Several major elements are moving in the right direction

Until FY 24, E Road was doing well (high margin and some top line growth*), but was struggling to get any free cash flow.
Mainly due to a high level of Capex.

Since FY 25, the profile of E Road has changed for 2 main reasons :
- a significant decrease of their Capex (despite still an impact of 4G upgrade) from 57.4 m$ in FY 24 to 30.9 m$ in FY 25,
- a potential strong acceleration of their revenues thanks to the change of regulation in NZ, where they do 77 % of their EBITDA (before corporate costs).
Yesterday, the NZ government unveiled a plan to transition all the NZ vehicles to Electronic Road User charging (eRUC).
It would add 3.5 m vehicles into the eRUC system** vs 1 m vehicles already subject to Road User Chages.
The government prepares legislation in 2026 and targets full implementation by 2027.

Overall, E Road has now a free cash flow yield of 5 % based on FY 3/25 results (FCF corrected from 4G upgrade).
In fact, this free cash flow is still impacted by 2 negative elements : Capex which remains high (vs their forecast for FY 26) and a large negative impact of working capital on their cash flow (9.5 m$).

So far, the company was guiding for a revenue growth of 5.7 % in FY 26 and a free cash flow of 16.4 m-20.5 m NZD of free cash flow (normalised for 4G hardware upgrade).
This looks now modest vs the potential of the new regulation in NZ (impact from FY 27 or FY 28).

* their top line growth has regularly increased hoh since FY 20. In FY 3/25, their top line growth was 6.8 % (3.2 % coming from volumes).
** in their last presentation, E Road indicated a potential market increase from 1 m vehicles to potentially 4.6 m vehicles in NZ, thanks to EV. The new regulation in NZ probably means that they will be able to reach this target much faster.