The UK Investor Magazine was delighted to welcome 1Spatial to our Investor Conference at the London Stock Exchange 13th March.

In this article, we feature geospatial SaaS company 1Spatial, summarising its investment case as presented by the team at last week’s event.

Key facts 1Spatial (LON:SPA)

Market capitalisation: £66m

Price: 59p

52-week high/low 65p / 44p

Analyst Target Price: 80p

Based in Cambridge, with some 350 employees globally, the highly innovative 1Spatial group, is a global leader that has been at the forefront of providing software to manage location data for over 30 years.

It provides Location Master Data Management software, solutions and business applications, primarily to the Government, Utilities and Transport sectors via the 1Spatial platform.

The group, which has operations in the UK, Ireland, USA, France, Belgium, Tunisia and Australia, helps its customers to make better business decisions by unlocking the value of location data.

The group’s user-friendly, no-code, cloud-enabled solutions and business applications facilitate automated data governance, while delivering increased efficiencies and significant cost-savings.

Its solutions ensure data governance, facilitating the efficient, effective and sustainable operation of customers around the world.

Three Main Platforms

The generator for the group’s development into two new markets is based upon its existing enterprise business – namely its Location Data Management software platform, which is the heart of 1Spatial and its competitive advantage.

The fast-developing other platforms are two new high gross margin Software as a Service (SaaS) platforms, which are cloud-based and fully scalable.

SaaS is a software licensing and delivery model, where software is licensed on a subscription basis and is centrally hosted.

1streetworks is a platform that can create a compliant traffic management plan in less than two minutes, requiring no specialist software or hardware, able to be accessed from anywhere, on any browser in real time by all stakeholders.

The 1Streetworks’ cloud-based SaaS solution is the first solution in the market to fully automate the production of traffic management plans, diversion routing and asset inventory lists and has the potential to fundamentally change the industry.

It is worth noting that there are some 4m roadworks a year on low-speed roads alone, which gives the group an addressable market worth over £400m in ARR.

Aimed at the US market, the NG9-1-1 (Emergency Services) platform is the next generation cloud service that enables counties and cities to cleanse their data, ensuring compliance with National Emergency Number Association standards and ensuring accuracy of location data for NG9-1-1 call routing.

Geospatial Data Analysis

Geospatial data analysis involves collecting, combining, and visualising various types of geospatial data which is used to model and represent how people, objects, and phenomena interact within space, as well as helping to make predictions based on trends in the relationships between places.

The company aims to solve the world’s most difficult geospatial challenges with its leading software and solutions, thereby enabling its customers to make better informed decisions saving money, saving time, saving lives and contributing to a more sustainable world.

The Geospatial Information Systems Market is currently worth $10bn, which is estimated to more than double by 2027 to $21bn, and secondly, the mainstream Master Data Management market, which is worth $16.6bn but estimated to triple by 2030 to $54bn.

The 1Spatial Platform

The 1Spatial platform is a comprehensive set of data and system agnostic LMDM software components which helps ensure master data is compliant, current, complete, consistent, and coordinated – and that customers can be confident it will remain that way as it evolves.

It allows them to master their data on any device, anywhere, anytime and can be deployed as SaaS in the cloud, on-premise, or as a hybrid of both.

The 1Spatial Platform consists of a complete set of LMDM software components, which combine servers, portals, dashboards, software development kits, application

programming interface, data connectors, business-focussed applications, the patented 1Integrate rules engine and the 1Data Gateway self-service web portal.

Group Clients

The group works together with government, utility and transport sectors around the world to meet the green agenda, support the investment in infrastructure upgrades and help organisations implement strategies in response to the digital transformation taking place across all industries.

It collaborates with global partners on large-scale data transformation projects and tap into a broader network of prospective clients.

Globally the company’s 1,000 plus clients include national mapping and land management agencies, utility companies, transportation organisations, government and defence departments.

The group’s key customers are located in over 25 countries across the globe.

In the UK & Ireland its clients include UK Power Networks, HS2, United Utilities, Ordnance Survey, the Department for Environment Food & Rural Affairs, and the Rural Payments Agency amongst hundreds of others.

In the US its fast-growing customers list includes Google, United States Census, Coltrans, and an increasing number of States Government bodies.

Included in its France & Belgium clients roll are EDF, VINCI, Veolia, Airbus, and Engie.

In Australia Hunter Water, Nova Systems, North East Water are amongst businesses on its clients list.

