EROAD has posted a net loss of $2.9 million for its first half 2022 financial year result and says it’s entering a “transitional period” for the next phase of growth particularly in the Australian and US markets.
The result was down from a $1m net profit in the same period last year relating to the six months ended September 30.
Revenue increased $2.2m to $48m reflecting growth in units, dashcams and additional add-on subscriptions sold to customers.
Over the period, contracted units grew by 5% to 132,703 reflecting continued growth in both New Zealand and Australia.
The transportation technology services company also continued to see increased momentum selling add-on hardware or SaaS subscription products with over 296 customers adding a product or service to their existing plan, representing 7341 Dashcam Clarity, Inspect, Logbook or Bookit subscriptions added.
Monthly SaaS average revenue per unit (ARPU) was $57.64 reflecting additional products and services sold.
Its asset retention rate remained high at 94.1%. Operating expenditure increased from $30.5m to $35.4m. This increase includes $2m of transaction and integration costs relating to the Coretex acquisition.
“EROAD’s financial result reflects both the continued investment in our growth strategies as well as the resilience of our business model in continued challenging macro-economic conditions,” chief executive Steven Newman says.
“Sales momentum is expected to increase with the easing of COVID-19 impacts, the launch of the next generation platform and hardware, the release of Clarity Solo, and the Coretex acquisition.”
Chair Graham Stuart says the company is now “positioned for the next phase of growth as we look to build our business in the North American and Australian telematics markets”.
Growth strategy
Since March 2021, EROAD has released a series of enhancements and new products including EROAD Analyst, EROAD Bookit, EROAD Messaging and EROAD Where Mini Tags.
In October, EROAD expanded its video telematics offering with the launch of Clarity Solo Dashcam (with no in-cab requirement for a pre-installed EHUBO unit).
Clarity Solo is an integrated dashcam and telematics device which expands the company’s addressable market into a wider range of fleets (e.g. US light commercial vehicles), without the need to also install an EHUBO, and it can also be installed alongside other telematics providers. With the low penetration of video telematics across North American transportation fleets, this significantly increases EROAD’s addressable market, the company says.
EROAD entered into a strategic partnership with Philips Connect in June this year which provides customers a single view of all of their assets, including trailers. It sold 666 Philips Connect solutions in H1 FY22.
EROAD has also entered into a partnership with Seeing Machines, an industry leader in vision-based monitoring technology, that enable machines to see, understand, and assist people.
In July 2021, EROAD entered into a conditional agreement to acquire Coretex. The acquisition is expected to accelerate key growth metrics by two years enabling EROAD to capture significant growth opportunity in North America and Australia.
The acquisition has now received 100% shareholder approval, and both Overseas Investment Office and NZ Commerce Commission approvals and is expected to be completed by December 1, 2021.
It is anticipated that the two businesses will be largely integrated in approximately 12-18 months. The initial focus will be on North America and promoting the Coretex 360 platform and CoreHub hardware solution as EROAD’s next generation product within weeks of completion to enable sales momentum to increase in that market.
Outlook
EROAD says is faces “continued challenging macro-economic conditions” particularly in North America.
It expects stand-alone FY22 revenue growth to be between 10% and 13%, and continues to expect normalised EBITDA margin to be at or around the levels delivered in FY21.
“While good growth is still being experienced in both Australia and New Zealand, some anticipated growth has been deferred to either later in FY22 or into early FY23 due to COVID-19 lock-down restrictions delaying piloting activity, installation roll-outs and lengthening sales lead-times.
“North America continues to experience ongoing impacts of COVID-19 and its associated economic challenges, in particular significant driver shortages and supply chain issues impacting mid-market customers. As a result, growth to date has been below EROAD’s expectations.
“With the easing of COVID-19 restrictions and their impacts, the launch of EROAD’s next generation Android platform and hardware, the release of Clarity Solo in October, and the completion of the Coretex acquisition, EROAD expects increased sales momentum in FY23,” the company says.
