PowerFleet (AIOT) 6 Aug 242024 Q2 Earnings call transcript

Good morning, and welcome to the fireside chat. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, David Wilson, CFO of PowerFleet, Inc. David, the floor is yours.

Good morning, everyone, and welcome to today's fireside chat. My name is David Wilson, CFO of PowerFleet, Inc., and I am joined on today's call by Steve Towe, PowerFleet's CEO. I'll begin the call by sharing our safe harbor statement. today's securities forward-looking laws. on meaning within shared federal of information call statements contains the The be All do matters should not contained relate forward-looking statements in to of this historical presentation that considered statements. fact

of more should the These or Securities to anticipated results preliminary in include, based actual and March statements months to expectations. June those statements and Hence, XXXX. preliminary or time months forward-looking are benefits forward-looking example, results and business for and for and the by guarantees uncertainties synergies one without integration periodic incorrect, from the underlying may X to our nor are For these assumptions the XXXX, of risks. recognize indicated vary ended forma with these filings or Exchange regarding on limitation, our time current MiX our financial pro to MiX materially XX, subject businesses XX XX, from be Commission. anticipated the results with of ended neither risks Telematics ability are other and Telematics. These materialize our combination statements Should statements promises or our prove forward-looking management's Uncertainties statements. factors described the

assume information, Forward-looking obligations we result future a any this no this of so, disclaim obligation presentation. forward-looking new statements as update and by presentation do otherwise. of expressly law, included to events in the whether And required of date are only made applicable unless statements to otherwise or as any

XXX preparation a both Letter Inc., designation directly carefully Combinations, regarding XXXX does PowerFleet QX filings This in and deliberated recent July Limited. on with filings. the Telematics shared, matter from SEC by delay ASC was With related other the flow. The our on their Business accounting as the and Telematics necessary acquirer collaboration briefly the external the our in Comment reviewed with by close by SEC raised received and cash during call statements the S-X addressing impact with transaction. under regulatory accounting PowerFleet, the not of forward-looking and the We connection earnings our combination the of fiscal I'll MiX MiX matter start XX in advisers in

of is to, in While factor of must relevant the the sizes entities analysis gained merger. After relative the the of MiX PowerFleet under in had accounting U.S. important was this several PowerFleet Directors, over companies but in transaction, shareholding considerations ASC acquirer, acquirer identified recognize the any a comprehensive XXX as concluded relative the the transaction. accounting of X the and that involved that be it's identifying composition Board control include, control not management evaluated. paid Consequently, other limited that are a GAAP all premium These to outlined aspects control, Telematics. of both

are within our process. with ultimately closely this auditors advisers of upon review and While legal resolve we is timing the working month dependent SEC August, the to matter

XX-KT for XX, June As quarter to XX, delay review from our transition report first file XXXX, Form Form the the for to transition will result, ended ability a XXXX. March our ongoing on period and this XX-Q X, January fiscal our XXXX,

customer expenses price with PowerFleet part the allocation, Our the This related the relationships, by been amortization in June preliminary during quarter in results amortization offset have of acquirer. intangible purchase capitalized includes identified to for reduction prepared additional accounting a identified commission. primarily the as assets,

first quarter with SEC conclude an call turn of we'll Steve and understand our performance. our evaluation rigor them conclusion to the work and now and review importance this are with provide to provided we process confident Steve? operating believe in guidelines preliminary closely to aligns the this we the by over U.S. While the GAAP, overview of financial matter. I'll of process,

Thank to into I'd usual just you, that. matters like today. start to earnings formal discussed, all David by joining our Due last acknowledging and than David, no the gaps longer thank call. for there us you has been

time, and driving strategy deeply However, been results. focused on we've executing this during our meaningful

in financial quarter driven which seeing a X.XX growth year-over-year demand we've first North the safety the a in in performance, for pro we and performance warehouse to XX% of a robust strength subscriber strong America is million. million. Our Success the differentiated business. basis is positive very and of the of momentum This topline $XX our on by forma solutions indicator growth the revenue where base, and XX% particularly increased in Unity our by made growth approximately to our evident we're traction progress underscores across solutions, expect ongoing clearly year-over-year