Its Partners

The company partners with major technology consultancies and GIS providers such as ESRI, CGI, Atkins, Version 1, QinetiQ, Atos, Infosys, Version1, VertiGIS Studio and Landmark.

Its partners include tech consultancies, systems integrators, software developers, professional services firms and geospatial specialists.

Recent Orders

The group continues to invest in its SaaS based solutions, notably 1Streetworks in the UK alongside NG911 in the US.

Trials for both these products have progressed well over the last 12 months, resulting in the first 12-month licence for 1Streetworks with UK Power Networks and five annual NG911 SaaS licences.

In late February this year following completion of a successful paid trial, the UK Power Networks gave the company a 12-month contract for its 1Streetworks Traffic Management Plan solution.

UK Power Networks has 190,000km of cables and delivers thousands of streetworks every year across London, the South-East and East of England, to maintain safe and reliable power supplies to 19m people.

The company has a further four paid trials currently in place, together with several additional paid trials due to commence in the first half of 2024 across utilities, highway authorities and traffic management organisations.

For the NG911 SaaS application, the company is exploring a partner-led go to market strategy to accelerate the growth, which will provide wider market coverage of this key market.

Going Forward

The group considers that the demand for location data has never been greater.

1Spatial sits right at the heart of significant growth opportunities across multiple sectors, enabling a smarter, safer and more sustainable world.

It has a valuable customer base, while it operates a scalable business model and is enjoying a strengthening financial position.

Targeting ARR Growth

Annualised Recurring Revenue is the annualised value at the year-end of committed recurring contracts for term licences and support and maintenance.

The group’s existing enterprise business enjoys a 53% annual recurring revenue.

The potential for its two newer SaaS focussed businesses offers massive scope for very much higher ARR – with 80% being a near-term aim.

The group is focussed on growing recurring subscription term licences, its SaaS strategy and other recurring revenue from long-term contracts will continue to deliver revenue growth with improved gross margins.

Professional Shareholders List

Amongst the larger shareholders in the group’s equity Columbia Threadneedle Investments hold 19.94% of the group’s 110,859,545 shares in issue.

Others include Canaccord Genuity Fund Management (17.63%), Azini Capital Partners (12.37%), BGF Investment Management (6.25%), JO Hambro Capital Management (3.95%), Octopus Investments Nominees (3.71%), Herald Investment Management (3.56%), and Downing (3.02%).

Analyst Views

Ahead of the Final Results to end January this year, being announced on 24th April, analysts Andrew Ripper and Caspar Erskine at Liberum Capital have the shares of the group rated as a Buy, with a Target Price of 80p.

They estimate that the last year’s revenues were £32m (£30m) while its pre-tax profits were £2.2m (£1.8m), lifting earnings up to 2.0p (1.6p) per share, with no dividend being paid.

For the current year their figures suggest £35m in sales, £3.2m profits and 2.8p per share of earnings.

Analysts Max Hayes and Dan Ridsdale at Edison Investment Research have estimates for the 2024 results to show £32.1m sales, EBITDA of £5.5m (£5.0m), with earnings per share of 1.6p.

For the 2025 year to end January they have £35.2m revenues, £6.5m EBITDA and 2.3p of earnings.

The FTSE 100 hit the highest levels of 2024 on Thursday after the Federal Reserve and Bank of England kept rates on hold but hinted they were close to cutting interest rates.

UK equity bulls were out in force on Thursday as the FTSE 100 started the session higher following a strong session in the US in which the S&P 500 hit fresh record highs.

London’s leading index was 1.9% higher at the time of writing.

Perceived dovishness from the Federal Reserve sparked a risk-on sentiment on hopes we will soon see lower borrowing costs. Although the Fed didn’t provide a timeline for cuts, its language would suggest a rate cut very much on the cards this summer.

“Jerome Powell’s comment that ‘the risks of achieving our inflation goals are coming into better balance’ was enough to give the market confidence that we’ll soon see rate cuts, with three expected this year,” said Russ Mould, investment director at AJ Bell.

“It didn’t matter that yesterday’s decision was to leave rates untouched, the market is focused on what might happen next and any fears that the Fed might become even more stubborn over changing monetary policy appear to have been blown out of the water.”

The Federal Reserve passed the baton to the BoE, and focus shifted to lunchtime’s MPC decision, which was also to keep UK rates on hold. There was a notable shift in the voting behaviour, with two members who previously opted to hike rates rolling back their decision this time round and voting to keep rates on hold.

