Pointerra on the rise with first positive cashflow quarter and further contract wins expected by year-end

Pointerra Limited (ASX:3DP) moved to its first cashflow-positive quarter in the three months ending June 30 as new customers were onboarded across its suite of services – Data as a Service (DaaS), Analytics as a Service (AaaS) and Data Processing as a Service (DPaaS). This progress has seen shares as much as 25% higher today to 20.5 cents, a new six-year high, and since July 10 the company has risen from 5.3 cents. With further contract wins expected by the end of this year, there is every possibility of continued forward momentum. The Australian company is focused on the global commercialisation of its unique 3D geospatial data technology, which it says has solved an entrenched problem in the digital asset management sector and allows very large 3D datasets to be used without the need for high-performance computing. Proof-of-concept projects progressed During the June quarter, it progressed a number of ongoing enterprise proof-of-concept (POC) projects and subsequent to quarter-end, successfully concluded the most advanced of these projects with Pacific Gas and Electric (PG&E), one of the largest energy utilities in the US with more than 5 million customers. PG&E is emerging from US Chapter 11 Bankruptcy proceeding, which was triggered by the Northern Californian Wildfires in 2017 and 2018. As part of PG&E’s restructure and recapitalisation process, Pointerra has been working with the company and its adviser Accenture on an enterprise POC to demonstrate and quantify the value created by Pointerra’s cloud platform for 3D geospatial data across a range of diverse PG&E business units. The POC has been successfully completed and the parties are now negotiating an initial commercial enterprise agreement for the deployment of Pointerra’s platform, which is expected to make PG&E the company’s largest customer and also have a material impact on ACV growth. Pointerra expects to finalise and announce the quantum and key terms of an enterprise agreement with PG&E in the current quarter. US enthusiasm The company has also been working with other US utilities, large corporates and state/federal government agencies either directly or through its large US mapping company partners. These evaluation activities are also expected to mature into large enterprise customer relationships in the coming quarters. Pointerra also plans to partner with Accenture’s global Energy Consulting Services team to evaluate and pursue additional large-scale enterprise deployment opportunities for Pointerra’s platform around the world. Precisionhawk During the quarter, Pointerra renewed and further extended its commercial relationship with its longstanding customer and partner Precisionhawk. It continues to support Precisionhawk’s aerial inspection business in the US by automating analysis and interpretation of 3D data generated by Precisionhawk’s fleet of LiDAR equipped drones. Precisonhawk uses the complete suite of Pointerra solutions to reduce its operating costs and enhance its competitive advantage in servicing energy sector customers with essential network-wide condition assessment activities. Florida Power & Light Pointerra also extended the scope and reach of its commercial engagement with Florida Power & Light (FPL), one of the largest energy utilities in the US. FPL, owned by NYSE-listed NextEra Energy Inc (NYSE:NEE), is evaluating Pointerra’s platform across a range of business units including network condition assessment, vegetation management and storm/disaster response and recovery through a mix of trials and paid POC’s. The company expects to convert these opportunities into material enterprise license agreements in the coming quarters. “Getty Images” of 3D data In a first for Pointerra during the quarter, it began exploring the expansion of its 3D data marketplace into the film and television sector, with a partnership with Californian-based aerial 3D LiDAR business. Film and television production use real-world 3D data (streets, buildings, coastlines, etc) to drive Computer Generated Imagery animation and Pointerra plans to catalogue, license and offer this data for sale through revenue share arrangements with data owners. Whilst still at an early stage, Pointerra expects that the ability to match and connect owners of 3D datasets with prospective customers across a diverse range of sectors using Pointerra’s cloud platform will help drive its vision to become the “Getty Images” of 3D data. R&D and Solution Development R&D efforts continue to focus on the following strategic areas: ➢ Development of a platform to underpin the delivery of point cloud analytics to Pointerra customers (DaaS); ➢ Developing a catalogue of analytics algorithms (AaaS), in particular extraction of objects of interest from large scale datasets (e.g. poles, trees, signs), automatic point cloud classification and imagery analysis; ➢. Broadening the platform to support storage, visualisation and analysis of complementary 3D data types, including imagery, CAD and vector layers; ➢. Reducing the cost of providing the service by changing the way processed data is stored and streamed to client browsers and applications using the AWS cloud platform; and ➢. Enhancing its core web platform to support the development of additional applications that utilise the Pointerra API’s and available data. Placement and cashflow During the quarter, Pointerra received $820,000 in customer receipts compared to the March 2020 quarter figure of $530,000, which contributed to a cashflow positive result of $220,000. Pointerra received $120,000 in government grants and tax incentives, which represents funds received by its US subsidiary, Pointerra US, Inc from the US federal government’s Payroll Protection Program. This program is a COVID-19 relief measure that is similar to Australia’s Jobkeeper initiative (which Pointerra was not eligible for) and did not require a COVID-19 revenue or operational impact for qualification. Pointerra’s cash position as at June 30, 2020, was $2.34 million. Subsequent to the end of the quarter, on July 14, it announced a placement of 50 million shares at $0.05 to Capital [b] Trust, the early-stage investment vehicle of Australian technology entrepreneur Bevan Slattery and the Slattery family. The proceeds of $2.5 million will be used to accelerate the appointment of additional cloud platform development and sales resources in key Australian and US marketplaces and for general working capital purposes. COVID-19 minimal impact Pointerra said to date, there had been minimal impact from COVID-19 on the ability of its team to continue to operate the business. Its team members are based in three Australian and three US states, and apart from the head office in Subiaco, Western Australia, Pointerra has operated a work-from-home environment since 2018 for the non-Western Australian team members.