An Introduction To Smart Parking (ASX: SPZ)

Running late for an event is stressful enough and is only heightened when you’re unable to find a car park.

Thankfully, businesses like Smart Parking (ASX:SPZ) have developed technology to notify and streamline you finding an elusive spot. While there’s a feel-good story in there, the lion’s share of Smart Parking’s revenue is generated from significantly less popular parking tickets or Parking Breach Notices (PBN’s).

Nobody likes parking tickets, except for perhaps Smart Parking shareholders.

Smart Parking has a market capitalisation of $138 million. Once known as Empire Beer Group and the owner of Colonial Brewing Co and the Royal Bar in East Perth, Smart Parking listed via a reverse takeover in 2011 initially named Car Parking Technologies Limited.

The business has a wide range of technology to survey vehicle activity. These technologies include:

  • Automatic number plate recognition (ANPR)
  • Variable message signs
  • Car counters
  • In-ground or overhead sensors

You no doubt would have seen visiting large shopping complex’s counters and or green and red LED lights alerting drivers to park availability within each bay. These visual cues along with message signs improve traffic flows and space throughout any park. All of the data collected by the various hardware is then relayed back to its SmartCloud management platform. The cloud based program processes millions of parking events each day providing real time data and availability guidance to its mobile app and the previously mentioned occupancy indicators. The platform provides feedback to site owners including insights into capacity, traffic flow, parking patterns and assists in setting enforcement rules.  

The business has three divisions:

Parking Management 

Provision of parking management solutions (AKA parking tickets) with their target clients being the retail sector, managing agents and land owners in the United Kingdom, NZ, Australia (Queensland) Germany and now Denmark. For FY23 PBN’s made up 83% of the company’s revenue. Smart Parking is targeting 1,500 sites by 31 December 2024 which has been brought forward from the initial target of 30 June 2025.


The sale of technology, hardware and software. It primarily supports the parking management division through SmartCloud and bay monitoring technology. The on-street and off-street products include:

  • SmartApp
  • Automatic number plate recognition (ANPR) cameras
  • SmartSpot Gateway
  • SmartCloud
  • Overhead Guidance Indicators (OHIs)
  • Pay & Walk 
  • Enforcement Management System

How and Where Does Smart Parking Make Its Money?

As mentioned above 83% of Smart Parking’s revenue is generated by the issuance of PBN’s.

Of this, 88% of the parking management revenue is generated within the UK. While this is highly concentrated the Company has been expanding outside of the UK. In July 2023 Smart Parking acquired German business ParkInnovation which held a number of manually operated sites. 

This provides a significant opportunity for Smart Parking should they be able to convert these manual sites to its ANPR technology. Management believe that the total addressable market in Germany could be twice the size of the UK. With the majority of the existing parking management operated through the use of people/parking attendants, not technology. Smart Parking believes they will provide a significant point of difference leading to client wins. 

The company continued its expansion into Europe with an investment in Denmark. The Danish market brings what the company feels is an attractive regulatory space and estimates it to be 3 times the size of the New Zealand addressable market. 

Once initial capital expenditure is outlayed there is minimal maintenance capex required, allowing sites to scale quickly as they mature. I believe the hardware would remain quite sticky and would require significant re-investment by park operators to move to a competitor. 

When parkers outstay the paid period, this gives Smart Parking the opportunity to issue a parking breach notice (PBN). As site numbers grow, so too do PBNs, as Luke Winchester has pointed out on his blog.

Who Runs Smart Parking?

Paul Gillespie has been Managing Director since January 2013 following the retirement of Paul Collins, founder of the technology business.

Prior to joining Smart Parking, Gillespie held senior positions at Xerox Parking Services and boasts over 20 years of experience in the Parking and Transportation industry. Gillespie is currently a Non-exec director at DTI Group. DTI provides integrated surveillance systems, passenger communication systems and fleet management solutions for the mass transit industry and other related markets. Gillespie has some skin in the game with around 2% of Smart Parking held both directly and indirectly. 

With 34% of the company, significant shareholder and non-executive Chairman Christopher Morris has a considerable stake in the company.  

Morris’ tenure began back in 2009 while the company still traded as Empire Beer Group. Morris brings an impressive background having founded Computershare Limited (ASX: CPU) and taken it from an Australian business to the world. 

A Risky Business – Government Regulation Headwinds

To reference Matt Joass from a recent Baby Giants podcast, there are businesses that are risky and risky share prices. Smart Parking is a risky business.

Smart Parking is at the mercy of government regulation and with a sniff of the popular vote the bulk of its revenue could be legislated out. This has been particularly evident with their venture into the Australian market. 

Following a number of complaints the Queensland government temporarily paused private parking operators’ access to the Queensland Motor Vehicle Register in February 2023. This took away the ability to identify who is the owner of the car.  On 10th August 2023, the Queensland Department of Transport and Main Roads released a consultation document seeking comments and submissions on options to reform the release of personal information for enforcement of private car park conditions. It is unclear if or when access to the Queensland Motor Vehicle Register will be reinstated.

While Queensland represents a very small portion of the business (71 sites, revenue of $1.4m and an EBITDA loss of $0.4m in FY23), it does show how susceptible the model is to government regulation. In many of the other Australian states it’s already illegal to look up plate data. Former Transport Minister Mark Bailey called parking businesses like Smart Parking predatory and was quoted as saying:

“What we’ve seen is some predatory companies issuing what looked like fines, and are actually not fines, to people for overstaying in carparks,”

“And the way it’s been done has been, to be quite frank, it’s been a real rip-off and it’s been something that’s trying to exploit people rather than managing carparks.”

