Fund Manager Summary
Eroad Ltd (ASX:ERD) has demonstrated a significant turnaround, with recent fund manager commentary highlighting strong FY25 results that surpassed expectations and a forecast of revenue growth to at least NZ$205m for FY26, driven by robust cash flow and operational leverage. The company’s transition to electronic road user charging (eRUC) in New Zealand, and similar potential developments in Australia, present substantial growth opportunities, leveraging their dominant market position. However, risks loom from a challenging US segment, where customer churn and integration issues have impacted performance, leading to cautious sentiment reflected in recent downgrades. Despite this, fund managers maintain a bullish outlook on Eroad's core ANZ operations, viewing its focus on eRUC as a strategic pivot that could yield high returns, reinforcing confidence in its business model and cash generation potential. The overall sentiment suggests that while there are operational challenges, Eroad is well-positioned for a positive re-rating as it capitalizes on structural tailwinds and improves profitability.
Source: Trading View
Commentary From The Managers
Subscribe To Unlock
Date
Price
Summary
Unlock Recent Updates With ThesisTracker Pro
Don’t let information asymmetry undermine your investment returns. Join other engaged investors on ThesisTracker Pro.
Salter Brothers
31 Oct 2025
$1.70
Summary
- Eroad experienced a decline in October due to ongoing softness in the North American market.
- The loss of a major legacy transport customer was a significant factor contributing to this decline.
- In response, Eroad announced a strategic pivot towards focusing on the electronic road-user charging (eRUC) opportunity in New Zealand and Australia.
- This pivot is viewed positively as Eroad has established leadership and regulatory support in these regions.
- Governance changes include the appointment of John Scott as Executive Chair and the departure of co-CEO David Kenneson.
- The investment team at Salter Brothers sees this renewed focus as a positive reset.
- This strategy aims to concentrate investment and management resources on areas with stronger competitive advantages.
- Policy tailwinds are expected to improve the outlook for Eroad, potentially accelerating revenue and margin expansion.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Subscribe To Unlock
Share Price
Summary
Date
-
Thesis Tracker gives investors direct access to professional fund-manager commentary on ASX-listed companies, all in one structured database.
-
By reporting on thousands of qualitative investment insights, Thesis Tracker helps investors make better decisions beyond just financial metrics.
-
Trusted by active, Retail and Professional ASX investors, Thesis Tracker saves research time by surfacing institutional-grade perspectives that are difficult to find elsewhere.
Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Salter Brothers
31 Oct 2025
$1.70
Summary
- Eroad experienced a decline in October due to ongoing softness in the North American market.
- The loss of a major legacy transport customer was a significant factor contributing to this decline.
- In response, Eroad announced a strategic pivot towards focusing on the electronic road-user charging (eRUC) opportunity in New Zealand and Australia.
- This pivot is viewed positively as Eroad has established leadership and regulatory support in these regions.
- Governance changes include the appointment of John Scott as Executive Chair and the departure of co-CEO David Kenneson.
- The investment team at Salter Brothers sees this renewed focus as a positive reset.
- This strategy aims to concentrate investment and management resources on areas with stronger competitive advantages.
- Policy tailwinds are expected to improve the outlook for Eroad, potentially accelerating revenue and margin expansion.
Cyan Investment Management
31 Oct 2025
$1.70
Summary
- Cyan Investment Management continues to monitor Eroad Ltd closely.
- Despite a solid month, the Fund faced declines in some less material positions.
- Eroad (ERD) experienced a significant drop of 26%.
- The company had previously benefited from government support for electronic vehicle tracking.
- Recent performance was affected by a disappointing downgrade in US progress.
- Eroad attempted to present the downgrade in a positive light.
- In response to these developments, the Fund sold down its holding in Eroad.
Seneca Financial Solutions
31 Oct 2025
$1.70
Summary
- Eroad (ERD) experienced a 21% decline following a trading update and guidance cut due to a US customer churn.
- Despite a ~3% revenue downgrade, the impact on free cash flow was significant.
- Investors reacted negatively, adopting a 'shoot first, ask questions later' mentality.