preliminary expansion the we to delivered from securing EBITDA million quarter. topline Our integration with over exceed and EBITDA leverage $XX.X as strong It implementing representing initiatives. savings ahead in of effectively year. we increase $X.X the as model synergy schedule, while period and inherent of anticipated annualized cost million, same operating pro business is an running adjusted growth to excellence our compared program This strength in XX% reflects execution our forma adjusted our demonstrates the EBITDA last exit

of raising million, start fiscal Looking to given prior the up approximately forward to $XXX from guidance exceed $XXX to guidance XXXX our revenue year, are future, million. full-year the strong our we

our run adjusted strategy growth incremental EBITDA also synergies and compared previous an drive our our million these efficiencies. topline of guidance We guidance $XX ability exit approximately secured are to $X to operational We believe effectiveness to exceed our the $XX million, rate includes results cost reflect million. our integration in increasing and which of

earnings want matter, questions, during operational with of on session. the and performance. Thank business continued our We I the remainder accounting more to is for next call Before in discussing our your reflective and in not support the in the resolve PowerFleet. questions to of to reiterate look of item SEC your floor We're results diligently the to confidence resilience and you that confident we forward working growth remain open addressing performance. and we these the this detail the

session. move to let's Operator? Now on the Q&A

Capital. is from Searle Scott question ROTH of Instructions] Your coming first [Operator

here. to see the the quickly, that noncash aspect is standpoint from in Nice maybe is cetera, I SEC who purchase et standpoint direction. a acquiring sure got entity impacts happened right topline from want starting an just the what Dave, and of is, accounting, therefore, determining to accounting to we've allocations, right? That move intangible what's make then, simple is the

Yes. That's absolutely Scott. right,

company. of really terms value book PowerFleet So which would be it's about assigned the paid either MiX price the you ledger of the given or the having intangibles in side of

look base? that platform and And terms are into raising wondering they're number in strength? where see you could much sales how up nice to It's then, year-over-year. to MiX deploying expectations but on first where you. the XX% the I recurring that did the when what aspects? And the versus as start customer early of of the little customers, product How June of, guys I warehouse, certainly end about ahead a wonder else base reference I'm for you're in bit seeing into modules was it's the Got Unity the You markets, provide the geographies. guidance you color talked that of increasing And, doing if is quarter. growth seeing existing combination. think, we XX% in and of Steve, you the year, terms

go. as unpack Thanks, Scott, we and try I'll and those

we're we that I of and results come sentiment disruptive So strong. really the to out now the ultimately, to to think broader I represent And base. and customer wanted solutions market differentiated think play gate to a transaction sentiment the customer the the and the bringing

our strong say the And up also, on seeing, overall in terms revenue. solutions, were was would strong cover numbers, very within board. Unity, North of very, great XX% up talked So off we America would XX% performance which Unity the service I split across of were good about. a in will to again, safety solutions is terms . David that But revenue in say, traction year-over-year. what just But year-over-year. I the those we've in we're

But of issues take we're of this the same, in wins. a those is all most macro resiliently. We're strong, team And around aware the kind we're should as I very now first come that but groove sales a of X XX% coming are But how aware world. has out-of-the-gate think come portfolio. to the you months So on logo. team all go. just from challenges getting PowerFleet with the more out of -- broader very the to is concerned just I going in of think signal it's people X turning geopolitical this together, think of base performance. And response I strong XX% headwinds. to the new notably, customer terms into a when in perspective, from a a strong a about business over of existing business, performance companies the terms perspective, from MiX just from And from our their

So doing I doing plus that is the it growth, also very business. but a think, for point second profitably,

with of mechanics off the delighted revenue. we're might the you the to So of want just some start. David, cover

Yes.

