Focused execution following the business combination with MiX Telematics evidenced by annual revenue and AEBITDA growth of +10% and +50%, respectively
Revenue Grows 10.2% annually to $75.4 million, driven by unity ecosystem and safety-centric solutions
Cost synergy traction with $8.7 million in annual run-rate savings secured by end of June quarter
WOODCLIFF LAKE, N.J., Aug. 22, 2024 /PRNewswire/ -- Powerfleet, Inc. (NASDAQ:AIOT), reported its financial results for the first quarter ended June 30, 2024. This marks the first full quarter post-close of the MiX Telematics Ltd. business combination with prior year comparison numbers adjusted to reflect the pro forma financial performance of the combined businesses.
FIRST QUARTER 2025 HIGHLIGHTS
Total revenue was $75.4 million, up 10.2% year-over-year, driven by the strength of our safety-centric product solutions.
Product revenue rose by 29% year-over-year to $18.7 million, reflecting strong demand for our differentiated product offerings; building our recurring revenue base; and contributing to a 7% expansion in product gross margin.
Excluding the impact of non-cash charges from the amortization of acquisition-related intangibles, gross profit increased by $3.5 million, or 9.0%.
Adjusted EBITDA, a non-GAAP metric, totaled $13.7 million, a significant 52.2% increase year-over-year, driven by strong topline performance and the realization of initial cost synergies.
MANAGEMENT COMMENTARY
"I'm incredibly proud of the traction we've gained and the significant progress our team has made following the close of the MiX Telematics transaction in early April", said CEO Steve Towe. "The successful execution of our integration strategy is already evident in our strong financial performance this quarter, with a 10% increase in combined revenue and a remarkable 50% rise in adjusted EBITDA compared to the prior year. This reflects our ability to drive radical change without disrupting operations, setting a solid foundation for sustained growth."
"Our strategic rationale behind the MiX transaction was clear: securing scale is critical to distinguishing our combined business from competitors and aligning with market leaders as the core telematics industry rapidly transforms. By leveraging our Unity ecosystem's advanced AI platforms and next-generation data capabilities, we are poised to thrive in a market that increasingly values innovation and agility."
"We are also off to a strong start in achieving our cost synergy commitments, securing $8.7 million in annual savings within the first 90 days. These savings have provided us with the flexibility to make targeted investments in our go-to-market and customer success teams, leading to a 30% increase in our sales force in the coming months. As we continue to work towards our target of $27 million in savings, we remain focused on scaling our operations and driving sustainable growth as we advance toward our goal of rule 40 performance over the next two years."
FIRST QUARTER 2025 FINANCIAL RESULTS
Total revenue for the quarter increased by 10.2% year-over-year to $75.4 million, up from $68.4 million in the same period last year. This growth was largely driven by the continued success of the company's differentiated safety-centric product solutions, with product revenue increasing over 29% to $18.7 million.
Service revenue grew by 5% year-over-year to $56.7 million. This performance highlights the strength of the Unity product strategy and the benefits of operating at scale globally, which helped mitigate the impact of previously disclosed churn in the legacy MiX customer base and macro and geopolitical pressures in certain regions, such as Israel.
Combined gross margin of 52.6% includes a $3.0 million non-cash expense for the amortization of acquisition-related intangibles from the MiX business combination. Excluding this expense, adjusted gross margin was 56.5%, compared to 57.2% in the prior year, with the current period's performance partially affected by a higher proportion of product sales.
Operating expenses for the quarter totaled $57.9 million, including $20.4 million in one-time transaction, restructuring, and accelerated stock-based compensation costs. On an adjusted basis, excluding these one-time costs, operating expenses were $37.5 million and in line with the prior year.
The company reported a net loss attributable to common stockholders of $22.3 million, or $(0.21) per share, compared to $(0.04) in the prior year. However, after adjusting for one-time expenses and the amortization of acquisition-related intangibles, adjusted earnings per share was $0.00 for the current year.
