Welcome to Quartix Technologies Plc. Following completion of our 2022 financial year, I'm pleased to share with you an overview of our business model solving fleet visibility, a summary of our operational and financial performances, and our view of priorities for 2023 and beyond. My name is Richard Lilwall. I have over 20 years' experience in the vehicle tracking and telematics sector, and today, you'll be hearing from me as Chief Executive of Quartix Technologies and also from our Chief Financial Officer, Emily Rees. Quartix is an AIM-listed, cash-generative, debt-free business with 92% recurring revenues and high customer satisfaction rates. We offer a value-based proposition with competitive pricing and excellent service.
The Quartix business started in the U.K. in 2001, following its success in the domestic market, launched in France in 2010 and the U.S. in 2014, the same year the business IPO'd on London's AIM market. 2018 saw our launch in Spain, plus a Queen's Award for Innovation for our SafeSpeed product. Further launches in Italy and Germany followed in 2019, along with a gold award from Investor in Customers. In 2021, Andy Walters, the Quartix Founder, made the decision to retire, I joined the team as CEO in October of that year. In 2022 and early 2023, we launched our EVolve EV transition tool and Quartix Check products. Also, I'm pleased to announce, we've recently won gold in Investors in Customers for a second time.
The Quartix business has grown its live subscriber base to over 235,000 vehicles across some 25,000 customers. This includes international expansion, which has seen us grow to over 50,000 live subscribers in France, over 30,000 in the U.S., and more than 15,000 in our other European geographies. We own our technology and the intellectual property we use to help our customers solve their business challenges. Before using our technology, prospective customers tell us their challenges are centered around a lack of visibility of their mobile assets. This fundamental issue sees those customers experience waste from suboptimal planning and work allocation, misuse of company vehicles, a lower capacity for work due to inefficient vehicle utilization, heightened road risk from excess miles and poor driving behaviors, and a more negative environmental impact than they wish to achieve.
Our solution, in addition to a small hardware unit discreetly installed in the vehicle, is a simple-to-use cloud-based platform, accessible in real time from any device. This platform gives managers new insights that empower instant improvements in their daily operations, addressing the challenges they face. High-risk driving can be controlled, better planning and resource allocation become possible, and green credentials can be greatly improved. In terms of customer outcomes, independent surveys show 25% reductions in fuel spend, 15% more utilization, 15% improvement in overall workforce productivity, 10% fewer miles driven, up to 15% reduced employee overtime, and a 25% reduction in vehicle idling time, to name a few. I'll now hand over to Emily Rees, Chief Financial Officer, who will provide a summary of our financial results for 2022 along with some of the key performance indicators we use to run our business.
Thanks, Richard. My name is Emily Rees, I will take you through our financial results for the year ending the 31st of December, 2022. Quartix's key performance measure has been annualized recurring revenue, or ARR, which, since 2017, has seen relatively consistent growth. ARR is the most significant forward-looking KPI, it is pleasing that it grew to GBP 27.3 million (Pound Sterling) in 2022. As per 2022, the plan for the short and medium term is to see an improved return on investment in marketing and sales headcounts, resulting in another year of stronger ARR growth. ARR will accelerate following the investments made in 2021 and 2022.
There is more focus in the team now on return on investment and customer acquisition costs to ensure that sound decisions on investment are made to strengthen the returns on ARR, ensuring it will continue to see double-digit growth. As Richard Lilwall mentioned, recurring revenue currently represents 92% of the business's total revenue. I will now go through the business's main KPIs for 2022. As per the previous slide, it is pleasing that annualized recurring revenue, when measured in constant currency year-on-year, grew by GBP 2.6 million (Pound Sterling) to GBP 27.3 million (Pound Sterling) as at the 31st of December, 2022. New vehicle tracking unit subscriptions added to the subscription base grew by 20% to just under 61,000 units installed in 2022, an improvement from the growth rate of 18% seen last year.
Fleet gross attrition marginally increased to 12.8% but is still considered low by industry standards. Our core fleet business delivered excellent progress in a further year of investment, with our installed base now exceeding 235,000 units. During the course of the year, we won more than 6,500 new fleet customers, with the customer base now exceeding 25,000 customers, a 12% improvement year on year. Price erosion, defined as the annual decrease in the average subscription price of the entire subscription base, reduced to 4.7%. In the year, the price erosion for many new units installed in 2022 versus 2021 was flat, with no decrease in pricing on a constant currency basis. I will now summarize the financial results for the year ending the 31st of December, 2022.
