Quartix sales breakdown reveals recurring dominance
Fleet vehicle tracking specialist Quartix is in our portfolio because its business model should allow its margins to keep improving as its revenues grow. The long-term outlook is therefore very exciting. This is the ultimate guide to announcements from the AIM-gem.
As expected, revenue at Quartix (LON: QTX) dropped slightly in the first half of 2019, in-line with guidance for the full year, which chief executive Andy Walters has confirmed this morning. The cause, once again, was a planned decline in the lower margin insurance business where revenues fell 35% to £2.5m, meaning the division now contributes just a fifth of the overall top line. Fleet revenue growth was an impressive 11%.
Importantly, Quartix has provided a breakdown of divisional revenue and costs for the first time, which reveal that a whopping three quarters of sales come from recurring sources, up from 65% this time last year. The fleet telematics services - which is almost entirely recurring revenue - cost just under £2m in sales and marketing, equipment installation and service charges, giving an impressive operating margin of 80%. Most of the group's costs come from winning new customers and in the first half, the subscription base grew by 12% to 138,081.
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