PowerFleet (AIOT) 12 Mar 242023 Q4 Earnings call transcript

Good morning. Welcome to PowerFleet's Fourth Quarter and Full Year 2023 Conference Call.

Joining us for today's presentation are the company's CEO, Steve Towe and CFO, David Wilson. [Operator Instructions]Before we begin the call, I would like to provide PowerFleet's safe harbor statement, which includes cautions regarding forward-looking statements made during this call.

During the call, there will be forward-looking statements made regarding future events, including PowerFleet's future financial performance. operation, present company's facts, anticipated for plans position, forward-looking results than statements include future growth, other position, statements. industry anticipated the competitive trends company's regarding for of and demand statements for and regarding product which historical any financial company's the All expectations strategy, offering opportunities other business future considered operations, are financial include, are not expectations company's for but the XXXX statements Such to, beyond. and limited uncertainties statements and beyond forward-looking All imply which of risks, many the are contingencies, such the presence of control. company's conditions, performance the company's actual forward-looking and products achievements The company's actual include, economic and from materially factors, demand those competitive could services, business SEC that or results, results of cash any for or in the others, new may differ technologies materially overall amongst differ company's assumed to position. emergence cause projected filings, statement.Factors and to reflect Relations would I over The CEO, any made to undertake the company Mr. forward-looking like duty will Investor call replay remind circumstances.Finally, available website at I company's call any of would not turn or be for to to in intend does like the that this events the update section PowerFleet's statements everyone to www.powerfleet.com.Now to future Towe. Steve Sir, please proceed.

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Instructions] Your MKM. Scott for today is with from Searle first question [Operator ROTH

starters, you're a of job Maybe the I to, sounds integration are launch. picture, wanted value, on continues are terms seem quarter. you going some like from looking? the in things to little of now. just are But as speaking, X to Israel we March directionally April a an everything be sounds in ARR be get continued sequentially headwinds, current contract should and growth? efforts next you're what couple bit of It's are Dave, in industry, It into right I seeing broader over kind Steve, how how Nice nice up sales to what tracking in be about seeing things. then about for the quarters thinking It fourth guess, see color And of but quarter. the the opportunity like kind to go pipeline? seeing very healthy here? forward of What we total terms filling reflect pipeline, And of the looks the the cycles you broadly itself to that how be thinking

opportunity make We're making great going of the of insight terms our Great. there's a in year calendar sure Thanks, really we're up to Scott, energy in some next is steam head building into of have. sure of year. click we place. focused in of A and half just things QX. lot huge first just that happy Clearly, to set start of a in terms terms in

So start running have for a we April.

view Israel. of would events terms the where expenses reacted bit of terms QX focused.There I we're as some definitely stub period a So we lower in fourth a in benefits to as were of quarter in also just the in

in focused sure of much we're very control we're terms there. making So in

some there standpoint. business OpEx will reinvestment back an of sort into from be the So

there certain savings terms people to doing. it of delayed example, line. that being of called, for in front just the Others, we just things Some were

of healthy off to So on the getting there focused the were a place goal start that sort Israel we're in certainly including things, focus costs really April. in in fourth to is a really multiple EBITDA certain from Obviously, quarter.But that things contributed managing financial in again, running but performance, is pretty on we avoided, and QX. overriding the get to

about Yes. And answer Scott, your pipeline question, to and market.

quantity the increasing. both So and quality pipeline of is

coming SaaS you revenue, think back very pivoted testament revenue growth the out and just with to took of that pipeline improved a the deals also to trajectory through. through and well the are in we of discipline is margins quality then quality in if better I where as and gross at the recurring quickly much-improved we terms look higher product working deal a that's the output overall

to doors. trajectory which now, very combined of conversations about we MiX top are on clients clients that will portfolio, and with is further starting opening the early So continue.Obviously, have PowerFleet that

So in strong. think market is the general terms, I

in we quarters of revenue tick and investment to get us only the over and driving can to is rhythm, develop future medium pipeline of to which much to side, one-stop underpinning outputs cost giving shop kind the inputs that do the the is the the I sales then the we come of holistic for strategies see through that, first feet we the are and ability part couple strategy the the able take I further and attractive on in-warehouse of where about What the unlock into And time. is think Unity the we're kind around put business trajectory very And that start integrating to have good, as our of over in growth provide we a we term, we'll and terms revenue us up operating take we P&L. of data vectors then synergy as an is as oxygen earlier think company. of of positive have advantage capability future.What have and and that, the terms in into really and the that street. discussed more multiple we sources road. marketing, key the stated to ability on much invest for more unlock customers short But to I feel growth,