- Management reaffirmed a focus on the New Zealand/Australian division over the US division.
- This strategic shift is viewed as sensible given the competitive US market.
- Higher returns on capital are expected from core ANZ market opportunities, particularly with the rise of electronic road user charge (eRUC) as electric vehicles become more prevalent.
- Eroad has previously attracted takeover interest from Constellation Software.
- Current trading at 1.7x EV/Sales presents significant growth optionality compared to the ASX tech sector at 7.7x.
- Seneca Financial Solutions continues to hold Eroad as they see potential for recovery and growth.
Mereweather Capital
31 Oct 2025
$1.70
Summary
- Mereweather Capital sold their investment in Eroad due to a very disappointing update regarding revenue and free cash flow guidance.
- The US segment showed continued weakness, prompting the downgrade.
- ERD's US expansion was accelerated through a large acquisition in late 2021, which was made at a steep price of ~20x EBITDA.
- The loss of a large customer and increased discounting from peers in the US will result in the impairment of all goodwill from the acquisition.
- Although the guidance downgrade was not significant (~5% recurring revenue at the mid-point), the lack of operational clarity and loss of cost discipline were disappointing.
- Mereweather Capital's investment thesis was based on the market recognizing the turnaround in ERD’s cash profitability, but this setback has damaged market confidence.
- As a result, Mereweather Capital swiftly exited their position to re-deploy capital into better opportunities.
Tamim Funds Management
31 Oct 2025
$1.70
Summary
- Tamim Funds Management sold their investment in Eroad (ASX: ERD) following a trading update.
- Management is focusing on ANZ eRUC opportunities, leveraging their NZ market leadership.
- Growth investment will prioritize ANZ to capture opportunities over the next 2-3 years.
- North America remains important but faces challenges, including elongated sales cycles and a major contract non-renewal in Feb 2026.
- FY26 guidance was downgraded with revenue expectations of $197–203m (previously >$205m).
- ARR expectations were adjusted to $175–183m (previously >$188m).
- FCF margin guidance decreased to 5–8% (previously 8–10%).
- A $150m impairment on NA intangibles is anticipated.
- The anticipated Investor Day was rescheduled to March 2026.
- Tamim Funds Management initially bought ERD at sub $1.20 and saw significant gains as the stock re-rated to mid $2s.
- Profits were taken while maintaining a core holding; however, the stock was sold off post-update.
- Overall, ERD contributed materially with over 70% profit on the investment this year.
- Tamim Funds Management will reassess the company after their FY results, but from the sidelines.
Ausbil Investment Management
31 Oct 2025
$1.70
Summary
- Eroad (ERD) fell -25.8% for the month.
- Early signs of a turnaround were noted following a management restructure, product enhancements, and improving free cash flow.
- Medium-term opportunities exist due to changes in electronic road user charging in New Zealand.
- The loss of a large enterprise customer in the US led to a subsequent earnings downgrade.
- Ausbil Investment Management believes it is sensible to repivot focus back to profitable Australian and New Zealand operations.
- Looking forward, there is an expectation for stabilisation of earnings as the eRUC opportunity becomes more tangible in the coming year.
Ellerston Capital
31 Oct 2025
$1.70
Summary
- Ellerston Capital notes that Eroad (ERD AU) underperformed in October due to a market reaction to a minor downgrade in FY26 guidance.
- The adjustments to ARR and revenue were between 2-5% at the midpoint, leading to a disproportionate share price reaction.
- While the eRUC opportunity is significant, Ellerston Capital believes the market may have overestimated the timing of this opportunity.
- The downgrade was primarily due to a one-off churn event in the legacy Coretex US business, recognized as lower quality, not reflecting weaknesses in ERD's core ANZ operations.
- ERD's core ANZ operations continue to experience strong growth.
- Ellerston Capital supports ERD's strategic pivot towards Australia and New Zealand, which positions the business for structurally higher returns.
- The market's focus on the guidance reset has overshadowed key developments, including strengthening leadership with a new Executive Chair experienced in scaling tech platforms.
