Aerial mapping provider turns legal defence into offence in patent stoush as profit unveiled
The tech company, which is subject to a $1.1bn takeover bid, says it is fighting its US legal matters head-on.
Shares in aerial mapping provider Nearmap edged higher on Wednesday after the company announced it had lifted its gross profit by 35 per cent, and earnings before interest, tax, depreciation and amortisation (EBITDA) by 32 per cent year-on-year.
Its full-year results come just days after it revealed a $1.1bn takeover offer.
Nearmap, which is in exclusive talks with private equity giant Thoma Bravo about a potential sale, posted revenues of $146m for the 12 months ending June 30 – up 29 per cent – along with gross profit of $11.3m, and EBITDA of $16.6m, in results that were in line with analyst expectations.
It ended the year with annual contract value – a key metric for subscription-based technology companies – of $159.9m, up 25 per cent, while its net loss widened from $18.8m to $30.8m. The company had a cash balance of $93.8m at the end of June 2022.
Nearmap earlier this week revealed it had granted exclusivity to Thoma Bravo for seven days, with obligations that prevent Nearmap from soliciting rival bids, while the company has also agreed to pay a break fee of up to $US3m ($4.23m). The deal would be subject to approvals from both the Foreign Investment Review Board and US regulators.
Thoma Bravo’s $2.10-per-share offer places a 39 per cent premium on Nearmap’s closing share price last Friday, and a 67 per cent premium to its six-month volume-weighted average price.
Thoma Bravo was an unsuccessful underbidder on rival EagleView seven years ago, and Nearmap is currently embroiled in a legal dispute with EagleView and another US rival, Pictometry, over claims of patent infringement.
EagleView and Pictometry claimed that Nearmap’s roof measurement technology used to help determine the outcome of insurance claims violates their patents. Nearmap has described those allegations as “meritless” and has vowed to vigorously defend the legal proceedings, which have been ongoing since 2021.
Nearmap chief executive Dr Rob Newman said in an interview that his company was in fact changing tack from defence to offence when it came to defending its IP.
“(The lawsuit) is not having an operational impact on our business,” Dr Newman said in an interview on Wednesday. “We’ve always said the case against us is without merit, but as we’ve looked into the intellectual property of EagleView, we believe that’s actually there’s some fundamental issues with their intellectual property.
“So we have actually filed what’s called an inter partes review. An IPR is the acronym with the patent office, and we’re actually challenging the validity of their patents. So we’ve kind of gone from a defensive stance to an offensive stance in regard to the litigation. And so that gives us good confidence that we will endure.”
He said his company had produced another strong set of results, validating the “razor-sharp focus we have on our strategy”.
“Our team continues to successfully execute to this strategy, delivering consistently strong growth from our core industry verticals,” Dr Newman said.
“We have now clearly established our market leadership position in the North American market and continue to extend our market leadership position in Australia and New Zealand.”
Dr Newman said he could not speak about the ongoing discussions with Thoma Bravo, but that his company was somewhat immune to the ongoing challenged market conditions, particularly in North America.
“Our customers are cyclical and these are businesses that need to continue to run independent of the economic conditions. People need to insure their homes every year, and governments need to provide services to their local constituencies. So by and large, in an environment like this, we don‘t see much impact,” he said.
“The macroeconomic conditions really have not had an impact on our business. And while market sentiment has turned against growth companies, we have a very strong balance sheet, as demonstrated through our announcements today, so we believe we’re in a strong position going forward.”
Nearmap shares last traded up 2.7 per cent to $1.98 per share.
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