on building Scott. just So Steve's comments,

strong quarter to So of terms we're sort product had this To point, Steve's bringing in solutions is differentiated we an incredibly market. safety-centric of revenue. a

well. resonates that So

traction revenue the is there. to And can time. precursor So have good you services we revenue strong as product attach over appreciate,

of end gives and between So year. foundation a that now the results the good us of

strong. very was that So

couple there. In mid-single terms of A of service revenue, year-over-year it was up digits. points

the information significant shared then we're outpace you some. And that the if some back have that of that growth Firstly, there of previously, clearly, MiX in sources to some did churn has their to base. think and they seeing

how performing of versus well. where about of plan, as good feel of we are. So are sort And in our services plan then terms internal we ahead it's

the good rest a So foundation fiscal for this of year. firm

a if number. quickly on target up, they're the could wondering idea impressive I'm an if are entire think Are XX% out broader is just from ARPUs X MiX Steve, comparing. give coming guys Great. how with Unity for? roll an suite was Okay. that remain logos us signing quickly new base? those could in to I And the I up is the to service you months. follow track And

Yes.

Unity kicking the of elements think what I also So ARPU. is is increase that in

they're which ARPU on we what operations, on taking people logo the for device seen piece. the early integration, piece. the the up ingestion, unified And broader So is into brought data the as signing also systems and device-agnostic are us this helps we've business new ingestion base data

So that is strong. very

from next question Stoss Craig-Hallum. of Anthony coming is Your

a goal synergies, where filing in kind is hear then And end up sub or results. the million detail the of bulk seeing Nice follow to what where sub online, you coming customers products? new share the David, perhaps year? love by I'd coming you if of terms of I that also, those share subscribers. new this to Steve, more X.X the want, count, on of you're want million of Can count And X from?

actually it's million, being that -- So terms is revenue is the I think subscribers. in driven think, And coming. X.XX the the I subscribers in same of where are

alignment So areas yet -- subscriber the think of subscribers. that's future. the growth don't the versus I high guidance in a for we've terms given

for piece, that I terms to one comes think through. And then is the of a actually, call of synergy that's note. couple when things in overall think, earnings the it I

of ahead we're First all, of schedule.

I think again, $X.X this, and testament think of annualized million already strength is in the terms of plan X I taken that's add but in year. the referencing, the So he delivered of capabilities. what we've the what And also in kind annualized of version years, our to quarter, the is on team David it's integration and a can is of first in adding the the

X, So plus add run of rate. XX X kind is the is

that follow-up and just are of the terms Unity because is. I'd capabilities, come I like answer to I Scott's to services. track back question consume hardware question software the where to that's for we didn't for customers think MiX on both in I realized the

those ahead of starting be of on customers. already track. of into it, elements more MiX So work get the but is hands capabilities done we're certain we're to There to

of terms the need EBITDA just guidance, to little standpoint. In complex it a more be it's bit probably an than from

post actually plus chat, realized recently $XX talked previously fireside for not for really cost million the would giving necessarily of the was gave as about EBITDA, So the the ticket EBITDA as April in guidance what credit which ourselves hitting year. full the but year, we we

$XX that run terms million actually million. in EBITDA So hit of the rule plus in rate what the about posted of an extra million so look thumb for $X of excess is of or of $XX sort was

be we'll straightforward So hereon now. more

more our Any better churn here. updates can And in it. average quick changes or you've seen I Got products your it that hear sale if by just follow-up up, on that. customers. can one to taken comments being results with is seems going any that are also share I'd price the either probably you on much love

to add part you you repeat, question? just Can of the the the of first start could

any average seen and If again, then, size. you've churn, of changes just kind sales to

Yes.

our articulated aware We've So MiX renewed been were on, in I the energy able we space. the within across be reduce churn that. that over earlier we've base, do and MiX there churn as both is able to absorb PowerFleet customers to strong think And to time. think mechanisms got David place think that. of into some putting side some the on to I And some we're I

as good We are is obviously through. in There But we've us really ARPU, retail well. account is no this seeing in growth. some got increase come logo growth, plus about where business a as said, little this the for expansion we've wins new

of it's business. run because nice is this So rate kind

portfolio can device-agnostic also well as services of alongside. from want have to deciding value-added that customers and one-single well, I perspective, the And and their glass. knowing it's us our the hardware business of of offer think that But pane shop Unity it's expanding we they bring all one-stop a really to that use as to

your well. not costs only revenue, your revenue as So of but hardware that kind increments subscription

