Nearmap (ASX:NEA) - CEO & Managing Director, Dr Rob Newman
CEO & Managing Director, Dr Rob Newman
Source: Startup Daily
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  • Nearmap (NEA) has struck back at a scathing report from Beijing-based short-seller J Capital today, labelling the report erroneous and unsubstantiated
  • Last week, J Capital accused Nearmap of deceiving shareholders and hiding its failures in the U.S. through “accounting tricks”
  • The short-seller said Nearmap failed to succeed in the U.S., misrepresented its customer churn rate, and operated under a deceptive price model, among other claims
  • Nearmap, however, has blasted the report as inaccurate and hit back with its latest half-yearly report for the six months to the end of December 2020
  • In the report, Nearmap highlighted a “record” result in North America, with annual contract value and revenue both stronger than the year before
  • At the same time, Nearmap narrowed its half-yearly loss from $18.6 million in the second half of 2019 to $9.4 million in the second half of 2020
  • CEO and Managing Director Rob Newman said the J Capital report shows a “deep misunderstanding” of Nearmap and the whole aerial imaging industry
  • Shares in NEA are up 10.65 per cent this morning and trading at $2.39 per share — higher than they were before the release of the J Capital report

Nearmap (NEA) has struck back at a scathing report from Beijing-based short-seller J Capital today, labelling the report erroneous and unsubstantiated.

Last week, J Capital accused the aerial imaging specialist of deceiving shareholders and hiding its failures in the U.S. through “accounting tricks”.

Among other claims, the short seller said Nearmap has “failed to succeed in any key sector in the U.S.”, misrepresented its customer churn rate, operated under a deceptive price model, and lost its technological edge.

Nearmap shares tumbled on the J Capital report, losing over 10 per cent in intraday trade the day the report was released before a trading halt was called.

Today, Nearmap has taken back all of this lost ground and then some with its response to the J Capital report, timed nicely with the release of the company’s latest half-yearly report.

Nearmap’s half-yearly financials

For the six months to the end of December 2020, Nearmap highlighted its group annual contract value (ACV) portfolio of $112.2 million, which equates to $116.7 million on a constant currency basis. This represents ACV portfolio growth of 21 per cent compared to the same time period in 2019.

The ACV growth translated to an 18 per cent bump to statutory revenue compared to the previous corresponding period, with Nearmap making $54.7 million in the first half of the 2021 financial year compared to the $46.3 million over the first half of the 2020 financial year.

Despite the ongoing challenges of COVID-19, customer retention was 93.9 per cent during the half-year compared to 88.5 per cent the year before.

While Nearmpap still posted a loss after tax of around $9.4 million for the six-month period, this loss is almost half of the $18.6 loss posted over the previous corresponding period.

Nearmap CEO and Managing Director Rob Newman said these figures show that the J Capital report demonstrates a “deep misunderstanding” of the business and the aerial imaging industry as a whole.

“The report contains many inaccurate statements, makes unsubstantiated allegations and presents a misleading representation of our business,” Rob said.

“Our company has delivered a very strong result which clearly demonstrates the strength of our business and the high levels of engagement of the Nearmap team,” he said.

Company management said the J Capital report follows a “pattern of overseas domiciled funds making speculative claims in order to generate uncertainty through adverse publicity and directly profit from such claims”.

Nearmap is hoping that the numbers can speak for themselves from what it has called “record” North American results.

What’s next?

Looking ahead, the Nearmap chief said the company is in a strong position to continue on its current growth trajectory in some of its core markets.

“Our focus for the remainder of FY21 and moving into FY22 will continue to be providing best-in-class service to our customers, through successful execution of our go-to-market strategy and continuing to develop our superior technology,” Rob said.

Specifically, the company is busy developing the HyperCamera3 system, which it is touting as the world’s leading aerial camera system.

“As we continue to innovate, we will roll-out tailored industry vehicle solutions, to ensure we remain a trusted and increasingly valuable partner to our customers.”

While J Capital has not responded to Nearmap’s retaliation, investors have certainly shown their support for the company. Shares in NEA are up 10.65 per cent at 11:42 am AEDT, trading at $2.39 per share — higher than they were before the release of the J Capital report.

Nearmap has a $1.18 billion market cap.

NEA by the numbers
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