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  • Writer's pictureMark Watson-Mitchell

1Spatial Offers Innovative And Exponential Growth

This little company, valued at just £65m, is highly innovative and, in my view, is on the cusp of exponential growth over the next few years.


Its shares hit 65p recently and are currently 58.50p, but I see them hitting 100p in due course.


From 41.5p when I first Profiled the company, they have since hit my 52.5p Target Price.

I am now confidently setting a new Target of 75p for 1Spatial (LON:SPA).


The Business


The company, which was set up in 2005 and has its headquarters in Cambridge - used to be called Avisen until 2012, when it changed its name to 1Spatial.


Today this group provides software solutions and business applications for managing location and geospatial data.


It helps its customers to make better business decisions by unlocking the value of location data.


It is a highly scalable business, built upon three pillars: Innovation, Customer Relationships and Smart Partnerships.


Whether it is implementing digital transformation strategies, helping to clean its clients' data at scale or providing support to governments on accelerating their green agenda, 1Spatial claims that it is making significant strides across a range of sectors.


The company is a global leader in providing Location Master Data Management (LMDM) software and solutions, primarily to the Government, Utilities and Transport sectors.


What is ‘geospatial’?


Geospatial or spatial data describes data that represents features or objects on the Earth’s surface.


Whether it is man-made or it is natural, if it has to do with a specific location on the globe, it is described as ‘geospatial’.


Just think how much we use it almost every day of our lives - planning a road trip, looking online for the nearest chemist, or syncing our location on Facebook or other social media – massive everyday usage.


And then also consider the mass of commercial uses.


A global leader in LMDM


This group, which is a global leader in LMDM software and solutions, helps its customers make better business decisions and move forward to a smarter world by unlocking the value of location data. 


Its platform delivers powerful data solutions and business applications ‘on-premise’, ‘on-mobile’ and ‘in the cloud’ - thereby ensuring that the data is current, complete, that it is consistent through using automated processes and that it is always based on the highest quality information available.


As location data from smartphones, the Internet of Things (IOT) and the masses of ‘big data’ increasingly drive commercial decision-making, this group’s technology helps to drive efficiency and provides its client organisations with confidence in the data that they use. 


An impressive client list


With operations in the UK, Belgium, USA, France, Australia, Ireland and Tunisia, the company’s global clients include national mapping and land management agencies, utility companies, transportation organisations, government and defence departments.


Such customers include the Brazilian Army, the USA Census Bureau, Google, Network Rail, the European Union Satellite Centre, SDFE (the Danish agency for data supply and efficiency), the National Underground Asset Register,  the Royal Saudi Air Force, the Environment Agency, Transport for London, Avon and Somerset Police, the Arizona Department of Transportation, the State of Michigan, the MoD’s No1 AIDU (aeronautical information document unit), California’s Office of Emergency Services, the Energy Networks Association, the Rural Payments Agency, the Ordnance Survey, the US Department of Commerce, Northumbrian Water, Northern Gas Networks, the US Geological Survey and United Utilities amongst so many others.


1Streetworks Offers Massive Upside


There are over 2.5m low-speed road works undertaken in the UK per year and that is estimated to grow to 4m in the coming years, leading to a total annual addressable market opportunity in the UK of some £400m.


The 1Streetworks' cloud-based SaaS solution is the first solution in the market to fully automate the production of traffic management plans, diversion routing and asset inventory lists and has the potential to fundamentally change the industry.


The group has recently been selected by UK Power Networks to help it to revolutionise streetworks planning and it is undergoing ‘paid-for’ trials currently.


It reduced the time surveyors spent on labour-intensive streetworks design plans from hours to just minutes, while continuing to meet the high levels of safety and accuracy required under the regulations.


The average time taken to connect new or altered power connections was reduced by a quarter across approximately 300 roadworks sites where 1Streetworks was being used.


1Spatial’s Public Safety NG9-1-1


The company has developed a solution that combines a powerful rules engine and data aggregator with a self-service cloud platform to support public safety entities in their data readiness needs.


The unique rules-based process includes pre-configured criteria aligned to North America's NENA standards and State-specific requirements which identify exactly where the data requires adjustment, enabling users to immediately and accurately pinpoint problems and errors that can be rectified quickly.


It has already been sold to 7 US States and also Los Angeles County.


Recent Trading Update


On Monday 11th March the group issued an update on its trading to end January this year.


Based on the unaudited financial results, the group expects to report significant progress against key financial metrics, providing a strong platform for further growth in future years.


Total revenue for the last year is expected to be no less than £32.1m (£30.0m) with approximately 55% (50%) represented by recurring revenue.


Within recurring revenues, software term licence revenue had increased by approximately 70% to £8.7m (£5.2m) with double digit growth across the UK, US and Australia.


CEO Claire Milverton stated that:


"We had a great year with our enterprise business, gaining more customers and sales worldwide.


Our recurring revenue grew, setting us up for long-term success.


Our new SaaS products are a game-changer for our financial performance and I am proud of the 1Streetworks deal with UK Power Networks, a leading utility company.


With our strong enterprise business and profitable SaaS solutions, we are ready to grow and succeed in the market."


A strong equity 


There are some 111m shares in issue.


Large holders include Threadneedle Asset Management (19.94%), Canaccord Genuity Wealth (16.62%), Azini Capital Partners (12.37%), Harwood Capital (6.70%), BGF Investment Management (6.25%), Perpetual Investment Management (4.92%), Liontrust Investment Partners (4.92%), Octopus Investments (3.62%), Herald Investment Management (3.56%) and Hargreaves Lansdown Asset Management (3.42%).


Brokers View – Price Objective Of 80p


Analyst Andrew Ripper at Liberum Capital rates the group’s shares as a Buy, with a Price Objective of 80p.


His estimates for the group’s sales in the year to end January 2024 are £32m (£30m), while pre-tax profits are £2.2m (£1.8m), lifting earnings up to 2.2p (1.8p) per share.


For the year now underway he has pencilled in £35m sales, £3.2m profits and generating 2.8p per share in earnings.


My View – Confidently Setting A New Target Price Of 75p


As readers will know well by now – I just adore companies that look to generate high rates of Annual Recurring Revenue (ARR) and 1Spatial has just that aim, currently running at over 55% but expected to reach 80% fairly soon.


The potential for the group’s technology products and services is massive, in fact totally global – it will gradually score more deeply into its marketplace – and then the returns upon time and money spent to date will prove well rewarded.


The results statement and reassessed investment analysis following this Wednesday’s announcement could well be just the start of the next rise in this group’s shares.



(Profile 12.05.21 @ 41.5p set a Target Price of 52.5p*)

(Profile 22.04.24 @ 58.5p sets a new Target Price of 75p)

 

(Asterisk * denotes that Target Price has been achieved since Profile publication)

 

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