The S&P/ASX 200 Index (ASX: XJO) has seen some strong share price gains over the past month. General market sentiment continues to rise. The Aussie tech sector, in particular, Nearmap Ltd (ASX: NEA) performed strongly with its share price surging 50% higher in May.
Other strong performers include Afterpay Ltd (ASX: APT) which has seen its share price up by 54% and Pushpay Holdings Ltd (ASX: PPH) which saw a massive 69% share price rise.
However, few ASX tech shares have managed to grow at such phenomenal rates.
So, what is behind the recent strong growth of Nearmap’s share price?
Nearmap’s strong subscriber growth continues
Nearmap has performed well during the last few months, as it continues to grow its subscriber base at a solid rate. In addition, its average revenue subscription continues to improve. This is further improving its overall margins. In particular, it has been growing strongly in the North American market.
A series of positive market updates in April and May, in particular, has encouraged investors.
In a May update, the company informed the market that its recent business performance has been very solid.
Month-to-month recent sales growth has been strong across its key market segments. This is despite challenging market conditions.
Actual cash value (ACV) for Nearmap’s overall portfolio was reported to be over $102 million. A strong result.
There has been some downward sales growth momentum. This is due to some customers delaying their purchasing decisions. However, the overall impact on its sales pipeline has been negligible.
Customer churn has pleasingly been declining. It was reported to now be below 10% on a 12-month rolling basis. This is down from 11.5% at the end of last year.
New artificial intelligence (AI) product set to launch this month
In another positive market update, Nearmap indicated that its new artificial intelligence (AI) product would be launched this month.
The AI product will target a range of industries including insurance, utility and local government. This follows the successful launch of its 3D and rooftop geometry products.
On track to reach break-even target
In a previous market announcement in April, Nearmap indicated a number of cash-management initiatives. These are aimed at reducing operating and capital costs by 30% and achieving a break-even target by the end of June.
In its latest update last week, Nearmap indicated that it is currently on track to achieve this goal. This also seems to have pleased the share market.
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Motley Fool contributor Phil Harpur owns shares of AFTERPAY T FPO and Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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