TIDMQTX
RNS Number : 0126Z
Quartix Technologies PLC
09 January 2024
9 January 2024
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 as retained as part of UK
law by virtue of the European Union (Withdrawal) Act 2018 as
amended.
Quartix Technologies plc
("Quartix", "the Group" or "the Company")
Trading Statement
Quartix Technologies plc, a leading supplier of
subscription-based vehicle tracking systems, software and services,
is pleased to provide an update on trading for the year ended 31
December 2023 (the "Period").
Management estimates provided in this update may be subject to
revision following the nalisation of December's trading results and
audit.
Additionally, the Company announces that its registered office
has changed from Sheraton House, Castle Park, Cambridge, CB3 0AX to
9 Journey Campus, Castle Park, Cambridge, CB3 0AX.
Financial Results
The Board estimates that revenue, pro t (adjusted EBITDA) and
free cash ow for the Period will have been GBP29.8m, GBP4.9m and
GBP3.1m respectively. The Company's cash balance at year-end was
GBP2.3m.
Free cash flow for the period excludes the capital investment
made in the purchase of Konetik Deutschland GmbH ("Konetik"), but
includes the effects of operational losses from the Konetik
acquisition post-completion during the Period. The net cash
expenditure attributable to these were GBP1.95m and GBP0.7m,
respectively. In addition to this the Company incurred incremental
corporation tax charges of GBP0.7m associated with changes it made
to its accounting policies in 2022.
Given the closing cash balance at the end of the Period the
Board will consider whether to recommend a lower ordinary dividend
than that implied by its current dividend policy at the time of
publication of its audited results.
Fleet Subscription Base
The Company made good progress in its core eet business during
2023: the vehicle subscription base increased by 13% to 266,568 and
total fleet revenue grew by 10% in the Period, to GBP29.5m.
Attrition has marginally increased to 13.3% (2022: 12.8%) driven by
increased attrition in the US market. Following the planned
discontinuance of the insurance business, insurance revenue reduced
further to GBP0.4m, representing less than 2% of Group revenue.
Excellent growth was achieved in both France and the Company's
new European territories, with performance in the UK and the USA
being subject to renewed focus in 2024.
ARR Growth New subscriptions Subscription Growth Customer
vs. 2022 (units) base (units) in subscription base
(constant base vs
currency 2022
1 )
31/12/2023 FY 2023 31/12/2023 31/12/2023
Region (GBPm)
UK 16.5 2.1% 26,411 146,679 7.4% 11,305
------------ ---------- ------------------ ------------- ----------------- ------------
France 7.4 22.2% 22,151 67,895 29.1% 8,230
------------ ---------- ------------------ ------------- ----------------- ------------
USA 3.1 (5.4%) 5,994 29,235 (5.1%) 3,849
Spain, Italy,
Germany &
Ireland 2.1 45.3% 9,862 22,759 46.0% 3,884
Total 29.1 8.0% 64,418 266,568 13.2% 27,268
------------ ---------- ------------------ ------------- ----------------- ------------
Annualised Recurring Revenue ("ARR")
ARR is the annualised value of the Group's recurring fleet
subscription base. ARR increased by GBP2.2m during the period, on a
constant currency basis 1 , ending the year at GBP29.1m. Price
erosion measured at a constant currency has remained stable with
the prior year at 4.6%.
Given the inflationary pressures of the past two years the
Company has introduced a change to its terms allowing a price
adjustment to be made to certain contracts following expiry of the
initial term. Customers were notified of this change at the end of
the Period and it will come into effect from 1 February 2024 for
approximately 80% of the subscription base. This is expected to
have a positive impact on ARR from February onwards and the Company
will be in a better position to report on the improvement after the
first quarterly billing cycle has been completed.
EVolve and Konetik
Revenues from Evolve during the Period and independent revenues
from Konetik post-acquisition during the Period amounted to less
than GBP0.1m combined. For this reason, and those outlined in the
RNS of 11 December 2023, sales, development and marketing resources
for the UK and USA will be entirely refocused on the core business,
and reduction of the financial impact of this acquisition on the
operating performance of the Company is now a matter of utmost
priority.
It is expected that actions taken to reduce resource commitment
in this area will help in accelerating growth of the core business
in the UK.
4G network migration in Europe
As described in the Company's RNS of 6 October 2023, the Company
expects the 'sunsetting' of the 2G mobile network in France to be
finalized by the end of 2026. This necessitates the replacement of
a large proportion of the French installed base of tracking systems
during 2024 and 2025 and the Company has taken the decision, as it
did for the US, to provide this service free of charge to customers
in order to minimize the chances of incremental attrition and to
further enhance the Company's reputation in the French market. The
estimated cost of this replacement programme is approximately
GBP4.1m which the Company (subject to final audit) expects to take
as a provision in its 2023 accounts, although this is excluded from
adjusted EBITDA above.
The Company continues to review the situation for network
migration in the UK. Currently all new systems installed are either
4G compatible or make use of a roaming sim card which can use a
range of 2G networks, as it is believed that some of these will
continue to be operational beyond 2028.
Operational efficiency
As noted in the RNS of 6 October, cost reductions in
manufacturing were achieved during the second half of the year. The
Company has now also initiated a more significant revision and
update to its 4G telematics hardware to achieve further significant
reductions in manufacturing cost. This is targeted for release in
the second half of 2024 and this project is progressing well.
The Company will continue to review overhead expenditure to
ensure that effective investment is being made in the acquisition
and support of customers in its core fleet business.
Notice of Results
The Company expects to publish its results for the year ended 31
December 2023 on Monday 4 March 2024. The results, together with
accompanying presentations, will be posted that morning on the
Company's website at www.quartix.com/investors.
Andy Walters and Emily Rees will also give a presentation of the
Company at the ShareSoc Growth Company Live Seminar on 28(th)
February in London.
Andy Walters, Executive Chairman of Quartix, commented:
"We finished 2023 with 266,000 vehicles under subscription,
having grown the base by 13% during the year. Over the past 5 years
it has more than doubled, from 123,000 at the start of 2019. Much
of the growth in 2023 was driven by France and our new European
territories, which advanced by c.30%. Success in France was
particularly notable, with all channels to market performing
strongly.
Annualised recurring revenues ("ARR") increased by 8% during the
year and we expect ARR growth in the first half of 2024 to be
supplemented by an inflation adjustment to pricing on existing
contracts.
We have significant opportunities for business development
across all our markets as we refocus all marketing and channel
activity on our core business.
We look forward to achieving further growth in 2024 and are
confident of achieving market expectations(2) for the new financial
year."
[1] Based on currency rates as at 31 December 2023.
[2] The Company believes that market expectations for 2024 are
as follows: revenue: GBP32.1m ; free cash flow*: GBP3.4m ; adjusted
EBITDA: GBP5.4m
* Note excludes expected cash expenditure of GBP2.5m on 4G
upgrade programme during the year.
For further information, please contact:
Quartix (www.quartix.net)
Andy Walters, Executive Chairman
Emily Rees, Chief Financial Officer 01686 806 663
Cavendish Capital Markets Limited (Nominated
Adviser and Broker)
Matt Goode / Seamus Fricker (Corporate
Finance)
Tim Redfern / Sunila de Silva (Corporate
Broking) 020 7220 0500
---------------
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END
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(END) Dow Jones Newswires
January 09, 2024 02:00 ET (07:00 GMT)
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