CalAmp (CAMP) 26 Apr 232023 Q4 Earnings call transcript

Welcome to CalAmp's Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call. My name is Tiya 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 conference quarter call. welcome XXXX fiscal and results financial afternoon, CalAmp's and fourth year Good I'm Group, firm. CalAmp's Achramowicz, Investor Joel Managing Relations Director of Shelton With Executive and Chief CalAmp's Officer, us Gardner; Financial Jeff and Chief Kim. Jikun today are Officer, President

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

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

that, to call President to CalAmp's Gardner. turn CEO, go pleasure it's Jeff my over and Jeff, the please With great ahead.

Joel. And us the first all welcome as while part as serving acting today. I wanted of thanks you team. just on Kim. our new also for transition to for period. call him, to This joining is CFO, CFO our Zhang, him have to call with thinking Jikun you, great Thank during It's the of Cindy my

flat prior line the year and for revenue was full the with was $XX.X year. million our $XXX quarter million, expectations, in Fourth which was revenue with

from prior XX% total X% record to services sequentially, year subscription revenue quarter $XX.X and in million, and approximately revenue. grew XX% the Software representing of a the

of subscription and XXXX revenue in the XX% to total year to Full represented prior services XX% revenue year. in million compared XX% and $XXX grew software

of revenue. was sequentially, to million, XX% X% the and our performance, EBITDA of $X.X highlight or XX% year-over-year quarter approximately Another adjusted which increased

that year I end past our several turned We year-over-year was factors. But 'XX By This we EBITDA due our to year, year, objective the target along margin, non margin will the return macro to aside, one return GAAP of year by in of chain supply have continued reductions end to with improvements the the we performance. believe implemented to see corner. and believe growth. us norms to last revenue fiscal improved achieve cost the a gross is challenging allow the factors historical

decided the of the with and and history business be enhanced out CalAmp close capture phase constructive safety, might we a to phase of and to it device process. I maintenance, providing our provide thought provider data data capabilities and enabling transmission visibility, to we insights conversion from leading efficiency. of and one analytics transformation As AI transform the with you telematics and how compliance data why next enter brief sophisticated software a

the field, of These this XX recurring basis new the than analysed. devices IoT points processed operational applications more data annually and installed million base. and increasingly more trillion as more is CalAmp Telematics saw become our in with clearly Today, generated are cloud and offered more a sticky platform, subscription extensive than data hardware value we and in hardware X.X on

customers, focus with to well. the new a applications, increasingly not and industry's analyse, opportunity We decided our as to on offered recurring today as is become and analytics. These sticky, and are customers to software to Autonomous hardware data navigational AI and particularly on subscription only features that more more electrification. seize generated basis valuable but generates providing the applications existing by monetize the new insights our

fleet, recurring similar in to device customers subscription journey to business transform and KXX, call management a ago, our operations. hardware solutions connected converted CTC. than mind, objectives business commercial car began we only more a to hardware platform, started With XX% our application only of our cloud years deployed this these have our model strategic DM we two Since existing to on

the recurring to to some cloud generates fee. to with this revenue, conversion of firmware hardware But the the process updates. the and manage have took particularly modest this monthly a over and devices, enhanced features, its Clearly, effort. configurations customers edge its appreciate value addition time In and platform accounts come new and capabilities computing air organize

Platform of GPS many number and Localiza, DCS, Insight, have Micheline, important customers We others. converted Navman, Trimble, Science, large a like

turnkey as And addition, accelerated In we've customers stack. significant competitive made by our offering believe adoption developed and our that solutions software continue application anticipate our advantage, as we a we also transformation. are in we R&D investments we

to analogy say of transitional that Using in innings the we inning would game. I are our characterize baseball a nine a strategy, middle

CTC software During layered the over strategy, developing two and would platform, drive for the defining our vision target years, our years business identifying segments we for innings establishing the DM in stack initial ahead. application the conversion, the multi past in laid foundation customer solutions that the the the

initiative Company to investment our cloud. the as the in a value from add essentially The Software edge this dollar made multimillion we linked and Systems

profitability. aligned leadership solutions adjusted structure our our a function cost also organization to team We customer to based as and improve

commence significantly. process, we increased this our conversion As count subscriber

basis. on each application a management pressure the revenue conversion blended However, on put recurring device some we new subscription from consolidated ARPU received actually modest

