The Nearmap Ltd (ASX: NEA) share price has dropped 10% after the lawsuit of a rival.
Why it’s in the news today
The aerial imaging business said it was made aware on the morning of 5 May 2021 of a complaint against its US subsidiary, Nearmap US, in the United States District Court (District of Utah, Northern Division).
The complaint alleges patent infringement relating to the plaintiffs’ roof-estimation technology. The allegations do not affect Nearmap’s core proprietary technology and do not affect the surveying of imagery or the delivery of premium content. Nearmap re-iterated that the business remains unaffected.
It has been filed on behalf of Eagle View Technologies and Pictometry International. The plaintiffs are seeking unspecified monetary damages and the prevention of alleged further infringements in relation to the plaintiffs’ roof-estimated technology.
Nearmap CEO and Managing Director Dr Rob Newman said: “Nearmap has always taken the subject of intellectual property rights and patent protections seriously and believes the allegations are without merit. We will vigorously defend against the complaint. The business remains unaffected by the complaint.”
Why did the Nearmap share price rise 14.5% yesterday?
You wouldn’t think that a lawsuit would result in a large share price increase. It was actually an update for FY21 that led to the investor excitement.
It announced an increase to its FY21 annual contract value (ACV) guidance to between $128 million to $132 million, up from a range of $120 million to $128 million.
Nearmap said that it has seen momentum continue with growth across its core industry verticals from both new and existing customers. Management said this further reinforces the attractiveness of the company’s subscription business model, the benefits of the company’s technology leadership position and the differentiated customer offering which combine to give Nearmap a significant competitive advantage.
The ASX tech share said that it remains on track to deliver on its 20% to 40% ACV growth targets from FY22 onwards.
Summary thoughts on the Nearmap share price
Nearmap is an interesting business that seems to have a lot of growth potential. I’m not sure how big the opportunity is, or how profitable Nearmap can be. So I’m happy just to watch from the sidelines. We’ll have to wait and see how this plays out in court.
There are other ASX growth shares that I understand better, so I’m more attracted to those ideas.
