Eroad Limited · NZX:ERD
Eroad — H1 FY25 Earnings Presentation
44 slides from Eroad's earnings presentation, Nov 25, 2024
Slide 1: EROAD Financial Results H1 FY25
EROAD (NZX: ERD ASX: ERD) Financial Results For the 6 months ended 30 September 2024 (H1 FY25) 25 November 2024 1
Slide 2: Important Information
Important Information The information in this presentation is of a general nature and does not Non-GAAP Measures constitute financial product advice, investment advice or any EROAD has presented certain non-GAAP financial measures as part of its recommendation. Nothing in this presentation constitut
Slide 3: Agenda
Agenda Result Overview Operational Overview & Key Metrics Geographic Financial 4G Hardware Upgrade Program EROAD Strategy Strategic Priorities Partnerships New Products Light Vehicle eRUC Opportunity Outlook & FY25 Guidance 3
Slide 4: Delivering intelligence you can trust for a better world tomorrow
OUR PURPOSE: Delivering intelligence you can trust for a better world tomorrow QUALITY FOOD STRONG FOUNDATIONS CONNECTIVITY SUSTAINABLE FUTURES Trusted by the companies who keep society moving 4
Slide 5: H1 FY25 Results Overview
01 HI FY25 Results Overview 5 PAGE 5
Slide 6: H1 FY25 Financial Results
H1 FY25 Financial Results On track to meet financial guidance on all key measures Reported Revenue Reported EBIT Free Cash Flow $95.9m $2.4m $0.1m +8% H1 FY24 $0.1m H1 FY24(1) ($0.2m) H1 FY24 of $88.9m ARR(2) ARPC Asset Retention $177.9m $17.8k 92.8% +8% constant currency (Average Revenue Per 94.2%
Slide 7: Building Momentum for Growth
Building Momentum for Growth Positive results affirm FY25 guidance SOLID FOUNDATIONS CONSISTENT EXECUTION OF STRATEGY Delivering core business Drive customer expansion Pathway to growth • On track to deliver FY25 financial • Continued focus on existing customers • Partnership with Geotab in New guid
Slide 8: Strategic Priorities for Sustainable Growth
Strategic Priorities for Sustainable Growth Build a scalable, customer-centered platform driving sustainable ARR growth across global markets. Ecosystem Product Expansion & Customer-Centric Data-Driven Insights Partnerships for Interoperability Sales Strategy and AI Innovations Market Reach Drive mu
Slide 9: Customer Mix
Customer Mix Weighting to Enterprise segment an opportunity to expand with our customers 10% average organic growth in US Large Enterprise customers • EROAD’s largest 195 customers compared to HY1 FY24 account for 54% of revenue. • These enterprise customers represent potential for product $490k NZ
Slide 10: ARR Expansion via Product Adoption
ARR(1) Expansion via Product Adoption The value in offering an all-in-one platform modelled on illustrative fleet of 100 US trucks In-Cab ARR(1) Opportunity Trailer & Load ARR Opportunity Whole Fleet Within the truck, driver & $359k manager segments add-ons Higher product increase potential ARR (1)
Slide 11: New Zealand H1 FY25
New Zealand H1 FY25 New Zealand Strong cash generative market with a focus on multi-product adoption HIGHER VALUE Generated $25.3m of free cash flow(2) $49.8m $13.8k 94.1% FCF increased 15.5% YoY, ARPU NZ NZ increased 2.2% Revenue 11.4% ARPC Asset Retention Rate CUSTOMER LOYALTY 4G Hardware Upgrade
Slide 12: North America H1 FY25
North America H1 FY25 North America Solid foundations for enterprise growth and customer expansion ENTERPRISE SALES CYCLES Moved to pilot across several enterprise accounts NZ $39.6m NZ $29k 92.2% RENEWALS AND EXPANSIONS 2.6% Focused on securing renewals and Revenue ARPC Asset Retention product expa
Slide 13: Australia H1 FY25
Australia H1 FY25 Australia Strong growth with momentum building in enterprise TRANS TASMAN ENTERPRISE Expansion of ~5k units from existing $25k 88.2% NZ enterprise customer not NZ $6.5m NZ reflected in revenue and partially in unit sales count with ~70% still to come Revenue 16.1% ARPC Asset Retent
Slide 14: H1 FY25 Financials
H1 FY25 Financials Medline The largest owned transportation fleet of any healthcare product distributor in the U.S. 1,900+ fleet. Recently signed a renewal for a 41 month term at a 6% increase in ARPU. 14
Slide 15: Revenue & EBIT
Revenue & EBIT Financial results on-track for guidance, demonstrating our commitment to deliver on our promises Reported Revenue Reported Operating Costs Reported EBIT $95.9m $88.9m $66.7m $63.3m SaaS SaaS $83.5m $89.7m $2.4m $0.1m (1) H1 FY24 H1 FY25 H1 FY24 H1 FY25 H1 FY24 H1 FY25 Hardware Fee Oth
