Connexion extends smart car deal with GM, share price soars 14%
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Smart car tech company, Connexion Telematics (ASX:CXZ), is set to increase its SaaS annual recurring revenue, after extending its OEM contract with US giant General Motors (GM).
The contract, which was first signed in 2018, is for the provision of the OnTRAC software platform, and will now run for another five years.
The deal falls under GM’s Courtesy Transportation Program (CTP), where GM assists its 4,300 dealers across the US by providing vehicles to support their customer care processes.
Connnexion says it is unable to disclose the commerical terms of the contract.
Connexion provides smart car technology, and primarily serves the US automotive software market.
The company’s proprietary software incorporates telemetry, fleet management, contract management and data analytics tools to deliver automotive solutions.
Its cornerstone and biggest OEM client is GM, for which it exclusively powers the car maker’s CTP program via the software.
GM’s CTP program gives incentives to dealers to maintain a GM rental fleet, rather than having an in-store rental agency such as Enterprise or non-GM vehicles at GM dealerships.
This incudes courtesy cars, loan cars, a loyalty program that rewards drivers who own GM vehicles.
For this program to run efficiently, Connexion supplies a range of tools for GM’s OnTRAC system, which is powered by Connexion’s SaaS solution.
This includes tools such as telemetry, reporting, and analytics.
The company says that over 2 milluon contracts are issued annually on this software platform.
Connexion believes that there is a high barrier of entry to its OEM GM business.
This is mainly due to the high development costs, which could be up to $5m, required to develop the software.
There is also a training process that involves more than 10,000 users, and once the solution is integrated with the GM system, it is difficult and costly to untangle.
In the last quarter, Connexion reported revenue of $1.5 million, which was slightly down from the previous year’s corresponding quarter.
Considerable progress, however, has been made on the company’s strategic objectives, which resulted in ongoing enhancements made to the OnTRAC system.
Connexion’s share price has risen by 50 per cent over the past 12 months.