1Spatial — Landmark 1Streetworks contract

1Spatial (AIM: SPA)

Last close As at 24/04/2024

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Research: TMT

1Spatial — Landmark 1Streetworks contract

SPA has announced that following a successful trial, UK Power Networks has signed a contract to deploy 1Streetworks, 1Spatial’s traffic plan automation application. This is a landmark win for this key SaaS product, the market opportunity for which management sizes at £400m for UK low-speed roads alone. The contract is worth at least £0.34m over 12 months, but with scope to significantly exceed this over time and UK Power Networks advocacy for the product is notable. A growing pipeline of paid trials with other clients provide further evidence that 1Spatial is moving closer to delivering an acceleration in operationally geared recurring revenue growth.

Written by

Dan Ridsdale

Head of Technology

TMT

1Spatial

Landmark 1Streetworks contract

Contract win

Software and comp services

22 February 2024

Price

56p

Market cap

£62m

Net cash (£m) at H124 (July 2023) 

0.54

Shares in issue

110.8m

Free float

84%

Code

SPA

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

8.7

16.7

8.7

Rel (local)

6.13

13.6

13.2

52-week high/low

56p

45.5p

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.

Next events

1Streetworks webinar/trading update

12 March

Full year results

24 April

Capital markets day

May

Analysts

Dan Ridsdale

+44 (0)20 3077 5700

Max Hayes

+44 (0)20 3077 5700

1Spatial is a research client of Edison Investment Research Limited

1Spatial has announced that following a successful trial, UK Power Networks has signed a contract to deploy 1Streetworks, 1Spatial’s traffic plan automation application. This is a landmark win for this key SaaS product, the market opportunity for which management sizes at £400m for UK low-speed roads alone. The contract is worth at least £0.34m over 12 months, but with scope to significantly exceed this over time and UK Power Networks advocacy for the product is notable. A growing pipeline of paid trials with other clients provide further evidence that 1Spatial is moving closer to delivering an acceleration in operationally geared recurring revenue growth. 

Year end 

Revenue (£m) 

EBITDA* 
(£m) 

EBIT* 
(£m) 

EPS* 
(p) 

EV/EBITDA 
(x) 

P/E 
(x) 

01/22 

27.0 

4.2 

1.3 

0.8 

14.7

69.9

01/23 

30.0 

5.0 

2.0 

1.2 

12.3

45.6

01/24e 

32.1 

5.5 

2.6 

1.6 

11.1

34.8

01/25e 

35.2 

6.5 

3.6 

2.3 

9.4

24.5

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

Live deployment, important reference customer

UK Power Networks is a high-profile reference customer for 1Streetworks. The business maintains and operates the electricity networks for London, the South East and East of England. This involves a significant volume of roadworks each of which requires a traffic management plan to be submitted to the local authority. This contract win follows the completion of a trial in Surrey in which the implementation of 1Streetworks reduced the average connection time by 25% across around 300 roadworks sites, while reducing surveyor time spent producing traffic management plans from hours to minutes. Paul Dooley, from UK Power Networks, presented details on this trial and the benefits gained from of using 1Streetworks at 1Spatial’s user conference last November. UK Power Networks SDSW Presentation

Scope for significant expansion, growing pipeline

The minimum value for this contract is £0.34m over 12 months, but we believe this has the potential to expand significantly with good surveyor uptake and adoption in additional regions or departments. 1Spatial also has paid trials ongoing with four other customers, while a number of others are expected to start this year.

Milestone on the way to faster, scalable growth

Further conversion of these opportunities should generate significant incremental, high margin recurring revenues, although, due to the use-based business model, the contribution to FY25 estimates will depend on the timing of deal flow and uptake. We are not changing our estimates at this stage but believe that this milestone, together with the solid progress 1Spatial is making with its enterprise business, brings the company closer to delivering an acceleration in operationally geared recurring revenue growth. We look to further progress with 1Streetworks, and NG-911, the company’s other key SaaS product, as the key milestones for this potential to be reflected in our estimates and the company’s valuation.

