Summary
The fund managers believe that Eroad Ltd presents a strong investment opportunity due to its innovative technology and robust growth potential. In their opinion, the company’s focus on enhancing fleet management solutions positions it well within the expanding telematics market. They highlight the importance of Eroad's strategic partnerships, which are expected to drive further market penetration. Additionally, the fund managers note that the company's financial health is solid, with consistent revenue growth and a sustainable profit margin. They express confidence in Eroad's management team, emphasizing their track record of effective execution and strategic vision. Overall, the fund managers are optimistic about Eroad’s future performance and recommend it as a compelling addition to investment portfolios.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Source: Trading View
Commentary From The Managers
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.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
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Commentary From The Managers
1851 Capital
12 Sept 2025
$2.36
- 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.
Summary
Acorn Capital
31 Aug 2025
$2.17
- 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.
Summary
Salter Brothers
19 Aug 2025
$2.20
- 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.
Summary
Acorn Capital
30 June 2025
$1.30
- 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.
Summary
Cyan Investment Management
31 May 2025
$1.51
- 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.
Summary
Mereweather Capital
31 May 2025
$1.51
- 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.
Summary
Ellerston Capital
31 May 2025
$1.51
- 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.
Summary
Salter Brothers
31 May 2025
$1.51
- 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.
Summary
Ellerston Capital
31 July 2024
$1.21
- 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.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Frequently Asked Questions
Who has invested in Eroad Ltd (ASX:ERD)?
Fund managers including Cyan Investment Management, Mereweather Capital, Salter Brothers, Ellerston Capital, Acorn Capital and 1851 Capital have invested in Eroad Ltd (ASX:ERD).
Why have investment managers invested in Eroad Ltd (ASX:ERD)?
Fund managers are investing in Eroad Ltd (ERD) due to its strong financial turnaround and promising growth prospects. Following a discounted corporate selldown and positive FY25 results, ERD demonstrated a clear shift towards profitability, generating significant cash flow and beating revenue expectations. The company's transition to a high-margin, subscription-based SaaS model, which now accounts for 95% of its revenue, positions it well for sustainable growth. Despite past challenges, including a declining share price and operational headwinds, recent strategic changes and cost rationalization have led to improved cash profitability and operational leverage. Fund managers see ERD as undervalued, trading at attractive multiples relative to its recurring revenue and cash flow, with a solid outlook for continued revenue growth and expansion into new markets. This combination of financial resilience, operational improvements, and a favorable market position makes ERD a compelling investment choice.
What happened to Eroad Ltd (ASX:ERD)?
In recent comments regarding Eroad Ltd, fund managers highlighted the company's promising outlook as of September 2025, when the share price was around $2.36. 1851 Capital noted Eroad's strong positioning in the transport analytics sector across New Zealand, Australia, and the US, driven by regulatory tailwinds such as the introduction of road user charges in the US and potential EV charges in Australia, suggesting significant revenue growth. Acorn Capital reported a remarkable 57% increase in Eroad's value following the New Zealand Government's announcement to transition to electronic road user charging by 2026, while Salter Brothers emphasized Eroad's role as a leading SaaS provider for fleet operations, showcasing robust cash flow and a strong growth pipeline with FY26 revenue guidance of at least NZ$205 million. Overall, Eroad is positioned for substantial growth and profitability in the evolving transport landscape.