Just when it may seem like the days of IPOs of Irish tech firms are over, a Tallaght, Dublin-based tech company called Fleetmatics has shown that consistency and astute technological timing can mean anything is possible.
Fleetmatics was founded just after the dot.com crash of 12 years ago. In October of last year, the company floated on the New York Stock Exchange at a share price of US$22.95, up from an expected US$17 that would have valued the company at US$585m. At time of writing, the shares of the company were more than US$37 and the firm had a market cap of US$1.3bn.
Fleetmatics is in expansion mode. The company has just announced 24 new jobs and, according to Jim Travers, CEO, more than 25 to 30 jobs could be in the works for its Dublin headquarters.
Fleetmatics began operations in 2004 in Tallaght as a mobile platform to support commercial vehicle fleets with data on vehicle location. Its business model has evolved to embrace smartphone and cloud-delivery technology and the information it provides fleet owners is invaluable in terms of how driver behaviour is influencing fuel costs, for example.
The company now has 20,000 customers worldwide – mainly in Ireland, the UK, and North America – and its technology is installed on more than 417,000 vehicles.
Fleetmatics is focused on growing the company on a global basis, Travers said. His team is actively looking at mainland Europe in 2014, South America in 2015, and at Australia, where it has acquired software company Connect2Field for an undisclosed sum.
“The business market we are serving is under-penetrated. The UK, Ireland and North America have 29m commercial vehicles on the road and only 12pc of the market has been penetrated with this kind of technology," said Travers.
“There are lots of greenfield markets that we can target to grow organically. It’s going to be all about geography in 2014."
While Fleetmatics has grown to almost 600 people worldwide, it maintains its core IP (intellectual property) development in Dublin, where more than 100 people focus on worldwide product development and service delivery.
Product development is one of the key drivers for the company and it will be growing its employee base in Dublin and the UK over the next 12 to 18 months. Overall employment should increase 30%, Travers said.
Prior to going public in October 2012, Fleetmatics had raised a total of US$93m in venture-capital funding, including a US$25m funding round from Investcorp Technology Partners in 2008 and a US$68m funding round from Investcorp as well as Institutional Venture Partners and Pritzker Group Venture Capital in 2010.
Travers has cause to be optimistic on the jobs growth front. In the company’s last reported financial results in August, Fleetmatics’ revenue increased from US$30.6m a year earlier to US$42.5m – up 40pc – and the company reported a US$5.7m loss compared with a loss of US$1.4m a year earlier.
The key to Fleetmatics’ business model is software-as-a-service (SaaS) delivery, a model first championed by Salesforce.com.
Fleetmatics does not have any software running locally, it is all done via the cloud and over mobile, Travers said. What Fleetmatics does is collect driver behavioural information.
“A physical vehicle is a highly capital intensive asset," said Travers. "You can’t run a vehicle without fuel. So it is all about the efficiency of managing a physical item and that depends on the efficiency and performance of the driver.
“Most of our customers deliver services on a billable basis, so this information is critical."
Fleetmatics installs a small telematics device beneath the dashboard of a vehicle that collects the driver information and transmits it over wireless networks, such as AT&T in the US and O2 in the UK.
The software kicks in by providing the businesses with an analysis of things like routes chosen and time at location, which is important because the drivers are paid by the hour. The technology also clocks behavioural information, such as risky driving behaviour.
“Insurance is a high operating expense for any business, so we provide the ability to do driver scoring, such as acceleration and hard braking," said Travers.
“All of this provides businesses with the ability to not only reduce vehicle insurance but also have the ability to analyse routing options and pick up new hours, for example. Just one more billable event per week enhances a firm’s revenues."
All of the information gathered from the 417,000 or more vehicles is sent in real-time to servers in data centres in Ireland and the US, and the data is crunched in real-time for vehicle owners to see.
Fleetmatics can deliver a graphic set of results that can be read on any smartphone. In terms of the hardware, the company relies on good suppliers of off-the-shelf components.
“We are hardware agnostic and don’t manufacture anything ourselves and we’ll use any available wireless network," Travers said.
“Our core investment is in the data collection and the software that provides real-time, analytical reports to service businesses."
In terms of the market Fleetmatics is targeting, Travers said that as far as he can tell, there is no dominant supplier leaving that role open to Fleetmatics to take.
Fleetmatics has stuck to its core values to build a company that has the balance sheet and currency to help it fuel growth and use its stock for acquisitions. Going public was a very important decision for Fleetmatics, Travers said.
“From where we are seated, the capital markets have recovered, the appetite for IPOs and technology is on the upswing, and in particular SaaS has a lot of momentum," Travers added. "Investors are keen to back companies with recurring revenue models."
The key to the future of the technology industry, especially in terms of companies that are coming out of Ireland, is to develop software from a mobile-first perspective, according to Travers. Companies don’t have to manufacture mobile devices, they just need to build the intelligent products and services that sit on top of the mobile cloud.
Fleetmatics’ plan now is to grow organically, with the right strategic acquisition to bolster a move into new geographies.
“(The Connect2Field acquisition) was a key acquisition for us, because not only does it give us a toe-hold in Australia and the South Pacific region, but the technology itself is impressive," said Travers.
Connect2Field developed a mobile app that allows drivers to automate the entire billing and paperwork process. The driver just shows up and when the job is done, the entire billing process is activated, generating instant cash flow for the business.
“We feel strongly that mobile is where the future of business lies – it’s going to be all about speed and access to timely, relevant information."
Travers said Fleetmatics’ technology is designed to run on any device, from a PC to a tablet or smartphone. "We believe in being open across all the devices," Travers said.
The Connect2Field acquisition is part of a strategy by Fleetmatics to develop a range of crucial business apps around its core offering.
The Fleetmatics teams is building a software platform for SMBs (small to mid-sized businesses) that pivots off location and branches into other vital business processes, said Travers.
“With Connect2Field it is about work orders and billing, but there will be other apps around that, that will be important. Whether we build them ourselves or buy them through acquisition, it will all depend on how speedily we can integrate them with our core offering," he said.
The key insight, said Travers, is that Fleetmatics has 20,000 revenue-generating customers from whom it can generate additional revenue if it provides them with the services they themselves need and will prosper from.
“The nice thing about being a scaling company is that you have a lot of customers you can sell back to."
A version of this article appeared in The Sunday Times on 29 December