All comparative monetary amounts for 2021 have been restated in line with the business's change in accounting policy with regards to the recognition of equipment, installation, and carriage costs associated with contracts with customers under IFRS 15. Revenue grew by 8% during the year, in line with the growth in the annualized recurring revenue of the subscription base. While fleet revenue growth was strong at 12%, this was partially offset by the continual decline in the remaining insurance revenue, which was mainly deferred insurance revenue with very high profit margin that will not reoccur in 2023. Gross margin decreased to 71.6% in the year. The prior year's gross margin benefited from a release in the provision relating to the swap out of 3G units in the U.S. due to the reduction in the number of replacement units forecasted.
Excluding the profit and loss impact of the 3G swap provision in both years shows that the gross margin has remained constant at 72%. There was a GBP 500,000 (Pound Sterling) increase in sales and marketing expenses to GBP 6.4 million (Pound Sterling) in 2022 due to the investment in customer acquisition costs to accelerate growth in the business. Operating profit therefore increased by GBP 200,000 (Pound Sterling) to GBP 5.6 million (Pound Sterling). Adjusted EBITDA, which excludes the impact of the re-estimate of the 3G swap out provision, cost of living payments, and movement in the cost of options, increased by GBP 300,000 (Pound Sterling) to GBP 6.1 million (Pound Sterling). Basic earnings per share increased by 1% to GBP 10.42 (Pound Sterling) .
Cash generated from operations before tax at GBP 4.2 million (Pound Sterling), with 75% of operating profit, mainly driven by tax paid in 2022, which was lower than 2021. Working capital management was more challenging with the inflationary pressure on global economies. Trade debtors at the year-end was equivalent to 37 days of sales versus 34 days in 2021. Inventory levels increased significantly by 50% compared to prior year levels due to buffer stock holding to address component shortages and due to the increasing number of 4G compatible units in anticipation of the transition to 4G units in both the U.S. and Europe. A key focus of 2023 is to start to reduce component stock held in the business as the component shortage starts to improve in the wider market.
For many years, the group has applied a very conservative accounting policy of immediately expensing hardware and associated installation and carriage costs. The group is implementing a new policy for 2022, which will recognize these incremental costs on a systematic basis that more accurately reflects the revenue stream generated by them, with the costs recognized over their initial expected contract term of two years. Please note this is not being based on a customer's average tenure with Quartix, which is between eight to 10 years. Capitalization and subsequent amortization of the incremental costs will be more aligned to the core principles in IFRS 15 and will make the reported adjusted EBITDA more comparable with that reported by companies with a similar business model.
The impact of this change in 2022 is to increase adjusted EBITDA for the year compared with previous reporting methodology by GBP 400,000 (Pound Sterling). We believe the growth of the business in 2022 is better demonstrated through the GBP 300,000 (Pound Sterling) increase in adjusted EBITDA year-on-year. Comparatives to 2021 have been provided here both in the new and old accounting policies to help understand the changes in the business year-on-year. This chart presents the recurring revenue broken down by the year that a customer joined Quartix. We are very pleased that a good proportion of our subscription base continues to be from customers between 2002 and 2010. Through our strong operational excellence and customer service, we are able to maintain a low attrition rate in our base across all years.
Our fleet customers, now at more than 25,000 customers, typically use the group's vehicle telematic services for many years, resulting in low rates of attrition. Accordingly, the group focuses its business model on the development of subscription revenue, which provides the best return to the group over the long term. I will now provide the breakdown of performance by geography. Each geographical market registered increases in both new subscriptions and in the subscription base for the year. In the U.K., our most mature market, we were pleased to see double-digit growth in new subscriptions to 12% versus 6% in 2021. The subscription base increased by 9% year on year. The strength of our brand, service capability, and reputation in the U.K. is leading to higher levels of inquiries from larger fleet prospects.
Our U.K. website continued to perform well in terms of inquiries, and we continue to add new content to it. We will continue to focus on telephone sales staff, and we have increased U.K. field sales capacity to support our fleet marketing initiatives. We will look to develop existing channels and find new partners to help us develop the market. In France, we saw significant growth in new installations as a result of the continuing expansion of the sales teams, including the French field sales team, which targets customers who have larger fleets of 50 or more. France ended the year with just under 53,000 vehicles under subscription, a 30% increase year-over-year across just under 7,000 fleet customers.
In the U.S., new vehicle subscriptions continued to grow with high staff churn in the first half of 2022 impacting growth as the company focused on performance improvement along with reevaluating the U.S. expansion plan. It completed the year with just under 31,000 vehicles under subscription, a 10% increase year on year across 4,000 fleet customers. In the U.S., Quartix has hired two field sales agents based in Texas who will focus on new unit subscription growth. In addition, the group is seeking to increase resource into the direct sales teams and comparison sales teams who service the U.S. market to further increase new unit subscriptions. At the same time, we have implemented new processes to improve sales efficiency in the U.S.
