Connexion Mobility: A Hidden Gem in the Fleet Management Software Space

Connexion Mobility Ltd (ASX:CXZ), a provider of fleet management software for the automotive industry, has been quietly making waves in the market. The company, which changed its name from Connexion Telematics Ltd in November 2023, has expanded its reach into international markets, including Australia, the United States, Canada, and Mexico. With a market cap of AUD 22.08 million, Connexion Mobility is a small-cap company that has flown under the radar of many investors. However, its recent financial performance and growth prospects warrant a closer look.



In 2024, Connexion Mobility's revenue grew by 48.45% year-over-year (YoY) to AUD 14.75 million, driven by its two key products: OnTRAC solution and the Connexion platform. OnTRAC manages courtesy transportation programs, while the Connexion platform offers OEM-agnostic functionality, catering to a wide range of automotive industry clients. The company's revenue growth outpaced the Australian Software industry's average growth rate of 60.6% over the same period, indicating that Connexion Mobility is well-positioned for growth in the market.



Connexion Mobility's operating margin has been on an upward trend in the past year, driven by several key factors. Firstly, the company's revenue growth has contributed to an increase in operating income. Secondly, the company's gross margin has improved, leading to a higher operating margin. Thirdly, Connexion Mobility's operating expenses have decreased as a percentage of revenue, further boosting its operating margin. Lastly, the company's effective tax rate has also contributed to its operating margin trends, with a lower effective tax rate leading to a higher operating margin.



Connexion Mobility's cash flow from operations (OCF) has also improved significantly over the past year. The company generated AUD 3.66 million in OCF for the last 12 months, indicating that it is effectively managing its cash inflows and outflows. This growth in OCF suggests that the company is operating efficiently and generating more cash from its core operations.

Key takeaways:
Connexion Mobility's expansion into international markets, focus on fleet management software for the automotive industry, and strong financial performance make it an attractive investment opportunity. The company's revenue growth, operating margin trends, and cash flow from operations indicate that it is well-positioned for continued success in the market. Despite its small market cap, Connexion Mobility deserves the attention of investors looking for undervalued gems in the software industry. As the company continues to grow and gain market share, its valuation may improve, making it an attractive long-term investment.