Eroad Limited · NZX:ERD
Eroad — FY2022 Earnings Presentation
45 slides from Eroad's earnings presentation, May 26, 2022
Slide 1: Financial Results for the 12 Months Ended 31 March 2022 (FY22)
EROAD (NZX: ERD ASX: ERD) Financial Results For The 12 Months Ended 31 March 2022 (FY22) 26 May 2022 Safer and more sustainable roads 1
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 fo
Slide 3: Agenda
AGENDA 4 Highlights 8 Operational Update 17 FY22 Financial Results 27 Growth Opportunity and Outlook 3
Slide 4: FY22 Highlights
FY22 HIGHLIGHTS Graham Stuart Chairman 4
Slide 5: We Are EROAD
WE ARE EROAD OUR PURPOSE IS WE PROVIDE OVER 200,000 SAFER AND MORE REGULATORY CONNECTED VEHICLES SUSTAINABLE ROADS AND SPECIALIZED TELEMATICS SOLUTIONS across professional transport, refrigeration, and over 8,000 customers in New Zealand, construction and waste & recycling North America and Australi
Slide 6: Financial Result Reflects Investment in Capabilities for Future Growth
FINANCIAL RESULT REFLECTS INVESTMENT $114.9m $21.0m Over IN CAPABILITES FOR 200,000 FUTURE GROWTH REPORTED REVENUE REPORTED EBITDA CONTRACTED UNITS FY21: $91.6m FY21: $30.4m FY22: 208,697 FY21: 126, 203 reflecting the merger of Coretex and reflecting one-off transaction and integration reflecting bo
Slide 7: Together with Our Customers and Partners, We Will Create Safer, More Sustainable Roads
TOGETHER WITH OUR CUSTOMERS AND PARTNERS, WE WILL CREATE SAFER, MORE SUSTAINABLE ROADS INAUGURAL SUSTAINABILITY POLICY CORETEX PRODUCTS SUSTAINABILITY REPORT LAUNCHED REDUCE FOOD, CONSTRUCTION AND INDUSTRIAL WASTAGE To be published in June Working towards our customers, Adding to the range of produc
Slide 8: Operational Update
OPERATIONAL UPDATE Mark Heine Acting Chief Executive Officer 8
Slide 9: Grown to Over 200,000 Connected Vehicles
250000 GROWN TO OVER 200,000 New Zealand TOTAL CONTRACTED UNITS North America Australia 208,697 CONNECTED 200000 ANZ 14,099 VEHICLES • Acquisition of Coretex added 66,157 units on 30 November 2022 (North America: 50,628; Australia: 7,892 and New Zealand: 7,637) • Organic growth across markets of 16,
Slide 10: Recurring SaaS Revenue Model
RECURRING SAAS EROAD DRIVEN BY RECURRING SAAS REVENUE REVENUE MODEL EROAD GENERATES SAAS REVENUE THROUGH: • sale and rental of hardware • the licensing of its software on a monthly subscription basis FY22 • the installation of hardware devices EROAD has a SaaS based revenue model In FY22, EROAD gene
Slide 11: Growth Through Account Expansion
GROWTH THROUGH ACCOUNT EXPANSION GROWTH THROUGH ADDING NEW CUSTOMERS, EXPANDING UNITS WITHIN CURRENT CUSTOMER FLEETS AND SELLING ADD-ON PRODUCTS AND SERVICES EROAD CLARITY 5,540 Dual facing dashcam. Integration of dashcam with Ehubo data and other key driver and vehicle statistics supports DASHCAM a
Slide 12: Growth Through Account Expansion
GROWTH THROUGH ACCOUNT EXPANSION GROWTH THROUGH ADDING NEW CUSTOMERS, EXPANDING UNITS WITHIN CURRENT CUSTOMER FLEETS AND SELLING ADD-ON PRODUCTS AND SERVICES EROAD ANALYST – 6 EROAD Analyst Enterprise Data Connector makes it easy for customers to connect their data systems using pre- ENTERPRISE DATA
Slide 13: High Retention and Significant Number of Renewals