Becker next William Your Blair. of from coming is Dylan question

wondering starts of job as to Or there, come the kind at early integration outperformance guys the of first, early the conversations? we're you pull of stand-alone least both kind here, that the some of in phase? from consolidation vendor kind core revenue what given of in early are kind I'm it extent of on resonating especially Nice some out, of in platform your kind profitability. some that's forward, traction and is just play businesses of theme synergies, maybe seeing how anything to

Yes.

this few a things. think I So is

I experienced all, think, were first prepared at and doing of we integration. very highly

both which take and momentum strategy, table. at we've around the create running there's fast, ultimately in journey, a team we can very, going has and beyond on huge business positive in which I top businesses, to the hit think amount the the So of company a us ground allowed a very the sit energy market the is around to creating

off the And energy what plan companies a terms of EBITDA, really out of be So think the both reinvigoration there's the I focus is do that. in transaction. But coming of in from we've think has I execution able to I expansion back put definitely helped. think, the already to

companies customer's a I perspective, a think this portfolio, isn't definitely relationship is capabilities, discipline from perspective, right I from but scale, the better a sales just perspective. the having a really, a company stand-alone of in broader together job, customers. a coming is a from product understanding from terms with that this with improved businesses X new the And doing go-to-market attitude a, I think, long-term for much think this with

on So is wanted base something strategy remind -- and that think we months I to to everyone And our out, think customer back was first of ground just to a outcome come we call, those the messages of very, we've challenging I both combinations size, make that. And the cornerstone into partner to base. be the running. that it the got X sure out, we're set to our see very can the hit and starting in point period. X I'd of into this I'll we the that this most

we and We've beat that very fact seen external achievements. proud the operationally. very haven't focused very, I'm we've our strong enhanced a overall So results internal of skipped And a approaches.

start more of work to to, that want do lot coming very So but solid the where good get a of gate. We've out about. to that's we got ahead, much feel work something a we

additional inbound top platform the number kind guys, I of for would That's probably part had on on obviously, you transaction, know probably other leading of then great. assume a customer a a well. of what's that as solutions a of be that a how address and what to That's X -- so of platform innovation, on brought built the maybe as ability I guess helpful. indicator more out. come this to of to talent. about lot engineering of should think lot I Okay. functionality Unity, as Maybe we as

Yes.

had look, PowerFleet March group. its XX, within which engineers is ago, We only XX XXXX, in XXX. now So XX have months

to it our quality solutions ability and our where speed products compared was. is our innovation, transform and So with of seismic

So modules, think the do who going goodness Scott forward. doing in it we're faster this more AI the integrations, for terms scale capabilities, the only the third-party portfolio moving in to broader ability today, I introduction better we're mentioned of sets both of device Unity to evolve, ingestion of and we of in terms us plus the is data terms have things to as able was and plus and bring -- strategy

excites this what teams it in, this working to and together than future. discrete momentum, of execute So traction does plan. take guys then, its output. in that very terms But on and to and longer kick roadmap days been that's are engineers mobilizing got the we've those is us starting the for for that of XX a And well against are kind put

Instructions] from question [Operator Your next is of Sklar James. Raymond Alexander coming

merger, or in revisiting terms you just post TAM can of you're observing strong viewing the just you you're the and maybe about now pipeline? from the your standpoint. the feel growth coverage Any about of to opportunity X productivity some And results? given then talk opportunity just even growth a how the the months QX of stats Steve, the changes how rep so

capability output take and also call. Day to we're a a more to the I to do business. the carriers on to we'll of increase shareholders Investor I quota at those that geographies in more add is We're towards markets, more we're cover of time, we'll that be important execution. we'll adding business of articulated have customer Over because are more more and more feet -- had look, one And the market data folks journey part in for as kind And businesses, And point long TAM this significant an in playing plan, business, and and more which that's able be recruiting go, fall, those long, previously, of reasons, the that front top serve is that our increase No. lot the across the mean and will earnings the the scale. to -- in to for street. planning we is savings in verticals, sales visibility terms the think terms business. And that. XX to We're for EBITDA expansion granular in is that, we currently all This revenue-led on we're is on for having into of now from we the starting the different time. that success and both invest creating a foot, deeper on the markets. the of getting I've play offense defense getting a getting so us

