Flood Insurance Expansion And Government Contracts Will Drive Powerful Long Term Upside

Catalysts

About Intermap Technologies

Intermap Technologies provides high precision global 3D geospatial data, software and AI driven analytics for government, insurance and other commercial customers.

What are the underlying business or industry changes driving this perspective?

• Growing reliance by global insurers and reinsurers on high resolution 3D data, patented flood models and the IRAS platform, together with usage that can spike during climate events, positions Intermap to deepen subscription based relationships and potentially support higher software and analytics revenue and more resilient margins over time.
• The expansion of private flood insurance, with the U.S. private flood market already above US$1b in premium while the national flood insurance program retrenches, creates a larger addressable pool of risk where Intermap’s tools help carriers price and manage underwriting. This can support recurring software and solutions revenue and associated earnings contribution.
• Long duration, high ceiling U.S. government contract vehicles, including two NOAA related IDIQ awards, each with US$250m combined ceilings, provide recurring opportunities to bid for work that can fill the project pipeline and, if converted into task orders, may support revenue scale and help absorb fixed costs, with potential benefits for adjusted EBITDA margins.
• Company owned AI driven processing pipelines, GPU based capacity and a global archive of underwriting grade 3D vector data create a data and technology asset that can be reused across new insurance, transportation, telecom and government programs. This can support operating leverage, net margin efficiency and cash flow as volume builds.
• Improved balance sheet strength, with working capital of US$23m, shareholder equity of US$27.2m and removal of the going concern qualification, provides the financial flexibility to pursue larger World Bank backed and multi continent government tenders. This can support future contract visibility, revenue scale and earnings stability.

Assumptions

This narrative explores a more optimistic perspective on Intermap Technologies compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Intermap Technologies's revenue will grow by 71.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -11.6% today to 35.3% in 3 years time.
• The bullish analysts expect earnings to reach $29.2 million (and earnings per share of $1.13) by about January 2029, up from $-1.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 13.5x on those 2029 earnings, up from -53.6x today. This future PE is lower than the current PE for the CA Software industry at 48.4x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.94%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Revenue is heavily exposed to the timing of large government contracts such as Indonesia and U.S. federal programs, as shown by quarterly revenue of US$1.7 million compared to US$5 million a year earlier. Delays, cancellations or extended shutdowns could leave fixed costs underutilized and weigh on revenue and adjusted EBITDA margins.
• The bullish view assumes sustained contract wins and renewals across insurance, government and commercial users. However, management explicitly highlights uncertainty around future contract awards, revenue recognition timing and subscription renewals. If tenders or SaaS renewals fall short, this would directly pressure recurring revenue and earnings.
• The company is investing heavily in AI, processing capacity, aircraft and sensor kits to ramp for larger programs, while adjusted EBITDA was a loss of US$1 million and net income was a loss of US$1.5 million in the quarter. If expected scale does not materialize, higher operating costs could persist and keep net margins and cash generation under strain.
• Intermap positions itself as a global provider across insurance, transportation, telecom and multi domain GEOINT. However, building and maintaining global teams, permits and FX hedging across Southeast Asia, Europe, North America and other regions adds ongoing complexity and cost, and any operational missteps or FX swings could reduce earnings and weaken operating cash flow.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Intermap Technologies is CA$5.01, which represents up to two standard deviations above the consensus price target of CA$4.01. This valuation is based on what can be assumed as the expectations of Intermap Technologies's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$5.01, and the most bearish reporting a price target of just CA$3.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $82.8 million, earnings will come to $29.2 million, and it would be trading on a PE ratio of 13.5x, assuming you use a discount rate of 7.9%.
  
• Given the current share price of CA$1.96, the analyst price target of CA$5.01 is 60.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.