CalAmp (CAMP) 10 Jul 232024 Q1 Earnings call transcript

Welcome to CalAmp's First Quarter 2024 Financial Results Conference Call. My name is Bethany, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference call, Logan Lucas, Corporate Strategy and Investor Relations Manager at CalAmp. begin. may you Logan,

CalAmp's welcome call. fiscal Strategy I'm at Financial today Relations and Jeff Executive financial and Gardner; and quarter results Manager Chief are us With conference Logan Jikun CalAmp. and to afternoon, Chief first Officer, Kim. CalAmp's Officer, XXXX Investor President Good Lucas, Corporate

of XXA XXE will Act of Securities we call statements of today's the Exchange certain forward-looking within and of Section XXXX. the During make meaning the Act of Section XXXX

other are statements future on Many and future risks Forward-looking events assumptions the based statements projections, cause events are uncertainties. are about current from materially and forward-looking that predictions, actual and differ could factors as subject statements and to communication. expectations in a result, to this

to actual call that in from today's materially different the understanding the results make. plans, we be listen intentions, expectations our the with forward-looking You and disclosed may should statements

cause forward-looking earnings on statements to to may we company's about more results Commission. disclaims obligation well as not and the differ that filings the to actual forward-looking are refer update cautioned the the with reliance from may call. materially today's press today any undue Securities please and as the forward-looking For Exchange factors issued information release company on discussed Readers specifically be put to statements, statements that

Jeff, followed over the Gardner. CEO, results, and turn the operational Now, to will Jeff financial President will it's to please begin a provide review go today's my CalAmp's and review With of then that, Jikun highlights, of pleasure more call company's recent question-and-answer with call ahead. Jeff the great a a session. detailed by

you thanks call on And the us Logan. joining you, to all of Thank today.

have a enhance CalAmp unsolicited an few received has value we inbound In the been years as past past the inquiries. strategy weeks to executing independent company. shareholder Over

Special to the of help company. has all a Committee available alternatives As engaged the advisors formed a result, strategic Directors to explore and Board us

this on answering any not will topic questions today. We be

Overall topline structure focused leaner the than to selling ever installed-base have stack the a the driving efficient more cost increase to the the CalAmp to and to and profitability we on a organization of sales with converted more Strategically drive revenue upselling the team is model, and improve a solutions, subscription restructured and profitability. retention set team success cash business focused full customer flow up company. on

saw quarter, weakness the Regarding varying base. in of customer we the and first demand strength degrees across

large account Specifically, we million had in our a around the generating strong particularly industrial with revenue. $XX.X with quarter customers

We are against expect this their ship future performance to increasingly we continue into able as demand. to the

service adjusted hand, the demand and order environment. our the align On with quarter in customers from some their as telematics other channel normalized strategies inventory they to better in providers demonstrated a more volumes or shipping TSPs softness

far to longer to supply. Due order in secure customers need to improvements, no supply advance

lower volumes sell order inventory. they were So existing as

We correct other continue we will to expect drive a from take this to revenues of and business. few areas quarters additional to

focused recognized on in of revenue to and basis management continues efficiencies the the reduction from mix gross low-end quarter produced is $X.X the growth year-over-year. in supply guidance despite expense revenue margin recent over into million fiscal realize We of missing million Further, initiatives due operating cost the EBITDA. million better $X to XXX performance in expanded to PPV continued costs adjusted and decreased our expense resulting XXXX. year company as margin of to the in Now chain dive of team the The cost generated $XX.X efficiencies, gross first points normalize.

demonstrates achieved the we're range. business despite Overall, making the with we profitability shortfall, feel and which progress of and the the Improvements structure our our in gross adjusted side margin that pleased cost the topline initiatives. of culminated in effectiveness fell expense within on we a performance, cost strong EBITDA an are unexpected guidance

We growth, QX device the profitability will generation. will accelerate efforts to sales contracts. of the installed actively company. the of completion be structure customers base organization continue convert To marked revenue an the team's help logo increasingly to to maintain the Since new the lean to dedicating enhancing expense subscription additional bandwidth of

that in In team The multiple approximately the CalAmp's following subscription software products, XX,XXX gained the opportunity including fleet in selling deals first addition added traction an team in customers, application revenue enterprise modest subscribers, of R&L closed new our sequential growth with with resulting $XXX,XXX. a recurring quarter. carriers around sales

team execute renewals on up-selling the to addition, continued In and opportunities.

