Eroad Limited · NZX:ERD
Eroad — FY2021 Earnings Presentation
40 slides from Eroad's earnings presentation, May 28, 2021
Slide 1: Financial Results for the 12 Months Ended 31 March 2021 (FY21)
(NZX: ERD ASX: ERD) FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 31 MARCH 2021 (FY21) 28 MAY 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 6-13 14-26 27-35 36 HIGHLIGHTS OPERATING FINANCIAL GROWTH FY22 UPDATE UPDATE OPPORTUNITIES OUTLOOK 03
Slide 4: Continue to grow despite challenging macro-economic conditions
13 3.6 6.7 $ $ Continue to % m m grow despite IN REVENUE EBITDA OPERATING challenging EXPENDITURE macro- reflecting continued growth in which includes a non-recurring reflecting accelerated R&D and units in all regions items ($0.4m) and COVID-19 spend-to-save initiatives economic debtor provision ($
Slide 5: Accelerating growth strategies in FY21
8 94.9 58.30 Accelerating $ Growth % % Strategies CONTRACTED ASSET RETENTION MONTHLY SAAS AVERAGE UNITS RATE REVENUE PER UNIT (ARPU) in FY21 despite challenging reflecting quality of service with customers subscribing to marco-economic conditions and product offering additional SaaS services and FX
Slide 6: Operational Update
OPERATIONAL UPDATE Steven Newman Chief Executive Officer 06
Slide 7: 8% Growth since FY20, despite COVID-19
140,000 TOTAL CONTRACTED UNITS 126,203 122,193 2,874 8% Growth since 120,000 116,488 2,373 ANZ Australia 2,120 FY20, despite North America 1 New Zealand 108,414 1,513 100,000 96,106* COVID-19 86,240 35,294 35,437 • Contracted units continued to grow 34,002 across all regions 80,000 77,600 31,227 • H
Slide 8: Growth continued to be impacted
CONTRACTED UNITS ADDED DURING THE QUARTER H2 18 ELD Mandate Growth and Strong Enterprise Growth in New Zealand continued ANZ Australia North America 10,000 New Zealand 9,853 H1 20 Two Largest North American to be impacted by COVID-19 Enterprise Customers 9,000 8,209 8,000 • Growth in New Zealand rel
Slide 9: Growth through Retention and Account Upgrades despite uncertainty
Growth through Retention and Account Upgrades despite uncertainty for our customers 94.9 ASSET % 640 CUSTOMERS RENEWED RETENTION RATE THEIR EROAD PLAN (13,821 contracted units) 09
Slide 10: Growth through account expansion
Growth through account expansion Increases addressable market Improved ARPU Retention Tool EROAD CLARITY EROAD GO EROAD DAY MyEROAD FLEET EROAD INSPECT EROAD WHERE DASHCAM LOGBOOK MAINTENANCE Dual facing dashcam. A workflow application Simplifies fatigue Simplifies vehicle Makes vehicle inspections Affo
Slide 11: New Zealand remains a significant growth opportunity
New Zealand remains a significant growth opportunity CONTINUED EXECUTION OF STRATEGY • Renewed 7,507 contracted units. 2,896 of these were Ehubo1, of which 39% upgraded to Ehubo2 9 95.8 • Increased contracted units by 7,526, of which 31% were new customers across a range of industries • Won Toll N
Slide 12: North America increasing the addressable market
North America increasing the addressable market CHALLENGING MACRO- ECONOMIC ENVIRONMENT • Difficult operating conditions throughout FY21 with by COVID-19 operating restrictions, wild-fires, 4 92.8 civil unrest and politics • Economy is opening up again, bolstered by the increase in government suppor
Slide 13: Building the brand in Australia
Building the brand in Australia CONTINUED EXECUTION OF STRATEGY • COVID-19 restrictions impacted H1 growth, adding only 253 units 745 (0.9) • Growth returned to pre COVID-19 levels in $ H2, adding 501 new units to small-to-medium size fleets m • Won Ventia, our largest enterprise customer, which wi
Slide 14: FY21 Financial Results
FY21 FINANCIAL RESULTS Alex Ball Chief Financial Officer 14
Slide 15: EROAD delivers growth in challenging macro-economic conditions
REVENUE EBITDA EBITDA PROFIT/(LOSS) FREE REVENUE EBITDA MARGIN EBITDA MARGIN BEFORE PROFIT/(LOSS) TAX AFTER TAX CASH FREE CASHFLOWS FLOW +13% +13% 100.0 40.0 40.0 $ 91.6m4 $ 81.2m 33% 34% 80.0 30.7m5 $ 30.0 30.0 27.1m $ $ 61.4m 24% 25% +36% +$18.1m 60.0 10.0 20.0 20.0 43.8m $ 15.6m $ 40.0 5.3m $ 10.