Adjusted EBITDA increased by 52.2% to $13.7 million from $9.0 million in the previous year. This growth was driven by strong topline performance, resulting in a $3.5 million increase in gross margin after accounting for the impact of the amortization of acquisition-related intangibles.
The company ended the quarter with net debt of $108.2 million, comprising $31.4 million in cash and $139.6 million in total debt. After accounting for unsettled transaction costs, pro forma net debt was $114 million versus $110 million at the MiX transaction close date. The $4 million increase in pro forma net debt was primarily driven by an increase in net working capital of $7.0 million that is directly attributable to higher receivables following strong topline performance.
FULL-YEAR 2025 FINANCIAL OUTLOOK
The company is reiterating its updated guidance from the August 6th fireside chat. Full-year 2025 revenue is expected to exceed $300 million, an increase from the initial guidance of approximately $300 million. Adjusted EBITDA is anticipated to exceed $60 million, inclusive of an incremental $5 million in secured exit run-rate cost synergies, compared to its initial guidance of around $60 million.
INVESTOR CONFERENCE CALL
As previously announced, Powerfleet will hold a conference call on Thursday, August 22, 2024, at 8:30 a.m. Eastern time (5:30 a.m. Pacific time) to discuss results for the quarter ended June 30, 2024.
Management will make prepared remarks followed by a question-and-answer session.
Date: Thursday, August 22, 2024Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)Toll Free: 888-506-0062International: 973-528-0011Participant Access Code: 263975
The conference call will be broadcast simultaneously and available for replay here and via the investor section of the company's website at ir.powerfleet.com.
NON-GAAP FINANCIAL MEASURES
To supplement its financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP), Powerfleet provides certain non-GAAP measures of financial performance. These non-GAAP measures include adjusted EBITDA, adjusted gross margin, adjusted operating expenses and adjusted earnings per share. Reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of Powerfleet's current financial performance. Specifically, Powerfleet believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses and fluctuations in currency rates that may not be indicative of its core operating results and business outlook. These non-GAAP measures are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as an alternative to net income, gross margin, cash flow from operating activities or earnings per share as an indicator of operating performance or liquidity. Because Powerfleet's method for calculating the non-GAAP measures may differ from other companies' methods, the non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliation of all non-GAAP measures included in this press release to the most directly comparable GAAP measures can be found in the financial tables included in this press release.
ABOUT POWERFLEET
Powerfleet (NASDAQ:AIOT, JSE: PWR, TASE: PWFL)) is a global leader in the artificial intelligence of things (AIoT) software-as-a-service (SaaS) mobile asset industry. With more than 30 years of experience, Powerfleet unifies business operations through the ingestion, harmonization, and integration of data, irrespective of source, and delivers actionable insights to help companies save lives, time, and money. Powerfleet's ethos transcends our data ecosystem and commitment to innovation; our people-centric approach empowers our customers to realize impactful and sustained business improvement. The company is headquartered in New Jersey, United States, with offices around the globe. Explore more at www.powerfleet.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of federal securities laws. Powerfleet's actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements may be identified by words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions.
These forward-looking statements include, without limitation, our expectations with respect to its beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions and future performance, as well as anticipated financial impacts of our transaction with MiX Telematics. Forward-looking statements involve significant known and unknown risks, uncertainties and other factors, which may cause their actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. Most of these factors are outside our control and are difficult to predict. The risks and uncertainties referred to above include, but are not limited to, risks related to: (i) future economic and business conditions, including the conflict between Israel and Hamas; (ii) integration of our and MiX Telematics' businesses and the ability to recognize the anticipated synergies and benefits of the transaction with MiX Telematics; (iii) the loss of any of our key customers or reduction in the purchase of our products by any such customers; (iv) the failure of the markets for our products to continue to develop; (v) the negative effects of the transaction on the market price of our securities; (vi) our inability to adequately protect our intellectual property; (vii) our inability to manage growth; (viii) the effects of competition from a wide variety of local, regional, national and other providers of wireless solutions; (ix) failure to make timely filings of our periodic reports with the Securities and Exchange Commission ("SEC"), including our transition report on Form 10-KT for the period from January 1, 2024 to March 31, 2024 and our quarterly report on Form 10-Q for the quarter ended June 30, 2024, and (x) such other factors as are set forth in the periodic reports filed by us with the SEC, including but not limited to those described under the heading "Risk Factors" in our annual reports on Form 10-K, quarterly reports on Form 10-Q and any other filings made with the SEC from time to time, which are available via the SEC's website at http://www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by these forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.
