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CXZ - Connexion Mobility

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I think its probably just volatility in a micro cap, CXZ often jumps around in 10% range, i reality it hasnt gone anywhere in 2 years, the single client risk continues to hold it back IMO, I am happy to continue to hold a small position because its a pretty asymmetric bet, if they cant grow the business with new clients, its still a profitable little company that has little downside in the medium term, (especially since resigning GM.), on the other hand if they can get new clients or scale up CXZTRAC then it should show growth in profitability and ROIIC thereby earning a rerate.
 
Latest quarterly from the 21st of Jan.

Still plodding along with $100k net profit in the quarter and tracking to $3.5 - $3.7m in revenue for the year. they also have $4.6m in AUD in cash against a $10m MC.

The pilot programs look like a good move away from sole reliance on GM for their model.

Connexion signed Commercial Pilot Agreements (“Pilots”) with US automotive software companies Tollaid LLC (“Tollaid”) and Digital Dealership USA Inc (“Carsfast

FYI don't hold anymore, sold in October

 
A very tough half year 2022 for CXZ, the chip shortage and general supply chain issues have had a huge impact on the business. Regardless it still turned a small profit and FCF Was actually quite strong but I havent checked to see what is driving that (inventory, receivables, or payables?) A tiny position for me so not too concerning and as supply chains normalise they should see a quick return to increased activity.

 
True, Dona Ferentes. Its been a tough year for CXZ, the only consolation is the resilience of being a debt free, profitable business generating FCF. I like the style of management, CEO Aaryn Nania is a good communicator and seems to be very focussed and driven in his role. Only a tiny position for me, but happy to hold thru the current issues and see what the future holds.
 
Will put this here; not sure CXZ will be a direct beneficiary as it's more the car companies morphing.

​
“Today software represents 10 per cent of the value of the car. In 2030 it will be 40%.”​
Click to expand...
Luca de Meo, CEO, Groupe Renault​
 
Dona Ferentes said:
A trip to the basement.
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And up 40%. From 1c to 1.4c

Market Update

Connexion Telematics Ltd refers to the Renewed Agreement referenced in the ASX announcement dated 20 June 2021 titled “Connexion Telematics OnTRAC Renewal with General Motors”.

Connexion is pleased to advise that its cornerstone OEM customer has agreed to extend the supply of the Connexion Platform (originally branded CXZTRAC) to all its Courtesy Transportation Program participating dealerships as part of an “All in One” version of the OnTRAC platform. The
extension takes effect from January 2023, and is expected to be formalised in due course via an Extended Agreement. The Company expects a subsequent uplift in monthly subscription revenue of approximately US$250k.
 
Good news, and a significant reaction from the market! Given the tiny size of my position, 40% doesn't move the needle but still nice to see.
 
Well it ended up being up 90% at the end of the day, pretty certain thats the largest one day gain in share price I have ever had! Still doesnt move the needle though!

 
On November 21st, 2023, Connexion Telematics Limited changed its name to Connexion Mobility Limited.
 
H1 2024 was a good one for CXZ.




Earnings about half that after adjusting for Government grants, but even so the Cash Flow Statement really shows the simple power of this business in its present state,






No PP&E expences, no finance expences, no debt, no leases.


But worth noting the $1.3m OCF, is really $1.0m after deducting Government grants, then deduct $180k for SBC, so $800k then deduct some component of the R&D expences which are certainly Capex, given that its $1.3m this year its a not insignificant amount even if you consider it having a life of 5 years and then work out the NPV of this years share of that. So for 'back of the envelope" lets call it another $300k and we end up with $500k of FCF. Still not too shabby!

The only thing I am not a big fan of is the CXZ specific bull**** Earnings Bingo, "DMEPS", "NPBT" and "RGS".
Plus Aaryn mentioned "Flywheel effect" which is an automatic
 
H1 2025 results released, not bad, OCF down bigly which Aaryn explains is due to timing of receipts so revenue growth is not reflected in Cash Flow statement.

Still banging on about flywheel effect.

 
One concern is the drop in gross margins, COGS is up by nearly the same amount as revenue which is not talked to anywhere in the commentary. I have emailed Aaryn asking for an explanation.
 
what's moving this sleepy one?
Market cap of $24M


.
Half yearly
• Marketplace subscription growth emerging
• OnDemand progressed from pilot to general launch
• Increasing focus on user engagement & insights to drive dealership sales
• All reported figures are in USD, unless otherwise stated
• Revenue of $5.45m +15% over p.c.p.
• Gross Profit of $3.81m -1% over p.c.p.
• Net Profit After Tax of $1.09m +43% over p.c.p.
• Diluted EPS of 0.124c +59% over p.c.p.
• Operating Cashflow of $0.58m -58% over p.c.p.
• Net Cash and liquid investments of $4.5m, with no debt
 
Dona Ferentes said:
what's moving this sleepy one?
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Probably a few things, increased value due to share buybacks, a growing track record of disciplined capital allocation by the board, a growing respect for young Aaryn as CEO, has attracted some interest for a couple of micro cap fundies, consistently improving financials, and some signs the moves to mitigate the single client issue are starting to pay off.

The share buyback has contributed about 10% to value per share in my estimation, they have about $4m USD in accumulated losses to run down so perhaps another 20% of buyback before they would start accumulating franking credits and the capital allocation might be reviewed.
 
slept its way back to $0.25


.
still buying back shares on a daily basis.

and from the latest quarterly
• Marketplace subscription growth continuing
• R&D efforts focused on initiatives most impactful to OEM & large Dealer Group sales
• All reported figures are unaudited and in USD, unless otherwise stated
• Q3 Revenue of $2.8m .. +1% over prior quarter
• Q3 Gross Profit of $1.9m .. -1% over prior quarter
• Q3 Diluted Earnings Per Share of 0.068 US cents .. -12% over prior quarter
• Q3 Net Profit Before Tax of $0.83m .. -13% over prior quarter
• Q3 Operating Cashflow of $0.66m .. +293% over prior quarter
 
Here is how you do a trading update, no bull**** earnings, Revenue, actual EPS and NPBT as well as OCF.

 
A solid FY2025 for CXZ, modest growth in revenue & profit.




As noted in my HY commentary, COGS up significantly, gross margins have dropped to 68% now from 80% in H1 2024.



In line with the communication from the company, this is showing signs of flattening.


 
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