grow. to pipeline. What those the I company that's portfolio to think I create really sales doors which board the in open wallet with So across days. sales, bigger proposition. sales last sales an be we with a us customers. continue going terms to teams think see be that an better It's confidence the within more say is going being strategy, both and to teams and able terms a the broader being opportunity seen reps, ahead and from will value would teams And us, evolving reinvigoration intensity, of redefined for going from to in able increase of of share the just is that our conversion That's have of I the to And XX grow. for rate ultimately in the

all All you, maybe follow-up right. And I for Steve. just then that, great That's David. appreciate color. one

terms side the seems trends of that terms just the impact a kind the combined saw entities full-year from on of about kind of out? in the kind the call any curious well? and in Or in June, of on like that And Just is sequential -- preliminary what that just as It to X was in you FX on growth Can quarter. nice sequential is really you linearity the us all the I'm separate improvement? June between of then just the you product quarters services versus the number. in side talk company uptick March gave of

Yes. No, board. it's across the

really addition acceleration and the that definitely strength did To steam the companies both with So the in numbers in quarters. use for building of to across springboard, coming head earlier there's board. an seeing out Steve's we're we're together that sort point, the we're terms we future of of posting

to delighted in we're accomplish. happens able X apart, often again, M&A. So, coming which as moving quite organizations testament together a sort these coalescence under with to we're opposed to It's what of

we opportunity down, to So, -- on there's huge very again, regarding got it. we it's need what get here. clear traction It's when we when focus

is coming Greg Northland next question Gibas of Securities. Your from

congrats Steve quarter. and David, on the

most think of wanted visibility the uplift tracking discussed? has -- million I I same you cost get the longer-term seemingly previously synergies kind still of expectations, a sense do to $XX been you EBITDA to have everything of basis a But ahead on recognize addressed. that with kind

people to attitude delighted the make deliver low-hanging hard us. do. challenging things to stuff couldn't there's Yes, we've said, say low-hanging with happen Yes, better as to time it, significantly year. more number. past a get of year, gone of to I of skill in It's in the be to It's and have within to for able the north that very we by confident more able and we plan. through but going you're the XX% ability this it's But the work. but tough but it that And totally that being well were that also into you it takes the approach, behind feel the when of confident fruit, execution be to lot and and be we some this executed fruit always

repurpose which in number. more go-to-market. that we good the about savings to very past business, So as that us feel we've into terms I of allowing in And gone is articulated our earlier, actual

how a And new maybe margins pricing with trended. wanted of in to sense how has logo growth trended And get Great. the I quarter? gross Okay.

Yes.

terms to So in, drawn of earlier by promise is higher people point, Unity, that the be and differentiated service. of they coming margin, new primarily a higher Steve's in tend to ARPU

So that's working well.

point margin, is In safety the the to business. solutions, this terms earlier, it healthy of solutions, is differentiated margin

a we margin nice pick product standpoint, of service up sort in And on of perform of things. the well. of gross from saw gross in certainly things, side a continues of sequentially profit it terms side -- to product So terms margin

feel about So where margin standpoint. again, we good we are from a gross

Well, question-and-answer closing we to I the reached back hand appear Steve have session. to now of will end our over remarks. for

say like feels a long So for very just able on we've we come been to and time to continued the everybody, business. thank since It you, update your support. like

So to able have so. we're be to done delighted

approaching we're color SEC. seriously confident it we're that sure way we're through that very process in more we We provide this of with that process. very terms the will We that the making in process, once take follow and

and there dialogue. We straightforward So ongoing we upfront questions. be be want the our always shareholders to ask for appreciate very and to

updating understand to So excitement for and our the sessions to positivity the momentum we keep important business are now us. to for that forward. these we moving and forward the look have shareholders And the and feel super and

We'll support. great appreciate very back we be soon, So you. Thank have a day. your touch and in

does This today's much. very you Thank conference call. conclude

your lines and participation. have time, You your may a disconnect Thank wonderful at you this phone day. for