Quartix driving ahead

The company continues to sign up new SMEs at a pace based on the strength of its product and its focus on flexible 12-month contracts. This led to 10 per cent growth in recurring fleet revenues last year despite a slow first half. Meanwhile, recurring revenue accounts for about 90 per cent of all fleet sales, which underpins visibility. 

Earlier this month, the company told shareholders that first-half trading was ahead of expectations, with full-year revenues expected to be at least £25m compared with consensus estimates of £24.1m. Meanwhile, adjusted cash profits and free cash flows should “at least” meet market forecasts. Despite the top line progress, earnings forecasts have not moved because the cost of installing new telematics units, which is expensed as incurred, means delayed bottom-line gratification.

First-half fleet installations should be up by around 45 per cent year on year, with revenue up £1m to over £10m. The subscription base is projected to land at 137,000 – up from 112,530. And beyond its existing markets (UK, France and the US), which are ticking along well, the group has seen good early results from its marketing initiatives in Poland and Spain, having won around 40 new clients in each country. Quartix reckons that SMEs in the Hispanic community represent a major market opportunity.

Despite the encouraging progress in fleet, a glance at the accompanying table shows sales and earnings are set to shrink in the 2019 financial year before gradually improving. This reflects Quartix's decision to reducing its involvement in lower-margin insurance tracking operations. In the first half of the current year, its insurance revenues will fall by around £1.3m to just a fifth of total sales.