Connexion Media spends to expand

MELBOURNE automotive software developer Connexion Media will spend $2 million to expand the capacity of its Flex fleet management system before a major American client comes on stream in the next few months.

The investment will expand the capacity of Connexion’s infrastructure from 25,000 to one million vehicles, while the company’s call centre will also be expanded.

Connexion founder and chief executive George Parthimos said the investment was being made in response to “very encouraging customer uptake” since Flex was launched in March, adding that growth had been much faster than expected.

“When we first built Flex – remember we first launched in March – our initial estimates were that a capacity of about 25,000 vehicles for the next 12 to 18 months should give us the breathing space we needed,” he said.

“With what’s happened since the US automaker signed on, and also other opportunities, we have now revisited it and decided to ramp up to one million vehicles.”

Late in May Connexion reported that a “multi-national US car-maker” had signed a deal to offer the Flex system through 4000 dealerships across America.

“We are just preparing ourselves for the growth in Flex, which is more than what we expected.”

The company raised $2 million with an issue of convertible notes and it is this capital that is being used to expand the backroom infrastructure.

Mr Parthimos said increasing capacity when you have to manage 20,000 or 30,000 vehicles is a matter of adding additional processing power and doing some database work.

“Once you go from 25,000 to one million – a 40 times increase – you are getting to the next level which is the high availability, high-level requirements. That’s not just putting in more CPUs (central processing units), more memory.

“It’s actually about redefining your database structures and making sure the end customers can still access all of their vehicle information in real time.”

Mr Parthimos said the ability to simultaneously monitor one million vehicles around the world would put Connexion Media up with some of the largest operators in the fleet area.

“The upgrade will put us on par with some of the biggest fleet management companies in the world in terms of capacity and capability.

“Look at companies like Fleetmatics, which is a NASDAQ-listed enterprise-based fleet company, they have about 600,000 monthly subscribers.”

He noted that Fleetmatics’ share market capitalisation was around $US2 billion ($A2.81 billion). At the recent closing price of 17 cents, Connexion Media has a market capitalisation of $A4.4 million.

Mr Parthimos said the recent weakness of the Australian dollar was helping Connexion Media’s earnings.

“It’s good for us because obviously, with a US automaker, we are being paid in US dollars and with the Aussie dollar going down it works significantly in our favor. Our margins are a lot healthier.

“I would argue we are probably one of the most cost-competitive Western countries. Not against India, Sri Lanka and places like that, but Continental Europe and the US.

“The Australian cost base is really competitive and our know-how is really strong here because we have had an automotive industry in Australia for 100 years,” he said.

“We have a recognised know-how, a good price comparison and we’ve got the right education and training for the locals.

“It’s pretty exciting. The next few weeks and months are going to be very exciting for us.”

Connexion’s share price edged up 0.2 of a cent to 17 cents.