- There is accelerating momentum in ANZ and increased visibility on a multi-year, NZ$1.2bn eRUC rollout, where ERD holds a clear first-mover advantage.
- With the stock pricing in minimal growth beyond the core NZ business, Ellerston Capital sees recent weakness as an attractive opportunity to accumulate a high-quality earnings stream with significant medium-term optionality.
SG Hiscock & Company
31 Oct 2025
$1.70
Summary
- SG Hiscock & Company has recently updated its investment thesis on ERoad Limited (ASX: ERD).
- The company faced challenges this month, including the loss of a legacy North American contract.
- A refreshed management structure has been implemented, enhancing alignment with strategic goals.
- Focus has shifted toward the ANZ region, which is viewed as a sensible direction.
- The leadership adjustment is expected to align better with the upcoming eRUC opportunity in New Zealand.
- Despite short-term uncertainty, SG Hiscock & Company continues to hold a small position in ERoad.
- The core ANZ operations remain solid, supporting the investment thesis.
- The eRUC rollout is deemed a central pillar of the investment strategy, indicating potential medium-term upside.
Seneca Financial Solutions
17 Oct 2025
$1.70
Summary
- Seneca Financial Solutions highlights Eroad Ltd (ERD) as a key investment opportunity in fleet telematics.
- Eroad provides smart software for tracking fleet vehicles, particularly trucks.
- The stock previously peaked at $5 but fell to around 50 cents due to challenges in the US market and network upgrades.
- Management has successfully right-sized the cost base following these setbacks.
- Despite past challenges, the underlying growth of the business remains strong.
- Regulatory tailwinds are starting to favor Eroad's growth prospects.
- Current valuation is appealing compared to other quality tech businesses on the ASX.
- Seneca Financial Solutions considers Eroad a standout buy and one of their top investment weights.
1851 Capital
12 Sept 2025
$2.36
Summary
- 1851 Capital has invested in EROAD Ltd, a New Zealand-based technology company.
- EROAD focuses on transport analytics and operates in New Zealand, Australia, and the US.
- Current regulatory tailwinds are expected to drive profitability.
- The US government is implementing road user charges for all vehicles, presenting a growth opportunity.
- EROAD already has a contract for commercial vehicles in New Zealand, positioning them favorably for future contracts.
- In Australia, potential road user charges for EVs offer another significant opportunity.
- With a market cap of $400 million, EROAD has recently become cashflow positive.
- 1851 Capital believes there is further upside potential for EROAD.
Acorn Capital
31 Aug 2025
$2.17
Summary
- Acorn Capital updates its investment thesis on Eroad Ltd.
- Eroad saw a significant increase of 57% in response to government announcements.
- The New Zealand Government plans to implement legislation for electronic road user charging by 2026.
- This legislative change is expected to enhance Eroad's market opportunities in telematics.
- Acorn Capital continues to hold Eroad due to its positive market outlook.
Ellerston Capital
31 Aug 2025
$2.17
Summary
- EROD (ERD AU) demonstrated strong performance in August, driven by momentum in electronic road user charging (eRUC).
- The New Zealand Government plans to transition 3.5 million light vehicles to eRUC by 2027, favoring ERD due to its ~92% market share.
- This transition represents a potential revenue opportunity of over NZ$100 million annually.
- ERD is positioned as the clear incumbent in a regulated, high-margin market.
- Similar policy discussions are emerging in Australia, which may lead to tolling electric vehicles, providing additional growth opportunities.
- ERD has a consistent track record of exceeding revenue, EBIT, and free cash flow targets.
- The company is transitioning to being self-funding.
- Ellerston Capital believes ERD is in the early stages of a re-rating cycle as the market recognizes its domestic leadership and international growth potential.
Cyan Investment Management
31 Aug 2025
$2.17
Summary
- Cyan Investment Management continues to hold a position in EROAD (ERD), which has seen a strong gain of 56%.
- EROAD is a hardware-based SaaS company that offers tracking and efficiency solutions for large vehicle fleets.
- The company operates primarily in New Zealand, Australia, and North America.
