EROAD Limited (ERD) Earnings Call Transcript

[ Noon ], everybody. Thank you very much for joining our EROAD investor update that we're having today. As you know, EROAD has been on a bit of a journey, and we are fortunate that we have a really, really exciting future ahead of us. But as everybody will be aware, in order to deliver on our strategy, the most important thing is actually to have the right people as part of EROAD. So we've done quite a bit of a Board refresh going on, and we've done quite a lot of refreshing of the management team. And we're really excited that on the 5th of March, we announced that we're actually moving to a dual CEO role for EROAD. As we go along in the presentation, feel free to type in questions and answers that's on the top right of your screen. So as we go through the presentation, very happy -- the presentation won't be terribly long, but very happy for everybody to type in questions as we go and then we'll invite further questions at the end. But typing them in on the top right of the screen is the way to get your questions into our moderator. The dual CEO role isn't that common in New Zealand, although it is used elsewhere. I've actually worked with that model at Les Mills. We have Co-CEOs there. Netflix has Co-CEOs. And when we looked at it, we had a really good [ think ] as a Board as to how would it work and would it really help make EROAD go faster. So the Board did quite a lot of research around a Co-CEO or dual CEO model, and really did our homework to make sure that it was a concept that really would work. And Mark actually brought that to the Board. It was him that brought it to us to consider. And when we looked through and said, well, how's it going to work, how's the structure going to work, we really saw that it was completely complementary of Mark's skill set, but also with David's skill set. So the Board was fully behind it. We went through a really rigorous process with the employment of David. David has worked with the business for about 5 months and had got on extremely well with all the executives that he had mentored, both in North America, but also in New Zealand. So he had been working with the business, and we could see immediately the value that David could add by bringing him on board. Just as far as remuneration, because a few people say, how does that work, and I've got to congratulate both Mark and David for saying, hey, if we're going to be dual CEOs here, we're actually going to be on the same package. So both of them have ended up on the same package. It's not going to cost us zeroed a huge amount more because David is stepping in and taking over where elsewhere we might have had to add a Chief Revenue Officer or somewhere else. By having dual CEOs, we're going to be in a similar place cost wise to other structures that we could have looked at. And we're really excited that we're going to be moving forward with 2 people who are highly complementary. And I'm looking forward to introduce you to David. EROAD, absolutely built on innovation and we believe this is another great innovation that's going to be taking us forward. But Mark, let me hand over to you.

Great. Thank you so much, Susan. And first of all, I'm really delighted to have David join me as Co-CEO of the company. I'm incredibly excited by this model and I think we will get a lot of value out of doing so. Now, as you may recall, a key part of our strategy was growth in North America. Having worked with David for the last 5 months around the coaching he's been doing of our sales team, I got a chance to see how David helped support and grow businesses. And his background is certainly complementary to where EROAD needs to go. So when I met David, I certainly thought he's the right person to help join the team. Now it does help us enable our growth strategy going forward, especially in North America. As you may recall, for FY '26, we've targeted between 11% and 13% growth and I do believe that David will certainly help enable us on that pathway. The way we sort of set it up is that David is going to be responsible globally for sales, marketing and customer facing roles. I'll be supporting David by looking after product, technology and operations. There will be global roles. So I will still be doing work within North America. And equally, a key part of David's role will be supporting the ANZ sales function and having that grow to a greater level than what we have currently. I also do believe that it helps provide additional value to shareholders. The reason why we're doing this is we do see the need to help build our skill set in North America and we certainly mentioned that as part of the strategy that we'd need to focus on North American capability in the sales and marketing area. And some of David's capability is really hard to find at times. So given his background around technology and sales, I certainly thought he'd be a great addition to the team. Why don't I just pause and hand over to David to talk a bit about his background.

