The Eroad Ltd (ASX: ERD) share price has been a solid performer on Tuesday morning.
At the time of writing, the transportation technology services company’s shares are 1% to $4.77.
Why is the Eroad share price charging higher?
Investors have been buying Eroad shares this morning following the release of an update on its performance during the fourth quarter of FY 2021.
According to the release, the company sold 2,726 contracted units during the quarter. This includes 1,054 MYEROAD Clarity Dashcam units in March. Management notes that this reflects continued growth across its markets.
The majority of the company’s new units were in the New Zealand market. Eroad added 2,295 units during the quarter in its home market after it secured a large New Zealand Enterprise customer, Toll New Zealand. This was supported by a 182 unit increase in North America and a 249 unit increase in Australia.
This left Eroad with a total of 126,203 contracted units at the end of the period.
Management also provided an update on its guidance for FY 2021 and FY 2022.
In respect to the former, Eroad continues to expect a small increase in second half revenue compared to the first half. Whereas EBITDA is anticipated to be similar to the first half’s figure. This reflects the acceleration of product development and increased sales and marketing costs associated with the launches of key products.
Looking to FY 2022, Eroad anticipates that revenue growth will strengthen, but not be at the level experienced in FY 2020.
It commented: “In New Zealand, EROAD expects similar growth to the last four years. In North America, targeting an increased addressable market through improved product market fit, to deliver increased unit growth. In Australia, growth during the next 2 years will come predominantly from an Enterprise pipeline of 15-20,000 vehicles.”
“As EROAD continues to accelerate new product delivery for future growth in FY23 and FY24, it anticipates spending 24-27% of revenue on R&D during FY22. However, the company anticipates EBITDA margin to be maintained but improving at the end of FY22, to provide further increased EBITDA margin.”