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Product Review Img Vertical

Date : 26/10/2020

Aerometrex Limited



Market Cap : $127.44 Million


52 Week Range : $0.70 - $2.60

Share Price : $1.30

A high growth firm with a strong business model that is investing for growth. We recommend long-term horizon investors to "Buy".

Company Analysis

Aerometrex Limited (ASX: AMX) is an aerial mapping business that operates in 4 divisions – Aerial Photography & Mapping, LiDAR, 3D Modelling, and MetroMap. Aerometrex is relatively new to public investors on the ASX, having listed in 2019, it was established in 1980 and has now expanded globally. Being an innovator in the aerial imagery space, they have gone on to complete over 5300 projects globally.

Source: Aerometrex

Operation Segments

Aerial Photography & Mapping: Aerometrex uses its own sophisticated camera system mounted on aerial vehicles to capture aerial images. They provide 2D aerial image maps, terrain models, surface models and 3D feature data through their service. The applications are very wide and cater to most industries. Aerometrex is also the Australian supplier for Google Earth and Microsoft.

3D Modelling: Advanced photogrammetry and visual techniques gives rise to 3D reality modelling. 3D reality modelling is the creation of 3D models of the real world that has applications in construction, architecture, animation, virtual reality, etc. Aerometrex’s 3D modelling division gives its users access to all the resources they would need for their 3D needs – from building a model of a building, all the way to an entire 3D city. Aerometrex has already completed projects in Europe, Australia, and North America. The forecasts for FY2021 is also high as its growth expansion is well underway.

LiDAR: Light Detection and Ranging is a technology that uses lasers to measure objects. Fun fact: the new iPhones have a LiDAR sensor that can be used to measure objects for optimal artificial reality and night photography applications. LiDAR enables higher accuracy in aerial photography – especially when measuring complex terrains. Aerometrex’s aerial vehicles are equipped with LiDAR that have airborne GPS and inertial measurement systems that have a wide range of applications and are being used to create digital terrain and surface models.

MetroMap: Aerometrex’s as-a-service business model that offers subscribers aerial imaging services on a needs basis. With both 2D and 3D plans on offer, customers can leverage Aerometrex’s imagery data for applications such as disaster management, traffic management, etc. Governments and surveyors have been one of Aerometrex’s clients who have been subscribed to this service. We estimate the future to be driven mainly by MetroMap’s business model.

Company Updates

Following the listing in December 2019, the firm has had a topsy-turvy year as far the share price is concerned. A successful IPO raised $25 million on top of the $7 million it had raised prior to the IPO in July 2019.

The funds from the IPO are mainly being utilised for growth. Sales and Marketing spending and budgets have gone up and the company has expanded its operation in Europe. New sensor and aircrafts purchases are expected to hit shelves in FY2021. AMX has been active in the M&A space as well and has completed the acquisition of Spookfish for $1.5 million. The acquisition adds to the subscription revenue base, increased datasets and licences, and higher market share for Aerometrex as the firm has acquired a competitor.

An office opening in the USA opens new avenues for growth for the firm as Aerometrex is focussing on its overseas markets in addition to Australia & New Zealand.


Aerometrex had a very successful IPO and the stock surged to $2.60 per share earlier this year. However, the market crash in March brought it back down to earth. The stock has returned -34% in the year-to-date chart and currently trades at $1.30 – on the lower end of its 52-week range.

Border closures and restrictions have resulted in higher costs and unexpected delays in project completion. However, we believe the firm has not been impacted as much as the market states it has been. Increased infrastructure spending and the lifting of restrictions also mean brighter days for Aerometrex.

The firm’s strategy to look for organic growth may have slowed down due to the ongoing Covid19 crisis in the US and Europe. A general slowdown in the economy impacts the firm, however, Aerometrex continues to invest for growth and the firm has also confirmed that they will keep the door open for further M&A activities.

AMX’s new aerial mapping technology will enable governments and emergency authorities around Australia for bushfire mitigation. This firm believes this technology can be leveraged across the world for disaster management activities.

MetroMap has made breakthroughs in coverage and speed recently. The firm has confirmed an 8x increase in processing speeds of orthophoto and a 75% coverage of the Australian population in the past 3 months as the capture program has been used in every capital city and 49 regional cities.

