CalAmp (CAMP) 21 Dec 222023 Q3 Earnings call transcript

Welcome to CalAmp's Third Quarter 2023 Financial Results Conference Call. My name is Heena and I’ll be your moderator for today’s call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Joel Achramowicz, Managing Director of Shelton Group, CalAmp Investor Relation firm. Joel, you may begin.

to third welcome results XXXX and call. conference afternoon, CalAmp's quarter fiscal financial Good Managing Shelton Director Relations Achramowicz, Joel I'm of firm. Group, Investor CalAmp's Jeff With Chief Cindy CalAmp's are Gardner; Officer, Zhang. us CFO, and President Acting today Executive and

we this may that contain remind call begin, I'd statements. Before to you like forward-looking

are call they're and These it's with Gardner. implied operational pleasure followed review cause today, in company's these to go actual earnings discussed or the to While recent judgment, Cindy differ statements risk financial of by and session. update the filings risks Jeff materially the undertake on then revise With a forward-looking CalAmp's that, reflect obligation please my and to President circumstances. forward-looking those no events any these statements today's which our reflect of results highlights, provide projections. forward-looking future a ahead. CEO, question-and-answer uncertainties factors current from Jeff, results the SEC call to in CalAmp's regular great best begin subject that available details will by over review to our We are turn or could website. and Jeff issued to will release

thanks you on the Thank to call. all you, for Joel. And of joining us

CalAmp of demand including it shut avoidance Verizon and these allowed the expectations. in Our customers XG pressure in higher-than-expected secured revenue and margin of orders sequentially grew exceeded network customers for additional commitments. of market fulfillment to the affected our which several the This X% for end accomplished for our the third fulfillment customer we customers. order of This significant But revenue the both by resulted quarter $XX.X to the million, high objectives created which other components aged meet quarter. from business down, spot disruption our

fulfill continued conversions, well of early a and the the component the transitory strategic discuss spot situation unpredictable as financial in impact the this availability year. margin more the view in a it then of margin next pressure some in absorb orders. necessary of with impact pricing to QX, team lesser of order but will market, more We as the Given fiscal in these to nature as much normalized felt return importance and gross the detail Cindy a this extent, in level to to moment. in

team customers framework customers contracts, Turning to our sales to has back new hard quarter, recurring to in for our working to securing drive future progress the setting also convert the very growth. our been while

subscription and sequentially software increased Our services XX% quarter, to third the million. software revenue $XXX performance also a the Remaining million, along XX% and to two we Notably, large customers, million. X.X number quarter increased converted of subscribers record $XX.X to Michelin sequentially other customers. to sequentially and obligations the in and Navman subscription in contracts XX% increased a by with recurring

our remaining to quarter during customers are yearend. CalAmp a Telematics services This leading large XXX,XXX commitment. customer customer, has subscription multimillion-dollar with industry shipping which outfitted a trailers is platform, software contract software telematics our and parcels multiyear with approximately devices renewal Cloud. edge end, and we software contracts, to substantially for the conversion on converted have included XX% complete track the by recurring customers highlights quarter eligible of As and the process approximately cumulatively fiscal Other

in We Europe. based we And the subscription GPS customer also a new developed launched in collaboration quarter. major with during Ford, news BMW North tracking our solution, as secured vehicle America

groups our to opportunities CRO expanded of new by our recurring and our the increasing joint a focus sales see partnership revenue led in been marketing expect resulted is to of securing Much ahead. the We the that's development from this for the success has this and quarters the go-to-market This setting pipeline has business and the customers. team. CMO, implementation between building for the improve in to foundation recent sales generation activities sales systematically activity company our enabled lead due work program

the release that upcoming for strategy. major product to about side, I milestone tell wanted an transportation development you On a will exciting represent our logistics

to CalAmp Soon, tracking insights tracking to manage. will experience shipments in for will we released cargo an be make This user even that assets easier protecting innovative and our will be application. new and simple use,

maintain all down for ecosystem. customer cargo brings will and our experience customers. provide release highway. the that is trailer into the each with proceeds Telematics data tire partnership Telematics application visibility insurance devices trailer, Cloud pressure, will It offer our for installed a But across CalAmp from this environmental regulations plethora with through to CalAmp these access temperature to keep insight benefit door As adds the One The uptime the CalAmp’s monitoring, sensors portfolio data single many against we control, extreme those the shock, makes from other We all insights critical goes the in time, cargo as large Translead. appeal tilt, with sensors factors. a new API's cloud. an from This and protection a cargo cargo our to easy it trailers, insight departments recent XX.X% that industry to and step of the in data functional the of have for aggregates the to and accountability compliance new for application. further, our our of including our shared and long informed transportation strategy presents on Cloud sensors edge Hyundai leading platform multisided precious first of and tractors to trailer industry cargo driver. claims life vehicle logistics it light on a industry