Very the David, then, is the also And you can to expand little get on really point you Unity X follow my you're customer here launch thinking the of not Analyst the installed up are close on little guess, that the early just if helpful. Unity Steve, in a it's front? hands of bit April. in time I'm Day, get long-term if terms change back hitting Good. any base. running hitting integration the and the up to any could the Steve, I that there start when get we I targets the follow wondering as in far queue. just Is platform. and time? And wanted And lines with thought to platform. questions But I more around I'll IoT applications November know I ground could you beyond start in that. incorporated you getting guys of there this MiX bit a out to, change referenced about at into a there being on how but

your to projections don't of forward remain plan we've the think change credible I within shareholders and we or that's terms numbers we're we'll We get landscape to and that the together we Obviously, in then able customers see confident Unity in the see in of Unity put Investor X plane of to overview to go question, we another MiX, We enjoy terms months journey had X business. we the put services. X of indications Day. an being and X any of have And we ability for strong. fly maximum, feel under months think our the first the utilize to confident, us. skin remain the a that. customers going front So will on.In the to fully ourselves, the for overall, combined at the But when

hard working communicate as to ensure obviously are installed, bidirectionally. already device that hardware and can We well is

broader exist a kind can all utilize which at and terms perspective, Unity don't also, we're building the we that into proposition.Then asset So from overall obviously in of IoT, looking types. PowerFleet of we're capabilities MiX the

about to be temperature systems just organization. It holistic be different in solutions that order monitoring provide customer we've view a defibrillator can from, humidity. their previously, that talked with exist and relevant to as of and can is data things that to So a

So we'll we expand go. those as

of are And have that core part it But I the all is this customers that's right can seeing you to make what can We strategy offerings of And take type undertake. of saying for look, us? sensor? think type from we now. this asset, our we you us, from of sense data

add, on numbers, just Scott, know confirm, sorry, said just to Analyst a the we it quick the on Day day. I

close. think being first X numbers to after quarters those the about need as You

It's calendar the really for not year So it's months after a XX close. projection.

of in the not those terms numbers XX, thought year should March of be XX. So ending December

and combined entity Great. to Great on [indiscernible]. quarter, the looking forward job the

question next Mike with is Walkley Your Canaccord Genuity. from

question then around on hardware? the services, all margin the achieved XX% expect should it first on Or on about think hardware, this in Is to I David, given level Congratulations Great. guess in also there mix where sustain gross you quarter? should new we shift this quarter. go that XXXX. mix of a is in just for forward? quite way strong going And a good to the

Yes.

right. you're QX. low gross it was was margin Obviously, closer strong XX% It was XX%. normalized of sort XX%. and It at services So to ran unusually about in

most important earlier for a margin expand working benefit as performance, level. questions, that mentioned of there So being shifts, in call we're gross was fewer is time. QX is in example, seeing what pull were comment over the center at But a out. costs at a service terms I level the just I the earlier in think to Israel There on able

of there's benefit sort point there. probably So of percentage X over

the XX% So go-forward of hardware time.And expand it XX% services from. headroom I expand with XX% of is is thought about yes, as think time. now, to to over to baseline the the in that to and your good right over on say, I to think standpoint, look a way a on terms at. question sort again, would margins, is build sort of basis, The then goal from base is of a right But probably

for Or pulled trends of should PowerFleet year out, of about up in was of beginning how lapping $X the comparables plays it million just you're Is the we in revenue And out? setting year at the or think mostly business XXXX? growth terms end stand-alone the easier on out as just Great. annual that? pulled when with it the

Yes.

'XX from took and onwards. impacted the QX lapping really P&L was QX hold initiatives basically, 'XX becomes easier onwards. that So It the from

of think the adjusted for you play before last terms margins EBITDA as business could over margins area stand-alone the have entities year? just those And me about as in look Great. What reach combined out stand-alone expanded. targets. question this I the of at how and the PowerFleet pass and you business's much the course do it your trends But on. Excited

Yes.

expectation we over business, we to we that would always be So in margins drivers a And continue drive can comments, basis, sort There's time. stand-alone the stand-alone margins EBITDA terms from to be lot of a been company. has the the the we on Rule earlier see of XX XX% in OpEx do think over Again, key range the gross standpoint. of expanding efficiencies an there. time. a can of Two

of standpoint, that services scale a as percentage the services a expectation from grows. is also from a as as has will it grow continue to mix Firstly, benefits revenue standpoint, that And the been revenue growing.

we one always an we we been joy a quickly. base totally basis.The expectation stand-alone more elements the obviously, there's there. a And also, and key within is being efficiencies expectation So that's of transaction of can have the cost and the control on our get certain the there P&L MiX lot harvest the

just add. Mike, And I to think,

technological balance restrictions. the envelope we So of make the transformation had that terms obviously, and in sheet huge we've managed to a within

that, in now can -- grow what flow we we margins So of will to we and PowerFleet to to and out those getting we a bunch investments can but continue a was see move that to ripping to of getting path but as improving those committed And place, we -- go. profitability. through think start stand-alone costs all numbers I

That's and pass guess question it one very on. I Great. I'll last helpful.

