EROAD has delivered continued growth across its markets with an additional 2726 contracted units sold for the three months to March 31 including the signing of new enterprise customers Toll NZ and Ventia.
The transportation technology services company operates in New Zealand, Australia and North America. The quarterly result includes 1054 MyEROAD Clarity Dashcam units sold for the period and an asset retention rate above 95%.
In New Zealand, the company’s growth was 2295 units for the quarter, driven by approximately equal growth in new and existing customers.
The quarter included EROAD securing Toll New Zealand as a large enterprise customer. The business, which delivers freight forwarding, end-to-end transport services and comprehensive logistics solutions to customers has chosen EROAD as its regulatory partner in New Zealand.
The contract includes almost 1000 units across their heavy vehicle, light vehicle and trailer fleet. So far, the company has installed EROAD into over 500 of their vehicles.
Toll New Zealand are also utilising several EROAD SaaS (Software as a Service) services, including inspect, logbook and the maintenance module.
New unit sales “continued to be challenging” in the first half of Q4 in North America, due to the impacts of COVID-19 lockdowns, with only 182 additional units sold during the quarter, the company says.
However, it reports encouraging signs in the latter half of Q4 with the North America economy starting to open up again, “bolstered by the increase in government support and rollout of vaccination programme with workers beginning to return to their workplaces across the region”.
EROAD currently has two enterprise customer prospects in pilot for its Ehubo delivered services (around 1500 units) as well as a range of further pilots for dashcam units with existing and new customers.
Growth in Australia in the small and medium customer segment continued at the same run-rate as the previous quarters. EROAD signed its largest Australian enterprise customer Ventia, contracting approximately 2500 Ehubo 2 units in Australia and 1500 units in New Zealand to be installed through-out the 2021 calendar year. This win almost doubles the size of EROAD’s Australian installed unit base.
Growth strategies
The company’s MyEROAD Clarity Dashcam was launched in October 2020 and it began marketing, selling and dispatching the product in March this year.
“As expected, high demand was seen in North America as our customers looked to reduce their insurance premiums from demonstrating their vehicle safety,” it says.
The company says it expects the sales run rate to continue for the product following the 1054 units already sold for the quarter.
Over the last six months, EROAD has more than doubled its Day Logbook subscriptions in New Zealand, selling an additional 3376 subscriptions, taking the total number to 6407 subscriptions at March 31, 2021.
FY21 and FY22 guidance
EROAD says it remains confident with its FY21 and FY22 guidance provided in the November 26 half year results.
For the second half of the financial year, EROAD continues to anticipate a small increase in revenue compared to the first half.
EBITDA is anticipated to be similar to the first half’s figure, adjusted for one-off items, reflecting the acceleration of product development and increased sales and marketing costs associated with the launches of key products, it says.
For FY22, the company anticipates that the percentage revenue growth in FY22 will strengthen, but not be at the level experienced in FY20.
In New Zealand, it expects similar growth to the last four years. In North America, targeting an increased addressable market through improved product market fit, to deliver increased unit growth. In Australia, growth during the next two years will come predominantly from an enterprise pipeline of 15-20,000 vehicles, it says.
The company says it continues to accelerate new product delivery for future growth in FY23 and FY24, and anticipates spending 24-27% of revenue on R&D during FY22.
However, it anticipates EBITDA margin to be maintained but improving at the end of FY22, to provide further increased EBITDA margin.
It notes that the first half increase in doubtful debt provision of $900,000 relating to the impact of COVID-19 is not considered to be a one-off and likely to recur in H2 FY21 to some extent.
