted EBITDA up 140% to £1.2m.

The company has come a long way since Avisen took over 1Spatial in October 2011, assumed their brand and went about building their portfolio of geographic information systems (very clever maps) and selling to utilities, telcos and governments. See here and work back to see the route they took. The latest acquisition of Belgian software firm Star-Apic contributed the great bulk of the revenue and profit advance over last-year’s comparables. The underlying business showed a 7% revenue growth on a constant currency basis, but this was whittled away by Sterling’s strength.

The company has been able to win a significant contract with the MOD and extend its business with a wide range of utilities. Overall the order book was stable at £7m.

Management is building its sales and professional services teams and there are plans to invest further in international operations (US, AP, Australia). The company is also expanding its portfolio with industry-specific applications, offering cloud delivery and building a strategic partner channel (now with Oracle and ESRI on board).

We, like 1Spatial, are enthusiastic about the potential for the greater use of geospatial data in the management of resources, the environment and the building of smart cities but sales cycles may be extended and near-term returns constrained. We consider that the company is now in a crucial phase, having to balance investment with orders, revenue generation and importantly, cash. With the company on the hunt for further acquisitions the £10m cash pile could disappear very quickly. Management have a lot to do. Hopefully they have their plans mapped out.



1Spatial’s interim results show strong progress both from a financial and operational perspective. The group delivered a significant uplift in adjusted EBITDA to £1.2m, generated operating cash flow even after exceptional costs, maintained the order book at £7.0m through new contract wins, made key hires to strengthen the group and forged a strategic alliance with the global GIS market leader, Esri. We have made no changes to our forecasts which assume strong earnings growth over the next three years. We remain optimistic on its growth prospects, as delivered by its direct efforts with the potential to be significantly amplified by recent partnerships.

[412069] 31/10/2014 16:16

Cheers Yump.

[woodcutter] 31/10/2014 11:22

I sold my last tranche of 60K shares this morning and took the loss, sadly i hadn't followed my usual chart strategy, not significant in terms of my performance last year nevertheless a bit disheartening.

Ignoring the TA for a moment the fundamentals are imv appauling

7% revenue lfl growth for a company that is fundamentaly portraying itself as a growth stock just isn't good enough. Worse still is the cashflow and in particular the falsely declared adjusted profits.

From the cashflow statement:
amortisation and impairment £452k
capitalised development costs added to balance sheet intangibles £1224K

Adding back the amortisation and then deducting the capitalised costs there's no question it's not turning a profit. Worse still over £1m less cash since january and the working capital suggests it should be worse as the increase in trade creditors can not be ignored. On a fundamental basis it's probably worth around 2p which is a little more than the cash on the balance sheet.

And it will be a lot less than that next year after taking into account all the extra sales staff recruited.

The only positive i can see is it has a decent balance sheet assuming the intangibles have value.

That's it for me now and software companies unlesss they are capitalising costs at the same rate as the amortisation.

I bought on the growth propects but they are just not delivering........another WAND, i'm afraid.

aimho

woody

[fgump] 31/10/2014 11:11

still no cash generation and such little growth from such a hot space...

[yump] 31/10/2014 09:15

I think if they are going to say this:

"...Today, with an ever increasing reliance on spatial and location-critical data, demand for our expertise has never been greater."

They should also be explaining why this demand has not resulted in serious organic revenue growth; or failing that, when they expect organic revenue growth to kick in properly.

[yump] 31/10/2014 09:09

Still having a look now and then. Still not interested.

Considering this is touted as a big thing, there is very little growth.
Revenue increase from acquisition doesn't count imo. if you're presenting your company as a growth tech. stock.

I suggest everyone goes to the site to read the full report - they seem to have just issued the good bits in the RNS. Unless the full financials are to follow.

Post tax loss has increased, the explanation is per usual stuff: "The overall loss after tax for the period and prior period is mainly due to exceptional costs, amortisation charges and share based payment charges."

Seems to me they are trying to present something that is not very exciting, as something that is.

It appears that 'clean' profitability is going to come from rationalisation as a result of the acquisition, not from exciting jumps in organic revenue.

[estienne] 31/10/2014 08:00

I agree it looks good.

[tsmith2] 31/10/2014 07:12

V good set..

[tsmith2] 30/10/2014 08:13

Results tomorrow. GLA!

[412069] 29/10/2014 08:52

A chance of some good figures due then.

[mwaller] 14/10/2014 23:54

Seriously? Announcement in the week with ESRI integration is a big deal for 1SPA... And ESRI ...

[fgump] 14/10/2014 18:41

I'm told £2.8m for the year with £1.1m for the first half...

[empirestate] 13/10/2014 16:16

a decent run to results would be nice, looks keen on the back of today's news. a good contract win before results wouldn't go a miss.

[412069] 07/10/2014 12:31

Hi Yump, what are you expecting from the results! any idea.

[fgump] 06/10/2014 07:38

results 31st October - good news always comes quickly, bad news always the longest....results on a Friday.