you just here then? need think you Just deal smooth debt closing there to the the happen other now in of between you've in it's Is terms until milestones any place, shareholder approval. from the date? closing, that got have and Or sailing

regulatory in been all place, funding mean, resounding. the conditions I of fully all Obviously, the the approvals was shareholder is vote met So required. in terms have and

it has now time, a passing is out that of to is So that and of Africa. just time matter under South terms just legislative

that, date new will be are we, at the launch that for confident combined point, company. So the X this highly April

for question next Jaeson from Street. Schmidt today Lake is Your with

or perspective, either jump out called are positive you just from out Israel, but if I curious any know geographical other that negative? areas a there

at commitments. I points logos, that's months, think growth you customer in we've America the where with North Unity. seeing look And sales is proof the we the enterprise It's that positive where terms super response of if last efforts. we're XX positive our launched of focused in new

where bunch our be on their its We effect embarking on and a Unity beats which there'll customers are talking May, Conference, heart in shortly of Customer is business. second Annual about

terms in So revenues. we've PowerFleet And some we're of of industry in considering, think the I seeing the chain strong that's overall, seen also supply headwinds traditional U.S., some the vectors. with

So almost mode, any European to the to solutions, new of our we're of a obviously, overriding, safety for some pipeline previously, solution we strategic that good kind look Argentina lease pipeline the road build I some into as midterm in of Europe. which, really life That's but our I have we over starting in talked South of the African burn, we've and where put region. But combined the think, growth in-warehouse it. a killed and we decisions And that's real and maintenance plant seeing of with we growth coming think we strength.We're when bear. kind to is for businesses, Brazil, see we alternatives kind made starting out of for coming the seeds,

So who job done say streams this got you thank to moving challenging and the the continue tremendous And team times. growth find a forward that life. Israel us region a if at revenue indication new that is we've alternative the October what well as support revenues to our fact would for I during to business. to have protect big potential has able you look obviously that Israeli X And of overall from in been the a challenges onwards, considering faced real strong terms quarter, gives in grow

expansion That's pipeline I logos customers? When you aggregate business, Got America. being across still know you helpful. at new logos? these Or expanding driven by in it. existing look at new North Steve, is pretty are significantly expansion really And that in your mentioned that just you

mixture both. It's a of

kind and cross-selling in is job we're PowerFleet versa. of the we what on mission-critical particularly partner. they're we it to up-selling, providers at we assets enterprises where a and and that exciting for play get format warehouse struggling in to are looking better doing stand-alone think are of make had now where vice So into much that and this the in But have are their large is and have a even of multiple I starting the and a I get the data U.S., of highway road data intriguing customers the that view more think meaningful sense a customers, in

more logo the the starting that's in there's frustration what some that market. of new role out bringing we're and maybe to verticals with the competitors key in some I tactical where play that's growth, is think

and ARPU, Okay. back And trending jump at it then I'll if expected disclose just in is the you the how but queue. to? you don't last one, least directionally, it know in I

benefit end it recurring for share value rent Yes. is we book of get is of a not that customer the focused of standpoint. we're Again, on a an earn our metric of of sort But delivered. We're ARPU that And economic business, to the adding clearly, really the from is focused extra Unity overly on. increasingly book value of layer business.

and to our then of same. finally enterprise adds systems taking add different of allows do solutions AI other that and to more in sending the third-party stickiness expanding into ARPU. capabilities integrating kind to business to to delivering sources, And adds data ARPU premium your the just applications your standard data to [indiscernible] the applications And the us and

think look nonprofitable higher the business, ARPUs of the stronger at some stuff that and we've out of revenue. better more and replaced the revenue quality PowerFleet all of and if margin So being with and I taken of had you kind that's now stuff of kind commoditized the

Barrington question next Research. Prestopino Your from with is Gary

of giving that a questions subscriber terms of the focusing count couple A ask just you answered guess metric David. a was going just you And I going on? I is one that in that are here. you're not Steve, be or is first to to

So the subscribers. talked about we I generically think

numbers. will subscriber provide We

subscribers. and it's scale terms revenue we're in just just attracting about subscriber of per us, of than ARPU revenue the For getting quality of rather

revenue vector another the that's is is of think I vector. pull it's but say vector. and would improving can think, per I the us, not share, that it something the -- So that The #X key forward and wallet I we profitability is customer that growth important to is the #X

Okay.

being the base of legacy your So derived these alone, are platform? you legacy the you metrics of of what customer or of give some mean, through can on the where Unity business revenues now on PowerFleet, just legacy are with side? revenues percentage the being platform Unity us in terms services a I part

Yes.

platform. is So an and a Unity ecosystem I mean,

of Unity. functionality previous all the So the heritage from in reside previous platforms

to platform to platform So revenue like from migrating Unity we're from platform it's and there It's one the A part Unity. B not is therefore, shift other. all of

are coming you that going say then the it's Unity what the proportion So is growth What in at a what do the does to and capabilities we to of growth today it's break I strong of is out. if the from would future. of it that difficult look fact achieving,

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I We question-and-answer the the for have now call reached Steve session, the end to remarks. and turn of over closing will

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