Fleet management and transport technology software company EROAD (ASX: ERD) has signed on its largest Australasian customer. Though EROAD kept the customer’s name under wraps, it did divulge the details.
EROAD has secured the contract for a minimum of 5,000 units for the customer’s Australian fleet and an additional renewal for 6,000 units for its New Zealand fleet. The contract is for three years, with an option for the customer to extend for two more years. EROAD anticipates this account will grow further over time.
EROAD is a fully integrated technology, tolling and services provider based in Auckland, New Zealand. It implemented a GNSS/cellular-based road charging solution across the country.
In FY24, the Company reported a positive free cash flow of $1.3 million, an improvement from the negative $29.9 million in FY23. Its revenue rose to $182 million in FY24, up from $174.9 million in FY23. This marks a 10.1% increase against normalised revenue for the previous year, adjusting for a one-off acquisition accounting adjustment of $9.6 million related to the Coretex merger.
EBIT for FY24 was $0.8 million, down from $1.7 million in FY23. However, normalised EBIT increased to $4.4 million, compared to a loss of $4.5 million in the previous fiscal year.
Co-CEO’s Mark Heine and David Kenneson said, “It’s been a year of disciplined delivery. Last year, we made a commitment that we would return the focus of EROAD to our customers, remove non-essential costs, and put the foundations in place to take advantage of growth opportunities, including in our largest market in North America.”
In FY23, EROAD reduced its headcount and overhead expenses and accelerated its 3G replacement program in FY24. By mid-year, the Company plans to introduce new products and a refreshed go-to-market strategy.
Over the past financial year, its customer retention of contracted units stood at 94.8%, remaining flat on FY23. It saw some key customer expansions, including staffing and facility management company Programmed in Australia, construction company Boral, and software company SkyBitz in Australia, Kinetic in New Zealand (owner of NZ Bus), and US Foods in North America. 68% of new enterprise units were expansions from existing customers.
EROAD has now reached 250,000 units globally, enhancing its operating scale.
For FY25, EROAD has projected revenue of $190 million to $195 million and EBIT of $5 million to $10 million, normalised for the 4G hardware upgrade program. The Company also expects to be free cash flow positive in FY25.
EROAD plans to grow its North American customer base through dedicated sales teams and expand in New Zealand by leveraging brand recognition. It noted that some proposed government policies for electronic road user charges (eRUC) present medium—to long-term opportunities.
Over the next three to five years, EROAD will capitalise on sales and product improvements, aiming to grow its enterprise customer base and expand its product suite in Australia. The Australasian contract further cements its strategy.
Alinda is a Business Reporter for The Sentiment
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