at like during our tremendous hand in Before Engineering Kim Cindy Business exceptional Columbia Growth Jikun her degree thank be be Electrical in detail has an various a Needham who track as record including ensured listed from at a executive an He of received like time, level Momentus, and management maintained and an CFO, new attention. her with at He'll of MS Cindy degree to take served Merex to companies, over CFO Prior CFO CFO, joining me same Berkeley. School, as in for the will January and acting a the been I UCLA, Momentus, of transition. our tech Chang, January have the X. engineering he AeroVironment. infrastructure BS NASDAQ firms Formlabs, to electrical and starting California team space XX. from her call a Jikun operations financial most University tech financial successful have At CFO our time on and and the this recently on long, for company. to support Conference welcome Cindy I'd from our I to job Group EMCORE, done that MBA would

So him, those I meet of With his even Cindy. after planning days pass chance you now that, to to only that a to start over the few attend will have though event a date. call

quarter will announcing Thank the GAAP was to Jeff. adjusted issued included measures that EBITDA financial net My with in you, non-GAAP of release, our corresponding measures basis full non-GAAP to income, of reference the is measures press third EBITDA commentary earnings these reconciliation earlier closest adjusted include the year adjusted margin, XXXX basis fiscal today. a the and

to quarter prior quarter, we X% year increasing Jeff same quarter, compared to mentioned, XX% the ago. compared up As in to a $XX.X growth the and had the strong million a revenue

approximately in software converting services and Software are up the device and XX% $XX.X approximately year. total making and recurring the the contracts, our million, end and telematics consolidated two of convert remaining XX% growth business end of year, customers our revenue telematics quarter, of prior revenues million subscription by eligible device eligible which the the subscription quarter. customers customers converted $XX and the was XX% in year-over-year to XX% up sequential have we the At to our sequentially representing Both from third we've services the reflect anticipate of subscription fiscal substantially revenue. progress contributed the the

software and in approximately from up quarter quarter performance business, XX% obligations ago. services the year same XX% up from performance million, terms the the and remaining In for of our quarter, prior third subscription was $XXX a metrics

sequentially, was During quarter the in increase Telematics decline the represented X% X% a revenue base to and up XX% our which subscriber an X.X XX% year-over-year. million, million, third and up products $XX.X sequentially, quarter, year-over-year. increased

$XX.X it down Our but million last the for in from representative of revenue which largest customer $XX.X same $XX.X quarter, million quarter, quarter million the ago. was from up year a

remains in the Our solid. compared and customer gross quarter backlog was with this ago. a to XX.X% quarter a the last year in XX.X% XX.X% same Consolidated quarter, margin

As earlier, we Jeff demand. backlog aged had of mentioned

Verizon XG available customers upgrade backlog, we spot essential sunset. the incur these including an As components to in costs those secure became ahead additional decision to XG of a made requiring components to critical fulfill to for network market,

in normalize the in term of balance, expenses pressure in efforts our In to our to levels these million, fiscal margin operating XXX quarter, by customers passed to margin. basis costs quarter achieve or the next were and early margin gross lower efficiencies. meaningfully levels continued $X.X operating with buys short fourth driven and return gross of on quarter anticipate gross to our negatively approximately spot improve This the to Some three year. We on by points. affected the we the manage putting

EBITDA and quarter in third a prior year. margin quarter a $X quarter a Adjusted last non-GAAP offset the EBITDA and the operating prior by $X.X decreased flat the gross same by sequentially, by million the was expenses year. expenses sequentially in million $X.X decreased X% million As to operating over result, lower third the reflecting XX% remained Adjusted compared quarter a compression. in

liquidity billings our eligible $XX capacity million borrowings position, a credit, sequential total $XX we no quarter. was at total to XX, last had due an were of or outstanding total In as of at and borrowing as XX, net increase At million compared to equivalents this was million. the unbilled line, in accounts line third terms end on under receivable cash approximately the based of XXXX, November overall our deferred in revolving cash decline result. of cash the The on November there and inventory equivalents million cash receivables quarter, $XX and $XX