“The BoE produced few surprises this lunchtime, holding Bank Rate steady at 5.25%, as expected, though the decision did have more of a dovish tinge to it than that delivered in February,” said Michael Brown Senior Research Strategist at Pepperstone.

“While guidance that policy must remain ‘sufficiently restrictive for sufficiently long’ was maintained, the MPC are no longer as divided on the policy outlook, with the 2 hawks from last month now joining the majority of the MPC in voting for Bank Rate to be maintained. Furthermore, Governor Bailey indicated that “things are moving in the right direction” in terms of the inflation outlook, and thus the ability to begin to normalise policy.”

Broad rally

The gains for FTSE 100 companies were broad with 94 of the 100 constituents higher at the time of writing.

3i Group was the top riser after announcing a portfolio update highlighting a particularly strong start to the year for ‘Action’ as well as other portfolio companies. The update was well-received by investors and 3i shares were 7% higher at the time of writing.

Next shares gained 5% after releasing a customary strong set of results for 2023. Total sales rose 5.9% and profits gained 5%.

“Next is often considered a barometer of UK consumer sentiment and based on today’s update, consumers are ready to loosen the purse strings. Profits have risen 5% in the face of a tough, but improving, high inflation, high interest rate environment, showing that shoppers are back out there spending despite some uncertainty still lurking around,” said Adam Vettese, analyst at investment platform eToro.

Hikma was the top faller after losing the rights to its latest dividend.

Next shares hit record highs on Thursday after posting another set of strong full-year results, as the group navigated softer economic conditions to produce higher sales and profit. 

There’s no stopping Next. Neither the momentum in sales nor its shares.

As competitors went into administration and closed their doors over the past decade, Next continued to grow through a carefully executed plan to increase online sales and better customers’ in-store experience.

The cost of living crisis and tensions in the Middle East have been blamed for soggy sales elsewhere in the sector. Not so at Next.

“We’ve heard of many retailers having to contend with disruption to shipping due to geopolitical tension but Next has said this will not be a significant factor,” said Adam Vettese, analyst at investment platform eToro.

“This is good news for shareholders but more importantly Next will continue to funnel cash back to them in the form of dividends and share buybacks as they have done consistently in recent years.”

Total group sales increased 5.9% in the year to January 2023 and profit before tax rose 5%. It isn’t explosive growth, but it’s steady and increasingly reliable.

Next has grown the business over the years by acquiring complementary companies, and the acquisition of Reiss has delivered a non-cash gain of £109m. 

“Next appears quietly confident for the year ahead. Shrewd acquisitions and investments have improved its growth prospects, while moderating inflation has significantly reduced pressure on costs. And while the UK economy isn’t out of the woods, the economic tea leaves don’t read as grimly as at this stage last year,” said Charlie Huggins, Fund Manager at Wealth Club.

Investors cheered full-year results, and shares jumped 2.9% in early trade.  Next shares have gained 26% over the past year. 

Though a night at the casino could feel like a blast from the past, the casino business is evolving quickly, and new trends offer investors a special chance.

Many states in the United States are starting to legalize online gaming, and established casino establishments as well as emerging online gambling businesses are following suit. At the end of the previous year, online casinos in PA set a record in revenue. No one would have thought that casinos in this state would show these kinds of results. Thanks to this, they will only increase their presence on the market, offer more unique promotions at PA online casinos, and provide gamers with exciting moments and opportunities. Other states where online casinos are legalized also show positive dynamics.

In the meantime, the Asian industry, which is concentrated in the Chinese province of Macau, has established itself as the world’s biggest gambling market, offering many profit opportunities to potential investors.

1. MGM Resorts

Among the casino industry’s most remarkable property portfolios is MGM’s. It has properties in Atlantic City, Detroit, Mississippi, and several of the most well-known casino resorts on the Las Vegas strip, such as the Bellagio, MGM Grand, Luxor, and New York-New York. Additionally, it has a 56% share in MGM Macau and MGM Cotai, two Macau casinos.

Compared to many of its contemporaries, it is more vulnerable to Las Vegas tourism since almost two-thirds of its 45,000 hotel rooms are located on the strip.

When the pandemic initially started in March 2020, MGM’s stock fell sharply. However, with the support of an investment from IAC/Interactive (IAC -0.15%) and a shift to online gambling via BetMGM, the company has since recovered to post-financial crisis highs. In 2021, it created sportsbooks at a number of its locations and began accepting bets online in other states. For its regional and Las Vegas Strip properties, it reported record EBITDAR in 2022. However, for a large portion of the year, COVID-19-related casino closures in China negatively impacted its business.

