03.03.2025
This morning Quartix Technologies (LON:QTX), a leading supplier of subscription-based vehicle tracking systems, software and services, announced its Final Results for its year to end-December 2024 – they were better than previously expected.
Subscribers will know by now just how much I love to identify companies with growing Annual Recurring Revenues – and that is just what Quartix can claim running at some 96% of its yearly turnover.
The Business
The group was set up in 2001 by four industry professionals in the UK, who have a combined experience in systems design, telemetry, embedded computing, communications and database design and implementation.
Globally the group now has more than 30,130 fleet customers.
In fact, across some 8 countries, it has installed more than 800,000 units since its establishment.
Each month it signs up about 400 new businesses to its services.
The Quartix vehicle tracking lets fleet managers view the live location of their fleet vehicles, at any time, from any device.
Fleet managers from many sectors benefit from the tracking services provided.
And this is the bit that I really like - 96% of the group’s revenue is derived from recurring subscription services.
As an example, a range of Quartix unit customers operate in various sectors, tracking vehicles, and thus operatives, in:
Building and construction: like excavation, painting and decorating, plumbing, electrical services, bricklaying, flooring, drywall, roofing, siding, and air conditioning.
Trades and field services: such as sign installation/ maintenance, shopfitting, pest control, merchandising, machine tools, replacement windows, cleaning, and environmental services.
Transportation: covering the full range of transportation services, including trucking, courier and dispatch work, taxis and specialised services such as the transportation of fine art and valuables.
Security: including CCTV installation, patrol car monitoring, staff transportation, monitoring of expensive plant and machinery, and locksmiths.
Distribution: such as for raw materials, food, poultry, packaging, hardware, electrical goods, jewellery, and component distribution.
The group remains as a leader in telematics technology, by continuing to offer cutting-edge solutions that meet evolving market demands, such as the recently launched Quartix Check walkaround app and the company’s connected dashcam solutions, both of which were well-received by customers and contributed to overall growth in 2024.
Today’s Results
The year to end-December 2024 reported revenues 8% higher at £32.4m (£29.9m) with adjusted pre-tax profits 25% better at £6.3m (£5.4m), lifting earnings to 9.78p (8.75p) and a 50% improved dividend to 4.50p (3.00p) per share.
As the group declares – its main strategic objective is to achieve profitable growth in its fleet subscription base and the associated annual recurring revenue.
Management Comment
CEO Andy Walters stated that:
"In 2024 the value of our subscription revenues increased by £3.5m, marking a significant new record for Quartix.
Adjusted profit before tax grew by 25% to £6.3m as we cut administrative overheads whilst steadily increasing sales and marketing investment.
2024 concluded with the monthly rate of new customer acquisition exceeding 700 and progress in this key measure has continued into 2025.
An accelerated development programme for a new telematics platform resulted in a product launch at year end which will reduce manufacturing costs from July 2025 onwards.
Overhead costs in 2025 will continue to be subjected to detailed review with the aim of achieving further improvements in return on sales.
2025 has started on a strong note: new installations reached a significant new milestone in January and customer acquisition rates have further increased.
This positive momentum, coupled with growth opportunities across all six territories, underpins our confidence in the outlook for 2025, during which we believe we will increase our recurring revenues and adjusted profit before tax by approximately 10%.
We will provide a further detailed trading update in early April."
The Equity
There are some 48.39m shares in issue.
Founder Andrew Walters is the largest equity holder (22.44%), while other private investors include Andrew Kirk (8.29%), William Hibbert (5.50%) and Kenneth Giles (3.87%).
The larger professional holders include Liontrust Investment Partners (11.27%), Charles Stanley Investment Management (9.97%), Sanford DeLand Asset Management (9.17%), Schroder Investment Management (5.50%), abrdn Investment Management (0.77%) and Jarvis Investment Management (0.54%).
Brokers Views
At Cavendish Capital Markets, analysts Michael Hill and Kimberley Carstens, have a Price Objective out for the group’s shares at 340p.
They consider that today’s results highlight that Quartix is excellently positioned to continue to outperform, with the potential for upside from further sales investment, further enhancements to gross margin, and further optimisation of overheads.
Their estimates for the current year to end-December 2025 are for revenues of £36.0m (£32.4m), with adjusted pre-tax profits of £6.9m (£6.2m), generating earnings of 10.8p (9.5p) with an increased dividend of 5.0p (4.5p) per share.
For the year to end December 2026, they see £39.9m in revenues, £7.9m profits, 12.4p earnings, and a 5.5p dividend per share.
Before this morning’s results analysts Carl Smith and Bob Liao, at Zeus Capital, had a 280p a share valuation on Quartix.
They estimated current-year sales of £35.9m (£32.4m), with £6.5m profits, 10.4p earnings and a 5.4p dividend.
For the 2026 year the analysts went for £37.8m revenues, £6.9m profits, 11.0p earnings and a 10.0p dividend.
My View
This £84.7m-capitalised group’s growth in its ARR is excellent, up another 3% last year to 96%, which must give its Finance Director a lot of balance sheet comfort as it carries on moving forward.
The Brokers have increased current year profit estimates, yet again, which I consider to be a real pointer for the group’s shares.
In reaction to these better-than-expected results, the group’s shares have moved up nearly 11.5% this morning, some 18p better at 175p.
(Profile 17.10.2024 @ 150p set a Target Price of 185p*)
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