Slide 16: Statement of Income (NZ$m)
Statement of Income (NZ$m) • Revenue increased 13% on FY20 to $91.6m, Movement Movement reflecting growth in contracted units and ARPU. FY21 vs H1 FY21 vs Revenue in H1 FY21 also benefited from the YEAR ENDED FY21 FY20 FY20 H2 FY21 H1 FY21 H2 FY21 forgiveness of a COVID-19 government support loan in
Slide 17: EBITDA up despite accelerating growth strategies
EBITDA up despite accelerating growth strategies NEW ZEALAND Continued growth into existing customer fleets, attracting new customers and continued high asset retention resulted in a 11% increase in EBITDA $38.8m. Movement Movement NORTH AMERICA FY21 vs H1 FY21 vs ($m) North American EBITDA result o
Slide 18: 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 150.0 141.9 30 100.0 134.4 88.4 84.06 125.0 117.4 80.0 23 22 22 100.5 66.5 100.0 20 19 60.0 75.0 14 14 12 12 40.0 50.0 10 10 9 8 7 20.0 25
Slide 19: Monitoring Performance: Enterprise Value from Existing Customer Base
Monitoring Performance ENTERPRISE VALUE FROM EXISTING CUSTOMER BASE ARPU ASSET RETENTION RATE 70 100 95.8% 94.4% 95.2% 94.9% $58.38 $ 58.30 60 $55.08 80 50 $54.32 60 40 30 40 20 20 10 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 - - Monthly SaaS ARPU has remained stable over past 12 months. Asset Retenti
Slide 20: 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 6 $1,400 22 $1,236 5.0 20 $1,200 5 20 4.6 4.7 18 4.5 17 $1,000 4 15 15 $791 13 $800 3 11 $600 10 2 6 $400 5 4 5 1 2 $200 FY20 FY21 FY18 FY19 FY20
Slide 21: Operating Expenses
Operating Expenses Increased Decreased Total $70.0m 0.3 0.7 60.9 1.6 1.2 0.9 1.2 $60.0m 3.4 54.1 (0.9) (1.6) $50.0m $40.0m Other Employment Sub-Contractors Legal Costs Other Professional Fees Other Sales and Marketing Personnel Expenses Software and Systems $30.0m SaaS Platform Costs $20.0m $10.0m -
Slide 22: Additions to Property, Plant and Equipment
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT PROPERTY PLANT & Total PPE Additions*($m) Hardware Asset Additions ($m) Hardware Asset Additions excluding EQUIPMENT Inventory Management ($m) 15.00 • PPE spend is $6.5m lower than FY20 due to a 11.6 combination of lower new unit volumes and 10.8 10.1 tight
Slide 23: Increased investment in R&D
Increased investment in R&D TO SUPPORT NEW PRODUCT DELIVERY IN FY23 AND FY24 RESEARCH AND DEVELOPMENT ($m) MOVEMENT IN INTANGIBLES ($m) 60.0 13.1 25.0 45.3 21.3 42.1 20.0 15.6 40.0 (9.9) 13.4 8.2 15.0 6.0 10.0 5.1 20.0 13.1 5.0 8.3 9.6 - - FY19 FY20 FY21 FY20 Additions Amortisation FY21 R&D Expensed
Slide 24: Free Cash Flow Analysis by Segment
Free Cash Flow Analysis by Segment7 45.0 10.0 40.0 38.8 (0.2) (0.2) (0.2) (0.1) - 38.7 (0.9) (0.2) (0.1) (0.2) (1.4) 35.0 (2.2) (1.2) Inflows 30.0 (3.1) (0.1) Outflows Total 25.0 20.0 (17.5) (0.5) 15.0 10.0 (12.2) 0.2 5.3 5.0 (0.9) (2.5) - Group Free Cash Flows FY21 Other Operating Cash Flows8 EBITD
Slide 25: Cash flow statement (NZ$m)
Cash flow statement (NZ$m) • Operating cash flows benefit from a higher Movement Movement revenue $92m versus $81m and hence increased FY21 vs H1 FY21 vs Year ended customer receipts FY21 FY20 FY20 H2 FY21 H1 FY21 H2 FY21 • Investing cash out flows fell from $35.9m to Cash flows from operating activ
Slide 26: Balance sheet (NZ$m)
Balance sheet (NZ$m) • Cash has increased by $53.7m as a result of the capital raise during September and the free cash AS AT PERIOD END FY21 FY20 Movement positive result for FY21 of $5.3m Cash 57.1 3.4 53.7 • PPE has reduced as depreciation of hardware Restricted Bank Account 10.5 14.0 (3.5) ass
Slide 27: Growth Opportunity and Outlook
GROWTH OPPORTUNITY AND OUTLOOK Steven Newman Chief Executive Officer 27
Slide 28: The Global Telematics industry poised for significant growth
