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23 March, 2020 - 13:46 By Tony Quested

US a strong driver for 1Spatial growth

Cambridge-based location software business 1Spatial saw its share price increase more than 10 per cent at the start of the trading week after issuing a robust trading update for the year to end-January. 

The US division was a strong growth driver for the geospatial specialist. 1Spatial reported “another year of solid strategic progress and strengthening financials, delivering double-digit revenue and adjusted EBITDA growth.”

The company expects to report revenue and adjusted EBITDA for the year  in-line with consensus expectations with revenues of no less than £23m (FY19: £17.6m) and adjusted EBTIDA of at least £3 (£1.2m). Revenues include recurring software revenues of £9.5m (£7.5m).

The company was free cashflow positive in H2, with a gross cash balance at January 31 of £5.1m. 

Following the acquisition of GI in May 2019, the company expects to report an amortisation of acquired intangibles charge of approximately £0.8m for FY20. The charge has no impact on group cashflow.

A key focus in the year was the successful integration of the acquisition of GI in France and closer integration with the Esri, Inc platform, the global market leader in GIS software. 

These initiatives have increased new customer wins and cross-selling to existing customers in France in the second half of the year.

The US division was a strong growth driver for the group, securing contracts with five US State Departments for Transport, and has a growing pipeline of additional customer opportunities for the year ahead, demonstrating the potential for this market. 

Importantly, the group increased R & D investment in the year, and this month has announced the launch of 1Data Gateway, a web based portal through which cloud versions of its apps will be accessible; the first app is in relation to data supply chain management.

Coronavirus continues to have an unprecedented impact globally and 1Spatial has updated its business continuity plans accordingly. It has always made use of remote working and has now extended this to all staff. 

So far it is continuing business as usual, signing and delivering on contracts. 

It reports little disruption in the day to day business in its key territories which include the UK, US, France, Belgium and Australia but realises this could change.  

CEO Claire Milverton said: “If in the coming months we were to see some slowdown in our customer win rate and activities we would take appropriate action. 

“Given our high level of recurring revenue, our strong backlog of contracted future revenue, and our software supporting mission critical operations at many of our customers, we believe our business to be well positioned to withstand this period. 

“This has been another year of strategic progress for 1Spatial, delivering growth in multiple geographies while investing for the future. The team completed the acquisition and successful integration of Geomap-Imagis, which was both immediately earnings enhancing and strategically important, strengthening our position in France and Belgium as well as our relationship with Esri Inc. 

“The US division has been an excellent growth driver and we are encouraged by the scale of the opportunity it represents, demonstrated by the growing pipeline of opportunities. We secured a greater number of new customers in the year across the Group, indicating a growing ability to deliver on our sales pipeline.

“Our focus on transitioning the business model away from the perpetual software licence model towards higher margin, recurring software revenues is resulting in an increased quality of earnings. 

“While cognisant of the rapidly evolving situation with COVID-19, our high levels of recurring revenues,  strong balance sheet and wide spread of customers provide the business with a level of resilience and we are confident in our ability to work through these challenging times.”

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