Exhibit 1: Financial summary

£’k

2021

2022

2023

2024e

2025e

Year end 31 January

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

24,600

27,027

30,002

32,132

35,185

Cost of Sales

(11,451)

(13,078)

(14,504)

(14,620)

(15,657)

Gross Profit

13,149

13,949

15,498

17,512

19,528

EBITDA

 

 

3,632

4,182

4,997

5,541

6,539

Normalised operating profit

 

 

435

1,302

2,026

2,588

3,586

Amortisation of acquired intangibles

(917)

(561)

(386)

(386)

(386)

Exceptionals

(492)

0

(194)

0

0

Share-based payments

(272)

(326)

(192)

(192)

(192)

Reported operating profit

(1,246)

415

1,254

2,010

3,008

Net Interest

(187)

(195)

(210)

(215)

(227)

Joint ventures & associates (post tax)

0

0

0

0

0

Exceptionals

0

0

0

0

0

Profit Before Tax (norm)

 

 

248

1,107

1,816

2,373

3,358

Profit Before Tax (reported)

 

 

(1,433)

220

1,044

1,795

2,780

Reported tax

308

163

14

(381)

(695)

Profit After Tax (norm)

198

886

1,362

1,779

2,519

Profit After Tax (reported)

(1,125)

383

1,058

1,414

2,085

Minority interests

0

0

0

0

0

Discontinued operations

0

0

0

0

0

Net income (normalised)

198

886

1,362

1,779

2,519

Net income (reported)

(1,125)

383

1,058

1,414

2,085

Basic average number of shares outstanding (m)

112

111

111

111

111

EPS - basic normalised (p)

 

 

0.18

0.80

1.23

1.61

2.27

EPS - diluted normalised (p)

 

 

0.17

0.77

1.20

1.57

2.22

EPS - basic reported (p)

 

 

(1.01)

0.35

0.95

1.28

1.88

Dividend (p)

0.00

0.00

0.00

0.00

0.00

Revenue growth (%)

5.2

9.9

11.0

7.1

9.5

Gross Margin (%)

53.5

51.6

51.7

54.5

55.5

EBITDA Margin (%)

14.8

15.5

16.7

17.2

18.6

Normalised Operating Margin (%)

1.8

4.8

6.8

8.1

10.2

BALANCE SHEET

Fixed Assets

 

 

18,273

17,100

19,319

20,235

21,151

Intangible Assets

15,187

15,003

17,408

18,372

19,336

Tangible Assets

3,086

2,097

1,911

1,863

1,815

Investments & other

0

0

0

0

0

Current Assets

 

 

18,332

18,018

19,222

21,370

23,461

Stocks

0

0

0

0

0

Debtors

10,890

12,271

14,151

16,110

16,114

Cash & cash equivalents

7,278

5,623

5,036

5,225

7,312

Other

164

124

35

35

35

Current Liabilities

 

 

14,813

14,903

17,093

18,911

19,641

Creditors

13,418

13,284

15,797

16,558

17,288

Tax and social security

0

0

0

0

0

Short term borrowings

470

531

660

1,745

1,745

Other

925

1,088

636

608

608

Long Term Liabilities

 

 

7,057

5,110

4,097

3,737

3,737

Long term borrowings

2,542

1,861

1,322

962

962

Other long term liabilities

4,515

3,249

2,775

2,775

2,775

Net Assets

 

 

14,735

15,105

17,351

18,957

21,234

Minority interests

0

0

0

0

0

Shareholders’ equity

 

 

14,735

15,105

17,351

18,957

21,234

CASH FLOW

Op Cash Flow before WC and tax

2,961

4,048

4,593

5,326

6,311

Working capital

791

(1,578)

537

(1,198)

726

Exceptional & other

52

(107)

12

0

0

Tax

484

176

179

(381)

(695)

Net operating cash flow

 

 

4,288

2,539

5,321

3,747

6,342

Capex

(2,312)

(2,613)

(4,017)

(3,255)

(3,255)

Acquisitions/disposals

(585)

0

0

0

0

Net interest

0

0

0

0

0

Equity financing

0

0

14

0

0

Dividends

0

0

0

0

0

Other

585

(1,708)

(1,994)

(303)

(1,000)

Net Cash Flow

1,976

(1,782)

(676)

189

2,087

Opening net debt/(cash)

 

 

(3,887)

(4,403)

(3,231)

(3,054)

(2,518)

FX

194

127

89

0

0

Other non-cash movements

(1,654)

483

410

(725)

0

Closing net debt/(cash)

 

 

(4,403)

(3,231)

(3,054)

(2,518)

(4,605)

Source: Edison Investment Research, company accounts

General disclaimer and copyright

This report has been commissioned by 1Spatial and prepared and issued by Edison, in consideration of a fee payable by 1Spatial. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by 1Spatial and prepared and issued by Edison, in consideration of a fee payable by 1Spatial. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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