Our Fleet solution stolen fleet here vehicle bus, high businesses, as margin mentioned Today the applications. and above, and high Commercial recovery, I ARPU KXX, others. Connected full management, comes such offer stack which Car namely

while base We believe a more subscription them our that higher new With the subscriber we advanced solutions in have and will customers. business on profitable growth consolidated software work also we basis. will this higher hardware conversions software revenue developed securing complete, upselling result to more a predictable, software increase to by across margin

businesses to applications, Solution such full Today, AI with increase through of to remaining stack in smart we and solution X.X Focus our as video we cargo value value innings the enabled new middle stack few provided conversions. as progress eligible game, driving customers have and complete the vision the the platform, hardware on our trailer, full insights.

for to past approximately stream the contributing year we revenue. million margins higher margin profitability, subscription our And increase our in revenue the where are $XX recognize flow the application cash increase and expand, to ahead. determined in we alone, significantly recurring In is will investors. years This

of subscription We TSP sometime few in 'XX, term expect be early final to of of a will majority our revenues enter the our excluding our the OEM innings year long a like game or recurring contracts, on customers. 'XX and during fiscal which

party at do that a development hardware of application ourselves Any choose point will our augmented Our platform, value hardware limited market software, strong we based will we've to provide is I strategy with hope value added and where this to on strictly select be segments be third and and where helps better are understanding summary a Cal amp going. and been where margins solutions. sustainable.

financially pleased operationally both past we and navigated our with as I accomplishments have of am transition. stage this this year, business the

the Our be company. top of transition operating level through near in high maintain execution enterprise ever a the advancing term a will software to while to closer CalAmp systems goal to move

to strides business halfway to made the increasing shareholder our are subscription this We in cash transforming most through Though direct only will thus great recurring be recurring value. a far we path flow, generating ballgame, revenue strong believe the based we've model.

progress with the rest to reporting ever the to the continue application stack we through software look portfolio. expanding chain game, value as forward of I our further we As move up full our advance

the review providing first to call fiscal He XX quarter year will guidance to already like over fiscal I'd while made come. this Jikun? to end believe first his revenue days of the now profitable significant goal has lead will We for results turn consistently in growth to the quarter Jikun, us our producing fourth of contributions and years to who for CalAmp. also XXXX.

Jeff. will analytics like join measures a be quite net Thank rest and here GAAP Please to today glad included thank EBIT my financial reconciliation adjusted to press I'm for finance GAAP income, the the seamless and excited also and are corresponding full of of team platform including A that measures the you, these reference Cindy measures note today, during and data provider. I transition. to GAAP non release. global adjusted non da margins. accounting CalAmp, a in to commentary I'd

line Fourth This prior expectations. FY million to million 'XX were revenues XX% million million in from quarter XXX were year. in Full with quarter the and XX.X was our $XXX flat to compared up $XX.X compared a year revenues year prior the ago.

segment. services XX% year device continued segment subscription revenues quarter million, The transition the subscription model cloud to increase year. and revenues S&SS record S&SS customers segment in business over Software TC over the our segment up up a management and or our Telematic quarter Telematics quarter was product our X% into $XX.X CalAmp reflect and DMC in over fourth

XX% to year $XXX from revenues performance in or quarter S&SS quarter $XXX the million, from compared million total obligations revenues year was remaining Full fourth increased XX% based of total XX% million. year XX% or X% and prior over quarter $XXX million approximately the $XXX to $XXX in revenues up of over down year. S&SS million,

over quarter quarter million, to X% $X.X During the were in year quarter over quarter over year-over-year. and and XX% year. increased $XX.X base quarter quarter subscriber flat revenue $XX.X Telematic our increased down fourth X% the million from million products

products telematic convert ended DMCTC backlog. with $XX We We to continue these the year to subscription telematic arrangement. in customers a product million

DM hence decreased XX% revenues to our products our large $XXX firm For the Combined ongoing to reflect that the portion model limited supply of moved full The S&SS revenues. customers million into year segment from backlog. have a to transition and telematic our and million. declined the shortages $XXX with ship subscription against 'XX ability of CTC revenues

telematic over XX from XX our XXX to customer quarter year quarter million. revenues OEM Within year X% product increased over XX% million the from segment, X and increased largest million

the On basis. full year

Our million year. in of which accounted $XX $XX for from customer was down revenues, the million largest OEM prior

this While in impacted the second supply to 'XX. recovered demand year FY have constraints the ability fulfil of for our half we customer in negatively

and moved we has As from improved strong. 'XX this customer into demand supply remains

million, exchange by discontinuation subscription business, million business. segment. of new telematics This by software products recurring card revenues subscription to attributable driven CTC revenue customer deem the logos and headwinds customers our foreign in leasing the converted annual $XX somewhat our auto from declined S&SS for connected primarily Our $XX being offset is application to to and

plan these quarter FY like applications discontinued the is our software the Excluding X.X discussed. application quarter. subscription revenues over to flat that and the In 'XX new focus recurring solution with listing revenues Vision drive just business, auto were recurring

