In morning trade the Nearmap Ltd (ASX: NEA) share price has zoomed higher following the release of its preliminary half year results.
At the time of writing the geospatial map technology company's shares are up over 9% to $1.74. At one stage they were as much as 12% higher at $1.79.
How did Nearmap perform in the first half?
According to the release, Nearmap has had another strong half and delivered further growth in its annual contract value (ACV).
Group ACV came in at $78.3 million at the end of December, up 42% on the prior corresponding period. This was driven by an impressive 107% increase in U.S. ACV to US$17.6 million and a 23% lift in Australian ACV to $53.3 million.
Management advised that the strong growth in the United States was driven partly by continuing operational improvements to its sales and marketing.
In addition to this, clear product advantages and functionality are driving increased market awareness and customer traction in the lucrative market.
Whereas in Australia the company's market leadership has helped to drive continued growth. It also had a small boost from its first sales contribution from customers in New Zealand.
CEO Dr Rob Newman appeared to be very pleased with the company's performance.
He said: "H1 FY 2019 has been another successful period of strong growth for Nearmap. Our Australian business is building on its market leadership and our US business is gaining significant market traction."
What's next for Nearmap?
Management appears confident that there will be more of the same in the second half and has reaffirmed its guidance for FY 2019 to be cash flow break even (excluding capital raising costs).
Dr Newman advised: "We are well placed to deliver ongoing growth as new product enhancements add functionality, and our markets continue to develop and expand. We are deploying the proceeds from the capital raise as per plan and we look forward to providing a further update with the release of our half year results."
Should you invest?
I'm a huge fan of Nearmap and believe it has significant potential. But with its market capitalisation now in excess of $750 million, its valuation is a bit rich for my liking.
Because of this, I'm not a buyer of its shares at the moment and would sooner pick up fellow tech shares Appen Ltd (ASX: APX) or Aristocrat Leisure Limited (ASX: ALL) instead.
