Slide 1: Capital Raise Investor Presentation
For personal use only (NZX: ERD ASX: ERD) CAPITAL RAISE INVESTOR PRESENTATION 17 SEPTEMBER 2020 01
Slide 2: Disclaimer: Important Notice
DISCLAIMER IMPORTANT NOTICE The following notice and disclaimer applies to this investor presentation (Presentation) and you are therefore advised to read this disclaimer carefully before reading or making any other use of this Presentation or any information contained in this Presentation. By accep
Slide 3: Disclaimer: Not Investment Advice (continued)
DISCLAIMER NOT INVESTMENT ADVICE This Presentation does not constitute legal, financial, tax, financial product advice or investment advice or a recommendation by EROAD or its advisers to acquire New Shares, and has been prepared without taking into account the objectives, financial situation or nee
Slide 4: Disclaimer: Investment Risk (continued)
DISCLAIMER INVESTMENT RISK An investment in EROAD shares is subject to known and unknown risks, some of which are beyond the control of EROAD. EROAD does not guarantee any particular rate of return or the performance of EROAD. (CONTINUED) FINANCIAL DATA For personal use only All currency amounts are
Slide 5: Executive Summary
EXECUTIVE SUMMARY EROAD Limited (“EROAD”) • Steven Newman joined EROAD in 2007 and listed EROAD on the NZX in 2014 For personal use only develops and markets • Provides regulatory compliance and telematics software to heavy and light vehicle fleets in New Zealand, North America and Australia technol
Slide 6: Growing Total Contracted Units
GROWING TOTAL CONTRACTED UNITS 120,000 - 122,000F 120,000 116,488 For personal use only 2,120 108,414 1,513 100,000 96,1063 34,002 31,227 86,240 ANZ 24,660 80,000 77,600 Australia North America 20,955 New Zealand 17,757 59,538 60,000 9,736 48,041 43,430 6,102 40,000 36,953 5,301 31,298 4,501 26,031
Slide 7: Recurring SaaS Revenue Model
RECURRING SAAS EROAD DRIVEN BY RECURRING SAAS REVENUE REVENUE MODEL For personal use only SaaS Revenue 94% EROAD generates SaaS revenue through: Software as a service (SaaS) revenue represents revenue earned from • sale and rental of hardware customer contracts for the sale or rental of hardware, in
Slide 8: The Right Team for Growth
THE RIGHT OUR BOARD TEAM FOR For personal use only GROWTH GRAHAM BARRY TONY SUSAN STEVEN STUART5,6 EINSIG6 GIBSON5,6 PATERSON5,6 NEWMAN Over the last 2 years: Chairman, Independent Director Independent Director, Independent Director, Executive Director / CEO Independent Director Chairman of Chair of
Slide 9: Background Company
For personal use only BACKGROUND COMPANY 09
Slide 10: Purpose: Safer, More Productive Roads
EROAD’S PURPOSE IS EROAD CUSTOMERS REDUCED FREQUENCY SAFER, MORE For personal use only OF SPEEDING BY 56% SINCE 2015 PRODUCTIVE ROADS (8.3B KILOMETERS TRAVELLED) 25 EROAD customer speeding events (per 100km) Driver Leaderboard TM 56 SAFER IMPROVED PRODUCTIVITY 20 Driver Login TM • EROAD solutions ha
Slide 11: Every Country Is Looking to Solve the Same Transportation Issues
REGULATORY TELEMATICS For personal use only EVERY COUNTRY IS LOOKING TO SOLVE THE SAME TRANSPORTATION ISSUES HOW DO WE PAY FOR HOW DO WE HOW DO WE ENSURE HOW DO WE AND MAINTAIN IMPROVE VEHICLES ARE BEST MANAGE ROADING HEALTH AND SAFETY FIT FOR USE? DRIVER FATIGUE? INFRASTRUCTURE? ON ROADS? 11
Slide 12: To Do Great Regulatory Telematics You Need a Great Platform
TO DO GREAT SECURE, RELIABLE, ACCURATE SIMPLIFIED COMPLIANCE REGULATORY For personal use only Highly reliable network, paired with Easy to adopt and use advanced ping rates – ensuring TELEMATICS YOU visibility for every trip NEED A GREAT PLATFORM INDUSTRY-LEADING PROACTIVE 99.99%7 SERVICE UPTIME CUS
Slide 13: Platform Overview: MyEROAD