He went on to say:

“They’re saying it’s a matter of litigation, but in reality they have no intention of going through all the court costs to recoup a small amount of money,”

“Don’t pay these so-called fines, they’re not fines. It’s a rip off.”

So if the government is saying don’t pay the fine, what chance does Smart Parking have of collecting the fine? If elected officials are not your flavour perhaps more influential is tiktok showing the disregard for a ticket issued by Parking Enforcement owned by Wilson Parking.    

As a result of the regulatory change, Smart Parking made 50% of its Queensland staff redundant with the remainder put into a reduced manual operation or being redeployed elsewhere in the Group. The company noted in the 2023 annual report that it believes there is a significant opportunity across the UK, Germany and NZ and will be focused on the continued roll out of sites and customer wins in the coming years, clearly omitting Queensland and Australia.

Queensland isn’t the only jurisdiction facing regulatory scrutiny. 

The UK government “temporarily” withdrew the private parking code of practice in June 2022. A number of changes to the code are being considered including capping the level of parking charges operators of private parking facilities could issue, as well as the removal of additional fees as part of the debt recovery stage. 

Per Smart Parking:

“The UK review covers the value of the Parking Breach Notice and debt recovery fees, accepting that Private Car Park operators have the right to access contact details of number plate owners in order to charge fees. Like NZ and Germany (but unlike in Queensland), in the UK there is a Code of Practice, enabling legal framework and established cost effective mechanism for retrieval of number plate details for enforcement of private car parks.”

While there is no issue of number plate identification at this stage, limiting the value of the fine will have an immediate impact on revenue. The updated code was due to come into effect at the end of 2023 but has continued to be delayed.

Furthermore, the reviews from parking offenders makes for difficult reading and would only encourage further intervention. Granted, I can’t imagine seeing too many people being complimentary of receiving a parking ticket!

Smart Parking First Half 2024 Results

Smart Parking reported its first half results recently, with revenue increasing 20% to $26.5 million. This translated through to the profit line with diluted earnings per share increasing 20% to 0.66 cents per share. Following a strong month where the share price ran up over 25% shares eventually finished down 8% on the day. 

PBN numbers increased by 22% compared to the prior period. Excluding the suspended Queensland operations the increase was 29%. The company had 1,219 total sites under management at 31 December and reaffirmed its goal of 1,500 sites by the end of the financial year. 

Smart Parking demonstrated significant growth in the expanded New Zealand and German markets. 

The New Zealand business effectively doubled in the half with revenue increasing by 99% off a relatively low base. Germany also saw significant gains with revenue increasing 1,643% which again was off of a low base. Management was confident both geographies had more room to grow, particularly in Germany as it is Europe’s largest market.

When pressed on the UK regulatory market, Gillespie seemed confident that the longer that resolution took the more likely it would be in parking regulators favour. The latest out of the government per Gillespie is that they expect to release the next consultation between March and May. 

I questioned on the call whether there was any concern around regulation pressure translating from Queensland across the Tasman to New Zealand. Gillespie was not concerned, commenting: 

“No, I guess, is the short answer to that. I mean, one thing I said about New Zealand is a code of practice in place, much like we have in the U.K. and much like Germany and also Denmark, which is essentially a kind of broader engagement that private parking operators have to sign up to to ensure that you do things fair, you are fair and reasonable in your actions, okay. Now we believe we are bearing reasonable. We’ve had that tested a number of times with kind of tribunals that people aren’t happy with a particular breach if we decline that appeal for whatever reason, when we’ve been to tribunal, we haven’t lost one and they’re backed up by the tribunal. So from that perspective, no, I’m not concerned about that at this stage.” 

Financial Performance and Valuation

Smart Parking continues to show signs of operating leverage. Gross margin continues to improve as PBN’s become a greater portion of the company’s revenue mix. 

While receivables increased by $1.3 million for the first half of 2024 it was not clear how much of that relates to PBN notices. While PBN receivables will naturally increase as revenue grows, it’s important to monitor the ability to collect those fines. Regulatory or cultural factors may influence the company’s ability to collect outstanding fines. Is it possible Australian culture is more predisposed to reject this kind of business model than others cultures?

With a share price of around 40 cents, Smart Parking’s market capitalisation is around $140 million. If Smart Parking can replicate the 20% profit growth in the second half we could see a profit for FY24 of $7.6 million. This would value Smart Parking at around 18.5 times future earnings.Taking into account the strong revenue growth and signs of scale/inflection, I consider this attractive. 

Clearly the potential regulatory impact, particularly the threat to revenue in the UK, could be justify caution. While the prospect of government intervention weighs on the company and potentially holds back its share price, I’m happy to take the risk and continue holding a small position in my portfolio, given the growth shown to date.

Disclosure: the author Nick Maxwell owns shares in SPZ and will not trade shares within 2 days of publication. The editor Claude Walker does not own shares in SPZ and will not trade within 2 days of publication. This article is not intended to form the basis of an investment decision. Any statements that are advice under the law are general advice only. The author has not considered your investment objectives or personal situation. Any advice is authorised by Claude Walker (AR 1297632), Authorised Representative of Equity Story Pty Ltd (ABN 94 127 714 998) (AFSL 343937).

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The information contained in this report is not intended as and shall not be understood or construed as personal financial product advice. Nothing in this report should be understood as a solicitation or recommendation to buy or sell any financial products. Equity Story Pty Ltd and BlueTree Equity Pty Ltd t/a A Rich Life do not warrant or represent that the information, opinions or conclusions contained in this report are accurate, reliable, complete or current. Future results may materially vary from such opinions, forecasts, projections or forward looking statements. You should be aware that any references to past performance does not indicate or guarantee future performance.