Eroad trims sales forecast while holding revenue outlook on US opportunity

Logistics and fleet management software and hardware developer Eroad doesn't expect to sell as many units in North America as previously forecast but is still optimistic new US federal rules on electronic logging devices will widen the company's market in the world's biggest economy.

The Auckland-based company said average sales for its US direct sales channel were 240 units a month, which was "broadly in line with the forecast." However, it cut its sales forecast for total contracted units to as few as 5000 by the end of its March 31 financial year, from an earlier forecast of between 6000 and 6500, as its indirect sales channel becomes established. It previously reduced the forecast in September from 12,440 units.

The reduction will have "minimal revenue impact" on its annual result, it said.

To date, the volume of distance recorder units contracted to Eroad customers in North America has grown to 4100, up 30%  from the end of September, with Oregon accounting for 3000 of those contracts. The company estimates it has a 3%  share in Oregon's weight mile tax services market. The majority of Eroad's revenue is still generated in New Zealand and Australia, with total contracted units of 31,300, from 28,140 in September. Eroad collects 34%  of total heavy vehicle road user charges in New Zealand.

"ERoad continues to deliver unit growth of over 58%  year on year, and the New Zealand and North American markets present sizeable and ongoing growth opportunities for the business," said chief executive Steven Newman. "With our unique technology, along with both our direct and indirect sales channels, we are very well placed to service the three million plus drivers and trucks required to comply with the new ELD (electronic logging device) rule by December 2017."

The company said it has seen a significant increase in engagement from customers since the US Department of Transport introduced a rule requiring commercial vehicle drivers to use ELD to record their hours of service.

The shares rose 1%  to $1.96, and have dropped 16%  this year. The stock reached a high of $4.28 in November 2014 after listing in August that year.

(BusinessDesk)