PLATFORM OVERVIEW MyEROAD provides customers with a range of real time reports and analytical reports for MyEROAD For personal use only managing their fleets and drivers efficiently and safely. USED BY DISPATCH OPERATORS, FLEET MANAGERS, MyEROAD integrates into back SAFETY OFFICERS AND OPERATIONS of
Slide 14: Platform Overview: Ehubo
PLATFORM OVERVIEW EROAD’s main hardware product is a dashboard mounted device (Ehubo) For personal use only connected to a cloud based data and analytics platform (MyEROAD) EHUBO LOGBOOK IN CAB DRIVER INTERFACE • A unified in-Cab Driver Ehubo is a regulatory approved device that Experience uses GPS
Slide 15: Why Our Customers Choose Us
WHY OUR CUSTOMERS CHOOSE US For personal use only PROACTIVE DIFFERENTIATED RELIABLE AND EASY CUSTOMER SERVICE SOLUTIONS ACCURATE TO USE ~ 95 % 99.99 8 % ASSET RETENTION RATE UPTIME # 2 / 33 9 “EROAD is one of the most dependable, durable, and accurate systems in the business. It’s easy to use, affor
Slide 16: EROAD Customers
CONTRACTED CONTRACTED CONTRACTED UNITS UNITS UNITS EROAD CUSTOMERS by region by business size by industry10 For personal use only Customer base is diverse across region, business size and industry EROAD markets and sells its products in New Zealand, 69% 63% 29% North America and Australia New Zealan
Slide 17: Operating Performance and FY21 Outlook
For personal use only OPERATING PERFORMANCE AND FY21 OUTLOOK 17
Slide 18: Delivery of Strategy Across Our Markets in FY20
DELIVERY OF STRATEGY ACROSS OUR MARKETS IN FY20 For personal use only 15 GROWTH IN UNITS % 96.1 NZ ASSET RETENTION RATE % 38GROWTH % 2 LARGE ENTERPRISE 59 GROWTH % SIGNED FIRST IN UNITS12 CUSTOMERS IN UNITS TRANS-TASMAN ONBOARDED CUSTOMER FY20: 80,366 FY19: 70,110 FY20: 34,002 FY19: 24,660 FY20: 2,1
Slide 19: FY21 Outlook
MEASURE ESTIMATED RANGE FOR H1 FY21 FY21 LOW HIGH OUTLOOK For personal use only Total contracted units 120k – 122k Continue to experience longer sales lead-times due to COVID-19, particularly in North American and Australian markets as well as Enterprise customers Remain confident of continued growt
Slide 20: Half Year Track Record
HALF YEAR TRACK RECORD For personal use only Revenue ($m) Revenue ($m) EBITDA EBITDA($m) ($m) 43.5 – 44.5F 45.0 42.7 16.0 15.2 12.0 – 14.2F 38.5 40.0 14.0 35.0 32.9 11.9 12.0 28.5 30.0 10.0 9.4 24.2 25.0 19.6 8.0 7.1 20.0 6.2 6.0 15.0 4.0 3.4 10.0 2.0 5.0 - - H1 FY18 H2 FY18 H1 FY19 H2 FY19 H1 FY20
Slide 21: Enterprise Value from Existing Customer Base
ENTERPRISE VALUE FROM EXISTING CUSTOMER BASE For personal use only Monthly SaaS Average Revenue Asset Retention Rate (%) Per Unit ($) 70 100 95.8% 95.2% 94.4% 60 $58.38 $54.32 $55.08 80 50 60 40 30 40 20 20 10 FY18 FY19 FY20 FY18 FY19 FY20 - - Monthly SaaS ARPU has been trending upwards reflecting:
Slide 22: Leading Growth Indicators
LEADING GROWTH INDICATORS Annualised Monthly Future Contracted Annualised Monthly Future Contracted For personal use only Research and Development Recurring Revenue ($m) Income ($m) Recurring Revenue ($m) Income ($m) as % of Revenue 150.0 Research and Development 150.0 as % of Revenue 100.0 100.0 13
Slide 23: Profitability Indicators
PROFITABILITY INDICATORS For personal use only Cost to Acquire Customers Cost to Service and Support as a % of Revenue as a % of Revenue 6.0 25.0 5.6 24 22 5.0 4.6 4.6 20 20.0 4.0 18 17 16 15.0 3.0 10.0 2.0 5.0 1.0 6 5 4 FY18 FY19 FY20 FY18 FY19 FY20 - - CAC Capitalised CAC Expensed CAC as a % of Re
Slide 24: Growth Strategy
For personal use only GROWTH STRATEGY 24
Slide 25: Market Drivers for Telematics Growth
MARKET DRIVERS FOR TELEMATICS GROWTH For personal use only GLOBAL TRENDS FOR TRENDS WITHIN OUR MARKETS EROAD TELEMATICS • Transportation and logistics companies face North America • EROAD is targeting a segment of c. 11,000 fleets (sized significant change and increasingly require • Almost 100% adop
