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Last close As at 25/03/2023
GBP0.47
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GBP53m
Research: TMT
1Spatial’s trading update confirms that trading has remained robust, with FY23 revenues and EBITDA expected to be no less than £29.8m (+10.3% y o-y) and £4.9m (+17% y-o-y) despite some inflationary pressure. The revenue mix continues to improve, with recurring revenues now c 50% (+c 22% y-o-y) of the total and term licences up c 80% to £5.2m. With momentum continuing into Q1, and a healthy order book and pipeline, the company looks well set to deliver further progress this year. Trials of the company’s SaaS applications are progressing well and strong uptake could drive an acceleration in scalable recurring revenue growth.
1Spatial |
Encouraging trading and outlook |
Trading update |
Technology |
6 March 2023 |
Share price performance
Business description
Next events
Analysts
1Spatial is a research client of Edison Investment Research Limited |
1Spatial’s trading update confirms that trading has remained robust, with FY23 revenues and EBITDA expected to be no less than £29.8m (+10.3% yo-y) and £4.9m (+17% y-o-y) despite some inflationary pressure. The revenue mix continues to improve, with recurring revenues now c 50% (+c 22% y-o-y) of the total and term licences up c 80% to £5.2m. With momentum continuing into Q1, and a healthy order book and pipeline, the company looks well set to deliver further progress this year. Trials of the company’s SaaS applications are progressing well and strong uptake could drive an acceleration in scalable recurring revenue growth.
Year end |
Revenue |
EBITDA |
EBIT* |
EPS* |
EV/sales |
P/E |
01/21 |
24.6 |
3.6 |
0.4 |
0.2 |
2.2 |
260.0 |
01/22 |
27.0 |
4.2 |
1.3 |
0.8 |
2.0 |
65.0 |
01/23e |
29.8 |
4.9 |
2.0 |
1.2 |
1.8 |
43.3 |
01/24e |
31.2 |
5.7 |
2.7 |
2.3 |
1.7 |
22.6 |
Note: *EBIT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Robust trading, improving mix
Revenues are expected to be at least £29.8m (+10.3% y-o-y vs Edison prior estimate of £29.0m) and the mix continues to improve, with recurring revenue accounting for c 50% of sales, up from 45% last year, and term licence revenue increasing by c 80% (historically one-time perpetual licences predominated). The United States contributed the most significant growth in annualised recurring revenue at 45%. Despite inflationary cost increases, adjusted EBITDA is expected to be no less than £4.9m (Edison: £4.9m), and (reported) profit before tax not less than £0.9m (Edison £0.8m). The group generated £5.3m in cash from operations, with net cash expected to be no less than £3.0m at the end of January 2023.
Encouraging outlook, scope for a SaaS acceleration
The update reaffirms our view that 1Spatial is well placed within the geospatial information services market, which we expect to deliver sustained double-digit growth, with a confluence of push and pull factors spurring adoption across a rapidly expanding range of use cases and vertical markets. The trading update reports that 1Spatial’s momentum has continued into the new year and that both the order book and pipeline remain strong. The company’s development of SaaS solutions, such as Traffic Management Plan Automation in the UK and Next Generation 9-1-1, looks to be on track with trials going well. If trials translate into strong uptake, then we could see an acceleration in scalable, recurring revenue growth.
Valuation: Scalable growth potential not priced in
Despite a recent rally, 1Spatial is rated at a modest 1.7x FY24e EV/sales and 22.6x FY24e P/E. We believe that these multiples do not reflect the potential for scalable, recurring revenue growth, which ongoing execution should generate. Hence, we still see potential for substantial upside. We believe that deal flow, particularly in the United States and SaaS, is likely to be a catalyst for more of this potential to be priced in.
