PowerFleet (AIOT) 11 Aug 182018 Q2 Earnings call transcript

Good afternoon. Welcome to the I.D. Systems Second Quarter 2018 Conference Call. My name is Catherine, and I will be your operator for today’s call.

Joining us for today’s presentation are the Company’s CEO, Chris Wolfe; and CFO, Ned Mavrommatis.

will call we questions. for remarks, their open up the your Following

forward-looking this we would statements Safe regarding I the that made to cautions Before call, Systems’ like begin call. provide I.D. includes statements during Harbor

statements and emergence reflect cash many does control. differ products results, are statements. uncertainties which the beyond demand materially conditions, cause services, competitive to and future strategy, company’s results During to risks, undertake for Factors regarding trends financial other for from that the those future future and the statements for Such Company’s including not others, operation, opportunities regarding materially or intend Company's not statements forward-looking expectations plans event of circumstances. events, and regarding and update present contingencies, factors, industry financial are future there statements performance filings, for position, forward-looking position. XXXX in projected historical the considered anticipated All forward-looking to include economics of overall competitive amongst any to imply and business I.D. technologies for statements other limited beyond. expectations the Company or the position, Company's any SEC such could the any or of could differ will statements call growth, to, include, performance. forward-looking made results new be but financial Company’s anticipated assumed actual forward-looking of than presence Systems’ achievements future Company’s product actual facts, demand operations, business offering Company’s are which The include The duty the statements. and may All any Company’s

that I section Investor Finally, for www.id-systems.com. like at the replay to made the available of Company’s Relations everyone at this call website be remind will would

the to CEO, call like I.D. proceed. Mr. Now Sir, Wolfe. over please turn Systems I’d to Chris

a After today. website. available joining quarter our press a we and in which the Good the release issued thank afternoon, our and us you, section you financial everyone, Catherine. of results XXXX of market copy Thank second for investor for closed, the of is

The for generated I.D. the quarter QX. we up momentum in another second quarter Systems marked strong building

by Our year-over-year sequentially million. in Industrial solid Truck the XX% by Avis Budget and also of highlighted was ITM our section with supplemented our from group. line and XX% the steady is Much to Logistics ongoing the or top growth quarter Visibility $XX.X generated but by Group performance contributions deployment growth Management core Solutions

and also of top I’d turn this clearly financial were and a of financials was strong insights solid addition on delivered call year-over-year CFO, to to But to quarter. our operational. net developments positive Mavrommatis improvement our lot a Ned Ned? non-GAAP we sequentially dive more quarter, our over both In like up to operational our in for detail There in the before quarter, $XXX,XXX. which line both progress, and provide our we to in the more details the income,

and Chris, you, afternoon Thank good everyone.

XXXX. XX, financial the June second our quarter to Turning for ended results

ramp This of the last half for revenue up revenue X% back Recurring from revenue our reflect $X.X year. their revenue due Breaking $X totaled second Connected the increased revenue from not Avis $X.X of the was Vehicle Connected higher in increased last Truck to million quarter million, does the year-over-year in million. mentioned, million and for revenue. the $X.X revenue Vehicle The million Solutions recurring our as XXXX to primarily year. source, revenue Chris QX Logistics was of XX.X As year. $X second down Solutions Solutions increase of increase Management was additional million million to quarter Industrial total will in XX.X units XX% QX by Visibility

were in Selling, lower XX.X% deliveries from improved the margins, over which XX.X% to in have to quarter $X year the due to XXXX QX Budget over decreased $XXX,XXX administrative Connected resources expenses time term. hardware, but inclusion profitability to gross cost of due period as in program up million was absent in year. expenses and ago $X.X R&D of the higher Solutions primarily year from The for for margin due Avis of SG&A last recurring $X to last a the quarter. upfront revenues margin expenses was in services Vehicle which same to the The expenses gross development year. decrease increase were margins second general The was of primarily internal R&D second reallocation same ago. kick of development high for of for from to product XXXX in for were million in contract the of making increase compared in QX in of quarter controller lifecycle Our XXXX million Group.