Slide 26: Strategic Priorities Across Our Markets
STRATEGIC PRIORITIES ACROSS OUR MARKETS For personal use only STILL SIGNIFICANT NORTH AMERICA IS A BUILDING BRAND GROWTH OPPORTUNITIES LARGE MARKET WITH MANY IN AUSTRALIA IN NEW ZEALAND OPPORTUNITIES • Growth through retention and account • Pursue Enterprise opportunities • Pursue Enterprise opportu
Slide 27: Growth Through Retention and Account Expansion
GROWTH NEW ZEALAND CONTRACTED UNITS BY HARDWARE TRACK RECORD OF EHUBO1 CONTRACT RENEWAL UPGRADES THROUGH For personal use only RETENTION AND ACCOUNT 58% 6% 9000 EXPANSION EHUBO2 ASSET 8000 7000 • Contract renewals provide 6000 an opportunity to upgrade customers plans 5000 5,177 4000 3,600 • Custome
Slide 28: New Products Provide Additional Revenue Streams
LOGBOOK FUEL TAX CREDITS EROAD INSPECT NEW LAUNCHED Q1 FY21 PRODUCTS For personal use only PROVIDE ADDITIONAL REVENUE STREAMS Simplifies fatigue management by enabling drivers to capture work and rest hours via a Takes the hassle out of FTC calculations and claims and allows businesses to unlock FTC
Slide 29: Focused on Platform Expansion: Major Launches in FY21
Extending the platform to FOCUSED ON PLATFORM EXPANSION focus on winning medium and enterprise customers in North For personal use only MAJOR LAUNCHES IN FY21 America and Australia Increasing scalability of the platform to enable EROAD to target larger Enterprise fleets Developing Integration & Data
Slide 30: R&D Investment
R&D INVESTMENT 13% For personal use only 1% R&D is critical in developing new products and services New to World to retain customers, open up the addressable market, Learning/Future grow connected vehicles and grow average SaaS monthly revenue per unit. 71% CUSTOMER FACING Target ~60% of R&D spend o
Slide 31: Strategic Inorganic Growth Opportunities
STRATEGIC 1 Likely to be a direct competitor. This 2 It is expected most acquisitions will INORGANIC For personal use only should be a profitable business so be a mixture of customer bases that the acquisition can be partially and capabilities for leverage. May funded by debt and maximise value be e
Slide 32: Offer
For personal use only OFFER 32
Slide 33: Offer Overview
STRATEGIC RATIONALE OFFER EROAD has a significant growth and revenue opportunity as penetration of telematics continues in New Zealand, North America and Australia. Contract renewal and launches of new products and services provides opportunity to improve Monthly Average OVERVIEW Revenue per Unit (A
Slide 34: Key Dates
KEY DATES For personal use only INSTITUTIONAL SHARE PURCHASE PLACEMENT DATE PLAN DATE Placement bookbuild Thursday, Record Date Wednesday, 16 September 2020 17 September 2020 (5.00pm, NZ time) Announcement of results of Friday, Expected despatch of SPP offer Wednesday, Placement and trading halt lif
Slide 35: Appendix
For personal use only APPENDIX
Slide 36: Large and Growing Total Addressable Market in Telematics
SIGNIFICANT EROAD IS OPERATING IN A LARGE AND GROWING TOTAL ADDRESSABLE MARKET (TAM) IN TELEMATICS GROWTH AND For personal use only REVENUE 14.0m OPPORTUNITY 13.0m REMAINS 12.0m 11.0m 10m Medium Vehicles V AS PENETRATION 10.0m OF TELEMATICS 5.0m CONTINUES 4.0m IN MARKETS 3.0m 4m 2.9m Heavy Vehicles
Slide 37: Building Our Customers' Telematics Journey Together
BUILDING OUR CUSTOMERS’ TELEMATICS For personal use only A COMPELLING ROI CASE JOURNEY, TOGETHER RUC SAVINGS OF EXAMPLE OF A LARGE ENTERPRISE’S EROAD JOURNEY $ ~ 24.67 PER MONTH PER HEAVY VEHICLE FUEL SAVINGS OF APPROX. 2013 Customer saw 2014 – 2016 Expanded across 2017 Won RFP on providing full 201
Slide 38: EROAD's Income Statement Track Record
