Quartix flags solid first-half subscription growth

8th Jul 2024 10:32

(Sharecast News) - Vehicle tracking specialist Quartix Technologies said in a trading update on Monday that it expected to report first-half revenue of £16m, adjusted EBITDA of £2.6m, pre-tax profit of £2.6m, and free cash flow of £0.9m.

The AIM-traded company said its net cash balance at the end of the period on 30 June stood at £2.6m.

It said the estimates included £0.5m in non-recurring costs, primarily related to the liquidation of the subsidiary Konetik Deutschland.

Additionally, the free cash flow estimate included costs from the 4G upgrade programme in France, amounting to £0.4m.

Quartix's annualised recurring revenue (ARR) grew by £3.01m, or 11%, year-on-year, with two-thirds of this growth occurring in the first half of 2024.

The average revenue per unit subscription increased by 1%, offsetting some price erosion effects.

However, the overall customer attrition rate rose to 14%, mainly due to the termination of a large UK contract and organisational issues in the USA.

In the UK, the company's renewed focus on core business activities, following the discontinuation of the Evolve product line, resulted in a 17% increase in new subscriptions and a 7% growth in the subscription base over the trailing 12 months.

Quartix achieved significant successes in the medium-sized fleet segment, attributed to its strong customer service reputation.

In France, the subscription and customer bases grew 22% and 14% respectively, on a trailing 12-month basis.

While new subscriptions were flat compared to the same period last year, they were 14% ahead of the second half of 2023.

In the US, organisational and strategic changes in 2022 and 2023 negatively impacted performance, reducing annual recurring revenue growth.

Recruitment efforts were reportedly underway to support the US business, with improving customer acquisition rates observed by the end of the period.

Italy, Spain, and Germany recorded strong growth across key performance measures.

Italy showed particularly strong customer acquisition rates, and Germany saw significant growth in new installations.

Further investment was planned for the markets in the second half of the year.

Quartix acquired Konetik in September last year for up to €3.9m.

Konetik, specialising in consultancy for fleets transitioning to electric vehicles, failed to deliver the anticipated growth, leading to its liquidation.

The liquidation process was well underway, with operating costs of £0.28m recorded in the period and an additional provision of £0.15m for final costs.

A further payment of £0.2m would be due in September under the acquisition agreement.

"It is extremely pleasing to have recorded strong growth in the value of our subscription base over the past 12 months," said executive chairman Andy Walters.

"Annualised recurring revenues have increased by just over £3m since July 2023 and two thirds of that increase was achieved in the first half of 2024.

"Double-digit percentage growth was also achieved in new vehicle subscriptions, the vehicle subscription base and customer acquisition rates."

Walters said the customer base grew 9% over the past year, with the company expecting to improve that further as it focussed on customer acquisition with businesses in the SME category.

"We have now put the issues of 2023 behind us and, despite incurring more than £0.5m of cost associated with those in the first half, we expect to record approximately £2.6m of pre-tax profit in our interim results.

"I am immensely grateful to all my colleagues and the management team at Quartix who have so successfully refocused the company on its core business activity since my return to the board last September, and we look forward to the future with confidence."

At 0921 BST, shares in Quartix Technologies were up 8.2% at 165p.

Reporting by Josh White for Sharecast.com.