Industry Analysis

The aerial imagery industry is a high growth industry. The CAGR has been about 12% for the past 5 years, and forecasts are still high. The industry will be led by growth in the use of drone technology in developed countries and the construction industry as the need for planning and surveillance continues to grow. Governments are also contributing to the growth of the industry as disaster management is of utmost importance.

The aerial imaging market is valued at about US$2 billion in 2020, and forecasts expect it to cross the US$4 billion in 2025.

3D modelling is in a high growth phase as well. Virtual reality and augmented reality use cases is expected to rise as the benefits are endless. With Aerometrex serving as a one-stop-shop for most imagery needs; the firm is well positioned to take advantage of the shift in market dynamics in a post-pandemic world.

The biggest competitor to Aerometrex is Nearmap – an ASX 200 listed company. Aerometrex’s 3D imaging technology is superior to that of Nearmap due to the LiDAR product. Nearmap does not have LiDAR in its products and hence suffers in the 3D imaging space. Another advantage AMX has over Nearmap is decreased costs as it owns and operates its own aircrafts for imaging purposes – a fleet of 8 aircrafts, while Nearmap uses aerial operator suppliers.

Nearmap has suffered from devaluation recently as it still cannot find a way to become profitable. The firm operates mainly in the USA and ANZ. Aerometrex on the other hand has already shown investors that its business is profitable prior to its IPO. The profits may be slim in the near future as it invests for growth mainly in Europe – however, its valuation is set to surge. All-in-all, we estimate a higher upside for Aerometrex than its competitor in the years to come.

Investment Thesis

The financial performance in FY2020 has been good. Revenues across all business segments have increased by 24.7%. The increased spending to drive growth at this stage means that the firm will not generate net profits. This is exactly the case in FY2020 as increased spending and increased costs due to Covid19 restrictions have resulted in Aerometrex reporting an EBITDA of $4.5 million and a Net Loss of $293,000. The EBITDA margins have decreased to 22.5% as a result of increased costs, from an otherwise stable margin of around 30%. We estimate margins to be up close to the 30% mark from FY2021, and then continue to increase due Aerometrex’s benefit of being a one-stop-solution for its clients. The business model ensures that as the company scales, the costs reduces – thereby increasing its margins and profitability.

Source: Aerometrex

The 24.7% growth in revenues is as a result of the exceptional performance of the LiDAR and 3D modelling segments – which saw revenue growth of 38% and 72%, respectively. The Aerial mapping and photography resulted in a decline by 5.9%. However, this is expected as the shift towards its latest subscription-as-a-service offering of MetroMap increases. We forecast the aerial mapping and photography segment to be eventually phased out in the future. MetroMap brings benefits such as a much more stable revenue generation that improves revenue efficiencies for AMX. Customers also benefit from the SaaS models due to the fact that they pay for what they use and are also lighter on their pockets.

MetroMap’s subscription numbers grew by 105% compared to the previous year. The growth here has been derived from both – organic and from the acquisition of Spookfish. The annual recurring revenue has increased by 186%. The total revenues from the MetroMap segments have increased by 42% as it accounted for close to $1.7 million. The ongoing investments and technological advancements that AMX has been making is aligned towards increasing MetroMap’s contribution towards its total revenues. The segmented revenue analysis can be seen from the chart below:

The inner circle represents the revenue contribution from each segment in FY2019 and the outer circle that of FY2020.

With local governments, state governments, federal governments, private companies already being serviced by Aerometrex, the forecasts are high. We estimate the firm to continue to grow at an average of 25% per annum for the next 5 years as favourable economic conditions and market dynamics add tailwind.

The balance of Aerometrex is strong. The firm has $22.2 million in cash and $4.5 million worth of debt facilities available. This effectively safeguards the firm from any credit default risk and also mitigates the risks involved in operating under current uncertainties due to Covid19. The short-term and long-term financial health of Aerometrex is sound. Total assets exceed total liabilities by 4x – indicating a very capital light business model.

Aerometrex has just over $3 million in debt. The capital structure is optimal – 92% equity financing and just 8% debt financing.


Aerometrex is a high-growth firm. The shift towards a SaaS based business model will enable the company to effectively manage its growth rates and ensure stability in revenues and profits. With investments being made towards growth opportunities, the forecasts are high. The financial position is stable, and we estimate Aerometrex to continue to scale its operations. Thus, we recommend our members to “Buy” as AMX has the potential to become a leader in its segment.

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