million or Turning profitability basic or $X.XX $XXX,XXX from an to per securities This and or XXXX net $X.X related per GAAP from share $XXX,XXX XX,XXX finally, cash balance was diluted foreign of non-GAAP basic second debt. and And second prepared This $X.XX This depreciation excluding share. improvement basic for in and sheet my loss the non-GAAP Chris? cash income quarter marketable diluted year. a and loss concludes net basic of currency and income an expenses last our remains QX of of strong in based per amortization with measures, remarks. the share. XXXX of and and million was equivalents our no per diluted totaled compensation, increase stock quarter losses net in translation year, for QX last of and share and acquisitions our $X.XX net $X.XX or totaled $XX.X diluted

reflect only but to second it execute that our Thanks, proves we grow Ned. simultaneously. deployments large business, our can profitably Not ability did quarter the also program that on

Avis XX,XXX platform global large-scale customers. for also quarter, telematics the keys addition unified to manage we units the we Truck with successfully In delivered two rollouts Industrial in

of our Logistics we products Visibility program thousands tens top out the later Our targeting will year. this of help XXX large as signing multiple with unit track new record launch fleets us for contracts, rolling

major orders our manufacturer, one first at numerous automotive Truck, orders the ITM one follow we largest received Looking business, producers. from world's large Industrial food from of on

generation previously fleets system targeting PowerFleet next small early product in is Our field called and trials. and entered test essence discussed telematics midsize is

major additions standpoint industry Rental to with contract our our will up gear and crunch, commercial portfolio contribution innovative our continue segment our a Association October business show. platform optimistic we the financial of to our are the launch unified customers XX,XXX in help new the solutions. Austin. shipping telematics additional renewals several is new products the for platforms and our continue slated the American These year. to improved the in a Avis will in about into from of extremely units as at revenue several generate introducing the launches translate steady total XX,XXX Overall, our business, customers. we our we first of product from telemetry we and at be this rollout to as In business with capacity We We’ll continue Trucking for and set products which recurring stickiness half we through chassis Solutions October. in Visibility greatly strong And sales Fleet realize do Logistics container QX overall wide for

the the mention of today. in last I shipping units see shipped as call, we QX in As remaining XX,XXX having

creativity market, concerning Avis our are we as successfully development work hone a order be rest also continue current negotiations to the launch The work are new deliver. products with order. year follow-on sell, we on half executing we showcase to additional as exciting active of looks While ability in and as our the and to and unit just first execute our innovative

ahead leverage Operator, year growing demand your up ahead. in operational we’re to not expanding open only this for strong please provide strong Looking the but appropriate the platform has years technology to our customer the us with call balance established a foundation our And momentum, questions. that instructions. sheet, ready and

Instructions] first [Operator Capital. comes question from Our Jaeson Lake you. Street Schmidt with Thank

Your open. line is

recurring Just question in how one our the segment wondering came VMS a from QX? quick revenue housekeeping much first,

from segment. is of recurring Hi, Ned. came Jaeson, million this revenue VMS X.X the the

size could the months you seeing size remained has Have relatively deal Or what have talk price been unchanged? a kind of few about guys the winning And you're here? seen the you wondering you then, in the of from over Chris, standpoint? increase past an if deal deals

for relatively the lumpiness unchanged. of out VMS their thing was about the are our enterprise you side. the VMS deals think most see the of numbers. The it as good also purchase are lower deals I as well our for smoothing here Keytroller strategic and the not steady it size have have their sales Obviously, scale of and I historical think acquisition held in part, but held and steady accounts sales the although at Keytroller typically size

market. but traction is change all seeing across no what’s of strata say So, I’d of kind the we’re good nice

then gross margin shipment kind back push expect of status to QX the we of QX? snap assuming here And in big the should regarding