FY QX in 'XX. Beginning

gross We down improved will subscription recurring year. to margin sequentially points application was pivot Consolidated fourth quarter XX% prior but XX.X% from the the the in to in focus basis revenues. our XXX

the $X prior to million, of of As resulted compared in a spot expected, $X.X PPV quarter. lower fourth in reduction quarter, which in of to levels the have buys we million net

product unfavourable shifts, impacts associated and by PPV related year-end customary the interest offset mix improvements gross adjustments. These lease to deals, margin were inventory with capital rate

'XX Full improvements in year anticipate to FY gross in XX% margins the prior XXXX. compared gross continued margin XX% in We was year.

and X% quarter intangible restructuring quarter-over-quarter, year full expenses, excluding over amortization Fourth amortizations charges asset asset in declined decreased restructuring and year intangible operating XX% charges operating excluding expenses year, X%

we to January, insight announced and driven to cost realign with and be analytics to late model. restructuring more data In recurring a operations our our address the structure consistent business revenue

to and these We operating capital annualized goods actions cash across their expenditures will in be savings expect These XX of XX savings cost result to approximately of realized expenditures. million. an sold,

of the beyond. being these realized the full quarter benefits We see in first in to and will benefits of the quarter second impact begin and actions

$X.X XX% increased revenue. million million, XX% from we or X% quarter of fourth over of over quarter million $X the to revenues. or year approximately Year X% in revenue $X.X increase X% a quarter saw from EBITDA or of Adjusted

of the the outstanding million of operating million back X% the quarter, cash total revenue to had $XX in and with prior no charges, combined under expenses, adjusted prior $XX.X adjusted line. year. cash or fourth FY as to borrowings of to X% slightly was the margins. in of excluding quarter XX compared improved and benefited approximately compared end the million, equivalents lower XX or million quarter EBITDA EBITDA revenue asset Compared our from XX million $XX.X had we At prior gross restructuring

of line capacity end convertible year million on on X approximately aggregate the this X% XXXX. million, XX due $XXX the is at the August Net $XXX notes was million, or outstanding senior borrowing debt Total of including

as first follows. 'XX Our FY are quarter the guidance for of

million, We and XX the to EBITDA expected between million. first be adjusted with expect between is in to to revenues quarter five XX range X

the turn call Jeff for I'll Jeff? to some With that, back thoughts. over final

Jikun. you, Thank

We growth hard people CalAmp to opening the the for thus incredible forward. seize position implement ahead. positioned going this believe of today the lie Q&A, worked call profitability to I'd transition the thank opportunities business company set we we've well Before turned are for like and all past for to that to the on our has their team year, corner and work out the

the industry, issues, transformation, delivering in solve to to critical solutions AI we're asset tools experience of invaluable insights. lead recent business developed customers we've operation, years mission while analytical telematics software optimal and And products quality to control. With and our and using this providing real actionable deliver for a that experience that reputation now, that high with

With that, the open questions, your we will operator. to now call

Instructions] The comes with Notter [Operator line from first the please question George proceed. Jefferies,

out so do guess, the break guys typically, you have us subscription number give recurring in thanks I but you the number? you case Hi, I can much. guys, it that application know offhand? in queues

revenues $X.X plus the million For million. fourth the $XX.X it quarter, rental was of

Got it. Great.

this afternoon. speakers] [Multiple later

great. Okay,

now? about guess line in make was recurring We've seen narrative line decline of kind understand sure a item sequentially number quarters. I revenue to it's few I just flat million quarter. $XX.X obviously, there. that the we perspective there? Is that the a piece, that for I the do out want really February item. So have that the or trajectory numbers lift should of And numbers? your fully some of finance auto the on be what's with is of seeing discontinuance Like, those more the to

DMC discontinuance impacted business, exchange is to XXX% on our finance automotive. George as the and that, year, resources things, recurring most last also 'XX base auto business fact our in behind revenue definitely affected focused it's the in sales with our KXX our I we're is what as we about excited by us, converting year TC, mean, fiscal it foreign on by some team of fleet Yes, over pressure businesses focus but the that largely two TNL is driving in automotive well

going churn looking been those forward, drive the is recurring to that what revenue have anxious stack full and think of for focus what's the to investors I and conversion value really really going us of So at complete base on businesses. which

Got it.

