Trakm8 Holdings PLC (LON:TRAK) has narrowed half-year losses despite recurring revenues at the fleet management and telematics outfit being hit by its largest insurance customer seeing an ongoing decline in young driver policies.
Pre-tax losses came in at £2.2mln in the six months to the end of September, reduced by a quarter from £2.9mln the previous year.
Trakm8 said this was down to flat revenues of £8.9mln coupled with an increasing gross profit margin of 53% due to “vigorous actions taken over the past 12 months” including cutting hardware costs and reducing direct labour costs.
Nevertheless, recurring revenues, which represent 55% of the total sales, fell 5% to £4.9mln, thanks to a decline in the revenue per unit in the insurance market and decline in install base of its largest insurance customer.
“Our largest insurance customer has continued to experience a decline in young driver policies and as a result the level of new policies written has been less than those not renewed or cancelled,” said Trakm8, having in July reported this issue meant fewer telematics boxes were being required.
In addition, its major vehicles customer did not order any more devices during the period, but has made a commitment to buy 45,000 units over the next twelve months.
Trakm8 said: “The board is encouraged that the decline in revenue has been arrested and the first two months of H2 are significantly ahead of last year,” before adding that it expects to meet full year market expectations of increased revenues and modest adjusted profit before tax.
Shares got a 4% boost to 23.5p in early trading on Monday.