April 1, 2020 | Software
Image Credit: Pointerra
In 2016, Pointerra’s founding Chairman and Non-Executive Director saw an opportunity to build another USD1bn technology company in the geospatial sector. This opportunity could satisfy a huge unmet need in a large, global and fast growing sector worth more than AUD5bn.
At the end of 2019, Pointerra’s recurring revenue had grown 200% in the last 12 months (tripled). This means at the current growth rate, it is following the trajectory of a unicorn SaaS company (one that becomes valued at more than USD1bn).
When Pointerra listed on the ASX in 2016, Rob Newman joined as Chairman and Graham Griffiths as a Non-Executive Director.
At the time of joining Pointerra, Rob and Graham were Directors of nearmap. Nearmap is an aerial imagery technology and location data company listed on the ASX under the ticker NEA (ASX:NEA). In late 2018, Rob Newman became the Managing Director of nearmap. At the end of 2019, nearmap was valued at more than USD1bn.
In addition to his success at nearmap, Rob Newman has a track record of successfully building and selling technology companies. Before joining Pointerra as Chairman in 2016, Rob was the Co-Founder of QPSX Communications Pty Ltd and Founding CEO of Atmosphere Networks, which were both acquired.
Also, Graham Griffiths, who sadly passed away in late 2019, was a successful entrepreneur and investor in Australian technology companies.
They saw an opportunity to satisfy a huge unmet need in a large and fast growing industry that they knew intimately and had been successful in before. Pointerra was another opportunity to build a USD1bn company like neamap.
Pointerra’s Total Addressable Marketing (TAM) is the global geospatial technology sector, which is estimated to be worth AUD5bn. It is an enormous and fast growing market.
No. Nearmap does pixels (2D), Pointerra does points (3D). They solve completely different problems. They are complimentary. Rob and Graham knew this.
Nearmap captures, manages and delivers the most current location content in the world, allowing businesses and governments to explore their environment easily. It is a global leader in the provision of geospatial map technology for business, enterprises and government customers.
Pointerra provides a powerful cloud based solution for managing, visualising, working in, analysing, using and sharing massive 3D point clouds and datasets.
Having been successful in the geospatial sector already, they knew that 3D point clouds and datasets were a massive pain point for enterprises and governments. They also knew that there was no solution that could appropriately solve the problem.
For example, enterprises and governments like Major League Baseball (MLB), Florida Power and Light, LendLease etc can now easily see, use and share all types of 3D data from the comfort of their computer browser. They no longer have to physically inspect assets.
As a result, Pointerra’s recurring revenue from their software increased by more than 200% in the last 12 months (AUD930k to AUD2.8m from 31 January 2019 to 31 January 2020).
Venture capitalists use the “triple, triple, double, double, double” (T2D3) rule to project if a company is tracking toward a billion dollar valuation (a unicorn). Pointerra has tripled its recurring revenue from around AUD1m to AUD3m over the last 12 months. This means, if you use the T2D3 rule, it is following the trajectory of a unicorn SaaS company.
Pointerra represents an opportunity to invest in a potential unicorn SaaS company with the highest quality recurring revenue (from enterprise and government clients). Also, it has recurring revenues that are almost the same as their expenses and more than AUD2m in the bank. This means it is unlikely they need to raise money for the foreseeable future.
Pointerra’s growth proves that it is solving a huge problem in a growing sector that is already worth AUD5bn . It would not be able to grow as quickly as they are if this was not the case.
Also, unlike most technology companies who spend huge amounts of money on marketing to grow, Pointerra spends, on average, less than AUD10k on marketing each quarter. For example, in Q220 Pointerra spent AUD4k on Marketing and Advertising and increased Annual Contract Value (ACV) by AUD430k (18% increase in a single quarter). This is important because it shows that Pointerra can grow super fast without having to spend large amounts on marketing. It is a very efficient machine. However, it can increase spending on marketing in the future to continue to grow. This is not a luxury that most technology companies have.
Further, Pointerra is helping enterprises and governments keep their employees safe during the COVID crisis. The software allows clients to inspect assets from the comfort of their home or office. This has resulted in increased interest from potential clients through paid Proof-of-Concepts (PoCs).
At the time of writing in April 2020, Pointerra’s Enterprise Value is approximately AUD10m.
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