quarter quarterly debt million, of is including due aggregate approximately maintaining senior at the its company detailed notes convertible the In policy fourth outstanding XXXX. $XXX the August $XXX XXXX, of providing million to Our outlook guidance. is not reference for our X%

third over company to quarter, in Jeff, to comments. volume With revenue this provide call However, be Jeff? quarter the of significant fourth the flat some expects that, turn given final I’ll relatively sequentially. shipments to the back

your I'm additional questions. to to all new drive Operator? to progress customers made of logos our And goal contracts fiscal for eligible open Thank Cindy. converting you. the our yearend, now of while will continuing continued to future towards globe that, we our secure growth. the by achieving proud team we software around recurring have With call

from Capital [Operator Instructions] is Markets. Latimore Mike The question with first Northland line the of

great. revenue and Congrats the Okay, your you. in fourth strong Question the converting the on subscription notion flat for Thank rest about software the Yes. be, would quarter, on or you that fourth and results sequentially the guidance talk customers. say, the of there. revenue

to at that XXX%. XX%, and almost subscription To the on from up going me, software some least imply So growth, would side.

should we Or about bit? little I sequentially, software rest two, the and those growing So of subscription the of think a how -- think ? should kind down business

Good Yes, thanks, question. Mike.

looked consensus allowed So, the some million, in was at third spot at quarter. I if second pull it, we into look half, buy to the way mean, our you orders the us $XXX

of do the fourth couple in customers. lot why a that's on we've it a talking quarter, lifting of big would got flat heavy our customers then our sequentially. we're and be So the most to the smaller done conversions, of about just We've

look production terms the half a of But quarter. would third versus the it's look the quite up we comparison said bit. in lot quarter, fourth second at So our that revenue the when a in you consensus, to like it

three-year two I put each our which all we're better I minimum Remember, And our for a So these cash we're is on add contracts, from us with getting important contracts we're up really think customers. long term commitments also cash the things flow. would of our getting position. happy of in new front, about, conversions, for

recurring salesforce on focused I long predictable extremely track that. here to pleased been and goal our on that revenue, company has And for that more we're term, has was build think really a So that. much

you think for EBITDA what margin I at you the then And got now was software the that your Okay and can quarter? then, least subscription a margin, XX-Q on as in software do provide what normalized and near it will, subscription business? it. view EBITDA

and Yes, jump I'll in. Cindy start that maybe can

the First this of unusual buys. an quarter all, is with spot

believe our of this what term, we subscription software a and quarter good give margin XX long at to going gross picture of Longer like it's businesses does which term. our we're you move you So our is And believe that percent looking goal. we that is shrinking, not all equipment with our plus look margin. that going range. term, the That's combine when towards to gross XX% long long-term in business, more

some talked move And closer as about long we made in you'll we improve we again, margins long-term company. I Cindy the think more in the goal. of continue XX% our cuts So software range, still a remains see expense historically the the to as the XX% business grow from towards efficiency which term the quarter, the range to that

line Notter with Our next George the question Jefferies. is of from

a backlog to metrics shipping maybe talk any I down the might for much. that? was company. very the in with this you you quarter, Thanks. I backlog, thanks getting guys, Hi, XG once to was the I don't left the impact are where might revenue what about us just past but I just that, you're sort sunset. curious guide is significant with stepped if against worked backlog sunset, how know it guys gotten kind Verizon sense from you've that or I'm kind about guess opportunity? here And or get incremental as down And much that you're explicitly we just for telematics just of give look was of wondering curious you sequentially. it also, of sense have of then assume kind down can happened. backlog of most it I there you like

Yes. Thanks question. George for X:XX:XX.X the the or call,

transition. them earlier, toward able terms finally were move In were fulfill take some of finally some and mentioned to we we those to with backlog, we a position older backlog, of of spot the support were our that the many for of our these our in to buys Verizon POs customers, as I

because we convert position this as demand as transition against really feel subscription the our fulfilling don't year, I the that some think for puts our software convert I our a that rise quarter. we've -- XG, we a think services in high incremental point and our salesforce way that I revenue, to being for better customers was But there revenue. to and again, it sell business, existing been

fleet So year. against going there. more been like to transformation our We're excited beyond. there we're had and step anxious the in with I filling base. to the transportation a fourth get demand ARPU XG, to and we've XXXX quarter. then solutions And some, don't and the full in I'm against that natural all our really was feel convert about we which are ability driven enterprise our stack to almost logistics opportunities, And by higher get We're fill one

