Eroad Limited · NZX:ERD
Eroad — FY2024 Earnings Presentation
43 slides from Eroad's earnings presentation, May 23, 2024
Slide 1: Financial Results FY24
EROAD (NZX: ERD ASX: ERD) Financial Results For the 12 months ended 31 March 2024 (FY24) 23 May 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 Strategy Market Opportunity Delivering Growth New Zealand Transport Tax Regime Changes Outlook & FY25 Guidance 3
Slide 4: Our Purpose: Delivering intelligence you can trust
OUR PURPOSE: Delivering intelligence you can trust for a better world tomorrow Delivering Intelligence Trust Better World Tomorrow Knowing our The best people Earned trust Always taking We think customers needs, powered by through the the wider beyond today and meeting them cutting edge validity of
Slide 5: FY24 Result Overview
01 FY24 Result Overview 5 PAGE 5
Slide 6: FY24 Financial Results
FY24 FINANCIAL RESULTS Reported Revenue Reported EBIT Normalised EBIT Free Cash Flow3 Guidance $182.0m $0.8m $4.4m $1.3m Guidance met or exceeded on all measures +10.1% FY23 $1.7m FY23 Normalised2 vs FCF positive in FY25 of $165.3m1 ($4.5m) FY23 FY Highlights Revenue Up. Costs Down Future Contracted
Slide 7: Connection Growth and Normalised Revenue Growth
Normalised Connection Growth Revenue Growth North America boosted by Sysco rollout and Enterprise expansions Net New Connections ~10% YoY normalised revenue growth by Region driven by 10.5% increase in connected units and supported by favourable MILESTONE 23,741 250,000+ foreign exchange. North Amer
Slide 8: Positive Momentum Continues
Positive Momentum Continues Strong results affirm our strategic direction STRONG FOUNDATIONS CONSISTENT EXECUTION OF STRATEGY Turnaround the business Drive operational leverage Pathway to growth • FY24 guidance provided in May 2023 • FY25 guidance projects growing • CEO partnership to drive focus on
Slide 9: Operational Overview: Delivering on Strategy
Operational Overview Delivering on Strategy Driving Operational Leverage Growth Pathway Improved EBITDA North American New Zealand Price Uplift Scale Achieved margins1 Opportunity Opportunity 6% 3% 29.3% 250k units $10bn $500m+ Australia & North Up from 21.5% in FY23 Global Milestone Total Addressab
Slide 10: Operational Overview: Renewed and Expanded Enterprise
Operational Overview Value of Enterprise Delivering on Strategy Net New Enterprise Logo 4,171 • Won Programmed (3,000 for 5 Onboard new accounts Won years) in AU and show value Strategic Priority: • Michael & Sons (972) in NA Win, Retain • Renewed (4,800) Fulton Hogan NZ Renewed1 (up to 1,400) Woolw
Slide 11: Key Metrics Trend
Key Metrics Trend Focused execution delivers strong results against refreshed strategy Targeting Free Cash Flow1 positive fiscal year 2025 Implementation of refreshed strategy provides pathway to sustainable, profitable growth Goal Metric FY22 FY23 FY24 FY26 Targets Strategy Grow customer base in-li
Slide 12: New Zealand FY24
New Zealand FY24 New Zealand Strong cash generative market with a focus on multi-product adoption PRICE UPLIFT 6% price lift implemented 1 July 2023 NZ $91.8m 7,962 94.77% CUSTOMER LOYALTY Fulton Hogan renewed (4,800) 3 year Revenue 9% Net unit Asset Retention Rate term adds 4G Hardware Upgrade Prog
Slide 13: North America FY24
North America FY24 North America Solid growth with momentum building in enterprise focus SYSCO ROLLOUT: Sysco rollout substantially completed Additional 1,400+ units above initial $79.6m 11,802 94.78% contract NZ CUSTOMER LOYALTY Revenue 11% Net unit Asset Retention Vulcan renewed (1,151) adds Rate
Slide 14: Australia FY24
