Urbanimmersive (UI.v) is Turning up the Heat
By: Lindsay Leeds
Tags: Investors, Stocks, Stock Market Tips, Investment, Investing

Introduction

Holding by holding I am forcing myself to justify my investment. Urbanimmersive is a large holding for me. Trading on the TSXV, Urbanimmersive last traded at $0.125 CAD. When I started writing this article three days ago, it was at $0.095 CAD. In the US some brokers allow you to buy and sell this stock using the OTC ticker UBMRF.

What Does Urbanimmersive Do?

Urbanimmersive is a platform to allow real estate photographers to much more easily produce 3D tours, dedicated property websites and floor plans in just hours using relatively inexpensive equipment. The customer is the real estate photographer or a group of real estate photographers. Urbanimmersive achieves this by ingesting the raw digital data and processing it in their data center. Additionally Urbanimmersive sells a CRM package to allow photographers to schedule their appointments and bill clients. They have a full suite to be the only software a real estate photographer needs to run their business.

What is the Story

Urbanimmersive is finally reaping the results of digesting a large acquisition, Tourbuzz, and launching a new generation of 3D tours that generates floorplans and allows consumption on mobile phones. After a somewhat lackluster year of growth in 2019, growth in 2020 is taking off. Covid 19 has boosted 3D tours somewhat, making them more popular as buyers want to shop for a home without leaving the house.

Revenue is Growing and Growth is Accelerating

Growth of gross merchant volume (GMV) has been strong since July 2020, and is now picking up steam. November 2020 GMV was up 54% over November 2019 GMV. December 2020 GMV has already topped December 2019 GM in the first 14 days of the month. GMV will have a correlation towards revenue, but it isn’t a 1–1 direct correlation. December 2020 may turn out to be 100% higher than last year.

Beating the Competition

Urbanimmersive has a solution that allows $500 to $1500 Ricoh cameras to be used instead of the $5000 cameras needed by their competition. Additionally their competitors need 2.5 hours to produce the 3D tour that Urbanimmersive can produce in 1.0 hours. Urbanimmersive estimates it is costing them 1/8th of the processing dollars to produce 3D tours on Urbanimmersive’s proprietary software platform.

Low Cost Lowering Barrier of Entry

Urbanimmersive has cheaper cameras, faster processing, and now a phone app, “UI Capture”, that makes it dead easy for photographers to produce high quality tours every time they shoot, regardless of lighting conditions and to some extent the skill level of the photographer. By driving down the cost and required skill of producing 3D tours, Urbanimmersive will expand their own market.

Growing the Company

In 2018 Urbanimmersive acquired Tourbuzz. Tourbuzz has 5,000 photographers using their platform. Urbanimmersive is just now starting to cross-market their 3D tours to Tourbuzz customers. I believe they have been waiting this long because their wanted to really polish their 3D tour product before pushing it. Additionally Urbanimmersive claims they can acquire new photographers with a lifetime value of $40 with about $12 of marketing, another avenue to grow.

Additional Markets

Real estate is not the only market 3D tours can be valuable for. Urbanimmersive is also entering the resort and hotel market where every room can be toured by a prospective guest wanting to book it. They have snagged a few large jobs in this space and this may turn out to be a big market. Additionally because their technology does not need infrared or lasers, it is now being used on crime scenes, even outdoors, to record exactly what was where and how far apart objects are. This is an additional market that is untapped. There is also some market for 3D tours of restaurants and stores.

Valuing the Future

Recently at an online investor event, Urbanimmersive gave a ballpark guidance for $6M CAD revenue and $1.5M CAD EBITDA for 2021. Putting a reasonable 15X multiplier on $1.5M EBITDA gives us a valuation of $22.5M CAD. Divide that by a fully diluted share count of 122M (options and warrants converted and exercised), and we get a valuation of $0.184 CAD. That gives a reasonable upside to today’s $0.125. But I believe this guidance to be possibly very conservative.

Gross Margins Will Go Up

Since future growth will largely come from the high margin parts of the business, revenue growth will have a big impact on net income. 3D tours have a 97% gross margin and floor plans a 65% gross margin. This part of the business should grow faster than the hardware sales part of the business which is only 30% gross margins.

Explosive Growth Possible

As the cost of entry level cameras comes down and the newly launched Urbanimmersive camera app allows more entry level photographers to produce tours, the market will expand. The market has been growing steadily, but this may be the inflection point where 3D tours become standard on every home sale and floor plans become standard as well. Additionally the consistent quality tours enabled by the “UI Capture” phone app may allow Urbanimmersive to be used by Airbnb or Zillow at scale.

Summary

Urbanimmersive is undervalued with a potential for the valuation to rapidly expand as the growth rate of the company justifies a higher multiple times EBITDA. Additionally the top line will grow solidly and may start to grow explosively. The company is executing well and may have reached an inflection point where they are ready to dominate their market.

Check out https://www.urbanimmersive.com for more details. This interview by Smallcap Discoveries is well worth watching as well.