Shares for the future: another good year boosts this firm’s score

The year to December 2025 was Quartix Technologies’ second good year on the trot, following a wayward period for the vehicle tracker. Revenue increased 12% and adjusted operating profit increased 35% after tax, compared to figures restated in 2024 due to a change in accounting policy.

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Future imperfect

The change requires Quartix to recognise the value of its tracking systems as property plant and equipment rather than recognising the value of the contracts under which they were rented out. This has barely impacted revenue, profit, and cash flow but has had a major impact on Quartix’s balance sheet.

The value of the assets carried is higher, and consequently so is the capital employed by the business. This has reduced capital-based ratios like return on capital.

Historical comparisons with dates before 2024 for these ratios are nonsensical, which is why I have only averaged the last two years in my calculations:

Mercifully, the numbers are still very good. Average return on capital is 35%. Net obligations to capital is still negative, which means the company had more cash than debt of any kind including leases at the year end.

Over the past 10 years, Quartix has grown revenue and profit modestly at mid-single digit compound annual growth rates (CAGR). Its future, though, may not resemble its past.

In the 2010s, there were two strands to the business. Quartix’s biggest revenue stream was the one that remains: subscriptions to a vehicle tracking service for small and medium-sized commercial van fleets.

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But by 2022, Quartix had substantively stopped selling trackers to the insurance industry via a single large supplier. The trackers were used to monitor new drivers.

Quartix also wasted time and money on a diworsification in 2023. It acquired Konetik, a software business used by fleet operators to decide which electric vehicles to buy based on their tracking data. Quartix bought the business, then decided it had no future and closed it.

Shorn of these complications, Quartix may grow faster. The last two years have been promising.

Recurring revenue

The attraction of commercial fleets is the recurring monthly revenues from subscriptions for as long as the customer uses the service.

Quartix makes it easy for customers to subscribe by providing trackers at no up-front cost and not committing them beyond their initial often two-year term. After the initial term, they pay as they go.

The longer Quartix collects subscriptions, the more profitable it is because the biggest cost is marketing the service on price comparison sites, by telephone, through distributors and field sales in larger markets.      

Typically, customers stay with Quartix for seven years. The trackers are small devices made from inexpensive components and assembled in the UK.                        

The devices send data from vehicles to Quartix’s cloud-based software via mobile networks so owners can monitor fleets in real time on a computer or mobile app. This helps them prevent moonlighting and ensure vehicles are driven safely and economically.

By providing generic devices simple enough to be installed and configured by customers, Quartix keeps costs low, pricing competitive, and still earns a decent profit.

Board concern                 

My biggest concern remains Quartix’s management. This is not because its three-person board is unimpressive, but because it is probably unsustainable. Part-time executive chair Andy Walters founded the company in 2001, and he is accompanied by two non-executive directors.

A typical board for a listed company, comprising a full-time chief executive, a chief financial officer and maybe others, would increase costs considerably. 

Quartix experienced this a few years ago, when Walters, now 70, retired. That experiment quickly unravelled after the ill-fated Konetik acquisition, which precipitated the founder’s return.

Below the PLC board, an operating board runs the company. It is staffed by Quartix loyalists, fronted by Dan Mendis, chief commercial and operating officer and Sally Morton, finance director. The company says it has a succession plan, but we don’t know what it is.

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I’m also keeping an eye on plans to shut down the 2G network, which Quartix’s older units still rely on. Quartix says its network provider will shut off its 2G network in 2029, but doesn’t quantify how many units will need to be replaced with 4G units or units that can roam on other networks. 

Quartix is currently bearing the cost of replacing units in France for the same reason, and has previously replaced them in the US. Even though the UK is its biggest market, Quartix expects the impact to be “minimised” by commercially confidential “additional contractual support” from its network provider, and replacing 2G units through customer churn and service upgrades.                           

The use of the word “minimised” does not reassure me as much as the word “minimal” would!

Overseas growth                               

Quartix is still growing in the UK, but it has long looked abroad. It first targeted France in 2010 and has an established business there. More recently, it has entered other European markets and the US.                                                                                      

It has found the US market most challenging, and in 2024 it reversed previous management’s decision to focus its US expansion on field sales in Texas. 

This policy contrasted strongly with Quartix’s nationwide and predominantly direct sales model in other countries, and sales contracted. While the US has returned to modest revenue growth, it remains the worst-performing territory. While revenue grew in 2025 due to price rises, the subscription base didn’t grow at all.

Growth in other new markets, Italy, Spain and Germany, is much more encouraging.

Source: Quartix annual report 2025.

Customers used to stick with Quartix for longer, but attrition has increased in recent years, probably because Quartix and its competitors have made trackers easier to install.

Quartix has always relied on winning more business than it loses to grow, but since last year it has pulled on another lever: prices. Until 2024 it had avoided raising prices for its existing user base for fear of losing customers.

The company’s aim for each year is to earn 100% of the Annualised Recurring Revenue from its subscription base at the beginning of the year, so each new additional unit contributes to growth.

Although it hasn’t quite got there, it is moving in the right direction. In 2024, it achieved 95.7% of NRR (Net Revenue Retention). In 2025, it achieved 98.1%.         

Scoring Quartix                                  

Glass half-full: Quartix grows faster now it has focused on what it does best - fleet subscriptions.

Glass half-empty: the low-cost board gives way to a conventional one, costs rise again and the company loses focus.

I last scored Quartix in September 2025.

30 Shares for the future

Here is the ranked list of Decision Engine shares. I review the scores at least once a year, soon after each company has published its annual report. The price scores are calculated using the share price prior to publication.

Generally, I consider shares that score more than 5 out of 10 to be worthy of long-term investment in sizes determined by the ideal holding size (ihs%).

Judges Scientific and Keystone Law Group  Ordinary Shares have published annual reports and are due to be re-scored.

Click on a share's score to see a breakdown (scores may have changed due to movements in share price). Key: qual is the share’s score out of 9 for the three quality factors (capabilities, risks, and strategy), price is the price score from -3 to +1, and ih% is the suggested ideal holding size as a percentage of the total value of a diversified portfolio.

Richard Beddard is a freelance contributor and not a direct employee of interactive investor. 

Richard owns Quartix and many shares in the Decision Engine. He weights his portfolio so it owns bigger holdings in the higher-scoring shares.

For more on the Decision Engine and Share Sleuth, please see Richard’s explainer.

Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard