When Andy Walters founded vehicle tracking specialist Quartix (QTX), he visualised a tech company that could generate most of its income via recurring revenue. That's why the plan is to focus on the fleet services market, where customer churn is particularly low. "Our first ever customer is still with us," said Mr Walters.
In 2016, the division won 2,336 new customers, taking the total installed base to 87,889 vehicles*. This helped fleet revenue grow 15 per cent to £14.9m. The smaller insurance business also continued to attract customers, and revenues here were up by a quarter to £8.4m. But the insurance market is crowded, and largely controlled by big players which have recently been cutting prices. "We're not prepared to follow the price down," says Mr Walters. Rather, the group will now focus on simply maintaining margins in the insurance business, but growing the top line for fleet.
This could stunt the growth we're used to seeing at Quartix, as management reckons its strategy will result in flat revenues and profits this year. Broker FinnCap expects adjusted pre-tax profits of £6.7m, giving EPS of 11.8p (£6.7m and 13p in FY2016).
*28 February 2017: The original version of this article referred to 6,191 vehicles, the size of the US segment. This has been corrected.
QUARTIX (QTX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 340p | MARKET VALUE: | £161m | |
| TOUCH: | 330-350p | 12-MONTH HIGH / LOW: | 468p | 263p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 39p* | NET CASH: | £6.2m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 8.3 | 2.8 | 5.2 | nil |
| 2013 | 13.2 | 4.6 | 8.3 | nil |
| 2014 | 15.3 | 5.0 | 8.7 | 3.0 |
| 2015 | 19.7 | 6.0 | 10.7 | 6.0 |
| 2016 | 23.3 | 6.5 | 12.9 | 6.5** |
| % change | +19 | +9 | +20 | +8 |
Ex-div: 6 Apr Payment: 5 May *Includes intangible assets of £14m, or 30p a share **Excludes 4.7p supplementary dividend | ||||