Yes, Jaeson, then quarter. Avis to expect in we the an But as of shipments many have and the additional gross obviously in so do as we some second quarter. margins third see the quarter, for units improvement third

one and the the in queue. And last I'll then jump back

theoretically technically want this Just point, car rental with be over talking Avis the at you is vendors? exclusivity other so with clarify to could

done see longer for we're is like earlier an this than additional out negotiations hammer somewhat agreement in and what’s it stated some competitive work to we differentiation Yes, is Avis. trying development Chris. active to being diligently I making for what

exclusivity and that's again, in were we’re active in while negotiations process, you right it's like out period So know of now.

think were So focused Avis. XXX% on I

Thank you.

comes question B. with next from FBR. Riley Our Josh Nichols

now is line Your open.

been Any And Company's the updates M&A have at that going release was also you again provide how and Keytroller the into level high thoughts as about business? you things regarding outlook for can integrated operations?

and our and kind make the right the product actually being year fire would actual That it's kept success. sales is is to products, that phenomenally two technology rolling not together. a technology we’re better two what's we together the year and and on expected. move put and the now, quickly seeing see being all leader we workouts in know said that And groups charge nice other know And did this two -- we bring separated organizations got we of groups sure done is cylinders help actually organizations we got next from somewhat the about each group Keytroller to platform to Keytroller impacted than Really, purpose, VMS whole perspective. to is we of last on could

suite role a way we whole the platform entry we its year, you next see the PowerFleet So whole out suite all enterprise the as launch from will of down to actually the what level. products, of -- PowerFleet branding call

material October solutions. How tracking to long-range you impact also could you on then, in have that some the Industrial few financials? offerings a potentially Company's quickly And start so those coming the market new ramp Truck and do having and in think

Right power now, primarily truck essence industrial platform, product. channel the and about that's a let’s first talk of

through the So mid actually XXX I that's and after channel was dealers. we’re Keytroller, with as to the tier the acquisition small which Keytroller them the going dealer brought what get behind fleets

we for this distributors So, we’re actively also signing product and with engaging actually industrial as speak dealers internationally. up will platform,

and primarily hits a the streets you’ll dealers, them XXXX on So out in actually signing basically traction but market, market the educated when the some getting literature QX, getting will up QX see but be see of in product and product because then education basically impact. the we the the

those in side, of those products and platforms QX many will we be fuel also the of trials LVS on we active today. have product the field through some On

large-scale up would again, be XXXX. So say would take in I

of just large Company's auto you and OEMs near-term that partnership So more Avis outside the were that’d helpful? ordering opportunities. one Toyota that's frame just that more and or some product bit guys as the of help keeps frame to of far as be from Whether you biggest trying a back little these could coming with

the ITM that awareness in our the where in Fortune names, our call biggest But I of so think for that biggest ramping potential spend some literally companies. automotive remaining in we marketing working our includes current did on also as primarily companies the up they're opportunities have base speak. we’re the The market customer just we of we coming refreshed the have we on have we we which mentioned product had have a we’re the Ned Yes, and that opportunity side, the automotive of that with those that last significant broader deployments out. actively with XX solutions, year launches to prior the

distributor mid So of to just ITM the quickly if in term what near tier, those me be our quick the and the up ramp execute we we -- small in are by the stellar tier channel to growth that’s ITM like would path followed that side.

the those But some attention, dealer as products products of well. also products. that sell so just again traction can We’re garner telemetry ancillary we really seeing some ancillary in

that and mind the So beyond to launching the being out have on of have side trailers successful trailer container if but initial XG our platforms our go that some just capabilities, But units also areas carriers be and -- some just trailers of target. out not of million one going the said five I’ve keep of They coming in on to we’re today, side. -- are top-X our of XX,XXX have of target that. Any we tracking LVS not of just is LVS want will tracking, the LTE. represent we’re million target our after those or XXX and past, before -- a technology top those to those from all that other that’s XX,XXX, are am to LTE and done platforms to as X talk my in I have about many those transfer could our X garner that's carriers

