As it continues its growth trajectory, Traffic Technologies (ASX: TTI) has collared up to $9 million in contracts with the Queensland Government’s Department of Transport and Main Roads (TMR) – cementing its position in the state and shoring up substantial long-term recurring revenue.
The department is responsible for planning, managing and delivering Queensland’s integrated transport infrastructure.
Under the contracts, Traffic Technologies will supply hardware and associated software across TMR’s infrastructure network.
The contracts are for an initial five-year term, with two options for further three-year extensions.
According to Traffic Technologies, including the extensions, the contracts would potentially expire in 2032 and generate up to $9 million in revenue.
Commenting on the new agreements, Traffic Technologies managing director Con Liosatos said they were “significant” and would provide the company with a source of long-term recurring revenue, while securing its dominant position in Queensland.
“The group has been able to significantly strengthen its position in the Queensland market following the acquisition of the Intelligent Transport Systems (iTS) business in June 2021,” Mr Liosatos added.
Today’s announced contracts with Queensland’s TMR follows an agreement earlier this month with Coates, which is a major equipment rental agency.
This deal has an estimated value of $5.7 million and will see Traffic Technology’s iTS business supply Coats with a range of intelligent traffic control equipment including electronic signs, radars and associated software to monitor and notify drivers of road conditions.
“In today’s road environment, static road and street signs are no longer enough to provide motorists with the right information when they require it,” Mr Liosatos said.
“Electronic information displays represent a value proposition for state road authorities and local councils and are being increasingly used for traffic management on congested roads.”
Forefront of intelligent traffic systems
For more than a decade, Traffic Technologies has been at the forefront of developing intelligent traffic systems – well before councils and governments realised the full-benefits they could provide including more fluid traffic management, cost savings and emissions reductions.
Traffic Technologies’ signage and traffic management hardware has been installed at more than 31,000 intersections worldwide and is approved for use by every Australian council.
Driving Traffic Technologies’ increasing revenue is the roll-out of its smart cities platform.
The platform is based on software as a service (SaaS) and internet of things (IoT) technology to make transport infrastructure safer, cheaper, less congested and more sustainable.
Building smart cities
Traffic Technologies says its SaaS platform is the only one commercially available that is capable of meeting the needs of councils, road authorities and power companies seeking better ways to manage their assets by providing them “greater control” and “data-driven insights”.
The company estimates about 80,000 of its smart-city enabled hardware devices are installed in 128 cities across 23 countries.
Traffic Technologies noted the global IoT market is worth U$1.7 trillion, with some predicting this will increase to US$12.6 trillion by 2030 – underpinned by demand for big data and smart city solutions.
Traffic Technologies has continued its growth trajectory from an early adopter of IoT technology more than 17 years ago.
Its FY2021 revenue was $52.3 million from clients across more than 20 countries, which was 18% higher than the $44.5 million achieved in FY2020.
Earnings before interest tax depreciation and amortisation (EBITDA) was up 222% to $4.5 million compared to $1.4 million.
This resulted in an net after tax profit of $200,000 in FY2021 – much higher than the $13.8 million loss in the previous corresponding period.
Driving the continued increase in revenue was recurring revenue from ongoing deployment of Traffic Technologies’ smart city platform, which rose 13% during the period.