Our Ravitch is Sachs. next question Jerry with from Goldman

on Williams Clay Jerry. is this Hi, for

install and of to expand the gross continue trajectory timing think XX% Just target you help Can back to going base? to there about the the you as a long-term of kind margin. get us

look working our And we're transforming been believe year, structure. next the seeing software progress subscription Cindy software, We've sequentially, of I significant make That's reflection we talked and costs. in very about XX% hard X% a down that company at to that quarter. when we're at our this on time, good going S&SS, a year-over-year. company. you did down fact seeing XX% into in improvement as really and growth we're services, this Clay, the Yes, same look at, cost

well year it's towards the we hard for that ‘XX, get, when goal in set March but to as to progress, think of definitely specific make And to make so in progress significant I we that fiscal begins think XXXX. that which we'll up you we give XX% to guidance get are

follow subscriber up a quick growth. And on you. the -- on thank No,

we going mentioned, subscriber in towards How the here you. about are term. the that should to longer year. of end the you of the conversions coming are As growth at annual and ‘XX, end think Thank longer we

had a of lot device Yes, been customers our a subscription growth. getting to And good. it's our been on So, That's model really with platform. year for conversion management do to that's our subscriber yes, a banner

brought in forward to terms slower what add transportation ARPU, about in much full in I'm think slightly I what terms we growth, really fleet, future our for to excellent but higher growth lot and at of Brennan those look when who's maybe is absolute more are of growth subscriber stack a solution domain why customers, terms is a logistics, to have investors leader, I these enterprise talked and Carson, XXXX, excited as growth, in expertise logistics, building doing transportation, conversions, in my we're sales of enterprise higher ARPU. fleet, much pipeline of we're

in see terms ARPU. you'll but slower think absolute much at slightly I of higher growth again, So subscribers,

Yes, SaaS guarantee are multiple deals want just with to conversion I a actually customers. the have minimum years deals, three based, Cindy, the is in we Jerry, add this that and right,

Jeff So in of there subscribers next number future. still we be growth next come more would we arrangement. that hope the within would, we a mentioned, right will in And the as year, expect good current to years, several the terms in of

a have to subscriber of the we the on So years growth number good in come. confidence

question The is from Searle with Scott Roth next Capital.

on a were am number number and there Hey, mix of software some heard extensions one-time wondering not my number. Hey, some there. also taking heard OEM big questions. customer in I provided. existing afternoon. for any was sign clarifications, total an services, I was OEM earlier good you I And number. that difficulties. subscription a there But Thanks sure if quarter, apologize for did if you a this contracts. And I the benefits then I'm Caterpillar couple I quick larger my within wondering technical other if

margin a had I couple then out, front. that on break follow could gross you If ups

answer Maybe question. the OEM Jeff I'll

Sure.

handle rest. the You can

had there, like the a Caterpillar past, one, of one past of the multiple we SaaS So, customers biggest we already customers into Scott, in actually is year. couple some the core a in in of successfully converted one past years, the OEM the OEM the business

customer major the category is caterpillar. almost the this or leading OEM So customer in

the business of So OEM revenue Caterpillar representative revenue. very honestly the total is very, is

the with support. do and as $XX.X million grow to continue can with quarter a remains we million So we was total specifically, when for this added OEM the continue three, business And mentioned, we to about revenue customer supplies solid, demand Cat the $XX.X our hope there.

We Navman. did have helped conversions. six side, And then, on quarter, was lot. so top And of our Two getting the yes, and successful customers thanks, That converted Micheline answer. Cindy. big a great some very we software a had that

parcel We large also multiyear, to that mentioned, in the dollar addition delivery multimillion company we contract.

also another each customer revenue for extension that delivers Pennsylvania, enterprise signed We year. Commonwealth millions, dollar another of multimillion large fleet

So, can think Revenue He some been with six Officer quarter. domain And his Carson, for of you're, I I here our every Chief pipeline each and Brennan you're months. growing ceded see an knowledge. seeing good leadership our things about amount sales to mean, I very respect has extensive with

I up numbers is going this It yes, kinds want good forward, was of great what those with And transformation to we a quarter all keep So, really about. that's you numbers. putting Scott. mean, But,

to not recurring just component million, any in there, should large clarify sort future there time or into but expect terms in that go to software Jeff, we be we Hey, quarters? one that's of one sales time as that $XX are of