Okay.

You DM-CTC. mentioned transition the to

number. ago, the sounds I saw think in progress diminishing release XX% think there base were And trying I I two quarters convert quarter, so XX%, this in you're I to total it customers like you past is press think ago, quarter the I XX%. you was the XX think at a were

are pat say how to the of make is look other customers that it? stand not going you So to XX% it Or fair do the just and transition? at

more, we accurate have customer have to large complicated with embedded a customers what's but is there we base think these do I for have large us, large right two get and no, us. No, want sure that customers more who contractual and volume our for that we issues both make

We still complete customers. term. we quarter, good making those near expect to were the with So to we're we're hopeful our in progress. but those the done working And in get

we're still So it's a well. them But seamless as no, on integration for track.

increases chain Was costs. to part Okay, quarter? success some pricing there? that great. that can in the telematics at? implementing past talking What looking were you the we're higher Or? know reflect Any one, implementing tell then about this you us I those And of guys number last supply

some of purchase or had really price brands, number from customers reduced items quarter, improved. you we saw because charged or revenue sequentially, the that Yes, we SWOT changes, the to our if in pricing impact buys we PPB

have were buys lead improved of deal, that other we to allocations the of able additional great pay the PPB our able in the our market. shortened, this we're customers in the times because has to and that of part to our spot have that chain was was a So terms fact build improved, supply less more part

flexibility, bit gross and leads pricing more us the cost reducing on also but pressure added that a having little margin. to again, So

Got it.

hand over. I'll right. Thanks All Okay. a it lot.

The next Roth Partners, Thank you. from question Scott of Searle with proceed. Capital comes the line please

they $X quarter, want $XX another plus restructuring for there's I Thanks the on a OpEx in taking of It OpEx $XX of Maybe out quickly terms Nice an implemented much clarifications was to million. restructuring like million Good announced, standpoint, afternoon. quarter the current dive the around to and to from how come I job got million in non-GAAP of questions. on the this annually. my sounds clarify couple quarter, think was to guys.

by out plus another to coming So expecting we're basis. of year, two million end the on quarterly fiscal be this a

gross And want things. margin just the front, then on couple clarify to of a

gross You talked of software terms by segment, about the normalization, if year. and of recap particularly application and overall for should services, what that pursuing value on you software term blended product I end mix? subscription and as end we get could just you're higher as look the like. us services, this better to the fiscal in that on And wonder higher added, long subscription for target now, what's dollar margins

Yes.

So let we questions. me your make got sure

impact First the normalized reductions question like term that the gross going is OpEx cost margin what was that, right? margins, of Second was future? would long did what get into on on and think gross be, on gross the I margins look we

Correct. Yes.

the OpEx to Okay, late were QX. be in very cost reductions they in implemented And continue implemented QX.

full will not $XX you QX. a year. of $X reductions roughly the you million impact So are those until correct million see really it's But to

in that in down we time. so in the fully, And should balance fully QX, be will most see and in QX some of starting and at we of that costed point

terms In margins. gross of

towards. If you XX% look is we're back that roughly XXXX blended That gross margins think and see where 'XX, to XX%. I at you'll trending

and overall we a application term revenues up the long portion recurring software wise higher However as business. have when our of

from for long gross basis. blended margin XX% a are term We looking a

out that that product The lower any FNF We where level. below that's break you don't really talk line hardwares. about, and that versus at

force of still that about targeting follow guys a overall laggards. largely the revenue and to going rate you're going if couple be of connected now that in done, What growth target growth you're have thinking maybe conversion How And bottoming devices? process, I And that's out? is the be ARPU, SNSS. could it up we you through Okay. terms the are for organic like sounds should number you

SSNS. let's Yes, so say really, We is Scott, recurring overall on for XX%. long goal term growth differently, revenue it

by you full We there So our is way of which recurring year. solutions. been revenue what growth, for, that of looking all the we'll driven our won't this definitely make get sales is progress. stack have guys clear, But more

goal revenue we're the remarks, better align to mean provider, to my in to more our growth is did of being we that the a see really software long subscriptions long saw you run, going expect and business company significant in as range. significant we the which going restructuring, margins better to term some be really in to return XX% software So mean, with and much

in DM-CTC stack with conversion, those They're we lower you'll think first I Our our see greater that XXXX relatively has helpful. But ship units. out Go ARPUs. is the what step And solution area. forward margin recurring everything in gross going the higher component. on of percentage a a definitely are full