Sure. Thanks, Mark. As Mark said, I've been working with EROAD now for about 5 months, but I'll give you a little bit about my background. I have over 25 years working for large and small, both technology companies, going through periods of high growth. In addition to that, a lot of that growth had to do with breaking into the North American market. I've taken other companies from Europe and Asia and helped expand their presence in North America and I'm really excited about doing the same thing here at EROAD. I've also held a lot of customer-centric roles. So whether it was Chief Revenue Officer or running customer success, I've always had a passion and a desire and a track record of building customer experiences as well as building markets out. And North American market is really one of my big focuses here. I think we have a lot of complementary skill sets as you'll take from a lot of our interactions and where we talk about the different roles we play in. And just lastly, about me, I am based in North America. I'm based in Philadelphia, married with a wife and 3 boys, but very excited to play a role both there and here. I think in addition to our colocations around the world, it allows for us both to get more intimate with our employees and our customers and I think that's going to be a real advantage for this new model. Back to Mark.

Thanks, David. So just a little recap around EROAD's strategy. As shareholders know we've got a very clear purpose around delivering intelligence you can trust for a better world tomorrow and have 3 key pillars to help enable that. The first is all about turning around the core. As we mentioned at half year, we're $18.5 million of identified or savings already put into fruition as part of our cost down program. And we're confident that by the end of March we would have identified the full $20 million of cost down and help enable that. We also really focus around customer segmentation. We have over 10,000 customers, from very small ones to incredibly large ones as well. So having the right service segmentation model is critical around how we can support our customers going forward. We're also really well positioned for market momentum going forward as well. And even last week the government announced the fact that in New Zealand we're really pushing for universal RUC. The government is quite keen to move away from fuel excise duty and use technology to enable customers -- sorry, consumers and also commercial entities to pick up RUC for their vehicles. And EROAD is incredibly well positioned to help support the government on that transition to RUC area. I might hand over to David to talk a bit about the growth in North America and that pillar.

Sure. Thanks, Mark. So obviously, growth in North America is important to us mostly from just looking at the total addressable market there. It's extremely large, untapped. We've already set up a great beachhead with some marquee customers. So it's certainly going to be an area of focus. But what enables us to go to North America is the base that we've established here in ANZ. So we're not going to walk away from that base. In fact, we need to strengthen that as we continue to fuel our growth in North America. We're also looking at some very strategic partnerships, one particular being with Thermo King and another being with Microsoft. With Thermo King we can come up with some very innovative solutions for our customers around [ reefer ] and with Microsoft specifically with AI, providing better data analytics and solutions to our existing and new customers. Mark?

Thanks, David. We might hand back to Susan to talk a bit about how we're tracking on our strategy.

Thank you, Mark and David. So, so far the company is doing really well as far as delivering on strategy, which we outlined for you earlier. Cost-out going particularly well and we're delivering the savings that we said we would. We are still targeting cash flow neutral later in this year. So we are on track for that and very focused on making sure that we're cash flow neutral in 2024. As this is an ongoing part, investing in the right team, the right people, and having the structure has been really, really important. So we are focused on getting the right people into the organization, both at a Board level. And you'll be aware that David Green joined the Board a bit earlier. We've really had Sara and Barry in North America step up. Selwyn Pellet from Coretex, who knows the business really well, and Graham Stuart, who has been around for a while, previous Chair. He has stayed on with us through the transition and the Board refresh. So we feel that we've got a fantastic team. It's really exciting for us as a Board to come to meetings and have the caliber of executives that we have around the table. So, Mark, to date, and I'm sure David, going forward, have brought on some really, really top talent for us. Our spend -- capital expenditure, we will keep roughly flat and that will help us as we grow. If we flatline the capital expenditure and investment, it won't go backwards because we do need to invest to keep ahead of the market. But that will flatline with our growth. And as we said earlier, we do have targets that we've put out there for FY '26. Those are unchanged, and we're still highly committed to achieving those targets. For the market we'll update next -- in May 2024, which is in line with previous practice. But I think that's an update from all of us and we're just really happy to answer any questions. So feel free to type those in the top right hand corner, and Jason is going to kindly moderate those and send them to the right person so we can answer the questions that you have. But thank you very much.

Thanks, Susan. Question for you, David. Can you talk about your prior work with EROAD and what changes you see at EROAD in the coming year?