HIGH RETENTION AND SIGNIFICANT NUMBER OF RENEWALS DESPITE 93.4% 1,131 $190.2m EROAD STAND ALONE ASSET CUSTOMERS RENEWED FUTURE CONTRACTED RETENTION RATE THEIR PLAN INCOME (31,597 contracted units)* Coretex’s 4 month Asset Retention reflecting high renewals from up from $149.1m at H1 FY22 Rate was 98
Slide 14: New Zealand
NEW ZEALAND NEW ZEALAND HAD AN EXCEPTIONAL YEAR REACHING OVER 100,000 CONNECTED VEHICLES WITH GROWTH IN NEW AND EXISTING CUSTOMERS 106,916 $45.2m CONTINUED EXECUTION OF STRATEGY • Despite COVID-19 lock-down restrictions and some supply chain issues contracted units increased by 19,024 reflecting: •
Slide 15: North America
NORTH AMERICA REGAINED GROWTH MOMENTUM FOLLOWING THE CORETEX MERGER COMPLETION WHICH IMPROVED PRODUCT MARKET FIT AND ENTERPRISE CAPABILITIES CONTINUED EXECUTION OF STRATEGY • Contracted units increased by 52,245 reflecting: • the merger with Coretex which added 50,628 units at 30 November 2021 • Goo
Slide 16: Australia
AUSTRALIA AUSTRALIA DELIVERED ITS FIRST YEAR OF POSITIVE EBITDA 14,099 $0.1m AND STRONG GROWTH IN ARPU REFLECTING THE SUCCESSFUL ROLL OUT OF VENTIA AU AND CONTINUED GROWTH IN SMALL-TO-MEDIUM CUSTOMERS UNITS EBITDA CONTINUED EXECUTION OF STRATEGY (FY21: 2,874) (FY21: $(0.9)M) • Contracted units incre
Slide 17: FY22 Financial Results
FY22 FINANCIAL RESULTS Margaret Delany Acting Chief Financial Officer 17
Slide 18: Financial Performance Reflects Investment in Capabilities for Future Growth
FINANCIAL PERFORMANCE REFLECTS INVESTMENT IN CAPABILITIES FOR FUTURE GROWTH REVENUE EBITDA FREE CASH FLOWS REPORTED NORMALISED* EXCLUDING MERGER +25% -32% -5% 120.0 $ 114.9m 40.0 40.0 100.0 $ 91.6m 30.5m $ 30.0 30.0 $ 28.8m $ 81.2m 27.1m $ 27.1m $ 27.3m $ 80.0 $ 61.4m 21.0m $ -$53.2 60.0 20.0 20.0 $
Slide 19: EBITDA Down Reflecting Investment in Capabilities for Future Growth
EBITDA DOWN REFLECTING INVESTMENT IN CAPABILITIES FOR FUTURE GROWTH NEW ZEALAND Movement Movement Restated FY22 vs H2 FY22 vs Continued strong growth into existing customer fleets, ($m) FY22 FY21 FY21 H2 FY22 H1 FY22 H1 FY22 along with attracting new customers and continued high asset retention has
Slide 20: Monitoring Performance: Leading Growth Indicators
MONITORING PERFORMANCE LEADING GROWTH INDICATORS ANNUALISED MONTHLY FUTURE CONTRACTED RESEARCH AND RECURRING REVENUE ($m) INCOME ($m) DEVELOPMENT 150.0 200 190.2 35.0 134.6 31.7 30.0 125.0 8.0 150 141.9 134.4 25.0 100.0 88.4 117.4 21.3 84.0 20.0 100.5 100 15.6 8.2 75.0 66.5 15.0 13.4 23.7 6.0 50.0 1
Slide 21: Monitoring Performance: Enterprise Value from Existing Customer Base
MONITORING PERFORMANCE ENTERPRISE VALUE FROM EXISTING CUSTOMER BASE ARPU EROAD STAND ALONE ASSET RETENTION RATE 70 100 95.8% 94.4% 95.2% 94.9% 93.4% $58.38 $58.30 60 55.08 $55.57 $ 54.32 $ 80 50 60 40 30 40 20 20 10 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 - - Monthly SaaS ARPU down from FY
Slide 22: Monitoring Performance: Profitability
MONITORING PERFORMANCE PROFITABILITY COST TO ACQUIRE CUSTOMERS COST TO ACQUIRE COST TO SERVICE AND SUPPORT AS % OF REVENUE PER UNIT* AS % OF REVENUE 25 24 $600 $587 7 6.4 22 20 $500 6 20 $451 18 5.0 17 5 4.6 4.6 $400 4.5 15 15 14 13 4 $300 11 11 3 10 $200 6 2 5 4 5 3 2 $100 1 FY18 FY19 FY20 FY21 FY2
Slide 23: Operating Expenses
