Thanks for those notes @actionman

My general thoughts are that eRoad is a perfectly decent company -- indeed, potentially a very attractive one. They have demonstrated exceptional (top line) growth in their home market, and despite their dominance in NZ continue to deliver solid growth. The US is a larger, albeit far more competitive market, but here too they have some solid runs on the board despite a few early stumbles and the impact of covid. They seem to think Coretex will be a real game changer for them in that market, and it does seem to have good potential. And the move into Australia seems to be going well.

They address a very large market, and have built a strong base of sticky, recurring revenues. They generate genuine value for their customers, be that in enhanced asset utilisation, reduced compliance cost/effort, heightened safety (i tend to think the ESG angle is a bit of a stretch, but it's all the rage at the moment).

My interest is always piqued for companies that are fast approaching breakeven with strong sales momentum and a business model that has the potential for genuine operating leverage. And hopefully this is the case for eRoad.

They have told us to expect 30-50% revenue growth this year, and think they can double the current top line over the next 3 years. They may fall short of that, of course, but even if the pace of growth is half of what they say, the current price doesn't seem very onerous.

For reference, the current revenue multiple is 1.4x, and the EV/EBITDA (excluding costs associated with Coretex) is 6.8x. Surely this has to be compelling for any would-be suitor?

Now, I do think costs are likely to rise -- there are genuine pressures on employee & component expenses. This could trim operating margins, as could the highly competitive market in the US. And, while existing revenues may be reasonably dependable, any economic malaise could easily dampen the growth potential. Especially for larger enterprise deals. And the situation in the US does seem pretty bleak.

So I think it's probably smart to take the lofty revenue targets with at least a small pinch of salt. But I just come back to what looks like a very decent margin of safety.

No doubt the abrupt CEO departure continues to weigh on sentiment, and shares are very illiquid on the ASX -- over the past month the average value traded per day is less than $30k! That tends to keep the major players away. And the balance sheet is more leveraged than i'd like -- especially given that the current share price would make any raise very costly for existing shareholders.

Nevertheless, so long as we see continued sales momentum and operating margin resilience, this looks like a good deal to me.