- Recent announcements regarding proposed NZ legislation could significantly expand EROAD's market reach.
- The proposed legislation introduces electronic user charging (eRUC), replacing the Fuel Excise Duty on petrol.
- This change aims to address the growing number of electric vehicles (EVs) on the roads.
- Speculation exists that similar legislation may be proposed in Australia and other regions.
- EROAD's solutions are well-positioned to capitalize on these potential developments.
Ausbil Investment Management
31 Aug 2025
$2.17
Summary
- EROAD (ERD) returned +56.3% for the month.
- Ausbil attended ERD’s annual Fleet Day in New Zealand, boosting confidence in the company’s innovation pipeline.
- The innovation pipeline is expected to expand ERD’s addressable market and deepen customer penetration.
- Proposed changes in New Zealand to replace the fuel excise levy with an electronic road-user charge (eRUC) by 2027 are viewed positively.
- Ausbil anticipates this change to be a transformational opportunity for ERD.
Salter Brothers
19 Aug 2025
$2.20
Summary
- Eroad is an international hardware enabled SaaS provider focused on safety, compliance, sustainability, and efficiency for complex vehicle fleets, offering real-time visibility and control.
- Salter Brothers initiated their position in Eroad in July 2024, accumulating shares ahead of the FY25 March year-end results.
- Eroad’s solutions are integrated into highly regulated fleet operations, including food distribution, construction materials, and heavy transport, helping customers operate smarter and safer.
- In May 2025, Eroad reported a strong full-year result, surpassing market expectations with free cash flow increasing to NZ$16.1m, despite a NZ$7.5m capex drag from the 4G upgrade program.
- Guidance for FY26 includes revenue of at least NZ$205m, a normalized free cash flow yield of 8-10%, and a medium-term ARR growth CAGR of 11-13%.
- The New Zealand Government's plans to transition to electronic Road User Charging (eRUC) positions Eroad as the market leader, with a potential to capture an additional 3.5m vehicles.
- With improving profitability and strong free cash flow generation, Eroad offers a compelling mix of operating leverage and recurring revenue growth potential.
Acorn Capital
30 June 2025
$1.30
Summary
- Acorn Capital notes a significant increase in EROAD's share price of 50.3%.
- The company reported FY25 results that indicate increasing operating leverage and free cash flow.
- This performance confirms that the turnaround is firmly in place.
- The exit of Constellation Software from its 10% stake has removed a long-standing takeover-bid overhang.
- This development clears the path for a potential valuation re-rating.
- Acorn Capital continues to hold its position in EROAD due to these positive indicators.
Tamim Funds Management
19 June 2025
$1.37
Summary
- Tamim Funds Management highlights EROAD Limited (ASX/NZX: ERD) as a compelling investment opportunity in a challenging market environment.
- Recent FY25 results show EROAD is demonstrating operational leverage and strategic clarity.
- Revenue increased by 6.8% to $194.4m, with Annualised Recurring Revenue (ARR) up 6.1% to $175.1m.
- Normalized Free Cash Flow surged to $23.6m, a significant increase from $1.3m last year.
- Positive NPAT of $1.4m compared to -$0.8m previously, indicating a shift towards profitability.
- Cash flow generation is now repeatable, with gross free cash flow improving tenfold year-on-year.
- Capex has decreased to $13.4m from $32.2m, indicating improved efficiency and a sustainable capex range of $14 to $18m going forward.
- Management has shown strong execution with high asset retention of 92.5% group-wide and a growing enterprise segment.
- North America presents significant growth potential, with a strong pipeline of deals anticipated for FY26.
- The exit of Constellation Software's 10% holding clears a path for EROAD to be viewed as a standalone business.
- FY26 guidance suggests revenue of at least $205m and ARR of $188m+, with a normalized FCF yield of 8–10%.
- Despite progress, EROAD is trading below historical highs, presenting a potential valuation catch-up opportunity.
- Tamim Funds Management believes EROAD fits their investment criteria, including high insider ownership and growing free cash flow.
- Overall, EROAD is positioned for a re-rating as it continues to execute on its growth strategy.
