Nearmap shares soar on growth forecast

Nearmap shares could post a strong finish to 2019 after the SaaS player forecast ACV growth up to 33% in FY 2020.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Nearmap Ltd (ASX: NEA) shares climbed 10% to $2.74 this morning after the aerial mapping business told investors to expect annualised contract value (ACV) between $116 million to $120 million in fiscal 2020. That would equal growth around 29% to 33% over the $90.2 million in ACV posted over fiscal 2019.

At its AGM today the company declined to provide any more specific financial guidance, although $120 million in ACV, if delivered, would be another strong year for the software-as-a-service (SaaS) player. 

For investors the large U.S market remains the key growth opportunity and the chart below shows how Nearmap has progressed in this market over the last 6 years compared to Australia.

Source: Nearmap presentation November 14, 2019.

Evidently if Nearmap's growth in the U.S. market continues to accelerate it could be a highly profitable business in a couple of years' time. This is no secret though with it already boasting a market cap around $1.24 billion based on 450.9 million shares on issue. 

Around 9% of Nearmap's scrip is currently shorted according to the latest ASIC data with today's ACV forecast putting the heat on short sellers betting against the business. Some of today's share price rises may be the result of short sellers scrambling to buy back shares and close out positions. 

Nearmap's Australian business is already profitable on a standalone basis and the group sports the high gross profit margins that are the calling card of popular cloud-based SaaS businesses.

This means the group has plenty of room to invest in sales, marketing, and product development that should generate more top line growth.

For now the investments are dragging the group into the red, with its full year result for fiscal 202o likely to be around breakeven. 

Other popular SaaS businesses on the S&P/ ASX200 (ASX: XJO) include Xero Limited (ASX: XRO) and WiseTech Global Ltd (ASX: WTC).

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Tom Richardson owns shares of Dicker Data Limited, Nearmap Ltd, WiseTech, and Xero.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Nearmap Ltd. The Motley Fool Australia owns shares of Xero and Wisetech. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another tough day for investors this Tuesday.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why HMC Capital, Platinum, Sigma, and Skycity shares are dropping today

These shares are having a tough session on Tuesday. But why?

Read more »

A close-up photo of a ballot box with an Australian flag in front of it and a gentleman's hands placing his vote in the 2022 election inside the box
Share Market News

How these ASX 200 stocks are primed to gain from Labor's resounding Federal election win

With the Federal election in the rear-view, which ASX 200 stocks should I buy now?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Dimerix, Evolution Mining, Inghams, and NextDC shares are charging higher today

These shares are rising when many are falling today. But why?

Read more »

Smiling young woman eating chocolate outdoors.
Share Market News

The See's Candies playbook for ASX investors

Two ASX businesses that remind me of Buffett’s sweetest investment.

Read more »

Man smiling at a laptop because of a rising share price.
Opinions

My 2 favourite ASX sectors to invest in

Finding your groove can help your investing success.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
Opinions

3 things I learned from Warren Buffett being the CEO of Berkshire Hathaway

The Oracle from Omaha is in his last year as CEO.

Read more »

A male ASX 200 broker wearing a blue shirt and black tie holds one hand to his chin with the other arm crossed across his body as he watches stock prices on a digital screen while deep in thought
Share Market News

5 things to watch on the ASX 200 on Tuesday

Here's what to expect on the local market today.

Read more »