Trakm8's new financial year begins as expected

21st Sep 2023 14:07

(Sharecast News) - Telematics and data technology specialist Trakm8 said in an update on Thursday that its financial year had begun as expected.

The AIM-traded firm, holding its annual general meeting, said fleet and optimisation revenues had experienced an uptick compared to the prior year.

Executive chairman John Watkins said that, on the other hand, insurance revenues had seen a dip, primarily due to ongoing capacity constraints in the insurance market.

However, two new customers had offset those challenges, while it was also noted that a significant surge in the cost of insurance policies had placed additional strain on the insurance sector.

A 28% decrease in new unit sales was reported for the first five months of the current financial year, equating to 63,402 units compared to 87,362 from the same period last year.

Renewal challenges related to insurance policies further caused a 6% reduction in total connections, resulting in a present count of 326,000.

Despite the decrease in unit sales and connections, Trakm8 said it had benefited from a notable reduction in overheads due to the Board's strategic cost-cutting measures implemented the previous year.

Consequently, revenues for the six months ending 30 September were projected to be slightly lower than the prior year, but reduced costs were expected to yield a significantly improved financial outcome.

To enhance its operational efficiency and cost management, Trakm8 said it had invested £0.5m in its in-house data centres.

That capital injection aimed to substantially lower the external costs of hosting the platforms.

The anticipated annual savings from the investment was estimated at £0.6m, with the new infrastructure expected to be fully operational at the beginning of the second half of the financial year.

Initially, the firm hoped that capacity issues would decline in the latter half of the financial year.

However, Watkins shared that the challenges might persist for the year.

On a positive note, the acquisition of a third client was imminent, with the company adding that it projected the total number of connections would increase by 7% to 350,000 by the end of the financial year on 31 March.

That increase in connections was anticipated to drive higher recurring revenues.

"As previously advised, our expectations for the financial year remain dependent on both the recovery of the capacity in the Insurance market and ongoing discussions regarding securing a further significant new software contract, which we hope will be achieved at the end of the current financial year," John Watkins said.

"We remain confident in our current profit expectations for this financial year; however, this will be achieved on lower revenues due to the insurance capacity and pricing issues offset by the lower cost base."

At 1145 BST, shares in Trakm8 Holdings were down 3.53% at 16.4p.

Reporting by Josh White for Sharecast.com.