bookings fleets standalone will optimize dash new software solution related New into products significantly by also camera driver the solution operating such vision and generation us quarter that This help advanced help and liability powered behavior will cost. and our second decrease drive new beyond. a as next is AI

as and full logos Sales to grow. impact release, this customer more base we both the to qualified has and team continues Since of different will XX opportunities the ARPU the the than have new a sell positive pipeline substantial existing on product

to by our sales and revenue we to compensation Carson, Finally programs plans the according personnel on of based Chief align the growth new goals customer reward success targets. personnel implemented Brennan sales built behind Officer. and through Revenue organizationally revenue, compensation retention rewards net logo new acquisitions recurring bookings our new value rolled-out The

drive automotive automotive The of growth demonstrating towards are revenue world's This the quarter. this the relationship 'XX. brands for. for of the the year revenues segment. the margins, and free-cash-flow remainder will to year and ramping-up The from revenue and the to into future fiscal for recurring well to BMW growth into and relationships continues aiming our company the profitable we with model expects drive growth, BMW perform continue other in will consolidated help the top several business consumer, Internationally, operating gross well

the various single have leader and Further, under effectiveness. operating operating the a maximize models geographies been to across cost-efficiency aligned

to already see new trend this structure have benefit expect to this We begun significant organizational continue. to and

on of from despite value deals strength demonstrates the ARPU low is a and of of occurred providers subscription as business which continue revenue solutions declines customers purchased software growth the We look towards focused robust pipeline recurring recurring away modest purchased These on of cloud customers to and by fleet ARPU revenue accelerating will we growing. opportunities. execution in area and in revenue shifts telematics the drive-up Subscription we device to API directly revenue in and management as to which fleet. this service with The Software line ARPU execute the grow converted direct overall and the application application mix forward by solutions channel are and positioned our Services recurring high

return and the coming over continue order to channel we volume to Finally, to will normalized our work with quarters. TSP customers

turn over I to in more will that, to With results quarter discuss financial the Jikun? call Jikun our first detail.

you, Thank Jeff.

measures. reconciliation A corresponding of will include these release. GAAP with included the in earnings the commentary non-GAAP measures reference non-GAAP My 'XX financial QX measures full to FY

we Revenues first devices sequential last year-over-year Total driven were in by revenue revenue. a sequential but realized $XX.X million. from quarter grew decline and $XX.X rental million income telematic was XX% the revenue in XX% quarter. The decline

business As excess his in K-XX a customers Jeff are inventories, in their temporary our slowdown as mentioned remarks, working hardware our installations. TSP well seeing channel as is and through

inventory this take to to a We through. corrections work quarters expect few

million, million hardware auto $XXX,XXX at sequentially increase. $XX.X backlog by $X the decline backlog and correction. driven was million sequentially. of and their RPO ended customers customer $XX million, inventory and channel recurring modifications, increased by and $XX $XXX declined decline hardware contract million million X% subscribers hardware respectively. sequential revenue Net backlog RPO leasing, a was X.XX the effect subscribers. the application quarter RPO to declined through and TSP Excluding driven subscription working was S&SS

was quarter as variance. to compared significant later as in 'XX mix margin reductions to purchase recover the margin gross first quarter. of the driven XX% Gross in QX well last XX% better a Consolidated by offerings, price from FY continues

by First quarter excluding lower expenses, and increased GAAP marketing and increased driven activities, restructuring charges, G&A. $XXX,XXX R&D sales operating sequentially by offset

and by reductions annual declined resets The their sequential increase our OpEx, FY million with along and goods CEO late $X.X for our to only The we of but and 'XX, operating implemented take that and cost related GAAP transitions. was OpEx not expenses in capital recruiting in commission 'XX activities are year-over-year. CTO cost impact starting to 'XX, expenditures. early incentive driven sold

cash cash of cash was the compared EBITDA $XX $X quarter. total in QX compared million At had 'XX, last adjusted capital equivalents quarter. and $X.X CapEx as by $XX FY EBITDA $X.X Year-over-year, decline QX approximately increased The was we 'XX paydowns working of and million to prior to million. the million in revenue, X% or FY driven million, the adjusted in quarter. end by of

Excluding million in $X.X improvement have a quarter. would operations paydowns, cash the prior from working cash from a $X.X flow, positive capital million generated resulted

$XX.X have back of the asset million in end we line undrawn At availability. the quarter,

August covenant tests. various are availability customary, X% is senior on $XXX As to XXXX. notes due convertible subject this The million X,

high-quality, to a by strong generate overhang run the year end options on resolve this provide to financing continuing is to EBITDA of our rate shares. objective the Our fiscal

As to past quarters, EBITDA quality over and demonstrated continues over improve quantity few the time.

factors EBITDA future Our initiatives. be several rate and driven by will run increases

device 'XX. First, the FY the telematic of of second normalization revenues in half

should us. customers drive our Video Vision which our commercial by channel X.X, market like new K-XX in Dash and new TSP Our our solutions Camera, across revenue be fleet customer installed significant inventory opportunities growth, will upsell behind ARPU corrections subscribers Recurring and driven growth with segment.