The forward-looking statements included in this press release are made only as of the date of this press release, and except as otherwise required by applicable securities law, we assume no obligation, nor do we intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.
Powerfleet Investor ContactsCarolyn Capaccio and Jody BurfeningLHA Investor
Powerfleet Media ContactAndrea (610) 401-1999
POWERFLEET, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended June 30,
2023
2024
Pro Forma combined
Consolidated
Revenues:
Products
$ 14,523
$ 18,738
Services
53,920
56,692
Total revenues
68,443
75,430
Cost of revenues:
Cost of products
10,931
12,751
Cost of services
18,381
23,031
Total cost of revenues
29,312
35,782
Gross profit
39,131
39,648
Operating expenses:
Selling, general and administrative expenses
34,575
54,782
Research and development expenses
3,565
3,101
Total operating expenses
38,140
57,883
Gain/(loss) from operations
991
(18,235)
Interest income
291
304
Interest expense
(676)
(2,691)
Bargain purchase - Movingdots
283
—
Other income, net
(709)
(624)
Net gain/(loss) before income taxes
180
(21,246)
Income tax expense
(1,836)
(1,053)
Net loss before non-controlling interest
(1,656)
(22,299)
Non-controlling interest
(6)
(13)
Net loss
(1,662)
(22,312)
Accretion of preferred stock
(1,772)
—
Preferred stock dividend
(1,128)
(25)
Net loss attributable to common stockholders
$ (4,562)
$ (22,337)
Net loss per share attributable to common stockholders - basic and diluted
$ (0.04)
$ (0.21)
Weighted average common shares outstanding - basic and diluted
106,390
107,136
POWERFLEET, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
March 31, 2024
June 30, 2024
Pro Formacombined
Consolidated
ASSETS
Current assets:
Cash and cash equivalents
$ 51,091
$ 30,242
Restricted cash
86,104
1,151
Accounts receivables
55,008
60,132
Inventory, net
25,800
25,832
Deferred costs - current
42
24
Prepaid expenses and other current assets
17,784
16,498
Total current assets
235,829
133,879
Fixed assets, net
48,306
49,705
Goodwill
121,713
300,775
Intangible assets, net
40,444
170,093
Right-of-use asset
11,222
10,722
Severance payable fund
3,796
3,760
Deferred tax asset
3,874
3,544
Other assets
19,090
12,435
Total assets
$ 484,274
$ 684,913
LIABILITIES
Current liabilities:
Short-term bank debt and current maturities of long-term debt
$ 22,109
$ 27,604
Accounts payable and accrued expenses
60,763
68,771
Deferred revenue - current
12,236
10,019
Lease liability - current
2,648
2,441
Contingent consideration
—
—
Total current liabilities
97,756
108,835
Long-term debt - less current maturities
113,810
111,957
Deferred revenue - less current portion
4,892
4,825
Lease liability - less current portion
8,773
8,555
Accrued severance payable
4,597
4,533
Deferred tax liability
18,669
52,645
Other long-term liabilities
2,980
3,015
Total liabilities
251,477
294,365
Convertible redeemable preferred stock:
90,273
—
STOCKHOLDERS' EQUITY
Preferred stock
—
—
Common stock
63,842
1,096
Additional paid-in capital
200,218
578,514
Accumulated deficit
(78,516)
(177,108)
Accumulated other comprehensive loss
(17,133)
(567)
Treasury stock
(25,997)
(11,518)
Total stockholders' equity
142,414
390,417
Non-controlling interest
110
131
Total equity
142,524
390,548
Total liabilities, convertible redeemable preferred stock, and stockholders' equity
$ 484,274
$ 684,913
POWERFLEET, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended June 30,
2023
2024
Pro Forma combined
Consolidated