I mean, so. don't our mix. it's believe much pretty normal I

forward. we out call unusual that can in large I model there, So, that be time that there's need would any so don't think to one going yes, you

helpful. very Okay,

more want then gross a numbers, XXX $X.X product cost related in on I like points of the I margin of the want to front. XX% And think of to recovery? sure It the Can was going four some clarify give Is I two number. sounds million, as we're maybe about to recovering the ‘XX? of make first that from half the standpoint, negative I magnitude you plus to a gross that to normalized, And the immediate fronts couple terms fiscal to overall, thought last in the clarify idea talk recovery. Thanks. the front, quarters it in product basis if normalizing margin in you're to I could just in Lastly XX% quarter. has you most us on where of that the been think, range to

Yes. an the third I unique continues you we how of we had that, opportunities. think level improve. buy supply tell it mean, to unprecedented what spot think about about How chain as investors quarter, I'll should about the was

spot sign opportunities, first is the buy that The of right.

customers who available sold product their who are their use in it didn't these brokers to allocation market. made So and these full smart

see in we to we capacity. production up what terms first allocations term, markets, and building us in new their our one into expanding of really buy which Texas long allow the Both our Instruments in our are at we're extra look think that improving, vendors got quarter, providing spot and I capacity, manufacturers, forecast, seeing to on our step the also into So we've we the got opportunity. of normal Vietnam, a with capacity bringing contract US, not some is source more as going

So terms of things in margin. that good means

we or the customers, the first And to under to of of spot means extraordinary spot will buy buy In be do we'll two much we on as the is were activity impending much third a fourth able our as That see pass much the are about the recovery opportunities, we meaningful what as the spot buy we're it. transition. an quarter pressure of I terms to and said our half customers the One you worked because believe in fronts, when be two our of significant how on much the so amount through more even because to we this, we've pass less quarter. as kind quarter. as of parts talk quarter, there's fourth on think recovery, in going

months or key to customers, to to this XG to in way What So outstanding, with really product better on old position work much orders on a we're away, goodwill earned X, bring think I the find them about the some our of a volume. pleased to six our customers Verizon shut as falling amount advance additional January now nine to in had tremendous I'm best to that's be going this down. as that of were for deliver which we

XXX,XXX on that quickly, using or to like that correct? rounding so line of in say could Is the the of non XG that added math, it existing to the base bit, of upgrade non-end a XG needed is migration. quarter. customers ballpark pretty Hey, up so. if in that be the big net Jeff, XX,XXX follow think front, Part XG sequentially, converted XX,XXX that little a XG which over And additions somewhere customers kind to plus ongoing the about the maybe then, I want straight about are looks Is of somewhere we XXX,XXX way that in of number. the to contribution? to kind you life I the is was

about we we our who Well, question. to or before transition, they of Verizon I we other something XXX,XXX be believe that XG the we that's over traditional. like words, get complicated in serve more our believe customers balance delivered so the think the product customers would the increased that a do that shipments needed cut to to But delivered, product to the that quarter. in XX,XXX XX% needed We, the were numbers

to not across strong was was supply still some that incremental of shipments very Chain customers this most board the the XG. of so as part improved. mean, I And but it our had

continue to Now in the ‘XX. that But of fiscal because expect into improved fourth this quarter spot the it market year improvement quarter. we

much. Great, thanks so

filed from do more Well, can add just little right, product buy yes, we actually margin. see telematics we color. want business a was I TS, harder products the I decision as XX-Q, support which on buys want actually, in add, you to telematics spot a expenses, our to gross the spot business, made quarter three, of to gotten majority our Scott,

subscriber the So it's business. by still of when SaaS SaaS was the of more the cetera. is about driven related actually, our SaaS our driven -- think and We to renewals, is subscriber conversion, growth, of XX% we business, actually rule, talk new can number in right? XX:XX the we the report it XX% logos growth by subscribers, terms et

point actually the our XG more is converted. customers, more that we very but products, actually support towards impact telematics XG, was new active business, our in So the is, just to it the subscriber

at There Instructions] additional waiting no are this [Operator questions time.

like any the would further call to Gardner I turn remarks. over to So Jeff for

in Well, the for And on And call interest your today. thank CalAmp. thank you. you continued for us joining

Growth I be this York, earlier, the in nice. Needham mentioned in we that'll again time Conference but person, January attending As will in so New be

So feel to with you're fourth meeting our April planning us We Operator, disconnect now year. may look holiday have please the progress today. schedule calls you XXXX to of earnings with of your season hope wonderful all free you quarter a in and our if to during sharing a forward call. attend. next We time appreciate you

That concludes today's call. Thank you for your participation.

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