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TrackX and Trakopolis are two Canadian IoT companies to watch, Haywood Securities says


As the market for connected technology continues to evolve, companies in the Internet of Things sector are seeing their growth opportunities multiply, including two emerging Canadian businesses that analyst Pardeep Sangha of Haywood Securities has added to his watchlist of tech companies: TrackX Holdings (TSXV:TKX) and Trakopolis (TSXV:TRAK).

The Internet of Things is being powered by the proliferation of devices and sensors that are connected to the Internet in order to generate data on physical environments. And within that realm lies telematics, which uses connected tech to transmit information concerning vehicles and transportation, from GPS positioning and trip time to online diagnostics regarding fuel consumption and engine status.

Both TrackX and Trakopolis are poised to gain from advances in telematics, an industry that is expected to grow at a 20.3 per cent CAGR, reaching US$51.3 billion by 2021, says Sangha.

“Combining new technologies with sophisticated software has enabled both TrackX and Trakopolis to gain traction and momentum in this growing market,” says Sangha in an industry report. “Taking a hardware agnostic approach to building their respective cloud platforms allows for flexible and customizable solutions that can evolve as customer needs change. The result is that customers are gaining added insight into their operations into which they previously had limited visibility.”

TrackX develops and markets software for real-time tracking and inventory management of physical assets. With its flagship platform, GAME, the company has been able to develop a strong client base including several Fortune 500 companies, says Sangha.

“[TrackX] has been successful in landing customers across the U.S. for various use cases,” he says. “For instance, TrackX is tracking high valued IT assets for a nationwide U.S. insurance company, providing supply chain management solutions to a packaging solutions company, and expanding its implementation with a leading online used car retailer. Below is a sample of use cases in different industries.”

The company achieved positive EBITDA for the first time in its most recent quarter, Q2FY18, ended March 31, 2018, when overall revenue increased to $1.8 million from $1.3 million in Q2FY17 and its EBITDA was $0.2 million compared to a loss of $0.9 million the same quarter last year.

Sangha says that while TrackX’s weak balance sheet is a risk to the business, the company also has a healthy pipeline of opportunities driven by increasing market demand.

“While asset tracking is not a new concept, the adoption of advanced technologies and analytics is accelerating in the market. From a customer perspective, many companies have started to rely on cloud-based solutions and past concerns over security have been largely alleviated,” he says.

Trakopolis offers a cloud-based platform to track IoT assets across a wide spectrum of businesses: from oil and gas, logistics and forestry to rentals, construction and urban contractors. Sangha notes that Trakopolis achieved 98 per cent year over year growth in 2017, driven by increasing monthly recurring revenue and one-time hardware sales.

“Trakopolis is steadily growing recurring SaaS revenue, which provides good visibility to future performance and generates high gross margins,” he says.

Sangha believes that the company will need to access additional equity capital over the next year in order to accelerate its growth but that the company has already impressed through its partnerships with companies like Microsoft, Honeywell and Telus.

“Trakopolis’ solutions have attracted large brands as customers and partners since the Company’s inception despite it being a relatively small player in the sector,” says Sangha.

“From a financial perspective both TrackX and Trakopolis are micro-cap companies with less than $25 million market capitalization, weak balance sheets, negative cashflows, and limited operating history,” says Sangha. “We believe the combination of lower costs of technology and meaningful ROIs of solutions provided by TrackX and Trakopolis, will produce significant growth in the sector over the next several years. It is still however early days in terms of how these companies will perform.”

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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