1spatial Share Discussion Threads

[maddox] 09/4/2024 11:08

Well the current mkt cap is £65m. A takeout price for a SaaS firm is typically between 5x and 7x revenue so the 1Streetworks as a standalone proposition could be worth £280m alone. That's 253p per share.

Just for context Sage (SGE) is currently valued at 5.8x revenue.

[hubshank] 02/4/2024 11:03

Curious, what would it be worth? And you think it will take 5 years?

[nchanning] 27/3/2024 10:26

Agreed big If but not implausible if the value proposition stacks up and it's the only solution in the market .

[fevertreeman] 19/3/2024 10:51

Big 'if'......

[nchanning] 18/3/2024 15:19

If they hit their target of 40m pure SAAS high gross margin recurring revenue out of a TAM of 400m from a standing start in 5 years with no competitors , what's that business worth ....

[robsy2] 18/3/2024 11:39

Yep pretty good , the new fella Andrew Fennel comes over well.

[tomps2] 18/3/2024 10:46

1Spatial (SPA) Introduction to 1Streetworks - March 24

1Spatial Non-Executive Chairman, Andrew Roberts, CEO, Claire Milverton, Andrew Fennel, Managing Director – Roads, and Stuart Ritchie, CFO introduce their 1Streetworks solution, outlining how it can be used to revolutionise complex streetworks planning and the potential addressable market.

Watch the video here:

Or listen to the podcast here:

[fevertreeman] 15/3/2024 09:30

74tom...I'm with you. Whats rattled my cage is the sudden volte face on strategy, and the fact that Milverton is now talking about build sales & marketing capacity to roll out 1streetworks. Just feel that this is another case of some great tech but underwhelming management and execution. The contrast between Spa and the other lot up the road IQGEO couldn't be starker frankly.

[74tom] 14/3/2024 13:49

My view is that the longer sales cycle / slow uptake is due to experienced surveyors being reluctant to wave in new technology that could effectively make them redundant. As a result they will try to pick holes in the solution and question it's veracity, meaning it will be a very slow process to convert leads into contracts.

Further to this point, where does the £400m TAM actually come from? I.e. This isn't going to create additional budget for power networks etc, so are the 'savings' 1streetworks make as a result of job cuts?

My other concern is that I have no idea why 1Spatial are flagging 80-90% gross margins when they currently have no sales?! If I was a potential customer I'd be telling them to take 30% off the price or forget it...

All in all, I can't see them getting close to £40m over the next 5 years, but IF large contracts do start to land, a la IQG, then I'll be a buyer. But I'll believe it when I see it.

[fevertreeman] 14/3/2024 10:30

Robsy2, not just Edison that got it wrong, the lad at Liberum was also in same boat. He has not changed his forecasts at all for FY24 or FY25, which is interesting. he is still at: FY24 Revenue £32.1 EBITDA £5.5 FY25 Revenue £35.3 EBITDA £6.5m...

Some of Liberum's comments were insightful and chime with my own:

A. UKPN study, cost of 1streetworks: they cited savings of £426 per plan vs cost of the 1street product of £125 per plan. Now, I don't know about anybody else but it strikes me as very commercially odd:
(1) that the benefit to the customer is so huge vs the price point. UKPN produce 90,000 plans per year which would would be £11,250,000 revenues p.a opportunity based on 90k x £125 , which is a big assumption (ignores discounts etc) BUT on the basis, that UKPN creates 90k at current cost of £426 per plan = £38.34m, then the cost saving to UKPN from adoption of 1streeworks is gigantic= 38.4m-11.25 = £27m per annum.....Any thoughts about our pricing strategy chaps?
(2) that Spa were happy for UKPN to reveal the cost....what sort of margin is Milverton working on when she points out the impact of inflation on the business & the investment being made into sales &marketing. Would be fascinating to hear what margin 1streetworks has for Spa,

B. Time taken to secure deals:

Liberum analyst has heading on paragraph in his report: Shortening the Sales Cycle Would Be Helpul....you got that right boyo! its good to know that I'm not theonly one concerned about the lack of pipeline visibility & the time it takes Milvertton to ink deals. With UKPN it took over 6mnths from October when CM said first pilot was imminent, and it was only a blasted pilot study!

The Liberum clearly doesn't want to pint the finger but he does make the very valid point that the trials underway are typically supposed to take 3 months but "we sense with the first wave in practice these are taking longer."

The fact of the matter is that the snail like pace of inking deals is a real headache. It means that revenue recognition is very tricky and so therefore is revenues and profits. And that's before the pivot to change the operating structure in the US (and associated diminishment in direct revs)

[robsy2] 13/3/2024 17:54

TU disappointing but a good opportunity to top-up , unfortunately I did so at 61p the week before. It is not good that Edison, who are paid by SPA to provide the forecast figures, get it so wrong. If they are adding short term expenditure to build up the business why not flag that up?.Anyway, the 1Streetworks presentation seems to have got the share price moving back up again.

hxxps://1spatial.com/media/jizn3k0k/1streetworks-presentation-12th-march.pdf

[wjccghcc] 11/3/2024 18:30

Good post fevertreeman. I agree with pretty much everything you say.