OPERATING EXPENSES Increased OPEX COSTS HAVE GROWN $32.7M: Decreased Total • $13.6m is Coretex costs for the four-month period and $7.6m $100.0m related to acquisition and integration expenses 13.6 93.9 $90.0m • Personnel costs have increased $8.3m due to remuneration growth, staff to support ongoin
Slide 24: Additions to Property, Plant and Equipment
ADDITIONS TOTAL PPE ADDITIONS*($M) HARDWARE ASSET ADDITIONS ($M) HARDWARE ASSET ADDITIONS EXCLUDING INVENTORY TO PROPERTY, 35 34.8 MANAGEMENT ($M) PLANT AND 9.2 31.6 EQUIPMENT 30 7.5 25 Additions Acquisition 20 PROPERTY PLANT & EQUIPMENT PPE increased to $34.8m reflecting: 15 14.9 25.6 2.5 • PPE (in
Slide 25: Increased Investment in R&D
INCREASED INVESTMENT IN R&D TO SUPPORT NEW PRODUCT DELIVERY IN FY23 AND FY24 RESEARCH AND DEVELOPMENT ($m) MOVEMENT IN INTANGIBLES ($m) 35.0 250.0 31.7 174.3 228.4 30.0 8.0 200.0 25.0 21.3 150.0 20.0 15.6 8.2 15.0 13.4 23.7 100.0 6.0 10.0 5.1 24.9 13.1 50.0 40.6 5.0 8.3 9.6 (11.4) - - FY19 FY20 FY21
Slide 26: Free Cash Flows
FREE CASH FLOWS 60.0 45.2 9.4 40.0 Inflows (5.9) (1.7) 0.1 Outflows (4.2) (0.2) (8.1) (1.3) (0.5) (0.2) Total (1.4) (0.1) (1.0) (0.1) 20.0 18.2 (11.8) (120.3) - (20.0) (33.9) (0.8) (40.0) 1.6 (26.5) (2.9) (60.0) (80.0) (72.4) (3.6) Other Operating Cash Flows EBITDA H&A Assets CA Assets CF Assets Oth
Slide 27: Growth Opportunity and Outlook
GROWTH OPPORTUNITY AND OUTLOOK Graham Stuart Chairman Mark Heine Acting CEO 27
Slide 28: Broader and Improved Product Offering to Enterprise Customers
BROADER AND IMPROVED PRODUCT OFFERING TO ENTERPRISE CUSTOMERS AND CUSTOMERS FROM DIFFERENT INDUSTRIES Solving Customers Problems Productivity Hardware Solutions Add on Products and Services EROAD CORETEX EROAD CORETEX Regulatory Compliance Road Safety Ehubo TMU1500 Clarity Dashcam Philips Connect IO
Slide 29: Our Next Generation Offering
Our next generation offering A complete, connected network that works with your systems OUR NEXT GENERATION OFFERING Hardware and software alike, design of products focused on ease of use, safety, A complete, flexibility and connected network quality - to deliver accuratethat works insights with cus
Slide 30: Broader and Improved Service Offering to Enterprise Customers
BROADER AND IMPROVED SERVICE OFFERING TO ENTERPRISE CUSTOMERS AND CUSTOMERS FROM DIFFERENT INDUSTRIES * Provides additional ARPU over and above normal subscriptions * Helps customers with their sustainability efforts Road safety ELD Fatigue Driver Video Inspect CaRa Re-Torque Service Pre-trip Manage
Slide 31: Next Generation Solution Meets Needs of Professional Transport, Refrigerated, Construction and Waste
THE NEXT GENERATION SOLUTION MEETS THE NEEDS OF PROFESSIONAL TRANSPORT, REFRIGERATED TRANSPORT, CONSTRUCTION AND WASTE INDUSTRIES IN CAB PROFESSIONAL REFRIGERATED CONSTRUCTION WASTE AND TRANSPORT TRANSPORT RECYCLING CoreHub can easily connect and integrate with AI Combine door, temperature and humid
Slide 32: Increased Scale and Broader Customer Base
INCREASED SCALE AND BROADER CUSTOMER BASE GIVING US BETTER REFERENCES TO WIN NEW BUSINESS Increased Scale UNITS BY MARKET Increase in UNITS BY CUSTOMER SIZE Entry into key UNITS BY INDUSTRY in North America Enterprise strategic verticals and Australia 2% Customers 28% 24% New Zealand SMB FY21 Constr
Slide 33: Coretex Integration on Track
CORETEX INTEGRATION ON TRACK WITH SIGNIFICANT PROGRESS MADE TO DATE EROAD remains confident in the revenue synergies identified through the due diligence progress. Expect to deliver key product and platform integration by the end of CY2022. GOOD PROGRESS SINCE 1 DECEMBER 2021 Sales activities underw
Slide 34: Our FY23 Priorities
OUR FY23 PRIORITIES Following the acquisition of Coretex, a strategy refresh will be conducted over H1 FY23 to maximize EROAD’s growth potential. Revenue growth momentum in New Zealand and North America • focused on Enterprise accounts in professional transport, refrigeration, construction and Waste
Slide 35: FY23 Outlook
FY23 OUTLOOK Growth momentum is expected to further build through the year with the successful conversion of some of the North American enterprise pipeline opportunities. Revenue growth for FY23 will reflect the lumpy nature of enterprise sales and the phasing of the hardware roll-outs. In addition,
Slide 36: Questions & Answers
QUESTIONS & ANSWERS 36
Slide 37: Appendix
APPENDIX 37
Slide 38: Statement of Income (NZ$m)
STATEMENT OF INCOME (NZ$M) Movement Movement • Revenue increased 25% to $114.9m, with underlying FY21 FY22 vs H2 FY22 vs SaaS revenue growing 22%. Following the acquisition of Coretex, revenue included outright hardware sales Year ended FY22 (restated) FY21 H2 FY22 H1 FY22 H1 FY22 that do not have o
Slide 39: Balance Sheet (NZ$m)
BALANCE SHEET (NZ$M) • Cash has decreased $43.2m following the As at period end FY22 Restated FY21 Movement purchase of Coretex and growth in property, plant and equipment (PPE) as increased inventory is held Cash 13.9 57.1 (43.2) to ensure continuity of supply given global supply Restricted bank ac
Slide 40: Cash Flow Statement (NZ$m)
CASH FLOW STATEMENT (NZ$M) Movement Movement • Operating cash flows have reduced by $13.8m Restated FY22 vs H2 FY22 vs reflecting the increased spending related to Year ended the Coretex merger along with an increase in FY22 FY21 FY21 H2 FY22 H1 FY22 H1 FY22 receivables and prepayments. Cash flows f
Slide 41: Reconciliation of Profit to Movement in Cash
RECONCILIATION OF PROFIT TO MOVEMENT IN CASH YEAR ENDED FY22 Restated FY21 Profit/(Loss) after tax for the year attributable to the shareholders (9.6) 2.5 Add/(less) non-cash items Tax asset recognised (1.1) 0.1 Depreciation and amortisation 28.2 25.3 Other non-cash expenses/(income) 1.4 (1.1) Add/(
Slide 42: ARPU by Market
RECONCILIATION OF PROFIT TO MOVEMENT IN CASH NZ$ Local$ FY22 FY21 FY22 FY21 New Zealand ARPU NZ$56.45 NZ$56.18 NZ$56.45 NZ$56.18 North America ARPU NZ$56.38 NZ$65.03 US$39.02 US$42.95 Australian ARPU NZ$38.99 NZ$35.50 AU$36.69 AU$33.16 42
Slide 43: R&D Investment
R&D INVESTMENT 77% Customer facing • R&D is critical in developing new products and services to retain 4% 3% customers, open up the addressable market, grow connected vehicles and grow average SaaS monthly revenue per unit 6% • Target ~60% of R&D spend on customer facing elements • Executed 19 key l
Slide 44: Glossary
GLOSSARY ANNUALISED MONTHLY RECURRING REVENUE (AMRR) A non-GAAP measure representing monthly EHUBO, EHUBO2 and EHUBO 2.2 EROAD’s first and second generation electronic distance recorder which replaces mechanical hubo- NORMALISED EBITDA Excludes one-off items including transaction and integration cos
Slide 45: Contact
ASX & NZX: ERD investors@eroad.com eroadglobal.com/investors 45