EROAD Limited Analysis

Overview

EROAD has created an electronic solution to manage and pay Road User Charges (RUC), support regulatory compliance and provide value-added commercial services to the heavy vehicle industry. In 2009, EROAD implemented the world's first network-wide GPS/cellular-based road user charging system, which modernised the existing paper-based RUC regime in New Zealand.

The EROAD system consists of a secure electronic distance recorder (Ehubo), combined with a bank-grade payment gateway and services portal. We undertake design and manufacture of our Ehubos, as well as software development, from our headquarters in Auckland.

EROAD's successful New Zealand reference site provided it with the opportunity to enter the international market. In 2014 we commercially launched in Oregon, becoming the first approved electronic Weight-Mile Tax (WMT) service provider in North America. We also entered the Australian market with a commercial services offering. For more information please visit www.eroad.com.

Performance

The following information was extracted from EROAD Limited full year results, released on 26 May 2025:

Financial Highlights

Substantial improvement in Free Cash Flow position (to the firm) rose to $16.0m in FY25 compared to $1.3m in FY24. This improvement is the result of the expansion of existing customer contracts, ongoing new customer wins, price increases and continued cost management discipline. When normalised for the temporary impact of the 4G upgrade program, free cash flow (to the firm) was $23.6m.

Revenue climbed to $194.4m for FY25 from reported revenue of $182.0m in FY24. This represents a 6.8% increase against the prior comparable period. Growth in revenue was delivered across all markets.

Annualised Recurring Revenue (restated)2 increased by $10.1m (6.1%) to $175.1m in FY25 from $165.0m in FY24, reflecting growth across markets and supported by favourable foreign exchange rates.

EBIT climbed to $5.9m in FY25 compared to $0.2m in FY24. Normalised3 EBIT increased to $9.9m in FY25 up from $3.8m in FY24. Normalised for 4G hardware upgrade costs of $4.0m and $3.6m in FY25 and FY24, respectively.

NPAT increased by $2.2m to $1.4m in FY25 from negative $0.8m in FY24.

Operational Highlights

Asset retention remains high at 92.5% in FY25 (NZ 93.6%; AU 89.0%; NA 92.0%).

Key enterprise customer wins and expansions during the period. A large New Zealand customer renewed and expanded into their Australian business adding $1.1m of ARR in the period, with 3-4 months remaining on the rollout. In New Zealand, expansions and upsell of existing customers added ARR by $7.2m. In North America, customer expansion added $4.9m of ARR.

Enterprise customers (>$100k ARR) represent 54% of ARR. The number of customers with greater than $100k of ARR increased by 7%.