'XX lastly, aggressive back trending cost our implemented cost in expenditures. of across sold, expenditures levels. improvements 'XX towards margins reductions operating XX% gross and in continued and Fleet capital historical And goods our

cash to cash In vigilance to continue next months. and will the generation addition, flows XX we our have over

these high the financing pay Refinancing coupon convert and portion other portion to EBITDA out loan expenses. as of gives of provide could pushing with cash off a maturity and interest come financing interest these as of during as interest and Refinancing which valuable of on opportunity loan Organic times the structure, with very higher run X% following convertible the financing which matures. prices the the will it options. conversion rates. Executing rates convertible will with the positive a the come well rates is rate flows improvements options. loan higher portion a term

take solution the other is who There single these to solutions address note, will over that of no resolve combination and will a time. convertible

As FY million to $X we million, million. revenue adjusted range between EBITDA $X 'XX $XX and expected million guidance, expect $XX QX with for between and

thoughts With that, over I to comments. Jeff and final the turn for will back some call

Thank Jikun. you,

continued and have transformational these both progress for future, our will profitability of I ability our our we proud ultimately shareholders. growing the creation both made into am value in execute efforts. on driving in am of to in which team confident the for manifest I revenues

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

reminder, to alternatives questions on decision company. we will a As the explore be Board's all for strategic Operator? our not answering

[Operator Instructions] ahead. ROTH MKM. Please line of with Our first Searle Scott the question comes go from

I had but clarify Hi, wanted I apologize inquiry? just And process, questions. a Jeff, ask good afternoon. plural multiple wanted it thought Hi clarification. the Thanks for was about single that. several I just was then the taking Or I inquiries? the in a quick to follow-ups. I to it strategic release. Was

Yes. was in Yes. It release. plural the

you. Thank Okay.

the gross more say kind the idea of I'm some front? Just you profile? And say normalization the on looking second levels when about guess quarter of bundled or of question, did inventory what that towards and channel did of the on you you the Jikun, to into product expect that the you I normalization half And how clarify, could inventories you feeling that wondering customer on if - us are margin are of front. equation. give side level fourth

yes, - Yes. On as both well can me? you volume hear as

you. Thank Fine. Yes.

the we're year, so both second well as QX of the half margin, On QX. the the Okay. and volume as discussing gross

Got terms of in your -- you. just looking And sequentially guidance

times of inventory they're on where an it with from levels unique our orders quite a situation. delivery. a went six is having out Scott, us very TSPs, terms And are them to to they precise give to now company their like place environment able quickly, really the months in

we - of lot So of feeling completed the much the a - backlog. and

to So they're just adjusting that.

levels we're Jikun expect said, we fourth quarter. what seeing. inventory As that's normalize in and to our But the third

I if you. lastly, could. just Got And

look EBITDA that front, then Looking the second to gross well to the as expecting I trend with on, that out, coupling margins quarter year front? headwinds at standpoint still as I the and think, -- XX Is mid-teens. the even the first track getting and are SS&S both as in that it on how that the from model an long-term path into months you've into, the product talked quarter, in some you're you on about guidance the And second the margins

We've more is It seen that the only driving Yes. to Yes, are EBITDA we're Scott. those on. in regard. come margins. some and to-date. of The kind there's Jikun things the of definitely real of expense a that savings improvements focused mentioned portion

about going I'll and - On where talk There chain gross there. mix, the margin is focusing two full we're the incredibly on supply are product two, environment stack Jikun One, more solutions on things it. the important. let environment.

elaborate you on would Jikun, please? So that,

Yes.

you And we've XX%. got this gross Last a of if out So problem 'XX. was been I'm our was it. we margin in quarter, kind way it sorry, FY quarter of 'XX QX into remember, percentage XX% - building

Obviously, to a application do historical XX% go above a COVID crisis Jeff the frame normalizing we gross you'll model, anticipate and further But back before recurring a from the model chain business current time supply it If you is. the That's few see in quarters is margin as revenue out XX%. we to subscription shift the as more numbers. mentioned, standpoint. that go as this issues, much

back queue. get the I'll in much. so Thanks Great.

add Yes. forward, to a Today, customers that's given margin device were that to ARPU. One lower our to I'd higher to the on of management full had like going really that, stage first going which profile ARPUs. transformation, a our TSPs we're in other focusing the stack conversions solution, moving thing those and drive these

So there. we had ARPU growth good

customers. now had - good on focusing subscriber searching ARPU we're growth I expect there. and think But We higher we

Thank you.

