EROAD has grown revenue by 13% to $91.6 million for its full year result to March 31 and says it expects to capture significant market growth ahead.
The transportation technology services company grew earnings before interest, tax, depreciation and amortisation (EBITDA) by 13% to 30.7m and net profit up 93% to $2m. Contracted units grew by 9,715.
EROAD chief executive Steven Newman says the company grew across all its markets in a year that “presented challenging macro-economic conditions”.
“In addition, we accelerated our growth strategies to take better advantage of opportunities that have emerged from the challenges of the last twelve months.
“EROAD is now stronger than ever before, better positioned to capture the increasing growth opportunities in telematics” he says.
EROAD chair Graham Stuart says the company “recognised that this was the time to be bold and to prepare to take best advantage of growth opportunities when macro-economic conditions improved”.
“For EROAD this meant increasing and accelerating its investment in its platform and products.
“The ASX listing and simultaneous $53m capital raise in September 2020 ensured we had the upfront funding to be able to begin this acceleration.
“We achieved what we set out to do. EROAD is now stronger than ever and ready to grow – and grow quickly,” Stuart says.
The company invested a total $21.3m for the year in research and development, representing around 23% of revenue. It says the research and development spend has been accelerated and it expects this will grow to around 24-27% of revenue in FY22 to be able to capitalise on growth opportunity.
New Zealand
New Zealand revenue increased 12% year-on-year to $59.8m. EBITDA was $38.8m, up 11% from $34.9m reflecting both increased contracted units as well as sales of add-on SaaS products.
The growth of 7,526 contracted units reflects further extension into fleets of existing customers, as well as new customers in construction and civil engineering, freight and road transport, services and trades.
During Q3, EROAD secured a large enterprise customer, Toll New Zealand. EROAD will install almost 1000 units and EROAD SaaS products, across their heavy vehicle, light vehicle and trailer fleet.
North America
Revenue for North America increased 19% to $30.6m and EBITDA increased year-on-year from $7.5m to $10m.
“North America, has been the most challenging of EROAD’s markets during COVID-19 due to the impacts of lengthy lockdowns, wildfires, civil unrest and politics,” the company says.
“New sales were significantly challenged with customers working from home and focused on maintaining their businesses as opposed to looking at making changes.
“While EROAD grew in North America, adding 1,435 units during the year representing growth of 4%, it was significantly less than the prior year.
“It is encouraging to see signs that the North America economy is opening up again, bolstered by the increase in government support and rollout of vaccination programme with workers beginning to return to their workplaces across the region.
“Reflecting this, EROAD currently has two enterprise customer prospects in pilot for its Ehubo delivered services (approx. 1500 units) as well as a solid mix of mid-market pilots either launched or beginning soon. There are also further pilots for Clarity Dashcam with existing and new customers,” the company says.
Australia
Revenue for the Australian business was $1.4m, compared to $700,000 for the same period a year prior.
EBITDA for the Australia region was $900,000 compared to $1.3m in the year prior.
Despite restrictive lockdowns in the first half of the year, the company added 754 contracted units in the period, with the majority of the units being added in H2.
The growth predominately came from new small-to-medium size customers in freight and road transport, construction and civil engineering, services and trades, the company says.
“During the year, we were focused on securing some large enterprise opportunities within our Australian pipeline,” it says.
EROAD announced at the beginning of April 2021 that it had signed its largest Australian enterprise customer, Ventia.
The contract almost doubles the size of EROAD’s Australian presence and it is still working a short to medium term enterprise sales pipeline of around 15-20,000 connected vehicles, it says.
Accelerating growth strategies
EROAD says it is very well positioned to capture “significant and growing opportunity” with enterprise customers in North America and Australia as uncertainty is beginning to recede.
Following the launch of Clarity Dashcam in October 2020, EROAD began marketing, selling and dispatching the product in March 2021.
It says high demand was seen in North America as EROAD customers looked for safety solutions to deal with challenges associated with increasing insurance premiums.
For the month of March 2021, EROAD sold a total of 1054 EROAD Clarity Dashcams and this run-rate is expected to continue at a group level, as North America continues to return to normality after COVID-19 lockdowns and further momentum is built within the New Zealand and Australian markets.
The EROAD Day Logbook product has seen “great success” with some 6407 drivers now using the product, including 515 subscriptions to customers who do not currently have EROAD hardware installed.
Global telematics poised for significant growth
EROAD says the global telematics industry is estimated to grow to US$750b by 2030.
As countries around the world look to solve their transportation problems and as companies look to solve their operational problems, the demand for telematics and EROAD’s products grows, it says.
“EROAD customers are going through a digital transformation and therefore they are increasingly looking for solutions that give visibility, data and insights to manage their fleets more productively track and manage mobile and remote assets and as well as help with their ESG reporting requirements.
“As governments look to solve transportation problems, regulatory telematics solutions in
particular are forecast to be a significant growth driver forcing telematics adoption over the next 5+ years. Declining transportation revenues (as cars become more fuel efficient and EV uptake increases) and continued growth in road congestion will accelerate moves to road pricing globally.
“EROAD is focused on world leading regulatory telematics solutions and is therefore well
positioned to take advantage of this trend.
“EROAD’s cash flow, combined with the recent $53m capital raise and banking facilities puts the company in a strong position to pursue strategic growth opportunities. EROAD continues to consider inorganic growth opportunities that will provide customer base and product capabilities to differentiate EROAD further,” the company says.