The Global Telematics industry THE GLOBAL TELEMATICS INDUSTRY IS ESTIMATED TO poised for significant growth GROW TO US$750B BY 20309 Digital Transformation Acceleration towards Health & Safety focus Regulatory Telematics Post COVID-19 Trends of the Transportation road pricing continues to increase •
Slide 29: Trends within our markets
Trends within our markets NEW ZEALAND NORTH AMERICA AUSTRALIA • Health & Safety remain drivers of telematics • Almost 100% adoption of telematics in • Chain of Responsibility obligations were adoption interstate vehicles over 10,000 pounds, expanded in Oct 2018. Expect further • Many enterprise busi
Slide 30: EROAD today
EROAD today NEW ZEALAND NORTH AMERICA AUSTRALIA 87,892 35,437 2,874 CONTRACTED UNITS CONTRACTED UNITS CONTRACTED UNITS 45% 30% 32% 10 10 10 ENTERPRISE CUSTOMERS ENTERPRISE CUSTOMERS ENTERPRISE CUSTOMERS 32% CONSTRUCTION & CIVIL ENGINEERING 47% FREIGHT & ROAD TRANSPORT 44% SERVICES & TRADE 16% FREIGH
Slide 31: Strategic priorities across our markets
Strategic priorities across our markets STILL SIGNIFICANT FOCUSED ON INCREASING GROWTH OPPORTUNITIES THE ADDRESSABLE MARKET BUILDING BRAND IN NEW ZEALAND IN NORTH AMERICA IN AUSTRALIA • Grow connected units to 100,000 over the • Grow connected units to 50,000 over the • Grow number of connected unit
Slide 32: Focused on Platform Expansion
Focused on Platform Expansion • Extending the platform to focus on winning medium and enterprise customers in North America and Australia • Increasing scalability of the platform to enable EROAD to target larger Enterprise fleets • Developing Integration & Data Analytics capability to provide custom
Slide 33: Inorganic Growth Opportunities
1 Likely to be a direct competitor. This 2 It is expected most acquisitions will Strategic should be a profitable business so that the acquisition can be partially funded by debt and maximise value be a mixture of customer bases and capabilities for leverage. May be either a direct competitor or a c
Slide 34: R&D Investment
1% 3% New to World 76% R&D Investment CUSTOMER FACING Learning/Future 14% • R&D is critical in developing new products and services to retain customers, open up Reliability, Availability, the addressable market, grow connected Serviceability vehicles and grow average SaaS monthly and Scalability rev
Slide 35: FY22 outlook
FY22 outlook • Reiterate the FY22 guidance provided November 2020 • Anticipate that the percentage revenue growth in FY22 will strengthen from that delivered in FY21, but not be at the level experienced in FY20 • In New Zealand, expect to add a similar number of units to that seen prior to FY21 (~9,
Slide 36: Questions & Answers
QUESTIONS & ANSWERS 36
Slide 37: Reconciliation of Profit to movement in cash
Reconciliation of Profit to movement in cash YEAR ENDED FY21 FY20 Profit/(Loss) after tax for the year attributable to the shareholders 2.0 1.0 Add/(less) non-cash items Tax asset recognised (0.1) (0.0) Depreciation and amortisation 26.3 22.5 Other non-cash expenses/(income) (1.1) (1.0) Add/(less) m
Slide 38: ARPU reconciliation of local currency to NZ$
ARPU reconciliation of local currency to NZ$ NZ$ Local$ FY21 FY20 FY21 FY20 New Zealand ARPU NZ$56.18 NZ$55.78 NZ$56.18 NZ$55.78 North America ARPU NZ$65.03 NZ$65.73 US$42.95 US$41.94 Australian ARPU NZ$35.50 NZ$37.28 AU$33.16 AU$35.86 38
Slide 39: 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 Glossary representing monthly Recurring Revenue for distance recorder which replaces m
Slide 40: 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 alex.ball@eroad.com • + 64 029 772 5631 260 Oteha Valley Road, Albany 7618 SW Mohawk Street 727 Collins Street, Dock