The EROAD Ltd (ASX: ERD) share price is on the move on Friday following the release of an announcement.
At the time of writing, the transportation technology services company's shares are up 8% to $4.75.
Why is the EROAD share price charging higher?
Investors have been buying the company's shares after it announced the signing of its largest Australian enterprise customer, Ventia.
Ventia is one of the largest essential services providers in the Australia and New Zealand region. It specialises in the long-term operation, maintenance, and management of critical public and private assets and infrastructure for corporate and government clients.
According to the release, EROAD and Ventia have entered into a five-year agreement for a monthly subscription of EROAD's software-as-a-service (SaaS) products. Ventia intends to install approximately 2,500 Ehubo 2 devices in their Australian fleet and a further 1,500 in their New Zealand fleet. The company expects the installation of these Ehubo units to occur throughout the 2021 calendar year.
Ehubo 2 is a driver-facing touchscreen display that enables a suite of functions to help assist drivers and managers.
EROAD's CEO, Steven Newman, said: "EROAD is pleased to announce that Ventia, an existing New Zealand customer for a number of years, has chosen to come on board as an Australian enterprise customer as well as significantly increasing the size of its New Zealand fleet utilising EROAD services. EROAD is looking forward to working in partnership with Ventia to deliver best safety outcomes."
How big is this contract?
This is a material contract win for its Australian operations. Management notes that the company entered the Australian market in 2018. Since then it has been building its brand on the back of regulatory reform, which has provided a significant low-cost growth option.
This led to EROAD providing monthly subscriptions for a total of 2,625 connected units at the end of December. As a result, if Ventia installs the 2,500 units, it will almost double its presence in the Australian market.
Positively, its growth may not stop there. Management points out that it has a short to medium term enterprise pipeline of approximately 15,000 to 20,000 connected vehicles.