Cash flows from operating activities
Net loss
$ (1,662)
$ (22,312)
Adjustments to reconcile net loss to cash used in operating activities:
Non-controlling interest
6
13
Gain on bargain purchase
(283)
—
Inventory reserve
443
257
Stock based compensation expense
1,092
5,929
Depreciation and amortization
6,334
10,335
Right-of-use assets, non-cash lease expense
660
760
Bad debts expense
1,416
1,993
Deferred income taxes
1,990
1,021
Shares issued for transaction bonuses
—
891
Other non-cash items
1,760
481
Changes in operating assets and liabilities:
Accounts receivables
(4,008)
(6,973)
Inventories
984
(624)
Prepaid expenses and other current assets
(38)
(1,518)
Deferred costs
(1,677)
(1,789)
Deferred revenue
58
(142)
Accounts payable and accrued expenses
(1,991)
4,993
Lease liabilities
(650)
(927)
Accrued severance payable, net
88
(2)
Net cash generated by/(used in) operating activities
4,522
(7,615)
Cash flows from investing activities
Acquisition, net of cash assumed
—
27,531
Capitalized software development costs
(2,352)
(2,308)
Capital expenditures
(4,582)
(5,586)
Net cash (used in)/provided by investing activities
(6,934)
19,637
Cash flows from financing activities
Repayment of long-term debt
(1,875)
(493)
Short-term bank debt, net
2,800
4,161
Purchase of treasury stock upon vesting of restricted stock
(4)
(2,836)
Payment of preferred stock dividend and redemption of preferred stock
(1,128)
(90,298)
Proceeds from exercise of stock options, net
36
—
Cash paid on dividends to affiliates
(1,331)
(4)
Net cash used in financing activities
(1,502)
(89,470)
Effect of foreign exchange rate changes on cash and cash equivalents
(1,930)
(824)
Net decrease in cash and cash equivalents, and restricted cash
(5,844)
(78,272)
Cash and cash equivalents, and restricted cash at beginning of the period
55,746
109,664
Cash and cash equivalents, and restricted cash at end of the period
$ 49,902
$ 31,393
Reconciliation of cash, cash equivalents, and restricted cash, beginning of the period
Cash and cash equivalents
54,656
24,354
Restricted cash
1,090
85,310
Cash, cash equivalents, and restricted cash, beginning of the period
$ 55,746
$ 109,664
Reconciliation of cash, cash equivalents, and restricted cash, end of the period
Cash and cash equivalents
48,830
30,242
Restricted cash
1,072
1,151
Cash, cash equivalents, and restricted cash, end of the period
$ 49,902
$ 31,393
Supplemental disclosure of cash flow information:
Cash paid for:
Taxes
$ 273
$ 41
Interest
$ 356
$ 3,057
Noncash investing and financing activities:
Common stock issued for transaction bonus
$ —
$ 9
POWERFLEET, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED EBITDA FINANCIAL MEASURES
(In thousands)
Three Months Ended June 30,
2023
2024
Pro Forma combined
Consolidated
Net loss attributable to common stockholders
$ (4,562)
$ (22,337)
Non-controlling interest
6
13
Preferred stock dividend and accretion
2,901
25
Interest expense
690
2,916
Other expense, net
—
1
Income tax expense
1,836
1,053
Depreciation and amortization
6,334
10,335
Stock-based compensation
1,092
5,929
Foreign Currency Translation
368
108
Restructuring Related Expenses
448
1,198
Gain on Bargain purchase - Movingdots
(283)
—
Net profit on fixed assets
(4)
—
Contingent consideration remeasurement
(24)
—
Acquisition related expenses
223
14,494
Adjusted EBITDA
$ 9,025
$ 13,735
POWERFLEET, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS) FINANCIAL MEASURES
(In thousands)
Three Months Ended June 30,
2023
2024