The group continued to make progress in its other European territories, achieving excellent results, albeit from a much smaller base, ending the period with a subscription base of just under 16,000 vehicles, a 63% increase year-on-year across just under 3,000 fleet customers. The group will increase investment in direct sales staff for Spain, Italy, and Germany, where unit sales have been growing rapidly in 2023. This graph shows the retail price of new installations on a monthly basis between January 2015 and the beginning of 2023. What you can see is that on a trend basis, the average retail price of new units being sold at Quartix as per the last time this was presented has continued to remain steady for the last four years.
We can therefore conclude that the price erosion, as per our KPIs, isn't from new business joining Quartix, but from our historical base, either from the loss of customers at a higher price point than the current average or attrition derived from customers renegotiating their current pricing plan. We anticipated that price erosion will continue to decline, which is evident in the 2022 results, and should continue to plateau as we move towards the current average installation price of the last four years. As expected, total revenue now more clearly reflects the growth in the subscription base growing in 2022 by 8% during the year. The remaining insurance revenue being highly profitable deferred revenue from the final unwinding of insurance had some impact in 2022 that will not reoccur in 2023.
Given the success that Quartix has achieved in its core fleet markets and considering the broader market opportunity available to it, the group intends to continue to invest a proportion of its gross profits on sales and marketing to develop further on the profitable subscription platform it has created by accelerating growth in its fleet subscription base. In 2022, Quartix finalized two value-adding features. The focus in 2023 will be on upselling these products for both new customers and to the existing customer base to further accelerate ARR and revenue. Shortly, Richard will highlight how this growth in revenue will reflect in improvements in the bottom line in the short to medium term. Finally, Quartix has some initial ESG KPIs that it is reporting to the market for the first time.
During 2022, Quartix formed an ESG Committee with the objective of ensuring the group's strategy and vision are aligned with agreed ESG metrics, so Quartix, beyond the core environmental benefits of the product, contributes positively in all territories that it operates. Quartix's ESG report for 2022 starts with incorporating some of the standard ESG KPIs. A more comprehensive report will be made available within Quartix's 2023 annual report. The business is setting 2022 as its base year for all ESG measurements. In particular, environmental reporting KPIs were higher than 2021 due to staff for at least half the year not working in offices or traveling on the road due to COVID-19, meaning that the figures for 2021 are artificially low.
During 2023, the committee will also work more widely with its stakeholders in the business to ensure that conversations around the ESG impact of business decisions becomes a more central function as it also becomes more central to our relationships with shareholders, institutional clients, customers, and employees. The committee recognizes that there will still be a journey to have a greater focus internally on key ESG metrics, and further commentary on the results presented here are available in the ESG report located in the business's annual report. Thank you very much, I will now hand over to Richard to summarize our 2022 product launches.
Thanks, Emily. In late 2022 and early 2023, we launched two new products helping Quartix to build upsell capability within our highly valued customer base. They also help our customers further with the challenges of road risk and also allow them to address the biggest disruptor to mobility for decades, the electrification of vehicle fleets. Firstly, in October, we launched our EVolve platform. The challenge for fleet operators is to understand how to move from internal combustion engine vehicles to electric vehicles with minimal business disruption. Our solution is to take their journey data combined with other data sources to produce a comprehensive, dynamic, and repeatable planning tool. The adoption of EVolve since launch has been strong and includes multiple local government fleet operators. The second release was Quartix Check. This smartphone-based app allows fleet operators to ensure their vehicles are safe to drive every day.
Drivers simply download the app to their device and carry out the necessary daily vehicle checks. The fleet operator can view checks are being carried out in real time and report on exceptions, enabling any necessary remedial actions. The application was released on iOS and Android in January 2023, the pipeline and early sales to date have been encouraging. Quartix has a great opportunity in the coming years, next I'll explain the size of that opportunity, where we'll win, and how we'll achieve success. Firstly, some context on the vehicle tracking and telematics market as a whole in our key regions of operations. We anticipate that in the U.S., which has a total vehicle park of around 31 million commercial vehicles, market penetration will increase from circa 50% today to between 60% and 70% in the next three to five years.