Exhibit 1: Financial summary
£’000s |
2021 |
2022 |
2023e |
2024e |
||
Year ending 31 January |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
24,600 |
27,027 |
29,800 |
31,200 |
Delivery costs |
(11,451) |
(13,078) |
(14,483) |
(15,101) |
||
Gross Profit |
13,149 |
13,949 |
15,317 |
16,099 |
||
EBITDA |
|
|
3,632 |
4,182 |
4,906 |
5,699 |
Operating profit (before amort. and excepts.) |
|
436 |
1,302 |
1,967 |
2,720 |
|
Goodwill and Acquired Intangible Amortisation |
(917) |
(561) |
(600) |
(600) |
||
Exceptionals |
(492) |
- |
- |
- |
||
Share based payments |
(272) |
(326) |
(360) |
(410) |
||
Operating Profit |
(1,245) |
415 |
1,007 |
1,710 |
||
Net Interest |
(187) |
(195) |
(186) |
(186) |
||
Other |
- |
- |
- |
- |
||
Profit Before Tax (norm) |
|
|
248 |
1,107 |
1,780 |
2,533 |
Profit Before Tax (FRS 3) |
|
|
(1,433) |
220 |
820 |
1,523 |
Tax |
308 |
(43) |
(205) |
(381) |
||
Profit After Tax (norm) |
198 |
886 |
1,335 |
2,527 |
||
Profit After Tax (FRS 3) |
(1,125) |
177 |
615 |
1,142 |
||
Average Number of Shares Outstanding (m) |
112 |
111 |
111 |
111 |
||
EPS - normalised (p) |
|
|
0.18 |
0.80 |
1.21 |
2.28 |
EPS - normalised fully diluted (p) |
|
|
0.17 |
0.77 |
1.21 |
2.28 |
EPS - (IFRS) (p) |
|
|
(1.01) |
0.16 |
0.56 |
1.03 |
Dividend per share (p) |
- |
- |
- |
- |
||
Gross Margin (%) |
53.5 |
51.6 |
51.4 |
51.6 |
||
EBITDA Margin (%) |
14.8 |
15.5 |
16.5 |
18.3 |
||
Operating Margin (before GW and except.) (%) |
1.8 |
1.8 |
4.8 |
6.6 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
18,273 |
17,100 |
17,850 |
18,600 |
Intangible Assets |
15,187 |
15,003 |
15,753 |
16,503 |
||
Tangible Assets |
392 |
350 |
350 |
350 |
||
Investments |
2,694 |
1,747 |
1,747 |
1,747 |
||
Current Assets |
|
|
18,332 |
18,018 |
18,865 |
20,883 |
Stocks |
- |
- |
- |
- |
||
Debtors |
10,890 |
12,271 |
13,200 |
14,200 |
||
Cash |
7,278 |
5,623 |
5,541 |
6,559 |
||
Other |
164 |
124 |
124 |
124 |
||
Current Liabilities |
|
|
(14,813) |
(14,903) |
(15,129) |
(15,879) |
Creditors & other |
(14,343) |
(14,372) |
(14,598) |
(15,348) |
||
Short term borrowings |
(470) |
(531) |
(531) |
(531) |
||
Long Term Liabilities |
|
|
(7,057) |
(5,110) |
(5,398) |
(6,416) |
Long term borrowings |
(2,542) |
(1,861) |
(1,861) |
(1,861) |
||
Other long term liabilities |
(4,515) |
(3,249) |
(3,537) |
(4,555) |
||
Net Assets |
|
|
14,735 |
15,105 |
16,188 |
17,188 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
3,983 |
2,497 |
4,173 |
5,449 |
Net Interest |
(179) |
(134) |
(186) |
(186) |
||
Tax |
484 |
176 |
(205) |
(381) |
||
Capex |
(2,312) |
(2,613) |
(2,764) |
(2,764) |
||
Acquisitions/disposals |
(585) |
- |
- |
- |
||
Financing |
- |
- |
- |
- |
||
Dividends |
- |
- |
- |
- |
||
Other (Repayment of Leases, etc) |
(1,069) |
(1,088) |
(1,100) |
(1,100) |
||
Net Cash Flow |
322 |
(1,162) |
(82) |
1,018 |
||
Opening net debt/(cash) |
|
|
(3,886) |
(4,266) |
(3,231) |
(3,149) |
HP finance leases initiated |
- |
- |
- |
- |
||
Other |
58 |
127 |
- |
- |
||
Closing net debt/(cash) |
|
|
(4,266) |
(3,231) |
(3,149) |
(4,167) |
Source: 1Spatial accounts, Edison Investment Research
|
|
Research: Consumer
McBride has witnessed improving momentum in its business during H123, with the company returning to positive adjusted operating profit during the last two months of the period. This trajectory has continued into the start of H2 and is coupled with some early signs of stabilisation in certain input costs and higher volumes from new business wins. The current retail environment is favourable as cost-conscious consumers turn to private-label products, and McBride has gained share of this segment. The company is launching a Transformation programme, targeting £50m of cost savings over five years. Energy costs remain high, as does general inflation, and the macroeconomic outlook for the consumer remains subdued. This results in a continued uncertain environment for McBride, though management’s full year expectations remain on track.
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