$17M of contracts for delivery in 2011
Sub-$100k
customers increase by 70% to over 1100
$52.8M asset
impairment charge in 2010
DENVER — (BUSINESS WIRE) — March 3, 2011 — Intermap Technologies Corporation (TSX: IMP) (“Intermap” or the “Company”) today reported financial results for the fourth quarter and year ended December 31, 2010. A conference call will be held today, March 3rd, at 4:30 p.m. Eastern Standard Time to discuss the results.
All amounts in this news release are in United States dollars unless otherwise noted.
New management has refocused sales and marketing functions, with products repositioned in certain markets. Intermap experienced a difficult year with four quarters of lower-than-expected revenues, resulting in management changes and a corporate reorganization that included significant reductions in personnel and operating costs.
“Intermap suffered much larger operating losses than was originally anticipated in 2010,” said Todd Oseth, president and CEO of Intermap. “Even with these large losses, net cash used in operations in 2010 was $8.2 million, significantly lower than the operating net loss for the year, thanks to the one-time sale of assets in the fourth quarter. We are now better positioned for 2011 having significantly cut operating expenses by more than $17 million annually, restructured the size of the overall organization to coincide with revenue expectations, and refocused the efforts of the Company. Several new contracts received in the fourth quarter of 2010, combined with prior contracts in process at year end, are valued at $17 million, the majority of which is deliverable in 2011."
An asset impairment review was performed at year end to determine if the carrying value of the NEXTMap USA and NEXTMap Europe datasets were recoverable. Based on current sales experience, the Company determined that the current fair value of the datasets was insufficient to recover the carrying value of the assets, resulting in an asset impairment charge of $52.8 million. This extraordinary loss was recorded in the fourth quarter. The impairment was driven by several factors, including the booked value of the asset exceeding the market capitalization of the Company and historical cash flows from the database not being supportive of previously forecasted long-term future cash flows.
As a result of the recent corporate reorganization, the new sales-oriented leadership at Intermap, led by incoming president and CEO, Todd Oseth, is transitioning from a primarily direct sales strategy to an expanded indirect sales approach using channel partners and cloud-based web services. Intermap’s direct sale model, which focuses primarily on large customer wins, suffered in 2009 and 2010; however, the Company’s NEXTMap recurring revenue model continued to gain traction during this period. The fastest growth segment for the Company was the broader sub-one hundred thousand dollar customer space, which grew in the number of customer sales by 70% in 2010 over 2009. This large segment, which includes telecommunications and corporate / government GIS customers, has increased in the number of customer sales at a cumulative annual growth rate of 56% for the past four years. The Company has grown this segment to more than 1,110 customer sales, contributing $2.7 million of revenue for the year. In addition, the Company believes it has reasonable near-term visibility to meaningful sales opportunities during 2011 for telecommunications applications in North America, as well as additional mapping services contracts in Asia. Management has refocused the Company’s sales force and believes that the value of the data lies in application solutions for specific vertical markets, and not solely in the data as a standalone product.
Intermap will support this trend through new product development, improved marketing programs, and expanded pricing plans. New product offerings for this segment will provide a growing catalog of data layer options, including the integration of third-party data. Improved marketing plans include new channel partner strategies, a cloud-based web services model, and improved recognition of the Company’s branding and capabilities.
“This approach is expected to address thousands of new corporate / government GIS customer groups. With new channel partners, we believe we have the ability to address the unique requirements of dramatically more customers than the prior direct sales strategy that was primarily used,” said Mr. Oseth. “We’re optimistic that we can drive significant customer growth through this revised sales strategy in the future.”
Financial Review
For the year ended December 31, 2010, Intermap reported total revenue of $13.9 million, a 54% decrease from $30.3 million in 2009. During the fourth quarter of 2010, Intermap announced three significant contracts, and as of December 31, 2010, there remained $17.0 million in revenue from existing contracts to be recognized in future periods: $12.9 million in contract services and $4.1 million in NEXTMap’s multi-client data library (“MCDL”) license contracts.
Contract services revenue for the year ended December 31, 2010 decreased
to $4.3 million from $20.1 million for the same period in 2009. The
decrease was primarily the result of a reduction in revenue from mapping
projects in Southeast Asia where the Company had $16.5 million in
revenue during 2009, compared to $1.0 million in 2010. The remaining
contract services revenue for 2010 related primarily to a mapping
project in the United States totaling $2.1 million.
