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Two recent wins highlight US potential

1Spatial 5 September 2022 Flash note
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Two recent wins highlight US potential

Contract wins


5 September 2022



Market cap


Net cash (£m) at end January 2022


Shares in issue


Free float




Primary exchange


Secondary exchange


Share price performance

Business description

1Spatial’s core technology validates, rectifies and enhances customers’ geospatial data. The combination of its software and advisory services reduces the need for costly manual checking and correcting of data.


Dan Ridsdale

+44 (0)20 3077 5729

Ken Mestemacher, CFA

+44 (0)20 3077 5700

1Spatial is a research client of Edison Investment Research Limited

Spatial’s two recent wins in the United States highlight the potential for the business to deliver significant, high-margin recurring revenue growth in the world’s largest market. We are not changing our estimates at this stage, but the repeatable nature of both deals indicates there should be more to come and we believe there is upside potential to our estimates for FY23 and FY24. We believe the current ratings of FY23e EV/sales of 1.4x and FY24e P/E of 17x does not reflect the company’s long-term earnings potential or its increasingly strategic position in the geospatial software industry, which is expected to grow at a sustained double-digit rate.

Year end











































Note: *EBITDA, EBIT and EPS exclude amortisation of acquired intangibles, exceptional items and share-based payments.

The first contract win is a $1.2m, seven-year contract with the State of Arkansas for 1Spatial’s next-generation 911 (NG911) solution, of which $1.1m will be recurring software licences. The first four years’ revenue, amounting to $0.7m, is committed and the next three years are under option. This is the eighth state that 1Spatial has won for its 911 solution and we are not aware of any states that have yet awarded this business to a competitor, indicating there is significant further potential for this product in the remaining states.

The second award is the first contract to be secured through a collaboration agreement between 18 US states (including both new and potential customers) plus Washington DC, ‘The Eastern Transportation Coalition’, to provide bargaining power and structure to procuring transportation solutions. Management estimates the total contract value for conflation within the framework will be up to $15m over the eight-year period and this specific win for conflation solutions is worth $400k with the Massachusetts Department of Transportation. What is interesting about this deal is that 1Spatial’s management believes it is the only vendor to offer conflation of data as a repeatable, automated rules-based solution (conflation is the process of merging different data sets into one consistent, reliable source).

These deals provide support for our estimates for this year and beyond and we believe 1Spatial’s potential for delivering robust, scalable growth continues to strengthen. The company is positioned at the intersection of two large, high-growth markets in geospatial and master data management and continues to win flagship clients in the United States, UK and European Union. 1Spatial is making good progress in migrating its revenue mix towards repeatable or recurring software sales and we believe its valuation of 1.4x FY23e EV/sales and its FY24e P/E of 17x do not reflect either the company’s growth and margin expansion potential or its strategic position in the geospatial software industry, which is expected to grow at a sustained double-digit rate.

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