Our of next question go ahead. Please Jerry comes with Revich Sachs. from the line Goldman

this wondering the and to free do half? just drivers in folks Thanks. can cash to talk how you mind flow quarter headwind Hi, I'm back resolves cash through about if wouldn't positive? that turn good And everyone. itself when bridging you capital if you flow sequentially of afternoon, the working the Hi, just expect

Sure.

let me a data the So here. at take just look

you a remarks, If - hold second. the based on prepared on My apologies.

give Just me moment. a

information. Looking some at

Yes. Okay.

million the flow, the current that million attributed a see at at But look that charges you almost in working you you look if quarter. capital it. the cash to If $X negative was free will it $X

$X operations core So positive was million.

So operationally, cash. are we generating

a If you'll positive that in see adjustments, you quarter. was it subtract million working capital out CapEx the without $X

So good turnaround. strong

that, having got challenges. Now we've said working some capital

receivable. You'll our accounts see that

$XX million of at If you with payable, see million. A increased you this the go And back two quarters. if has you few that, has conversion. also then the look do our that will X increased $XX years, over has accounts to lot last roughly

need quarter. $XX next of need We address to over we'll in We dropped $XX some on it obviously that from the We the last few made to headway to both these. to accounts payable quarters. continue do

we when In turn flow terms to cash a obviously, few it's going positive, quite free of take quarters.

you And on don't with the is could issue until you that expand on that what's last would mind, a point? model? don't more profile stabilizes few It context if that comment? mind, quite the business take If it that quarters, you point, driving receivables of new please? the Is just

were mean increases. funded I increases accounts Yes. basically, by receivable AP

the to can route. And payables address We're can ways, payables reduce you receivables two the down hold the flow the you go flat. and So trying or your flat hold cash in payables. pay receivables your

Okay. came that seasonality the driving sequentially deferred factors revenue the normal are And in was separately, any sequential driver? can I decline? Is that down other ask quarter. What or revenue a the deferred

Yes.

the declining I and we It bit, thing. come It's discussed driver. a think our a primary revenues back. K-XX should that's seasonal

Thank you. Okay.

in the to Jerry, quarter-end, thanks joining. TSP quarter. an we I out to did did largest did MSA by our we for model convert signing subscription want later the a after that point

segments of So customers serving turning a really device towards TSP with our all management happy about and our growth that attention solution. new our

How revenue? how that did was to Jeff, And that add much much contract? deferred

that happened after - quarter-end. just We the

in biggest provide to our going Jerry, terms it on but focus contracts, very where was. not of individual the we're our important details TSP, So and was

know we behind But now us. the everything painful. a I in position good cat a of recurring it was to exception has it's have that we're sell component the step So where that revenue with business.

difference. make we wanted So a of sales be going on I I the is higher we're a little where think to focus longer, ARPU big think to our took force but

Thank you.

You're welcome.

Thank you.

Our go Please line Notter ahead. from of next the question Jefferies. George with comes

subscriptions was sequentially, I $XXX,XXX up very guess, us about ask Thanks saw to The your substantially it gave subscriber up, it I I metrics pretty but were guys. that much. staff was guess metric. recurring you Hi, year-on-year. wanted down I year-on-year. application

the I'm of just dichotomy, phenomenon? to about So down, that the wondering I you kind talk up. subscription Can revenue guess that subscribers

Sure. Sure.

subscription capabilities. them subscriber that of Jeff to converted TSP growth big model, a low we think I service subscribers our So business. business, the very was management a device right, chunk telematics very have alluded ARPUs, our to this, only tied ARPUs. we large extremely provider They the count, low on buy to very our our right? And heavy So really conversions, based

the subscriber we increase hence, we - year. compared not a relatively not was that lot And and while FX see year, our this year some to we headwinds so that year did seeing last ARPU it had Last increased did base and flat. are this

it. Got

And you. then -- other Thank add I to Okay. one the wanted

standpoint if But did commentary. at one FY yes, from We bottom a just the out in look QX recurring you revenue - more 'XX.

improvements making we've two so And sequential been quarters metric. time that on the over last

it. Got Okay.