In Europe, which has a larger vehicle park of circa 55 million commercial vehicles, we expect penetration to increase from under 25% today to circa 35% in the same period. For Quartix, we feel this offers great potential in each of these large markets with significant room for growth. Here we're addressing the unpenetrated or greenfield customers, and this is a great but not only place for Quartix to win. How and where can Quartix win? Well, in full alignment with our strategy, we will win by providing the best service levels our sector has to offer at a lower price than customers typically find themselves paying today. This means we can win with greenfield accounts. These customers are often in the smaller, less penetrated fleet sizes. They want a simple, low commitment, reputable, low-risk supplier, and these have always been core customers for Quartix.
We will also win with those customers who already use a competitor product. These customers sometimes switch to Quartix to save money, but more often move to us seeking improved service levels. We see many ex-customers rejoin Quartix for exactly this reason. We're also seeing some mid-size fleet operators in the 50-500 fleet size seeking out a new supplier offering better value. These customers have higher priced, highly complex, or even customized solutions and seek to reduce costs while retaining the most important parts of fleet visibility and reporting. Naturally, this flight to value is more common in tougher economic conditions. How can we be so confident that our service levels are so good? We have two excellent and external proof points of the quality of service we offer to our customers.
Firstly, Trustpilot, the highly regarded customer review site, shows our average score of 4.8 out of 5 stars, putting us in the excellent category. Further to that, I'm pleased to announce that in January of this year, the customer experience assessment and accreditation specialists Investor in Customers awarded Quartix its top gold category. These third-party proof points, along with our internal metrics on case resolution times, customer satisfaction, and Net Promoter Score, demonstrate the customer-centric culture we have here at Quartix. Next, an update on our three-year plan based on the three pillars of sales execution, operational scalability, and deeply understanding our customers. Firstly, on driving sales execution.
This is a multi-year project that'll include best-in-class product demo and pitch, improved lead handling, scoring, and grading, combined with nurture programs and best practice funnel management, allowing us to optimally match effort and spend to specific opportunities at all stages. In December of 2022, we finalized implementation of a new tool, which is a very significant step towards this. In 2023, our teams will be using this to improve conversion rates at each stage of our sales funnel. This is about improving the efficiency of our sales and marketing investments. Secondly, on building operational scalability. This means simplification, digital transformation, and automation, ensuring we can offer our value-based proposition with excellent levels of service to more customers without a corresponding increase in cost. In 2022, we've had some real success here.
Against our very pleasing double-digit increase in our customer base, we've not added any heads to our customer support function, whilst at the same time, we've resolved customer issues faster than ever before and increased customer satisfaction levels to new highs. In 2023, our focus will move to systematic business process mapping and building a roadmap can deliver us to our ideal future state. The third pillar is to deeply understand our customers. We have, for the past year, been listening to customers more closely than ever before, understanding their unmet needs, business challenges, and technology strategies. This process has included calls and site visits from our leadership team to some of our key customers. These learnings, which will continue on an ongoing basis, help guide our future development hiring strategy and process improvements over 2023 and beyond.
Investments in 2023 will be directed to replicating our success model in more geographies. The model first built in our U.K. market has since been replicated in France, and over the past few years we've seen that yield excellent returns. In 2023, we will take some first steps towards building this model in other territories, most notably Italy and the U.S. In the U.S., our revised plan has a narrowed focus specifically on Texas, where we've now deployed field-based sellers. Later in the year, we'll also hire field-based sellers in our successful Italy region. In each of our regions, we'll be seeking to upgrade our distribution capability with resources specifically focused on adding new distribution partners. Following the product developments in 2022 supporting our land and expand capability with customers, in 2023 our development roadmap will focus on lower costs and improving service.
This will include, firstly, integration and development of our marketing and sales process tools for greater optimization, primarily focused on lowering our costs. Secondly, we'll be improving our core platform to benefit all customers with more support and service features built in. This will help us reduce costs and really improve customer experience. Finally, three, we'll be adding proactive and ultimately predictive support, solving issues as soon as or even before they become customer impacting, further enhancing our service excellence. In the long term, Quartix will stay tightly focused on value. That means providing excellent service at highly competitive prices. Our innovation efforts will keep our product simple, with valuable features and up-to-date with current and future fleet operator challenges. Our ability to upsell with genuinely value-adding services will help us further delight our base of customers.
Our sales execution and operational scalability mean we'll keep our prices where customers want them to be. We'll continue to partner with and listen to our customers as they help us shape our future. With laser focus on cost and customer experience, Quartix will be the clear leader for price quality ratio in each region of operation. We believe that the group has significant opportunity for profitable growth in its fleet business. Quartix intends to make further additional investments in sales channels during 2023 that will lead to accelerated profitable growth in annual recurring revenue, adjusted EBITDA and free cash flow in 2024 and onwards.