Slide 16: Operating Costs
Operating Costs Cost-out program to deliver cost base for profitable growth Operating cost as a % of revenue Operating costs as a % of revenue have continued to decline 50% 45% H1 FY24 H1 FY25 40% 82% 35% 75% 30% 71% 70% 25% 69% 20% 15% 10% 5% 0% H1 FY23 H2 FY23 H1 FY24 H2 FY24 H1 FY25 Operating cos
Slide 17: Operational Efficiency
Operational Efficiency Management focus on gaining efficiency across all cost measures Cost to acquire customers Cost to service & support Variable and fixed costs as a % of revenue as a % of revenue as a % of revenue 71% 69% 12% 11% 11% 30% 27% 5.9% 41% 42% 6.4% 6.4% H1 FY24 H2 FY24 H1 FY25 H1 FY24
Slide 18: Research & Development
Research & Development R&D % of revenue being held firm as re-focusing initiatives drive ROI and speed to market R&D as % of revenue NZ$m 50.0 30% 25% • Total R&D spend of $16.5m 40.0 in H1 FY25, 17% of revenue. 19% 20% • Compares to $14.7m, or 17% 30.0 17% 17% of revenue, in H1 FY24. 15% • Forecast
Slide 19: Cash Flow Trend
Cash Flow Trend Cash flow continues to improve through execution Positive free cash flow to the firm trajectory Average monthly cash burn continues to reduce H1 FY22 H2 FY22 H1 FY23 H2 FY23 H1 FY24 H2 FY24 H1 FY25 $0.9m1 1.5 0.1 -0.2 $0.5m -8.2 -14.6 -21.7 -30.5 H1 FY24 H1 FY25 Reported free cash fl
Slide 20: Normalised Free Cash Flow Growth
Normalised Free Cash Flow Growth Building a profitable business with strong fundamentals STRONG FCF GENERATING Normalised for the CAPACITY temporary impact of the 4G upgrade program EROAD’S core operations generated $14m of normalised free cash flow over the last 12 months NZ$m $15.0 This represents
Slide 21: 4G Hardware Upgrade Program ANZ
4G Hardware Upgrade Program ANZ Unit replacement program progressing to plan and on budget, 67% of all units in ANZ already 4G compatible UPGRADES TO ANZ NETWORK Rollout progress • One NZ announced it would further postpone shutdown of the 3G network to December 2025. Key dates PROGRAM COSTS Units s
Slide 22: Strategy Update
02 Strategy Update Clarity Edge Camera Pictured is the AI enabled Clarity Edge dashcam which is now in general release. 22
Slide 23: Data Rich Fleet Operations Platform
Data Rich Fleet Operations Platform DATA COLLECTED EROAD PLATFORM VIDEO FORMS DRIVER APPS TRACKING ROUTING WORKFLOWS COMPLIANCE & HEALTH & SAFETY PRODUCTIVITY SUSTAINABILITY INTEGRATIONS ASSURANCE • Road user charges • Driver coaching • Trip routing • EV support • Partner • Fuel tax • Vehicle health
Slide 24: Strategic Priorities for Sustainable Growth
Strategic Priorities for Sustainable Growth Build a scalable, customer-centered platform driving sustainable ARR growth across global markets. Product Suite Expansion & Customer-Centric Sales Ecosystem Partnerships for Data-Driven Insights and AI Priority Interoperability Strategy Market Reach Innov
Slide 25: Partnerships: Geotab
Partnerships: Geotab Introducing a simple, low-cost light commercial solution to the platform with EROAD Locate OPPORTUNITY EROAD has partnered with Geotab to introduce EROAD Locate - a new low-cost device for light commercial vehicles for ANZ. 4.8m BENEFITS By leveraging the hardware from Geotab, w
Slide 26: Light Vehicle eRUC Opportunity
Light Vehicle eRUC Opportunity Growth potential across light vehicles where eRUC adoption is low Annual RUC collected by NZ Government June 2024 $2.15b LIGHT COMMERCIAL OPPORTUNITY: • 91% of Road User Charges for light vehicles are not collected via eRUC $822m 86% $1.32b 9% • EROAD Locate via Geotab
Slide 27: Clarity Edge: AI powered real-time safety
Clarity Edge: AI powered real-time safety AI enhanced video detection with real-time voice coaching Real impact for real drivers. Our new Clarity Edge cameras combine AI and voice coaching to create safer fleets through real-time driver Overspeed Distracted Yawning Failure to Cellphone instances dri
Slide 28: Trends & Guidance
03 Trends & Guidance 28
Slide 29: Key Metrics Trend
Key Metrics Trend Focused execution delivers results against refreshed strategy On track for Free Cash Flow1 positive fiscal year 2025 Implementation of refreshed strategy provides pathway to sustainable, profitable growth Goal Metric FY23 FY24 H1 FY25 FY26 Targets Strategy Grow customer base in-lin
Slide 30: Guidance
