Friday 26th November 2021
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Transportation technology services company EROAD (ASX/NZX: ERD ), with its purpose of safer and more sustainable roads, today released its financial results for the first half of the 2022 financial year.
EROAD Chair Graham Stuart says: “We have always been clear, that EROAD chooses to grow through organic growth, strategic partnerships and acquisitions. In H1 FY22, we have successfully delivered across all these fronts. We are positioned for the next phase of growth as we look to build our business in the North American and Australian telematics markets.”
Revenue increased $2.2m to $48.0m reflecting growth in units, dashcams and additional add-on subscriptions sold to customers. This was partly offset by a reduction in other revenue from H1 FY21. This prior period included income from the forgiveness of a North American COVID-19 government support loan ($1.6m).
Over the period, contracted units grew by 5% to 132,703 reflecting continued good growth in both New Zealand and Australia. This was partly offset by a fall in units in North America predominantly due the loss of an enterprise customer (1,751 units) which aligned its technology with that of its acquirer. EROAD 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 7,341 Dashcam Clarity, Inspect, Logbook or Bookit subscriptions added.
EROAD’s Asset Retention Rate remained high at 94.1%, reflecting the quality of EROAD’s service and product offering. In addition, 538 customers across all markets renewed their EROAD plan (representing some 16,481 contracted units). EROAD’s Annualised Monthly Recurring Revenue metric increased to $92.8m from $88.4m at 31 March 2021. EROAD also increased Future Contracted Income from $140.0m to $149.1m reflecting the considerable number of renewals that occurred during the period, including the continuing 3G to 4G roll-out programme in North America (nearly 80% of North American units now on 4G technology.
As announced in EROAD’s Q2 operating update on 21 October 2021, with continued challenging macro-economic conditions (particularly in North America) and the Coretex acquisition expected to complete before the end of 2021, EROAD now expects stand-alone FY22 revenue growth to be between 10% and 13%, and continues to expect normalised EBITDA margin (prior to integration and transaction costs) 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 Coretex acquisition is expected to complete with effect from 1 December, therefore it is now appropriate for EROAD to withdraw its FY22 stand-alone guidance as it is no longer relevant for the combined entities.
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