Tech microcap Smart Parking posts FY22 earnings growth of 296%

Smart Parking (ASX:SPZ), a provider of parking management solutions (read: AI-powered licence plate recognition CCTV products) has seen its share price rise 11.8% in Monday trades to 21c on the back of a highly promising annual report. 

The big takeaway?: earnings are up a whopping 296% year on year (YoY) and group revenue is up 68% YoY. 

Much of that earnings growth is to do with the uptake of Smart Parking’s AI-powered licence plate recognition tech in the UK and Australia, which led to a significant increase in revenues from fines administered using company tech. 

In short, Smart Parking takes a cut from local councils and private counterpart entities once the fines are paid. 

Summary look at overall performance 

Broken down, the most important indicators from the FY22 result are as follows: 

• Group revenue up 68% YoY to $38.1m 

• Earnings up 296% YoY to $8.8m 

• Margins up to 23% compared to 9.8% in FY21

• Post-tax profit up 77.2% YoY to $3.9m from $2.2m 

• Free cashflow of $8.1m up 624% YoY  

International footprint 

All in all, parking breach notice issuance was up 81% through FY22, driven by an expansion strategy seeing the company’s tech placed at 303 new sites globally. 

The company also acquired two competitors through the period; Enterprise Parking Solutions and NE Parking respectively. 

Revenue is growing for the company in both the UK and Asia Pacific, where the company has operations in both Oz and New Zealand. 

Smart Parking has also entered Germany for the first time as part of its EU expansion strategy, giving it three sites in the region. 

Revenue up as people return to cities post-covid 

For the June quarter, Smart Parking noted its growth rate in parking breach notices at sites using Smart Parking tech in the UK was up 71% YOY. 

At the same time, growth in parking breach notices at carparks in Australia and New Zealand were up 83% compared to H1 FY22.

While these data-points underscore the efficacy of Smart Parking’s AI tech, they also suggest a larger macro trend: more and more drivers are heading back to the city for work and recreation.

It is also worth considering in current conditions, drivers may possibly be more inclined to risk a fine and save a few dollars by forgoing parking payments. 

Also important for UK data: more drivers out and about in the summer period. 

The company is targeting a total of 1,500 installations globally by June 2025, with a goal for 200 per annum in the next three years.

Smart Parking's three month chart make clear the impact of today's FY22 results on its share price. One month returns are up 18%; but one year returns remain suppressed.