1Spatial — Going to California with Caltrans on my mind

1Spatial (AIM: SPA)

Last close As at 20/12/2024

GBP0.69

−0.50 (−0.72%)

Market capitalisation

GBP77m

More on this equity

Research: TMT

1Spatial — Going to California with Caltrans on my mind

1Spatial continues its US expansion with the announcement of a contract win to support replacing the Transportation System Network (TSN) for the California Department of Transportation (Caltrans). The contract is worth c $1.4m over four years, including US$0.7m in software licence revenue, and was won in partnership with Rizing, a global SAP partner. The US market is a key growth engine for 1Spatial and the Caltrans win shows its strategic plan continues to bear fruit. This contract follows other recent wins and extensions in the US market, including with the states of Montana, Georgia, Minnesota and Arizona, and with Google. We are encouraged by its progress and maintain our forecast of significant growth in the US; we have not adjusted our estimates.

Analyst avatar placeholder

Written by

TMT

1Spatial

Going to California with Caltrans on my mind

Contract win

Software and comp services

24 June 2022

Price

40.3p

Market cap

£46m

Net cash (£m) at end January 2022

3.2

Shares in issue (January 2022)

110.5m

Free float

79%

Code

SPA

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

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.

Analysts

Ken Mestemacher, CFA

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5729

1Spatial is a research client of Edison Investment Research Limited

1Spatial continues its US expansion with the announcement of a contract win to support replacing the Transportation System Network (TSN) for the California Department of Transportation (Caltrans). The contract is worth c $1.4m over four years, including US$0.7m in software licence revenue, and was won in partnership with Rizing, a global SAP partner. The US market is a key growth engine for 1Spatial and the Caltrans win shows its strategic plan continues to bear fruit. This contract follows other recent wins and extensions in the US market, including with the states of Montana, Georgia, Minnesota and Arizona, and with Google. We are encouraged by its progress and maintain our forecast of significant growth in the US; we have not adjusted our estimates.

Year end

Revenue (£m)

EBITDA*
(
£m)

EBIT*
(
£m)

EPS*
(p)

EV/sales
(x)

EV/EBIT
(x)

P/E
(x)

01/21

24.6

3.6

0.4

0.2

1.9

11.7

232.3

01/22

27.0

4.2

1.3

0.8

1.7

10.2

52.1

01/23e

29.0

4.9

2.0

1.2

1.6

8.7

33.4

01/24e

31.2

5.7

2.7

2.3

1.5

7.5

17.6

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

Caltrans manages California’s highway and freeway lanes, provides intercity rail services and permits the state’s public-use airports and heliports. As part of its ‘Toward Zero Death’ strategy, Caltrans is upgrading its TSN to meet recent transportation legislation, which emphasises the importance of more advanced data systems for all public roads. For Caltrans, 1Spatial’s 1Integrate Rules Engine and 1Data Gateway Portal will be used to validate, clean and synchronise all the existing data within the safety data system to create a modern TSN that meets the legislative requirements.

This contract win exemplifies two key pillars of 1Spatial’s growth strategy in the United States. First, SPA targets scalable growth via its Land and Expand strategy, where the company wins an initial contract and, once the client sees the benefits of 1Spatial’s solutions, it expands into related services. The State of California is an existing client with 1Spatial’s Next Generation 911 solution and has extended 1Spatial’s solutions into transportation. Second, 1Spatial collaborates with major technology partners in bidding on large contracts, where its role is to be the data integrity provider, providing what management views as ‘best in breed’ solutions for handling geospatial data. In this case, it secured the contract in partnership with Rizing, a global SAP partner.

As we noted previously, the US market provides a significant scalable growth opportunity, with 50 states and 23k counties and cities, each with potentially their own 911 emergency services, departments of transportation and asset management teams, each of which relies on GIS information and would need solutions like SPA’s 1Integrate to check, validate and cleanse their data.

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 2022 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.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on 1Spatial

View All

Latest from the TMT sector

View All TMT content

Ensurge Micropower — Closer to delivering customer samples

Ensurge Micropower has provided a detailed update on its progress on manufacturing the world’s first milliampere hour scale solid-state lithium microbatteries, noting that it expects to provide samples to its customers ‘shortly’. This is a critical step in the company’s development, because it already has agreements with five customers that are waiting for the samples and, unlike most early-stage technology companies, already has a volume manufacturing facility, which it is preparing for delivery of commercial volumes of microbatteries to a lead customer by end 2022.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free