Analyst Comment

MapsPeople: Downgrades ARR guidance after corrections and delays

By Kasper LihnHead of Research

This afternoon before the market closed, MapsPeople downgraded its ARR expectations to DKK 58-64m (before DKK 77-87m) by the end of 2023. Revenue guidance is maintained in the range of DKK 38-45m, and EBITDA is also kept unchanged between DKK -62m and -52m in 2023.

Following an internal analysis of ARR calculations, MapsPeople has found misalignments in the methodology that mainly stem from its shift from the company’s previous cARR methodology to the current ARR methodology (invoiced and delivered). MapsPeople has partners with contracted commitments (reported as cARR) over a period. In some cases where an end customer of the partner has churned, the contracted commitment remains unchanged. However, with MapsPeople’s methodology, the delivered and invoiced ARR is to be reduced with this churned amount, which has not been done by the company in some cases. This correction has a negative impact of DKK 6.5m based on the ARR in Q2 2023 (from DKK 52.9m to DKK 46.4m).

The company also faces lower conversion of framework agreements to delivered and invoiced ARR in Q4 2023 than expected before, as the renegotiating of the partner framework contracts into new prepaid platform licenses takes longer than planned. This implies that this expected ARR is to a larger extent moved into 2024. MapsPeople comments that this delay has a negative ARR impact of DKK 9-13m by the end of 2023 compared to its earlier guidance.

Additionally, MapsPeople is facing a renewal negotiation of a large customer contract related to its acquisition of Point Inside’s assets in May 2023. If this is not concluded by the end of 2023, this will have a negative ARR impact of DKK 3.5m. MapsPeople expects that its ARR will be at the lower end of its new ARR guidance range if not renewed, and at the upper end of its new ARR guidance range if renewed before the end of 2023. However, MapsPeople has protected itself from such an event, implying that MapsPeople will claw back 50% of the purchase price of Point Inside’s assets according to the contract, equalling 1,570,101 MapsPeople shares. This is currently held in Escrow until clarity of renewal of all the customer contracts acquired from Point Inside in May 2023.

MapsPeople also comments that the realized ARR is DKK 51.4m at the end of Q3 2023, and the management continues to see the market growing and the demand improving despite the adjustments.

Read the full announcement here: https://view.news.eu.nasdaq.com/view?id=ba2b8f1936e64aebe0fb69430703387a4&lang=sv&src=listed

MapsPeople will announce its Q3 2023 report on Tuesday, 14 November. The next day, 15 November at 12:00, the company’s management will present the Q3 2023 results and the recent news including today’s ARR downgrade. Sign up for the event here where you can ask your questions now: https://www.inderes.dk/videos/mapspeople-presentation-of-q3-2023

HC Andersen Capital receives payment from MapsPeople for a Corporate Visibility/Digital IR subscription agreement. /Kasper Lihn 20:52, 10 November 2023.

MapsPeople is a Software-as-a-Service (SaaS) company focusing on digital mapping for indoor navigation. The two primary revenue streams are 1) MapsIndoors which is MapsPeople’s own developed mapping solution for indoor navigation 2) Google Maps partnership with Google. MapsIndoors is the key segment with high double-digit growth rates, and the Google Maps segment is expected to be a more steady business going forward. MapsPeople has a global presence with offices in Denmark, Germany, Singapore and United States, and customers include some of the largest brands in the world. The company has been listed at Nasdaq First North Premier in Denmark since June 2021.