Quartix Technologies plc

Overview

An investment analysis of Quartix Technologies plc (LSE:QTX), a UK-based subscription telematics provider for SME fleets, using William J. O’Neil’s CAN SLIM framework, integrating the company’s audited results, trading updates, and current market/price data to guide a potential buy/sell/hold decision.

Financial and Business Overview

Business model: Quartix sells subscription-based vehicle telematics to SME fleets across the UK, France, USA, Italy, Spain and Germany. The model is ARR-driven with high gross margins, low capex, and rising net revenue retention (NRR). 2024 audited results (year to 31 Dec 2024): Revenue £32.4m (+8%), adjusted EBITDA £6.5m (+21%), adjusted PBT £6.3m (+25%), statutory profit £4.77m (vs 2023 loss), gross margin ~69%, operating margin ~20%. ARR grew to £32.2m (+12%), fleet units 300,168 (+13%), customers 30,134 (+11%), NRR 96%. Free cash flow £2.6m; net cash £3.1m; FY dividend 4.5p. H1 2025 trading (to 30 Jun 2025): Revenue £17.6m (+10%), PBT £3.5m (+31%), diluted EPS 5.52p vs 4.37p (+26%), FCF £2.5m, cash £4.1m; TTM ARR £35.0m (+13%); NRR improved to 97%. Balance sheet: net cash position, low financial leverage (Debt/Equity ~0.04), current ratio ~1.6. Capital intensity is low; contract cost assets amortize over customer terms. Dividend policy: ordinary dividend ~50% of operating cash flow (post tax, pre capex); FY24 dividend 4.5p; H1 2025 interim 2.5p. Key one-offs: provision for 2G replacements in France recognized in 2023; balance falling as program progresses; Konetik acquisition (2023) wound down; cost drag eliminated in 2024.

Market Position & Competitive Advantages

Position: Quartix focuses on SME fleets in Europe/US, a segment where service, price and simplicity matter as much as deep enterprise suites. It competes with larger telematics players (Verizon Connect, Samsara, Teletrac Navman, Spireon) but differentiates via: (1) high-touch service (Trustpilot/external awards), (2) cost leadership and product simplification for SMEs, (3) disciplined sales/marketing and improving NRR through indexed pricing (+~3% in 2024, >5% in 2025 guidance). Competitive advantages: Recurring revenue base with rising NRR (93% in 2023 to 96% in 2024 and ~97% by H1 2025); multi-market footprint diversifies growth (Italy/Spain/Germany ARR growth >30% TTM); new low-cost TCSV17 hardware cutting unit costs (~£8 per unit from H2 2025) and prior generation savings already flowing; updated web/mobile software platform deployed; cash generative with dividends and net cash. Risks: (1) Network sunset risk—France 2G replacement cost largely provisioned; remaining ~£1.7m at 30 Jun 2025; UK 2G sunset expected closer to decade-end but monitored. (2) Competition—larger peers with broader suites may pressure pricing in some segments. (3) FX—~42–45% revenue ex-UK creates currency exposure. (4) Execution in the US—channels rebuilt, positive progress but still a work-in-progress. (5) Small-cap liquidity and moderate daily volume may amplify volatility.

Stock Performance

Price 274p (GBX). 52-week range: 138p–322.9p. 52-week performance: +97–104% (sources report +96.8% to +103.6%). Trend: price is above the 200-day MA (~236p) but modestly below the 50-day MA (~287p), indicating a constructive longer-term uptrend with a near-term consolidation. Trailing TTM EPS ~11p implies a trailing P/E ~25–28x; P/S ~4.3x; P/FCF ~35–36x; dividend yield ~1.9%. Beta ~0.65 (lower volatility vs market). Average daily volume ~38–41k shares; shares outstanding ~48.43m.

CAN SLIM Analysis

Conclusion

Fundamentals are strong: ARR compounding (+12% in 2024; +13% TTM by H1 2025), profitability restored with rising margins, FCF improving, net cash, dividend growth, and NRR trending higher (96%→97%). Product cost-downs (TCSV17) and software upgrades should further lift unit economics. Risks—2G replacement overhang (declining), competitive intensity, FX, and US execution—are manageable in context. Valuation (P/E ~25–28x; P/FCF ~35x; P/S ~4.3x) is fair for a quality ARR compounding story but not a table‑pounding bargain. From a strict O’Neil CAN SLIM lens, the ideal buy point is a breakout above the recent consolidation (≈290–300p) on volume in a confirmed market uptrend. Thus, maintain HOLD, with a buy trigger on a decisive breakout (or buy on constructive pullbacks near rising 200‑day support with tight risk controls).