This Little-Known Stock Rallies 149% to Take Australia's No. 1 Spot

(Bloomberg) -- Australia's best-performing stock is flying high in more ways than one.

Shares in Nearmap Ltd., which provides aerial images and location data that allow businesses to conduct virtual site visits, have surged 149 percent this year, making it the biggest gainer on the benchmark index. The cloud-based company was added to Australia's benchmark S&P/ASX 200 index last month.

Its strong performance “is a reflection of years of investment in market-leading technology that is now translating into strong growth in subscription revenue,” said Mason Willoughby-Thomas, a portfolio manager at Ausbil Investment Management, whose fund owns shares of the company.

Nearmap sells subscriptions to access high-resolution images that cover most of Australia and the U.S. Customers include construction firms viewing progress at a site remotely, or governments trying to work out emergency response plans for a particular area.

Competitive Advantages

An advanced camera system and proprietary software that can stitch images together to create photomaps are among Nearmap's advantages, RBC Capital Markets analyst Garry Sherriff wrote in a May 1 note.

Nearmap's cameras can take images at greater altitudes and speeds than its competitors without sacrificing resolution, Willoughby-Thomas said.

The most well-known aerial imagery product might be Alphabet Inc.'s Google Maps, though it targets consumers while Nearmap was designed for businesses, Willoughby-Thomas said. The mapping product from the world's most profitable Internet company also relies on lower-resolution images and infrequent capture rates, making it “inadequate” for commercial use, he said.

Expansion Plans

After completing A$70 million (about $50 million) in capital raising, Nearmap said in February that it plans to focus on further U.S. growth, entry into Canada and the creation of more products. The shares jumped after the announcement.

“Our rapid growth is attributable to the simplicity, scalability and efficiency of our business model, but also to our obsession with product innovation, and our focus on attracting and retaining the best people,” Chief Financial Officer Andy Watt said.

Nearmap's North American expansion is underway, as the company has started capturing images in Canada, Watt said. Nearmap entered the new market because of U.S. customers who were “looking for insights north of the border,” he said.

To sustain growth over time, Nearmap needs to target the “long tail” of small and mid-sized businesses, Willoughby-Thomas said, since much of the company's U.S. success comes from gaining large enterprise and government customers.

To contact the reporter on this story: Jackie Edwards in Sydney at jedwards160@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Joanna Ossinger

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