Australia FY24 Australia Solid growth with momentum building in enterprise focus NEW ENTERPRISE Programmed Australia (3,000) 5 year term NZ $10.6m 3,977 95.51% CUSTOMER LOYALTY Boral renewed (1,900) Revenue 14% Net unit Asset Retention and expanded (1,345) adds Rate Received confirmation (subject to
Slide 15: FY24 Financials
FY24 Financials Mātanga Projects Reduced emissions by 28% within 6 months of using EROAD 15
Slide 16: Revenue & EBIT
Revenue & EBIT Financial results delivered above guidance, demonstrating our commitment to deliver on our promises Reported Revenue Reported Operating Costs Reported EBIT $182.0m $0.8m $165.3m1 $129.7m $128.7m $(7.9)m1 FY23 FY24 FY23 FY24 FY23 FY24 Revenue of $182.0m is up 10.1% Executed $10m (annua
Slide 17: Operational Efficiency
Operational Efficiency Management focus on gaining efficiency across all cost measures Cost to acquire customers Customer acquisition cost Cost to support & service as a % of revenue (CAC) per unit1 as a % of revenue $615 3% $565 2% $499 3% 11% 10% 8% 6.4% 5.9% 6.2% FY22 FY23 FY24 FY22 FY23 FY24 FY2
Slide 18: Operating Costs
Operating Costs Cost-out program to deliver cost base for profitable growth Operating cost as a % of revenue Operating costs as a % of revenue1 have continued to decline 50% FY231 FY24 87% 45% 40% 82% 35% 75% 30% 71% 70% 25% 20% 15% 10% 5% 0% H2 FY22 H1 FY23 H2 FY23 H1 FY24 H2 FY24 es s s ng e el n
Slide 19: Cost Management program
Cost Management program Savings delivered over FY23 and FY24 Operating costs have been reduced while Composition of total savings growing the unit base Inventory Other COGS NZ$m Freight Business Systems Negotiations Outsourcing 129.7 6.8 128.7 Software/Mobile Corporate: ($7.2m) Contractors: ($5.6m)
Slide 20: Research & Development
Research & Development R&D % of revenue decreases as re-focusing initiatives drive ROI and speed to market R&D decreasing as % of revenue on strategic shift NZ$m 50.0 30% 28% 25% • Total R&D spend of $32.8m 40.0 23% in FY24, 18% of revenue. 18% 20% • Compares to $37.2m, or 30.0 11.7 23% of revenue,
Slide 21: 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. 54% 41% New Zealand • Targeted investment in Total R&D investment Includes new gen trailer new offerings increase
Slide 22: 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 $3.1m 1.5 -0.2 -8.2 -14.6 $0.6m -21.7 -30.5 FY23 FY24 Free cash flow to the firm expected to b
Slide 23: 4G Hardware Upgrade Program ANZ
4G Hardware Upgrade Program ANZ Unit replacement program progressing to plan and on budget, 55% of all units in ANZ already 4G compatible Upgrades to ANZ network Rollout Key dates progress • One NZ recently announced it would postpone shutdown of the 3G network to March 2025. Program costs June, 202
Slide 24: 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 in conjunction with capital raise. Bank Facility Amortisation will reduce the facility limit to $60m $43.4m $57.9m at end of the 3-
Slide 25: Strategy Update
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Slide 26: Strategy Timeframe
Strategy Timeframe Optimising business operations underway, clearing the way for scaleable growth WE ARE HERE Turnaround the core Future Growth Approach Corporate overhead reduction Efficiency in ANZ / Growth in NA Growth in NA Verticals Timing FY23 FY24 ~3-5 years Headcount reduction Accelerate
Slide 27: The value we deliver
EROAD’s strength is in providing the stable core foundations fleets need, with the additional The value we deliver innovations, integrations, and service required to deliver for enterprise. Compliance Safety Efficiency Sustainability • RUC compliance • Driver tools • Route management • Fuel & Idling