Thank Gibson Roth William with from Our next question comes Partners. you. [Operator Instructions] Capital

open. Your is line

clarify, heard I just correctly. want if to I

but the telematics at solution, not distributors, dealers, out point? of to terms you’re new recruiting talking In actually recruiting this selling

not trials. in early in currently we’re the test is It No, system field selling. actually

once again October will end through the August So, timeframe be deploying gets that for selling. by and active of we September, it in

a confidence second a terms XX% like this could And order Avis you in percentage of year? connected giving you of or car XX% of put

can't go Avis. negotiations active of only we’re stay in tuned. we with there great can so I a really basis have They’ve relationship and daily faith put say a I but lot a us, in on

Thank you.

comes Mattson Glenn with question next Our Ladenburg Thalmann. from

line Your open. is

The about unit products, pricing the that’s same right fixed on rate. those Avis UTP

would that million by So I is this be XX,XXX right. X for calculation it my under just units, guess

That’s for was Vehicle revenue correct. million The X Solutions. Connected

Keytroller core And year, in last correct? acquisition remind was in so just trying so the me, growth was the of to and that quarter part first at the July get that the third

It Xst. closed on August

Xst, August right.

So I down revenue quarter the product had Keytroller last the back quarter year-over-year, get but then guess Avis you where we're to was excluding this is, was contracts, trying didn't.

away can for to me just that So kind of give me as some out? and that how square played color

as this business just at our year, mean about I which we -- look was But we Yes, one of you out quarter segment. approximately separately it's because really it second if break don't the look were $X.X at was Truck X.X. compared for Keytroller year Industrial million to last

growth in So, we some saw the business. defiantly

but Now, this business. did segment one our of said, I break increase we don't really as Keytroller out like it

any Or just the waiting with Okay, on? purchases hardware the for expected? guess line in they coming people maybe, side that so I like there anything on maybe quarter? what is delay third because kind and from new was products it you is in was Or going this

this Obviously, General we some business from saw nice Motors. quarter

a last year's two that compare had number we second bigger to motors. quarter, from that General However, if order you it was

of win it's when see a orders So Truck this some look the out business by dealers Industrial revenue timing Toyota. as from well coming, specifically we is expansion at second better. as of of year diversification lot but smooth just And continued you quarter the the the Chris did GM with the mentioned, I in Keytroller think as nice

the differentiation product kind the made features comment I make details Avis. still quick would you for guess on I Appreciate far like and some deal that guess can as that of Avis sound in you that the put that out some that Chris hammering

other of would forward contract product as the that forward you're second role well on one based say then able of sort sell vendors is but the this the to contract, would be deadline So also and you kind pass, going exclusive Or to those maybe to still is as exclusivity Avis that as looking how new far have be think you exclusivity get about? terms? Avis to that

with try shut good to right spin Yes, development we because faith have we the the also being better with and short and to with and that Avis line happen large probably It's out negotiations where with and now deal other and opportunities with see that we right the where the order has the with Avis. deploy the them I are Avis down foreseeable think now done future. to hold in exclusivity get car rental activity we activities, negotiate of versus in they this if in we another we work order

So definitely like negotiations said want Avis to the trying the finalize them before we’re with order. daily active next I in

Westcap Weston question with Our next from Management. Dan comes

Your open. line is

questions a will just driver Chris seeing you have primary first the trying if but what -- business, you now, more. activity overall demand, I behind case? answered for the that’s RFP of customer of the the if been you're Most to is increased understanding get or maybe Visibility the by Solutions couple that am and the