2. Las Vegas Sands

Las Vegas Sands is the best option for an investor who wants to bet on Macau. With five casinos in Macau and the Marina Bay Sands in Singapore, the corporation is solely focused on the Asian market. In March 2021, it sold the Venetian as well as its Las Vegas operations to a private equity company for $6.25 billion.

Regrettably, during the COVID-19 epidemic, the plan of concentrating on Asia failed when tourism effectively died as a result of stringent lockdowns in China and other Asian countries. The business battled the limitations in 2022 and reported an operational deficit for the third consecutive year.

However, as the area develops and regulations start to loosen, commerce should pick up again. Macau should continue to lead the world’s gaming industry due to its close proximity to sizable populations and the shared cultural fondness for gambling in China and other Asian countries. The business is likewise making strong progress at its Marina Bay Sands resort in Singapore.

3. Wynn Resorts

Another operator of varied casinos, Wynn owns 72% of the Wynn Palace and Wynn Macau. Furthermore, it is the sole owner of the Encore Boston Harbor, which debuted in 2019, as well as the Wynn and Encore in Las Vegas.

In October 2020, the business also launched Wynn Interactive, of which it controls 97%. It collaborated with BetBull, which it eventually purchased, to develop an online sportsbook and online casino. Almost selling Wynn Interactive to a SPAC in 2021, Wynn withdrew from the agreement in November of that same year.

In January 2022, rumors in the media suggested the corporation was looking for a buyer once again. The economics of online sports betting, according to former CEO Matt Maddox, are unfavorable as rivals are spending excessive amounts on client acquisition. Following a $267.4 million loss in 2021, the business lost $98.5 million in adjusted property   on Wynn Interactive in 2022.

The FTSE 100 held steady on Wednesday after UK inflation cooled more than expected, and traders prepared to receive the Federal Reserve’s interest rate decision later this evening.

The FTSE 100 was up just 3 points at the time of writing as London’s leading index reversed early losses.

When we refer to early losses, the declines were a minor undulation to the downside that was steadily erased as the session progressed.

Early trade was dominated by UK CPI inflation, which declined faster than expected in February, and what the firm disinflation trend meant for UK assets. Judging by the market reaction, UK CPI inflation at 3.4% means very little for financial markets or the Bank of England’s rate decision tomorrow.

“The FTSE 100 dipped at the open despite UK inflation numbers falling more than expected for February,” said AJ Bell investment director Russ Mould.

“The market is now pricing in a higher chance of a June rate cut, even if today’s reading is extremely unlikely to have any influence on the Bank of England’s decision making later this week.”

Today’s main event is the Federal Reserve’s interest rate decision, which is due after the European close this evening. Like the Bank of England, the Federal Reserve isn’t expected to change interest rates, but the commentary and financial projections could be explosive.

“Although policymakers are largely expected to keep rates on hold, investors will be hanging on the words of Fed Chair Jerome Powell about the path ahead for monetary policy. Hotter than expected inflation readings, have pushed down market expectations for an earlier rate cut,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“While enthusiasm for the forecast benefits of artificial intelligence powered products and services is energising big tech, a more hawkish stance from the Fed later would be unsettling. At the moment the markets are pricing in a 55% chance that a rate cut may come in June, so any changes to the dot plot of pencilled in cuts by policymakers will be closely scrutinised.”

With the S&P 500 again flirting with record highs, any hints that the first rate cut could be pushed back to later in the year have the potential to hit stocks.

Prudential

Prudential was the FTSE 100’s top faller on Wednesday despite posting a strong set of results for 2023. The company’s presence in China is a concern for investors, given Prudential’s exposure to the property market.

“Despite analyst price forecasts being significantly higher than the current price, it would appear that The Pru still has some work to do in convincing investors that the prolonged downtrend is reversing,” said Mark Crouch, analyst at investment platform eToro.

“Prudential still has significant exposure to China and their share price dropped by a quarter in 2023, currently sitting at a key area of support that also marked the COVID lows.”

Prudential shares were down 6% at the time of writing.

Burberry was another heavy faller after European peer Kering posted a profit warning on weaker Chinese sales.

Melrose was the top gainer as UBS hiked its price target to 770p. Melrose was 4.1% higher at 646p.