EROAD Limited

FY26 reported revenue was NZD 195.2 million, broadly stable year over year, with growth in New Zealand and strong momentum in Australia offset by North America weakness. Normalized EBIT was NZD 2.9 million versus NZD 9.9 million last year, while reported EBIT was a loss of NZD 155.9 million due to NZD 152.9 million of noncash accounting adjustments. Reported free cash flow to the firm was just over breakeven at NZD 100,000, but normalized free cash flow was NZD 14.4 million and normalized free cash flow margin was 7.4%. ARR closed at NZD 174.3 million. For the regions, New Zealand ARR rose 5% to NZD 93.5 million and revenue increased 1.1%; Australia ARR rose 73% to NZD 21.9 million and revenue increased more than 40%; North America ARR declined 20% and revenue declined 7.1%. Looking ahead, management said Australia should continue at strong mid-digit growth in FY27, North America is targeted to be free cash flow neutral, and the group is guaranteeing free cash flow positive but is not giving revenue guidance.

John Scott framed the year as a strategic reset and said the business has strong product-market fit in New Zealand, but that each country has very different dynamics. He emphasized a back-to-basics, customer-focused transformation centered on operational excellence, platform modernization, customer intimacy, AI, and regional accountability. He was upbeat about New Zealand’s upside, Australia’s double-digit growth, and the longer-term optionality around eRUC, while also stressing that the company will fund the eRUC program from free cash flow and keep it under 5% of OpEx.

Ciara McGuigan said FY26 included NZD 152.9 million of noncash accounting adjustments tied to the year’s review and reset, which pushed reported EBIT to a NZD 155.9 million loss. She highlighted normalized EBIT of NZD 2.9 million, normalized free cash flow of NZD 14.4 million, and a 7.4% normalized free cash flow margin. She also noted operating costs of NZD 156.2 million, of which NZD 14.5 million were one-off items, and said recurring operating costs rose 5.1% year over year due to deliberate investment in customer service capability and platform stability. Cash and liquidity remained solid at NZD 49 million, including NZD 10.1 million of cash and nearly NZD 39 million of facility headroom, with bank facilities extended through October 2027.

Analysts focused on AI, the path to free cash flow neutrality in North America, and how the company would fund transformation while also pursuing eRUC. Management said AI should be beneficial, especially because EROAD is not purely SaaS and can use AI across hardware-enabled deployments, internal processes, and data products; John Scott said the company was previously subscale but can now gain from AI-assisted tools. On North America, management explained that the customer nonrenewal was low-margin and that pruning some large U.S. customers can actually improve profitability, while the target remains free cash flow neutral as soon as possible. Questions also covered the timing of the light passenger eRUC rollout, with management saying the consumer and business models would be out over the winter, and the 4G upgrade, which they said is expected to last another 10 years with no 5G upgrade expected in the next 5 to 7 years.