Fleet management technology specialist, EROAD, has released its financial results for the year ended 31 March 2020.
EROAD reported a revenue increase of 32 per cent to $81.2 million NZD (approx. 76.2 million AUD) with strong contributions from the New Zealand and North American markets.
The company's EBITDA margin increased from 25 per cent to 33 per cent, reflecting improved operating leverage.
EROAD also reported profit before tax of $1.4 million NZD (approx. $1.3 million AUD), up from a loss of $5.1 million (approx. $4.8 million) in the prior year.
Total Contracted Units saw growth of 21 per cent and 6.0 per cent in Average SaaS Monthly Revenue per Unit showing continued execution against strategy while asset retention was high at 95 per cent.
EROAD remains in a strong financial position and continues to focus on anticipated organic and inorganic growth.
“EROAD delivered an EBITDA margin of 33 per cent and a Profit before tax of $1.4 million [NZD] demonstrating our increasing scale and improving operating leverage," said EROAD CEO, Steven Newman.
"The quality of our products, the continued investment in research development and the quality of our customer service is reflected in strong growth in contracted units of 21 per cent, loyal customers with a 95 per cent asset retention rate and a rise in Average SaaS Monthly Revenue per Unit of 6.0 per cent.”
The New Zealand business delivered a strong performance, demonstrating continuing growth potential. Revenue increased by 21 per cent to $53.4 million NZD (approx. $41 million AUD) from $44.2 million NZD (approx. $41.4 million AUD) and EBITDA increased by 25 per cent to $34.9 million NZD (approx. $32.7 million AUD) from $27.9 million NZD (approx. $26.1 million AUD) in the comparable period.
The New Zealand business ended the year with 80,366 units, adding 10,256 contracted units during the year, to achieve an annual growth rate of 15 per cent through expansion into existing customer fleets, combined with a solid underlying new customer run rate.
Meanwhile, strong enterprise sales growth in the North American market resulted in a significant increase in revenue of 62 per cent to $24.8m NZD (Approx. $23.2 million AUD) from $15.3 million NZD (approx. $14.3 million AUD) and delivered an EBITDA increase to $7.5 million NZD (approx. $7.0 million AUD) from $0.4 million NZD.
The North American business added 9,342 contracted units, to deliver a growth rate of 38 per cent, reflecting the on-boarding of two enterprise customers in the first half of the year. Work is reportedly underway to improve the small-to-medium businesses run-rate, with a number of planned product and service launches expected to help build the growth momentum in this segment over the next year.
The Australian business is a relatively new market for EROAD. While the company is continuing to build brand presence, a promising enterprise pipeline is already evident. During the year the Australian business added 784 contracted units, reflecting growth in the small-to-medium business segment, to deliver growth of 59 per cent. This growth rate is expected to accelerate in FY21 through the Enterprise customer segment. Revenue remained relatively flat at $0.7 million NZD from $0.6 million NZD, while EBITDA was $(1.3) million NZD, as EROAD continued to invest in sales and marketing activity in this new market to support future growth.
EROAD invested $15.6 million NZD (approx. $14.6 million AUD) or 19 per cent of revenue in research and development, in line with expectations. As a result, the company launched seven new SaaS products and enhancements including the innovative asset tracking system EROAD Where. The company also invested $6.9m to implement new business systems that have enabled it to scale up to deliver future growth while also ensuring that EROAD’s operating efficiency can support its growth ambitions.
EROAD’s global business continuity plan has ensured the company has been able to operate effectively throughout the period of disruption caused by COVID-19. During this time, EROAD’s employees, products and services have continued to support the supply chain and business activities of our customers. Many of EROAD’s customers provide essential services that kept the New Zealand, North American and Australian economies running, despite the operating restrictions implemented to stop the spread of COVID-19.
Despite economic uncertainty across all our markets, EROAD remains well positioned for FY21 reflecting its strong customer value proposition, future contracted income and diverse customer base across regions, business size and industry. While uncertainty results in longer sales lead-times EROAD remains confident in continued unit growth across all three markets, albeit it is likely to be lower than delivered in FY20 and previously anticipated for FY21. EROAD continues to monitor economic conditions and their impact on debtor collectability and asset retention rates. EROAD will continue to focus on growing Monthly SaaS Average Revenue per Unit and investing to improve operating leverage.
EROAD’s Board remains confident and ambitious about the company’s future prospects. EROAD’s cashflow, combined with the recently announced refinancing will be deployed to support organic growth opportunities. EROAD remains committed to seeking growth opportunities to deliver its long-term strategy. Any medium to large opportunities, including acquisitions, will be equity funded.
In October 2019 EROAD announced it was considering seeking an ASX Foreign Exempt Listing, in addition to its NZX listing, to facilitate greater access to capital, and provide alignment with the company’s business operations and investor base. The Board is still evaluating this opportunity, in light of the evolving COVID-19 situation, and will provide an update during the second quarter of this financial year.
“We are living in unprecedented times, and a great many things have changed throughout the world," said EROAD Chairman, Graham Stuart.
"However, our passion and energy for solving our customers’ problems and the growth opportunities that presents, remain the same," he said. "With the investment we continue to make in our markets, services and people, we are well placed to support sustained future growth.”
Last year, EROAD received a major international award.