Basically, heard mentioned which talking, drive road. ELD drivers but the mandate but to drivers also caused and the somewhat curtailed capacity total I actually the yet on if behind of number hours I’d when of is legally, mandate my crunch it you -- was the now us, the ELD

have one pickup is a in you in long are tractor my you’re the you and IoT drivers that do shippers of and trailers, of basically seeing trailer speed come decision available. So the sensor figurative seeing And Amazon give without an at too and community is velocity X ratio if their what whole you with to have mile, for like platforms velocity? into had new about trailers. way it and out trailers with not much typically know and times And can't and dropping customers, there’s if to drivers we have said support queue the last companies, biggest who analytics. you're long this before is you’re analytics for the both and now waiting analytics visibility. that you queue industry I of And problems only integrated and detail, all times around you predictive can capacity. literal I Do them really capacity going And kind the X

and there, being lot now, line leave the crunch, information the you're to our past. make to won’t be than are So in there, and products seeing their customers the activity names field have that And of get’s is, the capacity feeling faster RFP sure were level in I'll literal those have though they currently are they back out trailer utilize but even coming figurative loaded there customers gets bottom the large in but and the came to couple right available in actively RFPs equipment, get’s them just I engaged and we’re mention a trials. of like just

on if to like seeing? some are do as to just the the of more dig on I yours customers the And or look that vis-à-vis you're other -- potential And evaluating this could like what a you at that, what market? what’s products competitors customers for feel little now positioned feedback you you this they're deliver capture to competitively been based are promising here they

then will product to known, and I answer, that differentiation would think give be announced we ATA competitive our the next I the call I at because when right. you the like will

I started from all a I kind background, logistics if of us here. that’s So the I’d my historically. do early, I come the kind out of service -- you miss background

again, innovative you people all our I too the deliver, to say business can changer the our me, in I get there have some but, I’d have there's and we velocity for to I’ll manage a have change execute think November. we the we way tell up in processes to pockets opportunities game this to

update initial those on an customer? with quick give just initial can last online completed you plant ago, update couple more had of you call on retailer have your particular couple ones, us said the the that or largest world's status think that of on Is rollout. quarters I and A traction there -- you any you three

active in actually sites. we’re bidding other a Europe, in for actually few Yes,

additional some speak. France of UK rolling the and so also as Italy, we out they're that’s So, sites, in act the and negotiations

that of actual our Truck offered depends actually because units orders we the on Some the OEM truck manufacturer. Industrial at

So the a Europe right going in and that's now on couple as going we for U.S on in of and sites. well have negotiations

and Avis. That’s going on then actually it also discussion to Is that as pertaining further there international interesting any front?

again, that Say sorry.

other going developments internationally Just on update Avis? on with any

that part network work just that I’m the glad there, but our part asked happen statement and about whatever of again so changes we’re product taking not of it's we also over that’s intend products a certified is that, to the it’s all call of of you use have what to work. so to this talking just development Europe the minor engineering

our modifying in EU. platforms actually can the So find

completed this anticipate international Okay the good specific in needed year? Do that’s will the color. development work calendar to business be

but in rollout. be in of Not large for this XXXX year, following second the calendar orders the will available

that. them completion I the of XX,XXX placing just with opportunities to the order? sure on the to international want some make unit you I’m have Is clear work the contingent of on related development next them

the of a numerous changes one part that all additions. only are just it's is contingent, it’s and just -- bundle, spread. those functionality Again, it's of No, feature not

quarter you And the you, just Avis customers in Ned could besides for obviously? XX% if

revenue. was and of then then the the was fourth below that revenue with with Yes, two XX% Wal-Mart in Toyota customer Avis GM of the the was revenue. X% XX% and big quarter of X% with

time, his call back concludes you. this like our remarks. Thank the At question-and-answer-session. over turn closing Mr. Wolfe to to I this for would Chris

today's and to our on specially in to for customers, I support. investors updating call. our call. you in And us, continued Thank you for Operator. their look us joining their next Avis forward for partners thank trust We want employees,

program. in thank Ladies does conference. you This today’s participating and gentlemen, for today’s conclude

a Everyone, disconnect. all have great may day. You