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1Spatial (LON:SPA) Might Have The Makings Of A Multi-Bagger

AInvestSaturday, Jan 4, 2025 4:45 am ET
7min read


1Spatial (LON:SPA), a geospatial software company, has been making waves in the market with its impressive earnings and revenue growth. With a strong focus on innovation and expansion into new markets, the company has the potential to become a multi-bagger, providing significant returns for investors. In this article, we will delve into the factors that make 1Spatial an attractive investment opportunity and explore how its performance compares to industry peers.



Earnings and Revenue Growth

1Spatial has demonstrated remarkable growth in earnings and revenue, which has positively impacted its stock price performance. Over the last year, the company's earnings per share (EPS) grew by an impressive 347%, while its revenue grew by a solid 7.7% to UK£32m. This growth is notable, especially considering that the company has been able to maintain similar EBIT margins to last year. In contrast, the broader geospatial information systems market is estimated to more than double by 2027 to $21bn, and the mainstream master data management market is worth $16.6bn but estimated to triple by 2030 to $54bn. This indicates that 1Spatial's growth is in line with the overall market trends and is performing well compared to its peers.

Expansion into New Markets

1Spatial's expansion into new markets, such as the US, plays a significant role in its potential as a multi-bagger. This expansion is driven by two new high gross margin Software as a Service (SaaS) platforms, which are cloud-based and fully scalable. These platforms are:

1. 1Streetworks: A platform that can create a compliant traffic management plan in less than two minutes, requiring no specialist software or hardware, and can be accessed from anywhere, on any browser in real time by all stakeholders. This platform has the potential to fundamentally change the industry, with an addressable market worth over £400m in ARR.
2. NG9-1-1 (Emergency Services) platform: A 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. This platform is aimed at the US market.

These new platforms, along with the existing enterprise business, are the generators for the group's development into two new markets. The fast-developing SaaS platforms have high gross margins, which can lead to increased profitability and cash flow. As 1Spatial continues to grow its user base and revenue in these new markets, it can further enhance its competitive advantage and drive shareholder value.



Strong Insider Buying Activity and Reasonable CEO Compensation

1Spatial's strong insider buying activity and reasonable CEO compensation contribute to its potential as a multi-bagger. Insiders, such as Stuart Ritchie, the CFO & Executive Director, have been purchasing shares in 1Spatial. For instance, Ritchie bought UK£9.9k worth of shares at around UK£0.56 each. This activity signals optimism on behalf of the buyers, indicating that they believe the company's stock is undervalued and has potential for growth. Additionally, 1Spatial's CEO took home a total compensation package worth UK£254k in the year leading up to January 2024, which is below the median for similar sized companies (UK£282k). This modest remuneration suggests that the board keeps shareholder interests in mind and practices good governance, which can be beneficial for the company's long-term success.

Conclusion

1Spatial's impressive earnings and revenue growth, expansion into new markets, and strong insider buying activity, combined with reasonable CEO compensation, make it an attractive investment opportunity. The company's growth is in line with the overall market trends, and its innovative solutions and expansion into new markets contribute to its potential as a multi-bagger. As 1Spatial continues to grow its user base and revenue in these new markets, it can further enhance its competitive advantage and drive shareholder value. Investors should consider adding 1Spatial to their watchlist and monitor its progress closely.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.