EROAD Limited

FY26 reported revenue was NZD 195.2 million, broadly stable year on year. ARR closed at NZD 174.3 million, and normalized EBIT was NZD 2.9 million versus NZD 9.9 million last year. Normalized free cash flow margin was 7.4%, with normalized free cash flow of NZD 14.4 million; reported free cash flow to the firm was just over breakeven at NZD 100,000. Reported EBIT was a loss of NZD 155.9 million, impacted by NZD 152.9 million of noncash accounting adjustments, including an NZD 134.7 million impairment and NZD 18.2 million of other accounting changes. New Zealand ARR increased 5% to NZD 93.5 million and revenue rose 1.1%; Australia ARR increased 73% to NZD 21.9 million and revenue rose more than 40%; North America ARR declined 20% and revenue declined 7.1%. The group ended with total liquidity of NZD 49 million, including NZD 10.1 million of cash and nearly NZD 39 million of available facility headroom, and bank facilities were extended through October 2027. Management said it expects to be free cash flow positive, target free cash flow neutrality in North America, and does not plan to give revenue guidance at this stage.

John Scott framed the year as a reset and said the company has strong product-market fit in New Zealand, but that each country must be managed differently because the dynamics are not the same. He highlighted a transformation program centered on customer focus, operational discipline, AI-driven efficiency, and platform modernization, and said eRUC is an important option but is expected to stay under 5% of OpEx and be funded from existing cash flow. His tone was upbeat about the long-term setup, especially New Zealand and Australia, but cautious about giving top-line guidance before the transformation is further along.

Ciara McGuigan said FY26 included NZD 152.9 million of noncash accounting adjustments tied to a year of review and reset. She pointed to NZD 195.2 million of revenue, NZD 174.3 million of ARR, normalized EBIT of NZD 2.9 million, and normalized free cash flow of NZD 14.4 million, while noting reported free cash flow was just over breakeven at NZD 100,000. She also said recurring operating costs rose 5.1% excluding one-offs, support and servicing costs increased to 8.9% of revenue, R&D was NZD 34.6 million or 18% of revenue, and liquidity ended at NZD 49 million with facilities extended to October 2027.

Analysts focused on AI, North America cash generation, New Zealand maturity, eRUC timing, Australia growth visibility, technology obsolescence, the consumer app model, and cash flow volatility in the second half. Management said AI should help across operations and platform modernization, that North America is being reset toward free cash flow neutrality as soon as possible, and that the lost North American customer was low-margin, so the remaining mix should improve profitability. They also said the light passenger eRUC offering should roll out over the winter, Australia’s growth is mostly precontracted with strong mid-digit growth expected in FY27, and 4G should last another 10 years with no 5G upgrade expected in the next 5 to 7 years.