you - thing And growing SaaS really believe that's stack our discussions. we believe the look on we guys metric That's to that's for business business. as as to George, That pure how this at recurring the focus our metric and of the revenue we're terms would business. in full that right solutions, refer is investors what more

summertime. that the but think then a why I was? Got the you it. you bit business And mentioned Can softer. guess I seasonality, was K-XX talk about

camera and in that still expertise is a Yes, quarter in adding bit back in seeing George, with in going well go-to-market business pressure, got our in quarters. leadership fleet. couple are our by a the to familiarity is customers in business we've I that the the process solution reception as the sales market. fewer a sales and already the think, We're that position in bounce driven will very a of was getting but that a expect going reps. over the little cameras, We're But really good really forward, as we good units simply, help really we the K-XX of business installed next position with

it. Got

And -- you the like thoughts then metric any Okay. on

high customers that. this that growing let of terms about we time, over a ARPU George, that to also really much wanted in Jikun do add-on talked earlier. very that is point for take incremental this talk I'll about margin when just the can solution a vision - a out lot is so we it I

second would Jikun, the you take So part there?

sorry, I'm question. I hear didn't the

repeat you If the question. could

an how terms obviously these that. is of there? Yes. at I existing customers metrics, But of I know to more you I full I as retention thoughts mean, like onto I'm the Do the guess, you you like the the customers? here a you I is doing K-XX are just get But element can capability. Any lower solutions provider. of us? kind telematics story that with of know I retention have share the curious business all look migrate ARPU to in stack transition, company of move rates

Yes. No, we the haven't disclosed quarters. base last you has relatively subscriber for that, but flat I can share been the with K-XX few

by competitors. sure incumbent as vision very we ARPUs, obviously, get own, solution a the that our we offensive, well that gain market make with it's share. meaning large market. but But this shareholder And our as upsell in large obviously, attacked go customers, as on holding are to time increase We an are to some existing of shareholder

Okay. much guys. very Great. Thanks

Sure.

You're welcome.

Thank you.

ahead. question Please line go Our comes Craig-Hallum. with Stoss the from of Anthony next

take where of using that Can seems your question, several been wise, more issues on now share it and you of high lot they're cetera, that pricing give to a you're telematics that et Hi Thanks. what you the and us are It guys years. abnormally you've growing like fact the ask confidence big kind a share? over competitors your That's are just any seems price that probably last I sourcing, your aren't. clearly wanted landscape though having competitors to competitive me. actually component picture losing not to devices Jeff, versus

Yes.

TS side, On important, business us. really the pretty that as TSP you Tony, the is to unique it's know,

So don't model, Samsara, convert necessary to this started. where big to It that we at it. to you base manage look a have when or Geotab so subscription us business. was we compared they really could TSP That's

I will think time. that over more stable be

configurability, it's would a still customers you need customers our we business priced on higher as lot to but It - are they as not little providers. We winning switch simple from a place our that are them allows configurability, our it. think really of because value to

So first quarter. change having is side, in I the really with they're that and big on is TSP the the least correction a inventory the think impact, second supply at making in chain

good look Samsara time, a very the competitor, are Geotab and yes, fleet, stack to high when now. think and and those we're think line we makes share like But and where you'll there at where now, the leverage logistics that's sales really think focus our growing. which, that force the pure what revenue turning I transportation the And could And with of trying see customers a about we can more really especially I they over recurring us do market big customers business engineering expertise. with long-haul end full like are it we growing us towards And play item.

upmarket. we very compete to We So tend well do there.

And the quarter the so Those there. end sales at in are little said seen higher - we we've wins, bit a the of couple a but cycle of longer ARPU. first as

for that Do expect then a on kind $XX this And guide to of of rate couple May you're to be February. for mention for both and just run August at expect to million you largely continue for this you that and November similar you quarters.

No.

of the half said recover the I year. think Jikun in we'll that back

to expect half. in levels the more second back to the we normalized So be TSPs

quarter, just went and why with range? the that So for review we the would Jikun, first once guidance you guidance

Yes.

second the I come again, But relative down. do back. actual, QX half it's we of mean, the But flat guidance slightly relatively year, TSPs the So expect situation. this reflects to to TSP our

expect for you November be both it to did fiscal you in what and 'XX February? versus year-over-year would up But

QX QX, Well, at fiscal look right, 'XX, $XX. you up at $XX and if we're and

is think the those some caused ordering what of I of kind TSP problems.

current normalization QX. you levels QX And between would so somewhere in put and

All right. Thank you.

welcome. Thanks You're Tony.

That remarks. you. Gardner back to Jeff pass any session. would to question-and-answer the I for Thank concludes like the now conference closing

on you call interest your Thank our our quarter CalAmp. very And to all call this for Yes. XXXX today you the continued look in now progress us may much. during Operator, earnings disconnect call. joining We the thank second you for forward later sharing year. you with

call. hope That you your day. concludes today's conference I all enjoy the rest of

You may disconnect lines. now your