Tamim Funds Management
31 May 2025
$1.51
Summary
- Tamim Funds Management notes that EROAD Limited (NZX/ASX: ERD) has delivered strong financial results for the year ended 31 March 2025.
- Revenue rose 6.8% to $194.4m, with annualised recurring revenue (ARR) increasing 6.1% to $175.1m.
- EBIT climbed to $5.9m, with normalised EBIT (excluding 4G upgrade costs) increasing to $9.9m.
- Net profit after tax improved to $1.4m, reversing a loss of $0.8m in FY24.
- Free cash flow to the firm reached $16.0m, significantly up from $1.3m last year.
- High asset retention of 92.5% and expansion across all markets drove growth.
- Key enterprise wins in NZ, Australia, and North America added $13.2m in ARR, with enterprise clients now contributing 54% of total ARR.
- The number of enterprise customers grew by 7%.
- Co-CEOs Mark Heine and David Kenneson highlighted progress under EROAD’s reset strategy, focusing on enterprise growth and disciplined cost control.
- FY26 guidance includes revenue of at least $205m, ARR of $188m, and free cash flow yield of 8–10%.
- Medium-term ARR CAGR is expected at 11–13%.
- Management highlighted 5 large contracts that are potentially near term.
- Tamim Funds Management sees this result as a watershed moment for the stock.
- With a $250 million market cap, negligible debt, and growing profitability and FCF, the stock is considered cheap at 1.4x ARR and 12x FCF.
- There is a belief in a potential upside of 200% over the next 12-18 months.
Cyan Investment Management
31 May 2025
$1.51
Summary
- Investment Thesis Update: Cyan Investment Management continues to hold Eroad Ltd. (ERD) due to its promising outlook.
- Strategic Acquisition: The addition of Eroad's fleet management business enhances the overall portfolio.
- Discounted Corporate Selldown: Acquisition was executed through a favorable financial structure.
- Positive Financial Performance: Eroad's strong FY25 results further bolster confidence in the investment.
Salter Brothers
31 May 2025
$1.51
Summary
- Salter Brothers continues to hold a positive outlook on Eroad Ltd (ERD) as an international hardware-enabled SaaS company.
- ERD provides solutions for safety, compliance, sustainability, and efficiency in complex vehicle fleets.
- In May, ERD released positive full year results, significantly exceeding market expectations.
- The company achieved revenue of NZ$194m, at the top end of their guidance of NZ$190-$194m.
- Normalised cash EBIT reached NZ$10m, also at the top of their guidance range of NZ$5-10m.
- Free cash flow increased to over NZ$16m, despite a CAPEX drag of $8m that will end in CY25.
- ERD provided FY26 guidance with revenue expected to be a minimum of NZ$205m.
- They forecast a normalised free cash flow yield of 8-10% and a medium-term ARR growth CAGR of 11-13%.
- ERD is now a top listed holding in the portfolio, reflecting Salter Brothers' confidence in its medium-term trajectory.
Mereweather Capital
31 May 2025
$1.51
Summary
- Mereweather Capital initiated a position in EROAD (ERD) following their full year 2025 results, indicating a clear turnaround in the business.
- ERD is a New Zealand-based provider of enterprise fleet telematics solutions, evolving from hardware to a full-service software platform.
- The company generates 95% of its revenue from software as a service subscriptions, benefiting from a significant acquisition in FY22.
- Despite solid revenue growth, the share price fell significantly, reaching a low of 40c in 2023 from a peak above $5 in 2021.
- ERD faced challenges with losses of $48m in FY22 and $35m in FY23, leading to a dilutionary capital raise at 70c in 2023.
- A new executive team has committed to rationalizing costs and returning the business to cash flow generation.
- Growing revenue and a flat cost base have led to improved operating leverage, with cash operating profit inflecting positively.
- ERD is undergoing a capital expenditure program to upgrade aging hardware, with a total of $30m spent over two years.
- The completion of the 4G upgrade will support cash profit growth and allow focus on new customer acquisition.
- At a current enterprise valuation of ~$295m, ERD trades at a low multiple relative to its annualized recurring revenue and cash operating profit.
- Risks include a challenging operating environment for logistics customers and stalled growth in the US segment due to strategic focus on larger clients.
- However, the nascent Australian segment shows promise with a 28% revenue growth, quickly scaling towards profitability.
- Management's commitment to cash profitability and cost discipline may lead to increased market recognition of ERD's value.
Ellerston Capital
31 May 2025
$1.51
Summary
- Ellerston Capital has held ERD in the portfolio, transitioning from a prospect to a core holding.
- The fund manager was anticipating ERD to demonstrate a shift to free cash flow positive.
- This transition is expected to lead to significant share price appreciation, marking the company as self-funding.
- Past examples of similar flips include Life360, Megaport, and Catapult.
- ERD has consistently exceeded its revenue, EBIT, and FCF targets for three consecutive years.
- The company reported an ARR of NZ$175m and a normalised EBIT of NZ$9.9m.
- For FY26, ERD provided guidance for revenue exceeding $205m and ARR above $188m.
- ERD maintains a medium-term ARR CAGR target of +11%-13% from FY27 to FY29.
- Ellerston Capital believes ERD is at the beginning of a re-rate cycle as the market recognizes its growth potential and customer base stickiness.
Ellerston Capital
31 July 2024
$1.21
Summary
- Ellerston Capital reports a significant performance boost in July, with ERD AU share prices rising by 29.4%.
- No market-sensitive announcements were made during July; however, a key contract was signed at the end of June.
- ERD secured a material contract with its largest Australasian customer, indicating strong client retention.
- The contract includes a renewal of 6,000 units in New Zealand and an addition of 5,000 units for the Australian fleet.
- This achievement reflects ERD's strategy of expanding share within its existing customer base and onboarding new clients.
- The Australian segment of the business is performing well, continuing a positive trend.
- ERD's revenue guidance for FY25 is set at $190m-$195m, which Ellerston Capital considers conservative based on recent contract wins.
- Ellerston Capital maintains ERD as a core position within its Micro Cap portfolio, viewing it as an attractive investment opportunity at current prices.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who is investing in Eroad Ltd (ASX:ERD)?
Fund managers including Cyan Investment Management, Mereweather Capital, Salter Brothers, Ellerston Capital, Acorn Capital, 1851 Capital, Tamim Funds Management, Ausbil Investment Management, Seneca Financial Solutions and SG Hiscock & Company have invested in Eroad Ltd (ASX:ERD).
Why do fund managers invest in Eroad Ltd?
Fund managers invest in Eroad Ltd due to its strong performance in fleet management and telematics, highlighted by robust annual results and a transition to cash profitability. The company's software-as-a-service model generates 95% of its revenue, with a high gross margin of 75-80%. Furthermore, Eroad's strategic focus on electronic road user charging, particularly in New Zealand and Australia, presents significant growth opportunities. Despite risks in its US market, the company's solid position and improving financial metrics attract investor interest.
What happened to Eroad Ltd (ASX:ERD)?
Fund managers are investing in Eroad Ltd due to its strategic focus on the Australian and New Zealand (ANZ) markets, particularly in electronic road user charging (eRUC) as governments shift toward usage-based models. Eroad's established presence in New Zealand, alongside anticipated regulatory support, positions the company to capitalize on significant growth opportunities. Despite recent challenges in the U.S. market, including a contract loss and lowered revenue guidance, the overarching sentiment remains positive about Eroad's potential for profitability and market leadership in the eRUC sector. This combination of regulatory tailwinds and a renewed management focus on high-return ANZ operations reinforces its investment appeal.
What is the short interest in Eroad Ltd (ASX:ERD)?
According to ASIC filings, there is negligible or no short interest in Eroad Ltd (ASX:ERD).
What does Eroad Ltd (ASX:ERD) do?
Eroad Ltd. is a company that provides ICT solutions and services to enterprises and businesses. It focuses on delivering practical technology-based services that enhance communication and operational efficiency. Operating within the information and communication technology sector, Eroad Ltd. is based in Sydney, Australia.