[fevertreeman] 11/3/2024 14:51

I must say I was very disappointed by the TU. It raises a huge number of questions in my mind about strategic direction. And it's clear to me that Milverton's realised that her ambitions for the business have to be pared back because they just don't have the working capital needed for the growth she wants....so I think we're looking an equity raise


Revs of +6%: Pretty pedestrian

Recurring revs +18%: Recurring SAAS revs growing smartly, but forecasting revenue growth with any confidence is not easy as UK power deals hows - 6 months to signing from Milverton's "It's imminent" comment in October!

EBITDA +10%: again, not shooting out lights, and I worry about her comments "Despite the impact of inflationary cost increases"...what exactly does Milverton mean and does it indicate that they've been unable to recoup part of the cost increases they're seeing through price increases to customers

And the net cash position notwithstanding the working cap reversal since wasn't flagged well given the analysts were off by miles

Finally, the big push to invest in sales & marketing for 1streetworks hasn't been really discussed prior to now. And I certainly thought that Milverton had already put that piece in place - clearly not! So with working capital requirements looking like they're going to rise substantially over next 12 months, I fear that Milverton will need to raise new capital

Also, there's another change of strategy for the other great flagship product in which they've invested tonnes - NG911. having trumpeted about how strong their relationships were with the individual states, and given a fairly strong track record, this sudden change in approach is unnerving. What it tells me is that :

1) current approach clearly isn't working anything like as quickly as MIlverton assumed (or was told) AND that they have read the market wrong
AND
2) they can't afford to invest in salesforce in US & at the same time build 1streetworks in UK. The partner-led approach means that they will have to share revenues, profits, and lose some degree of control.

[gopher] 11/3/2024 10:59

First commentary I’ve seen from Techmarket - a good summary of where we are.

‘Growing annualised recurring revenue (ARR) has been the strategic goal for some time with the business now having the building blocks in place. The NextGen 9-1-1 and 1Streetworks are both more standardised propositions which have many potential clients – success here (along with partnering) over the next couple of years will really define the firm’s future growth trajectory. The challenge remains executing on that plan over the medium to long term.

[apatel21] 11/3/2024 10:25

Not the best update and Market reaction reflects.Might be good point for any potential acquirer to pounce given proven Tech.Could get taken out for 75p

[gopher] 11/3/2024 10:25

I agree - decent results but not spectacularA quick calculation shows recurring revenue increasing from 15 to 17.6ml which imo gives a better view of the underlying growth as the conversion to SAAS continues. If they need to invest some of that recurring revenue into a recurring cost of increased headcount I don't necessarily see a placing is needed.All for the presentation tomorrow imo.

[wjccghcc] 11/3/2024 09:45

Don't disagree 74, but I calculated their FCF last year at 1.3mm which includes net spend on development costs. Will have to wait until the finals to calculate it this year but I guess it depends on how much the restructuring costs were and the working capital movements (since reversed).

[74tom] 11/3/2024 09:45

What about recurring costs andyview?

This mornings RNS indicates those are going to increase too

[andyview] 11/3/2024 09:42

Recurring revenue though…

Total revenue for the year is expected to be no less than £32.1m (FY2023: £30.0m) with approximately 55% (FY2023: 50%) represented by recurring revenue. Within recurring revenues, software term licence revenue has increased by approximately 70% to £8.7m (FY23: £5.2m) with double digit growth across the UK, US and Australia.

[74tom] 11/3/2024 09:39

@WJCC, the issue here is that the company isn't profitable if you include capitalised development spend.

This was their commentary in October's report;

"Development costs capitalised in the period amounted to £2.1m (H1 2023: £1.6m). Amortisation of development costs was £0.9m (H1 2023: £0.7m). The increased R&D expenditure primarily relates to the investment in cloud-based SaaS solutions and development of product where opportunities have already been identified."

I have no problem with new product investment, however capitalising at a run rate of >£4m whilst running net cash down to £1.1m isn't particularly clever IMO.

[andyview] 11/3/2024 09:33

Good update imho and at a loss about market reaction, I’ve added a few

Gla

[wjccghcc] 11/3/2024 08:55

Doubt they need a placing. Net cash has increased since H1 and they do say it was the restructuring charge and negative working capital which has reversed since year end so underlying cash flow should have been positive in H2. It would be nice if they had more resources though.

[eeza] 11/3/2024 08:48

Placing looks likely, but at what SP?

[74tom] 11/3/2024 08:37

"Building on the success of the first customer use case, the Company plans to invest in the expansion of the 1Streetworks sales and marketing teams. This investment will accelerate conversion of the substantial opportunities identified over the past year."

Why oh why would you say the above and not clarify how much investment they intend to make? It's clearly spooked a number of holders into selling. Surely with just £1.1m net cash they need to raise at least £5m to 'accelerate conversion'?

[mirandaj] 10/3/2024 13:31

1Spatial mentioned: