Eroad Limited · NZX:ERD
Eroad — H1 FY22 Earnings Presentation
42 slides from Eroad's earnings presentation, Nov 26, 2021
Slide 1: EROAD Financial Results H1 FY22
EROAD Safer and more sustainable roads EROAD (NZX: ERD ASX: ERD) FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2021 (H1 FY22) 26 NOVEMBER 2021
Slide 2: Important Information
IMPORTANT INFORMATION The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any recommendation. Nothing in this presentation constitutes legal, financial, tax or other advice This presentation may contain projections or for
Slide 3: Agenda
AGENDA 4-5 6-12 13-25 26-34 35 HIGHLIGHTS OPERATING FINANCIAL GROWTH FY22 UPDATE UPDATE OPPORTUNITIES OUTLOOK 03
Slide 4: Significant progress accelerating growth strategies
48.0 12.6 92.9 $ $ $ Significant m m m progress REVENUE REPORTED EBITDA AMRR accelerating up $2.2m from H1 FY21 includes $2.0m compared to $88.4m at FY21 growth strategies (which included non-recurring of transaction and and FCI increased $7.2m revenue of $1.6m) integration costs from FY21 to $149.1
Slide 5: Focusing on what is important to our stakeholders
10 538 99.9 Focusing on what is > OVER % % important REDUCTION IN CUSTOMERS RENEWED INDUSTRY LEADING to our SPEEDING FREQUENCY THEIR EROAD PLAN UPTIME stakeholders by 31% of vehicles once they installed Clarity Dashcam (representing 16,481 units) reflecting the quality of EROAD’s product and demonst
Slide 6: Operational Update
OPERATIONAL UPDATE Steven Newman Chief Executive Officer 06
Slide 7: 5% growth in H1 FY22 despite challenging macro-economic conditions
150,000 TOTAL CONTRACTED UNITS 132,703 5% growth in H1 FY22 despite ANZ 126,203 5,072 Australia North America 122,193 2,874 challenging 120,000 New Zealand 2,373 116,488 2,120 macro-economic 108,4142 1,513 96,106 33,9923 conditions 90,000 86,240 35,437 35,294 34,002 • Contracted units continued to g
Slide 8: Growth through Retention and Account Upgrades
Growth through Retention and Account Upgrades despite uncertainty for our customers 94.1 ASSET ⁴ % 538 CUSTOMERS RENEWED ⁵ $ 149.1 FUTURE CONTRACTED m 472 CUSTOMERS UPGRADED ⁶ 296 CUSTOMERS ADDED ⁷ RETENTION RATE THEIR EROAD PLAN INCOME THEIR EROAD PLAN ADDITIONAL PRODUCTS AND SERVICES TO THEIR PLAN
Slide 9: Growth through account expansion
Growth through account expansion EROAD CLARITY EROAD CLARITY PHILLIPS EROAD DAY EROAD EROAD DASHCAM SOLO CONNECT LOGBOOK INSPECT WHERE Dual facing dashcam. Integration Stand alone dashcam Advanced trailer and Simplifies fatigue management by Makes vehicle inspections easy, Affordable of dashcam with E
Slide 10: New Zealand remains a significant growth opportunity
New Zealand remains CHALLENGING MACRO-ECONOMIC a significant growth opportunity ENVIROMENT • COVID-19 lock-down restrictions in Q2 pushed some sales into H2 and caused some supply chain issues 7 97.3 360 CONTINUED EXECUTION OF STRATEGY % % • Grew contracted units by 5,747 to 93,639 reflecting the ro
Slide 11: North America increasing the addressable market
CHALLENGING North America increasing MACRO-ECONOMIC ENVIROMENT the addressable market • Lagging COVID-19 related impacts of driver shortages, loss of underlying contracts and broader macro-economic concerns CONTINUED EXECUTION 33,992 86.5 172 OF STRATEGY ⁹ • 306 net additional units added (gross sal
Slide 12: Building the brand in Australia
CHALLENGING Building the brand MACRO-ECONOMIC ENVIROMENT in Australia • COVID-19 lock-down restrictions in Q2 caused delay in installations due to access to worksites and supply chain issues (0.6) CONTINUED EXECUTION 2,198 OF STRATEGY $ • Largest Australian Enterprise customer the Ventia AU roll-out
Slide 13: H1 FY22 Financial Results
H1 FY22 FINANCIAL RESULTS Alex Ball Chief Financial Officer 13
Slide 14: Solid financial performance reflecting acceleration of growth strategies
Solid financial performance reflecting acceleration of growth strategies REVENUE EBITDA PROFIT/(LOSS) FREE REPORTED NORMALISED14 REPORTED NORMALISED14 BEFORE TAX CASH FLOWS +5% +9% -18% +7% 60.0 60.0 20.0 20.0 $ $ 48.0m 48.0m $ $ $ 45.8m 45.8m $ 44.2m 45.8m $ $ 15.2m $15.3m 15.4m $ $ 15.2m 15.4m $ $
Slide 15: Statement of Income (NZ$m)
Statement of Income (NZ$m) • Revenue increased 5% to $48.0m, reflecting growth in contracted units offset by the reduction in other revenue. H1 FY21 benefited Movement from the forgiveness of a COVID-19 government H1 FY22 vs support loan in North America of $1.6m, YEAR ENDED H1 FY22 H2 FY21 H1 FY21
Slide 16: EBITDA down reflecting integration and transaction costs for Coretex acquisition
EBITDA down reflecting integration and transaction costs for Coretex acquisition NEW ZEALAND Continued growth into existing customer fleets, attracting new customers and continued high asset retention resulted in a 19% increase in EBITDA to $22.0m Movement NORTH AMERICA H1 FY22 vs ($m) North America
Slide 17: Monitoring Performance: Leading Growth Indicators
Monitoring Performance LEADING GROWTH INDICATORS ANNUALISED MONTHLY FUTURE CONTRACTED RESEARCH AND DEVELOPMENT RECURRING REVENUE ($m) INCOME ($m) AS % OF REVENUE 100.0 200.0 30 92.9 28 88.4 84.0 84.8 80.0 75.8 149.1 23 140.0 141.9 22 150.0 134.4 21 130.9 20 20 60.0 17 100.0 14 13 40.0 11 11 10 9 9 8
Slide 18: Monitoring Performance: Enterprise Value from Existing Customer Base
Monitoring Performance ENTERPRISE VALUE FROM EXISTING CUSTOMER BASE ARPU ASSET RETENTION RATE 58.38 $58.80 58.30 95.2% 95.3% 60 $57.60 $ $ $57.64 100 94.9% 94.9% 94.1%16 50 80 40 60 30 40 20 20 10 H1 FY20 H2 FY20 H1 FY21 H2 FY21 H1 FY22 H1 FY20 H2 FY20 H1 FY21 H2 FY21 H1 FY22 - - Monthly SaaS ARPU d
Slide 19: Monitoring Performance: Profitability
Monitoring Performance PROFITABILITY COST TO ACQUIRE CUSTOMERS COST TO ACQUIRE COST TO SERVICE AND SUPPORT (CAC) AS % OF REVENUE PER UNIT (CTS) AS % OF REVENUE 25 $1,750 6 5.6 $1,536 22 $1,500 4.7 4.9 5 20 4.4 4.4 17 17 $1,250 $1,202 16 4 $1,026 15 14 13 13 13 $1,000 11 3 10 $947 10 $750 2 5 $500 5
Slide 20: Operating Expenses
Operating Expenses Increased Decreased Total $40.0m 2.0 35.4 $35.0m 0.6 0.0 0.2 0.4 0.0 2.4 0.0 (0.6) 30.5 (0.1) $30.0m $25.0m $20.0m Other Employment Sub-Contractors Legal Other Professional Fees Other Sales and Marketing Personnel Software and Systems Integration and Transaction SaaS Platform $15.
Slide 21: Additions to Property, Plant and Equipment and Intangible Assets
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT PROPERTY PLANT & EQUIPMENT Total Hardware Hardware Asset • PPE spend up $7.7m due to hardware purchases PPE Additions*($m) Asset Additions ($m) Additions excluding to support a combination of new units, release Inventory Management ($m) 10.00 9.4 8.9 of das
Slide 22: Increased investment in R&D
Increased investment in R&D TO SUPPORT NEW PRODUCT DELIVERY IN FY23 AND FY24 RESEARCH AND DEVELOPMENT ($m) MOVEMENT IN INTANGIBLES ($m) 15 60 11.8 13.3 52.4 12.0 45.3 (4.7) 2.8 10 9.3 4.0 40 8.2 7.4 4.2 3.2 2.8 10.5 5 20 8.0 5.0 4.6 5.1 - - H1 FY20 H2 FY20 H1 FY21 H2 FY21 H1 FY22 FY21 Additions Amor
Slide 23: Free Cash Flow Analysis by Segment
Free Cash Flow Analysis by Segment 25.0 22.0 2.9 $13.8m investing 20.0 (2.1) (0.9) 0.1 - for growth (1.4) (0.7) - (2.0) (0.3) (0.6) and scalability 15.0 (0.7) (0.1) (0.4) 10.9 10.0 (4.9) 5.0 - (11.9) (5.0) (10.0) (10.5) (1.3) (0.5) (15.0) (1.3) (1.2) (15.8) (20.0) Group Free Cash Flows H1 FY22 Other
Slide 24: Cash flow statement (NZ$m)
Cash flow statement (NZ$m) • Operating cash flows have reduced by $4.5m reflecting the increased spending related to the Coretex acquisition along with an increase in receivables and prepayments Movement • Investing cash out flows grew from H1 FY22 vs Year ended $9.7m (H1 FY21) to $25.6m reflecting
Slide 25: Balance sheet (NZ$m)
Balance sheet (NZ$m) • Cash has increased by $62.2m as a result of the capital raise during July • PPE has increased primarily as a result of investment in inventory given the current global AS AT PERIOD END H1 FY22 FY21 Movement supply chain pressures and delays Cash 119.3 57.1 62.2 • The increase
Slide 26: Growth Opportunity and Outlook
GROWTH OPPORTUNITY AND OUTLOOK Steven Newman Chief Executive Officer 26
Slide 27: We choose to grow and have significantly accelerated our growth strategy
We choose to grow and have significantly accelerated our growth strategy ORGANIC GROWTH ACQUISITION Executed 11 launches of new products or enhancements in H1 FY22 Coretex acquisition expected to complete 1 December 2021 accelerates growth • launched Clarity Solo in October increasing the addressabl
Slide 28: Expanding EROAD's Video telematics portfolio
Expanding EROAD’s Video telematics 4,141 OVER 10% portfolio CLARITY DASHCAM UNITS SOLD REDUCTION IN SPEEDING FREQUENCY since sales begun in March 2021 by 31% of vehicles once they installed • With low video telematics penetration across all Clarity Dashcam markets, focus on expanding and improving v
Slide 29: Strategic partnership with Seeing Machines increases addressable market
90% Strategic partnership SEEING MACHINES IS INDUSTRY OVER with Seeing Machines LEADER IN VISION- REDUCTION IN BASED MONITORING increases addressable FATIGUE RELATED DRIVING EVENTS TECHNOLOGY THAT market with in-cab alerts reducing fatigue by >60% and 24/7 monitoring ENABLE MACHINES TO • Entered str
Slide 30: Strategic partnership with Philips Connect increasing North America addressable market
Strategic partnership with Philips Connect increasing North America addressable market • Entered Philips Connect strategic partnership in June 2021 and have added 666 Philips Connect Solutions in PHILIPS CONNECT DEVICES, SENSORS AND REPORTING H1 FY22 • Phillips Connect solutions help customers locat
Slide 31: The Transformational Acquisition of Coretex
Building a safer, The Transformational greener and more Acquisition of Coretex productive world Products that COMPLETION IN EFFECT ON 1 DECEMBER 2021 optimise safety and fuel consumption, reduce wastage and Increased contamination Addressable Market Refrigerated transport Construction Less than
Slide 32: Combined regulatory telematics and vertical expertise creates advanced market fit
EROAD’s broadly adopted regulatory telematics solutions combined with Coretex’s extensive vertical telematics expertise and products creates an advanced market fit IN-VEHICLE HARDWARE SOLUTIONS ALL VEHICLES ALL ASSETS ONE PLATFORM for end to end visibility Camera options Ehubo2 Driver’s tablet Drive
Slide 33: Coretex's operating update for H1 FY22
Coretex’s operating update for H1 FY22 • Contracted units grew by 4% reflecting growth in North America • increased units in North America by 3,321 with an additional 4,144 of closed sales not yet shipped 30 September 2021 31 March 2021 • stable units in Australia with growth anticipated with the la
Slide 34: Integration Planning
Successful integration of Coretex key to maximising synergies June 2021 September 2021 December 2021 March 2022 June 2022 September 2022 Unification of Systems, Strategy Structures & Brand Stabilise & Enterprise Major Theme Refresh Minimise Risk Customer Focus Integration Planning Quick Wins Platfor
Slide 35: FY22 outlook
FY22 outlook EROAD STAND-ALONE GUIDANCE On 21 October EROAD announced it expects stand-alone FY22 revenue growth of 10-13% and Normalised EBITDA margin (prior to integration and transaction costs) to be at or around the levels of FY21 Good growth in both Australia and New Zealand, with some anticipa
Slide 36: Questions & Answers
QUESTIONS & ANSWERS 36
Slide 37: Appendix
APPENDIX 37
Slide 38: Reconciliation of Profit to movement in cash
Reconciliation of Profit to movement in cash YEAR ENDED H1 FY22 H1 FY21 Profit/(Loss) after tax for the year attributable to the shareholders (2.9) 1.0 Add/(less) non-cash items Tax asset recognised 1.2 (0.3) Depreciation and amortisation 13.1 12.9 Other non-cash expenses/(income) (0.8) (0.5) Add/(l
Slide 39: ARPU reconciliation of local currency to NZ$
ARPU reconciliation of local currency to NZ$ NZ$ Local$ H1 FY22 H1 FY21 H1 FY22 H1 FY21 New Zealand ARPU NZ$56.78 NZ$55.36 NZ$56.78 NZ$55.36 North America ARPU NZ$62.77 NZ$67.30 US$44.42 US$43.07 Australian ARPU NZ$31.72 NZ$35.12 AU$29.86 AU$32.79 39
Slide 40: R&D Investment
6% 72% R&D Investment 3% New to World CUSTOMER FACING Learning/Future • R&D is critical in developing new products 9% Reliability, and services to retain customers, open up the addressable market, grow connected vehicles and grow average SaaS monthly Availability, revenue per unit Serviceability and
Slide 41: Glossary
• ANNUALISED MONTHLY RECURRING • EBITDA MARGIN is a non-GAAP measure • NORMALISED EBITDA excludes one-off REVENUE (AMRR) is a non-GAAP measure representing EBITDA divided by Revenue. items including the COVID-19 grant in H1 FY21 Glossary representing monthly Recurring Revenue for ($1.6m) and the tra
Slide 42: For further information please contact
For further information please contact: GLOBAL HEAD OFFICE NORTH AMERICAN AUSTRALIA Alex Ball, Chief Financial Officer AND ANZ HEADQUARTERS HEAD OFFICE Level 36, Tower 2, Collins Square [email protected] 260 Oteha Valley Road, Albany 7618 SW Mohawk Street 727 Collins Street, Docklands Auckland, Ne