The Pointerra Ltd (ASX: 3DP) share price has been on something of a rollercoaster ride recently. Just a few short weeks ago, shares in the junior ASX tech company were trading for 52 cents, their lowest price since early February. But from there they went on a sudden tear, surging as high as 75.5 in just over a week – a gain of 45%!
Sadly, the rally didn't last. Last week, Pointerra shares plummeted back down to earth, wiping out just about all those recent gains. By the close of trade on Friday, Pointerra shares were valued almost back where they started a couple of weeks ago, at just 55 cents. So, what exactly was behind the big swings in its share price?
Company background
First, a brief explanation of what Pointerra actually does.
Pointerra develops software that helps companies in industries like utilities and resources (among others) manage and analyse large 3D datasets. Pointerra's software allows users to capture, store and visualise data with up to one-millimetre accuracy. As you can imagine, tools like this can come in handy when you are trying to plan and manage large-scale construction and mining projects.
The company operates a data-as-a-service (DaaS) business model. This is similar to the software-as-a-service (SaaS) business model employed by other tech companies like Altium Limited (ASX: ALU) and Bigtincan Holdings Ltd (ASX: BTH), where software developers sell subscription-based licenses to users which are then granted access to the software via a web browser. Pointerra just adds data hosting services on top of that. This means users can access their data from anywhere in the world – and also seamlessly share it with their employees and stakeholders.
Recent movements in the Pointerra share price
The initial jump in the Pointerra share price coincided with the release of the company's March quarter activities report. Pointerra reported record quarterly cash receipts from customers of $1.37 million (a quarter-on-quarter increase of almost 115%).
The company also stated that development projects designed to spur economic growth post-COVID were driving increased demand for Pointerra's data visualisation platform from the architecture, engineering and construction sectors.
Investors seemed to like what was in the report, and the Pointerra share price rocketed higher. That was until the release of two further announcements made by the company at the end of April.
The first was Pointerra's enterprise sales and annual contract value (ACV) update. The company stated that the annual value of its contracts with customers had increased by US$1 million (to just under US$8 million) during the period from 29 January 2021 to 29 April 2021.
The increase in Pointerra's ACV wasn't quite as dramatic as the uplift in quarterly cash receipts, but it may provide a more accurate view of the company's underlying growth rate. As Pointerra itself noted in the report, "quarter-on-quarter cash receipts may continue to be variable as new customers are onboarded with a variety of different payment cycles." ACV, on the other hand, ignores variability in the timing of these cash receipts.
The second announcement Pointerra made was its planned acquisition of US-based company Airovant. The company operates a similar DaaS model to Pointerra, but uses drone technology to collect aerial imagery data for customers in the construction and energy sectors.
What's next for Pointerra?
Where to next for the Pointerra share price is up for debate. Along with ASX industry peer Nearmap Ltd (ASX: NEA) – which also saw its share price tumble last week, though for entirely different reasons – Pointerra remains an exciting company operating in a niche industry. It is also still only a small company, with limited revenues and a market capitalisation of under $400 million – meaning it remains a speculative investment.
Pointerra has given the market a lot to digest over the last few weeks and, clearly, investors are still struggling to work out how to price it all in. While that could mean more volatility is on the way, it still makes the Pointerra share price an interesting one to watch this year.