Guidance On track to delivering a path to sustainable, profitable growth H1 FY25 results affirm year-end financial guidance Half-year FY25 results together with recent renewals, expansions and rollout of previously announced new customer contracts support achievement of FY25 FY25 Guidance financial
Slide 31: Appendix
04 Appendix 31
Slide 32: Statement of Income
Statement of Income NZ$m H1 FY25 H1 FY24(1) Change ($) Revenue 95.9 88.9 7.0 Operating expenses (66.7) (63.3) (3.4) Reported Revenue increased $7.0m primarily Earnings before interest, taxation, depreciation 29.2 25.6 3.6 due to unit growth of approximately 11,000 and amortisation units since 30 Sep
Slide 33: Cash Flow Statement
Cash Flow Statement NZ$m H1 FY25 H1 FY24 Change ($) Cash received from customers 96.1 88.5 7.6 Payments to suppliers and employees (71.4) (58.4) (13.0) Investment in contract fulfilment assets (5.1) (5.6) (0.5) Operating Cash Flow decreased $3.4m Net interest (2.2) (3.8) (1.6) primarily due to a red
Slide 34: Balance Sheet
Balance Sheet NZ$m H1 FY25 FY24(1) Change ($) Cash 11.3 14.5 (3.2) Restricted bank accounts 25.1 17.8 7.3 Cash decreased slightly by $3.2m primarily Costs to acquire and contract fulfilment costs 9.7 8.2 1.5 reflecting financing costs and lease liabilities. Other 32.5 33.2 (0.7) Property, plant and
Slide 35: Liquidity
Liquidity Strong balance sheet for strategic execution Bank Facilities Sufficient liquidity to fund strategic plan Secured new 3-year $80m bank facility in $80m October 2023 in conjunction with capital raise. Bank Facility Amortisation will reduce the facility limit to $60m at end of the 3-year comm
Slide 36: ARPU Trend
ARPU Trend NZ$ Local $ NZ$m H1 FY25 H1 FY24 H1 FY25 H1 FY24 North American ARPU NZ$59.49 NZ$60.23 US$36.18 US$36.85 New Zealand ARPU NZ$59.47 NZ$58.17 NZ$59.47 NZ$58.17 Australian ARPU NZ$48.13 NZ$46.67 A$44.05 A$43.16 36
Slide 37: Unit count
Unit count 250,890 253,930 242,884 227,149 217,519 208,697 106,494 106,860 New Zealand 103,393 95,058 Australia 90,596 87,682 North America 132,703 19,613 21,391 18,008 122,193 126,203 116,488 15,636 14,643 33,992 14,099 108,414 35,437 96,106 35,294 34,002 86,240 5,072 31,227 2,874 24,660 2,373 77,6
Slide 38: Free Cash Flow to the Firm By Region
Free Cash Flow to the Firm By Region Inflows Outflows Total NEW ZEALAND NORTH AMERICA AUSTRALIA CORPORATE & DEVELOPMENT $25.3m $6.9m $(2.5)m $(36.0)m H&A Assets - Hardware & Accessory Assets • CA Assets - Customer Acquisition Assets • CE EBITDA – Corporate and Elimination EBITDA • H&A under Construc
Slide 39: R&D Investments for Growth
R&D Investments for Growth Strategic R&D allocations across retention and growth areas globally • Ongoing maintenance spend in platforms and systems for existing customers for retention. 49% 42% New Zealand • Targeted investment in Total R&D investment Includes new gen trailer new offerings increase
Slide 40: Integrated solutions overview
Integrated solutions overview EROAD provides a complete connected network that turns disparate customer data into action Compliance and assurance Health & Safety Productivity Sustainability • RUC and fuel tax compliance • Driver behaviour • GPS tracking and • Fuel management and • Electronic, automa
Slide 41: Market Opportunity
Market Opportunity Significant growth achievable through market share gain NEW ZEALAND AUSTRALIA NORTH AMERICA Cash generative geography with Opportunity to leverage leading Largest market with leading market position in New Zealand market position for significant long-term Opportunity to drive targ
Slide 42: Sustainability
Sustainability Positioned for emerging social and environmental trends Market Trend EROAD Intelligence EROAD Better World Despite increasing pressure to reduce EROAD core products already track, Layering carbon reduction targets into environmental impact, sustainability measure and control leading i
Slide 43: Glossary
Glossary ANNUAL RECURRING REVENUE (ARR) A non- COSTS TO SERVICE & SUPPORT (CTS) MONTHLY SAAS AVERAGE REVENUE PER UNIT GAAP measure representing monthly Recurring A non-GAAP measure of costs to support and service (ARPU) Revenue for the last month of the period, multiplied customers. Total CTS repres
Slide 44: ASX & NZX: ERD [email protected]
44 EROAD acknowledges the Tangata Whenua of New Zealand, the Indigenous Nations and First Peoples of Australia, and the Custodians of the lands and waterways in the United States of America where our offices are located. We express our gratitude and appreciation to these peoples for sharing their cu