Great.

thanks I'll queue. back the get in much. so Okay

Thank proceed. next you. with Markets. Michael Capital comes Please Latimore, from The question Northland

Yes. Thanks. quarter there. Nice Yes. Great.

subscription software that year? is throughout On you the and it sequentially to business, the know fair grow continue to assume should

a in that. we That's absolutely. I'd say good Yes, always We've had I the have Mankato good goal. [ph]. mean, pipeline, pipeline

CalAmp our TNL got In terms app on of very good focus pipelines product, year. going we've the into our and our

last being with actually term In BMW we deal you long a year, the that's implemented. may remember, business, signed automotive

on full them side, been to rolling got and good DM for out stack our to very customers, businesses. keep service tsp making then We've us, are And excellent. who mind things for CTC. our a we're that the important we've in momentum customer So is hugely sure focused on our lot many

everything that recurring selling So have we're customers also revenue a while DSP ARPU, to our component. lower

to all long revenue those So recurring run. things over of growing the

been that early know, first the but early there? year, yet, for upsell those I converted this year, last upsell emphasis And half customers? far? to you the any of on, TC, a So calendar big has DMC, that say, to been customers color and last time hasn't how pattern

days DMC mean, on, of I TC capability. are realizing big our is the the customers technology TC. computing you one It's know, that advantage the edge with early I DMC think value

early and that, our, us competitive of it's So a better well, landscape to features. our I think days to position compete against position but their additional lot TSP on to sell opportunity customers

revenue way So more more stack than on businesses that. And line. think more is year driving the these about top of think I I next full recurring

very Thanks great. Okay, much.

importantly, questions one Yes, organization fleet experienced In of thing out there. But like lot is I'd time features we is as spent and what additional focus existing lowering churn, and selling free on logos. getting does top customers, that Taking our success most it. on other focused customers. mention new QX, a of K of then about a our force to our building we XX customer TNL, are up care so to a line existing sales revenue, lot that to exclusively automotive that

[Indiscernible] Sachs. Thank proceed. Please you. Delano next Goldman The question comes with from

free Hi, think this for inflection you during path us Thanks is Adam help your Beavis. taking On for timing could if Jerry and Wondering here. around positive flow a question. and transition about my cash today. the

free think better I have I both dose you the it the half reduction But a before gross we flow, From margin cash up capital start you'll working a in from working see adjustments, can enhance still if know, be contributing, we second in social of as late improving go impact. able we as a should that to bit so I cash think from flow or of do clearance year. to project capital Yes, that well the the much see qX, standpoint, ways think should take the implement you implemented that you standpoint.

quarter around thanks. then sequentially. I the outlook down Great, for revenue And think X.X% the implies

out that two between parse segments. if the wondering Just you can

didn't. level. Yes, that at guidance the We're unpack going to not we

have provide going but we're to be If clarity, additional I the not able questions, level. below aggregate go to might additional you an

thank you. All right,

of Thank the comes line proceed. Martin you. question The from Yang with next Oppenheimer. Please

and to Is most know is for taking reduction? savings headcount details you on my stocks, coming the question OpEx see there us for more the cost any question. concentrated afternoon, give from Hi saving where also, thanks plans. across Good you. One CapEx? more and do And where we way on Thank

to that Jikun focused definitely do I reducing legacy will in the on hardware income aspects various statement. and of we we across tried Yeah, more our some expenses add the think But color business. what

about million to eight cash say flow about reduction $XX and I CapEx in sold Yes, in of of OpEx. XX% goods and would roughly across sold of annual spoke is XX% spends so and we roughly OpEx cost is cost goods CapEx, and

headcount, was as In pretty marketing G&A R&D. terms well of it widely spread across sales amount as small in and a

Got the for details. Thanks it? additions

you. at additional time. closing to remarks. Thank are [Operator will no for I There it any Instructions]. questions this hand Gardener now Jeffrey back

today to thank us you for your of continued on call I joining CalAmp. again all and the support want for

emerging conference participating As a virtual I XX, will conference on note, a be Oppenheimer's will which in G growth final we answering con and be questions. May is speaking

which our you We So guys. to to progress expect of quarter you forward be if now updating June. Thank you please on earnings with attend. during Operator, call, schedule you disconnect may the call. our plan a to us look first we XXXX meeting in

Thank concludes That call. you. today's Thank conference you.

line. You may now your disconnect