Increasing Digitization Will Fuel Global Geospatial Integration

Key Takeaways

• Explosive SaaS adoption, U.S. expansion, and regulatory tailwinds position 1Spatial for sustained recurring revenue growth and significant margin uplift well above consensus expectations.
  
• Partnerships with major integrators could rapidly scale platform adoption, increasing stickiness and unlocking substantial new opportunities in data governance and digital infrastructure projects worldwide.
  
• The combination of open-source competition, complex regulations, market delays, high R&D costs, and strong rivals threatens 1Spatial's long-term revenue growth and profitability.

Catalysts

Engages in the development and distribution of software solutions with associated consultancy and support in the United Kingdom, Ireland, Rest of Europe, the United States, and Australia.

• While analyst consensus believes high-margin SaaS revenue streams like 1Streetworks and NG9-1-1 can steadily increase recurring revenue and net margins, these catalysts are likely understated-SaaS revenue for 1Spatial grew 400% this year alone, indicating recurring revenues and margin expansion could be transformationally higher as SaaS adoption accelerates and market penetration compounds over the next 3–5 years. This rapid compounding SaaS growth will have an outsized impact on both top-line growth and cash generation.
  
• Analysts broadly agree that U.S. market expansion and contract wins in more states could drive revenue, but the company's commentary shows that U.S. penetration remains tiny, with TAM far beyond the current footprint. 1Spatial's emerging telco and utilities opportunities and the land-and-expand dynamics within both state governments and large enterprises suggest U.S. recurring revenue, ARR, and ultimately earnings growth could exceed consensus forecasts by a wide margin as adoption ramps up.
  
• The accelerating need for validated geospatial data due to the global digitization of infrastructure, utilities, and smart cities is likely to structurally expand the addressable market for 1Spatial's patented platform, driving sustained revenue hypergrowth well beyond initial SaaS uptick and supporting long-term premium pricing and net margin uplift.
  
• Increasing regulatory and legislative pressure for data quality and geospatial compliance in both Europe and the U.S., including mandates like the National Underground Asset Register in the UK and FCC requirements for telcos, provides a durable pipeline of high-value contracts with multiyear visibility, directly supporting growth in recurring revenue and long-term margin stability.
  
• Near-term partnerships with global system integrators like Accenture, Deloitte, and prime contractors-explicitly referenced as a strategy-could scale 1Spatial's technology into large digital twin and data governance projects globally, introducing step-change upside to revenue, recurring license fees, and establishing platform stickiness across multiple industries and regions.

1Spatial Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on 1Spatial compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming 1Spatial's revenue will grow by 9.0% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 0.5% today to 14.9% in 3 years time.
• The bullish analysts expect earnings to reach £6.4 million (and earnings per share of £0.06) by about July 2028, up from £167.0 thousand 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 31.3x on those 2028 earnings, down from 316.8x today. This future PE is greater than the current PE for the GB IT industry at 19.9x.
• Analysts expect the number of shares outstanding to grow by 0.11% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.02%, as per the Simply Wall St company report.

1Spatial Future Earnings Per Share Growth

Risks

• The rapid adoption of open-source geospatial data tools could undercut the demand for 1Spatial's proprietary and paid solutions, posing a structural risk to long-term revenue growth and potentially diminishing the company's ability to expand recurring revenue streams.
  
• Increasing regulatory pressure on data privacy and localization, especially as 1Spatial scales its solutions across multiple geographies, could stifle growth in cross-border contracts and slow expansion in lucrative international sectors, impacting long-term revenue generation.
  
• Sustained delays and uncertainty within the U.S. market, where 1Spatial remains relatively small, combined with macroeconomic headwinds and government procurement volatility, create risks of revenue shortfall and hinder progress toward global market share growth.
  
• Consistently high development and R&D costs required to keep pace with rapid AI-driven and cloud-native technology changes may suppress net margins if recurring revenue growth does not accelerate as projected, potentially weakening profitability.
  
• The presence of larger technology competitors and industry consolidation increases the competitive pressure, which may lead to price competition and margin compression, placing downward pressure on both gross margins and overall earnings.

Valuation

• The assumed bullish price target for 1Spatial is £1.4, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of 1Spatial'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 £1.4, and the most bearish reporting a price target of just £0.75.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be £43.2 million, earnings will come to £6.4 million, and it would be trading on a PE ratio of 31.3x, assuming you use a discount rate of 9.0%.
• Given the current share price of £0.48, the bullish analyst price target of £1.4 is 66.1% 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.