ERoad Reports $144 Million Loss After North American Setbacks

Transport software company ERoad has reported a significant interim loss of $144.2 million for the six months ending on September 30, 2023. This downturn follows a major accounting write-down related to its North American assets, which failed to meet performance expectations.

In comparison to the previous year, ERoad’s adjusted operating earnings fell by 47 percent, attributed to a decrease in the capitalisation of research and development and accelerated amortisation linked to the termination of a major legacy customer in North America. The company has since shifted its focus towards enhancing its investments in New Zealand and Australia, citing strong competition and the adverse effects of tariffs in the North American market.

Chief Executive Officer Mark Heine expressed his commitment to maintaining financial discipline while steering ERoad toward a new phase of growth. He stated, “We’ll keep focusing on what we control: generating cash, delivering for customers, and directing investment where it creates the most value.” Heine highlighted the significant opportunities ahead for the company, indicating that the team is prepared to capitalize on them.

Financial Position and Future Outlook

ERoad’s free cash flow position improved markedly to $6.2 million during this reporting period, compared to just $0.1 million in the same timeframe last year. The company noted a rise in annualised recurring revenue, primarily due to growth in the Australian and New Zealand markets, although this was counteracted by a decline in North America.

Heine also pointed to specific opportunities in New Zealand, particularly with the transition to electronic road user charges. He remarked, “The government knows we provide a great service to them—close to a billion dollars last year—without any cost whatsoever when it came to eRUC.” He confirmed that the government is interested in ERoad’s solutions and is consulting with the wider industry, in which ERoad is actively participating.

Despite the challenges faced in North America, Heine conveyed confidence in the company’s positioning moving forward. ERoad has maintained its full-year revenue guidance, estimating between $197 million and $203 million.

As ERoad navigates these financial hurdles, the emphasis on strategic investment and operational efficiency remains crucial for its future success. The company aims to leverage its strengths in key markets, ensuring it remains competitive in the evolving transport software landscape.