Transportation technology company EROAD has reported improved free cash flow of $6.2 million for the six months ended September 30, up from $0.1 million in the prior period, as enterprise customer rollouts and price increases drove performance.
The NZX/ASX-listed company says revenue climbed 3.3% to $99.1 million, driven by 6.7% growth in Australia and New Zealand offsetting a 1.5% decline in North America. Subscription revenue, excluding non-recurring hardware and service revenue, grew 5.4%.
However, EROAD reported a net loss of $144.2 million compared to a $1.5 million loss in the prior period, primarily due to a $134.7 million non-cash impairment of North American assets.
EBIT declined to negative $133.9 million from $2.4 million previously. When adjusted for the impairment, normalised EBIT fell to $2.5 million from $4.7 million due to lower capitalisation of research and development and accelerated amortisation following a large customer termination in North America.
Major Australian contract win
The company secured a significant Australian enterprise customer win with Cleanaway, providing a comprehensive vehicle monitoring solution to over 3,000 heavy vehicles. The deal adds over A$5 million of annualised recurring revenue, rolling out over the next 12 months.
Annualised recurring revenue increased $11.4 million (6.9%) to $178.1 million, reflecting growth in Australia and New Zealand offset by decline in North America and favourable foreign exchange rates.
Asset retention remained high at 92.0% across all markets, with New Zealand at 92.1%, Australia at 95.5% and North America at 91.0%.
4G upgrade nearing completion
EROAD has substantially completed its 4G hardware upgrade programme, with 87% of units in Australia and New Zealand now 4G compatible as at September 30, increasing to 89.2% by early November.
A further $2.5–$4.5 million is expected to be spent in the second half to complete the programme. When normalised for the temporary impact of the 4G upgrade, free cash flow was $16.7 million.
Executive chair John Scott says the company is positioned to shape the industry.
“Our success ultimately comes down to people — customers, partners, and our team — and a shared belief that when you get those things right, everything else follows. Few companies get to shape an industry twice. EROAD is one of them, and we intend to make it count.”
Focus on ANZ markets
Chief executive Mark Heine says the company will maintain financial discipline while progressing to its next growth phase.
“We’ll keep focusing on what we control: generating cash, delivering for customers, and directing investment where it creates the most value. The opportunity in front of us is significant, and the team is ready to make the most of it,” Heine says.
The 3G network shutdown in New Zealand, scheduled for completion in December 2025, will release additional cash capacity and simplify operations. The company has increased investment in customer operations to improve the end-to-end experience.
Heine says new investment will be directed to markets where opportunity and conversion are strongest — primarily Australia and New Zealand.
“These are regions where we already have strong product market fit, credibility, and policy momentum. Governments in both countries are moving toward usage-based and time-of-use charging, and EROAD is uniquely positioned to help them get there,” he says.
Electronic charging opportunity
The shift toward electronic and usage-based charging represents a significant infrastructure transition, with New Zealand’s plan to move all vehicles onto electronic road user charges creating a multi-year opportunity that builds on EROAD’s existing capability.
Australia is signalling similar intent, and EROAD has previously worked with partners at state and federal levels to help shape practical solutions.
“These programmes will require proven technology, data integrity and regulatory experience at scale, and no one has deeper, more proven experience in electronic road charging than EROAD,” Heine says.
Guidance maintained
EROAD maintained its revised FY26 guidance communicated in October, supported by the enterprise win in Australia and New Zealand, price increases and continued growth in core markets:
- Revenue guidance of $197–$203 million
- Annualised recurring revenue guidance of $175–$183 million
- Free cash flow margin of 5–8%, normalised for the 4G hardware upgrade programme
The company maintains strong liquidity of $62.3 million with a $70 million credit facility limit against $7.7 million of net debt.
Governance changes
To support its strategy, EROAD has appointed John Scott as executive chair, with the board appointing David Green as lead independent director and establishing an Executive Oversight Committee of independent directors.
From December 1, half of each director’s after-tax fees will be applied to on-market purchase of EROAD shares quarterly, further aligning directors with shareholders.
