How EROAD’s FY25 Growth Sets the Stage for a Breakout FY26

Financial Performance Highlights

EROAD Limited (NZX/ASX: ERD), a leader in transportation technology services, announced a robust financial performance for the fiscal year ended 31 March 2025. The company reported revenue of NZ$194.4 million, marking a 6.8% increase over the previous year. This growth was supported by expansions in existing customer contracts, new customer acquisitions, and strategic price increases.

Notably, free cash flow to the firm surged to NZ$16.0 million, a significant turnaround from NZ$1.3 million in FY24. When normalised for the temporary costs associated with the 4G hardware upgrade program, free cash flow reached NZ$23.6 million. EBIT also improved markedly to NZ$5.9 million, with normalised EBIT climbing to NZ$9.9 million.

Operational Strength and Customer Expansion

EROAD maintained a high asset retention rate of 92.5%, underscoring strong customer loyalty across its key markets in New Zealand, Australia, and North America. Enterprise customers, those generating over NZ$100,000 in annual recurring revenue, now represent 54% of ARR, with the number of such customers increasing by 7% during the year.

Key enterprise wins included a major New Zealand customer expanding into Australia, adding NZ$1.1 million in ARR, and significant expansions in North America contributing NZ$4.9 million in ARR. These developments reflect EROAD’s successful transition to a software-as-a-service (SaaS) model focused on complex fleet operations.

Strategic Initiatives and Market Position

EROAD’s leadership highlighted the company’s competitive advantage in delivering measurable operational savings and compliance benefits to customers, even amid challenging economic conditions. The ongoing 4G hardware upgrade program, expected to complete by December 2025, is a key enabler for future cash flow improvements and operational efficiency.

Strategic partnerships with technology leaders such as Microsoft, Thermo King, and Geotab are expanding EROAD’s platform capabilities and addressable market. The company is also investing in AI-driven innovations, including the Clarity Edge AI Dashcam, which enhances fleet safety and driver performance monitoring.

Outlook and Guidance for FY26

Looking ahead, EROAD projects FY26 revenue of at least NZ$205 million and ARR of NZ$188 million, representing 7.5% growth. The company anticipates a free cash flow yield between 8% and 10%, normalised for the 4G upgrade program. Medium-term ARR growth is targeted at a compound annual growth rate (CAGR) of 11% to 13%.

Management acknowledges ongoing macroeconomic headwinds and the impact of global trade uncertainties on deal timing but remains confident in the company’s strategic direction and growth potential. An Investor Day is planned to provide deeper insight into product roadmaps and long-term targets.

Governance and Leadership

EROAD’s governance framework continues to evolve with a strong focus on ethical standards, risk management, and sustainability. The Board comprises six independent non-executive directors with diverse expertise spanning technology, finance, and transport sectors. The company is progressing a CFO transition, with an interim CFO appointed following the departure of the previous CFO.

Remuneration policies align executive incentives with shareholder interests, emphasizing performance-based rewards linked to revenue, EBIT, and free cash flow targets. The company also maintains rigorous compliance and disclosure standards across its NZX and ASX listings.