ERoad reports wider FY17 net loss but slightly better than forecast

Eroad chairman Michael Bushby. Photo / Dean Purcell

ERoad reported a wider net loss in the 2017 financial year driven by US investment and changes to the way it amortises development costs, although the result was slightly ahead of its forecast.

The Auckland-based company reported a net loss of $5.3 million in the year ended March 31, up from a loss of $1.3 million a year earlier. The result was better than the forecast for a net loss of between $5.5 million and $6.5 million it gave in April.

The logistics and fleet management software company reported a 25 percent gain in revenue to $33 million and a better-than-expected $7.1 million in earnings before interest, tax, depreciation and amortisation versus $5.7 million in 2016, however depreciation of $8.1 million and amortisation of about $4 million pushed the company into the red.

There was a 30 per cent increase in total contracted units sold to 48,041 and its future contracted income reached $59 million, up 22 per cent compared to the prior year.

"We have continued to grow well in New Zealand, while delivering our largest ever R&D project to the US market and also building our sales and marketing capability to address the US-wide opportunity," said chairman Michael Bushby.

The company operates in New Zealand, Australia and the US and its customers range from owner drivers to large fleet operators.

Chief executive Steven Newman said the loss was largely the result of investment in new team members, independent expert advice and analysis and branding for the US market as well as a change in accounting estimates in relation to the amortisation of intangible assets. The total amortisation charge for the year of $4 million was $1.4 million higher as a result of the change in estimate.

Looking ahead, Newman said research and development needs in the 2018 financial year would begin reducing but the company planned further investment in EROAD's back office systems and processes as well as development to enable connectivity with US customers' transport management systems.

He said the New Zealand business had a strong sales pipeline for year ahead with a large number of enterprise customers coming on board at the end of the 2017 year for units to be installed into fleets in the current year.

These include Fulton Hogan, Waste Management and Downer with 6,100 units to be installed in these fleets in the current financial year.

"In New Zealand we expected to have our largest ever year," he said.

In the US, he underscored that the company has worked hard to launch the ELD (electronic logging device) and build sales and marketing capability. "We are starting to see improving sales, but we recognised that, as occurred in New Zealand, it takes time to build sales momentum," he said.

The shares last traded at $1.75 and have fallen 29 percent over the past 12 months.