Slide 28: Full Stack: The EROAD difference
Full Stack: Fleet The EROAD difference Full Fleet Operations Operations Cross fleet visibility of all Platform for physical operations Enterprise Enterprise needs are complex in System Integrations: size, scope and scale. Standard off the Customer’s internal systems shelf telematics can’t meet their
Slide 29: 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 30: Changes to New Zealand Transport Tax Regime
Changes to New Zealand Transport Tax Regime Government has introduced RUC for light electric vehicles, plans to move all vehicles onto RUC New Zealand’s Transport Tax Regime Future policy • New Zealand employs two taxes systems to fund its • Multiple governments have supported the current roads tran
Slide 31: Outlook & Guidance
03 : il Outlook | . & Guidance
Slide 32: Outlook & Guidance
Outlook & Guidance On track to delivering a path to sustainable, profitable growth Introducing FY25 Guidance • Revenue growth reflects targeting large enterprise customers with long sales cycle FY25 Guidance • EBIT of $5m to $10m normalised for 4G hardware upgrade programme • Free cash flow positive
Slide 33: Appendix
04 Appendix 33
Slide 34: Statement of Income
Statement of Income NZ$m FY24 FY23 Change ($) Revenue 182.0 174.9 7.1 Reported Revenue increased $7.1m primarily due to unit growth of approximately 24,000 Operating expenses (128.7) (129.7) 1.0 units since 31 Mar 2023. The prior year Earnings before interest, taxation, depreciation included $9.6m o
Slide 35: Cash Flow Statement
Cash Flow Statement NZ$m FY24 FY23 Change ($) Cash received from customers 186.3 165.2 21.1 Payments to suppliers and employees (117.0) (128.9) 11.9 Operating Cash Flow increased $28.8m Investment in contract fulfilment assets (10.0) (7.6) (2.4) primarily due to the unit growth and cost Net interest
Slide 36: Balance Sheet
Balance Sheet NZ$m FY24 FY23 Change ($) Cash 14.5 8.1 6.4 Cash increased $6.4m following partial Restricted bank accounts 17.8 11.6 6.2 proceeds received from the capital raise (final Costs to acquire and contract fulfilment costs 8.2 7.6 0.6 $15m of proceeds were received post balance date) and pay
Slide 37: ARPU Trend
ARPU Trend NZ$ Local $ NZ$m FY23 FY24 FY23 FY24 North American ARPU NZ$58.77 NZ$60.92 US$36.65 US$37.16 New Zealand ARPU NZ$55.70 NZ$58.30 NZ$55.70 NZ$58.30 Australian ARPU NZ$46.35 NZ$45.44 A$42.27 A$42.12 37
Slide 38: Unit Count
Unit Count 250,890 242,884 227,149 217,519 208,697 North America Australia 106,860 103,393 New Zealand 95,058 90,596 87,682 132,703 126,203 19,613 122,193 18,008 116,488 15,636 14,643 108,414 33,992 14,099 35,437 96,106 35,294 34,002 86,240 5,072 31,227 2,874 24,660 2,373 77,600 2,120 20,955 1,513 1
Slide 39: Free Cash Flow to the Firm By Region
Free Cash Flow to the Firm By Region 22.0 62.2 Inflows 3.0 - Outflows (11.2) 51.5 (2.1) (0.2) (2.9) (0.3) (3.2) Total - (14.3) (1.5) (33.9) (0.4) 5.4 1.3 (21.0) (0.3) EBITDA CA Assets Other PPE EBITDA CA Assets Other PPE EBITDA CA Assets Other PPE Other PPE Software Assets H&A Assets H&A Assets H&A
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: 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 42: Glossary
Glossary ANNUALISED MONTHLY RECURRING REVENUE (AMRR) EBITDA FY (FINANCIAL YEAR) SAAS A non-GAAP measure representing monthly A non-GAAP measure representing Earnings Financial year ended 31 March. Software as a Service, a method of software delivery Recurring Revenue for the last month of the before
Slide 43: Acknowledgement and investor contact
43 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