EROAD’S INCOME STATEMENT FY20 FY19 FY18 TRACK RECORD Revenue $81.2m $61.4m $43.8m For personal use only EBITDA $27.1m $15.6m $10.5m FINANCIAL EBITDA margin 33% 25% 24% PERFORMANCE TRENDS Profit/(Loss) before tax Total comprehensive Profit/(loss) before tax $1.4m $(0.3)m $(5.1)m $(6.0)m $(5.9)m $(3.7
Slide 39: Statement of Income
STATEMENT OF INCOME (NZ$m) • Revenue increased 32% from $61.4m to For personal use only YEAR ENDED FY20 FY19 Movement $81.2m and EBITDA grew $11.5m or 73% to $27.1m reflecting strong growth in Revenue 81.2 61.4 19.8 New Zealand and North America. Expenses (54.1) (45.8) (8.3) • Operating expenses gre
Slide 40: Balance Sheet
BALANCE SHEET (NZ$m) • Cash reduced by $12.7m during the For personal use only AS AT PERIOD END FY20 FY19 Movement year to fund an increase in Research & Development activities as well as Cash 3.4 16.1 (12.7) investment of $6.9m in new generation Restricted Bank Account 14.0 12.7 1.3 business system
Slide 41: Cash Flow Statement
CASH FLOW STATEMENT (NZ$m) • Operating cash flow increased strongly For personal use only YEAR ENDED FY20 FY19 Movement to $23.1m from $14.2m reflecting an increased contribution from New Cash flows from operating activities Zealand and North America. Other operating cash flows 25.8 17.0 8.8 • Inves
Slide 42: Key Risks
KEY RISKS This section describes the key risks that EROAD has identified in connection with the capital raise. EROAD considers it important that these key risks, and their potential effect on the future operating and financial performance of EROAD, and EROAD’s share price, are specifically highlight
Slide 43: Key Risks: Risks Relating to COVID-19
KEY RISKS RISKS RELATING TO COVID-19 • The ongoing spread of COVID-19, its effect on the global economy and the actions taken in response by the New Zealand and other (CONTINUED) For personal use only governments has had an impact on EROAD. Those impacts are expected to continue in FY2021 and potent
Slide 44: Key Risks: Product Development Risks
KEY RISKS PRODUCT DEVELOPMENT RISKS • The development and delivery of new products and upgrading existing products is a key driver of sales in all three of EROAD’s markets. (CONTINUED) For personal use only However, as is the nature of product development, there is always a risk that development of
Slide 45: Key Risks: Product and System Reliability Risks
KEY RISKS PRODUCT AND SYSTEM RELIABILITY RISKS • An increasing focus on enterprise customers while maintaining a strong and reliable small and medium business product offering is (CONTINUED) For personal use only another key driver of EROAD’s growth. A failure to maintain reliable products and syste
Slide 46: Key Risks: Sales Risks
KEY RISKS SALES RISKS • There is a risk that EROAD’s current or future products do not align with potential customers’ needs across different markets and (CONTINUED) For personal use only industry types. Growth in new markets may be slower than anticipated, or more costly, due to the inability to id
Slide 47: Foreign Selling Restrictions
FOREIGN This document does not constitute an offer of New Shares of EROAD in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside New Zealand except to the extent permi
Slide 48: Foreign Selling Restrictions: United Kingdom
FOREIGN UNITED KINGDOM Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the SELLING For personal use only United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets A
Slide 49: Glossary
GLOSSARY • ANNUALISED MONTHLY RECURRING • EHUBO, EHUBO2 and EHUBO 2.2 • MONTHLY SAAS AVERAGE REVENUE REVENUE (AMRR) is a non-GAAP measure EROAD’s first and second generation electronic PER UNIT (ARPU) is a non-GAAP measure representing monthly Recurring Revenue for distance recorder which replaces m