MiX Telematics Reports Third Quarter Fiscal Year 2024 U.S. GAAP Financial Results
- Net subscriber additions of 52,400, bringing the total base to over 1,142,000 subscribers
- Total revenue of $39.1 million, up 6% year-over-year (constant currency)
- Subscription revenue of $33.7 million, up 6% year-over-year (constant currency)
- Net income of $1.5 million
- Adjusted EBITDA up 13% year-over-year to $9.5 million, at an adjusted EBITDA margin of 24.4%
- Subscription revenue represented 86.1% of total revenue
- The majority of the Company's total revenue and subscription revenue are derived from currencies other than the U.S. Dollar
- Total revenue increased by 5.8% on a constant currency basis, year over year
- Gross profit margin decreased to 60.1%
- Income from operations was $2.5 million, with operating income margin decreasing to 6.3%
Insights
An analysis of MiX Telematics' third-quarter financial results reveals several key indicators of the company's health and trajectory. The reported 6% year-over-year growth in total revenue and a 6% increase in subscription revenue, both on a constant currency basis, are positive signs, especially considering the company operates within the SaaS domain, where recurring revenue is a critical metric for sustainability and growth. The net subscriber addition of 52,400 is a robust figure, contributing to a substantial subscriber base of over 1.1 million, which is indicative of the company's market penetration and customer retention capabilities.
However, the decline in gross profit margin by 430 basis points to 60.1% raises some concerns. This dip, primarily attributed to higher in-vehicle device depreciation, might signal increasing costs or investment in new hardware that could affect future profitability. Furthermore, the operating income margin's decrease to 6.3% from 10.7% year-over-year suggests that the company's operational efficiency may be challenged, possibly due to the strategic costs related to the proposed Powerfleet Transaction. This is a critical aspect for investors to monitor as it could impact the company's financial performance post-merger.
When dissecting the financial health of MiX Telematics, it's important to consider the adjusted EBITDA increase of 13% year-over-year and an improvement in adjusted EBITDA margin to 24.4%. These figures suggest that, despite the gross margin compression, the company has managed to improve its earnings before interest, taxes, depreciation and amortization, which is often a better indicator of operational performance and potential for cash generation. The company's cash and cash equivalents of $25.4 million also provide a cushion for strategic maneuvers, including the pending merger with Powerfleet.
Investors should note the impact of currency fluctuations on the company's reported U.S. dollar revenue, particularly the 2.7% decrease in U.S. dollar subscription revenue due to a stronger U.S. dollar against the South African Rand. Currency risks are inherent in global operations and can lead to volatility in reported earnings. The upcoming shareholder vote on the merger with Powerfleet is a pivotal event that could significantly reshape the competitive landscape and financial outlook for MiX Telematics, making it an important development to watch.
From an economic perspective, MiX Telematics' performance can be partially attributed to macroeconomic factors such as currency exchange rates. The weakening of the South African Rand against the U.S. Dollar has negatively impacted revenue when reported in U.S. dollars, which is a common challenge for companies operating internationally. This highlights the importance of constant currency metrics to truly gauge a company's operational performance without the noise of currency volatility.
Moreover, the company's growth in the African segment as a primary driver for subscription revenue growth is a testament to the economic potential and increasing demand for technological solutions in emerging markets. The strategic merger with Powerfleet, if successful, could leverage this momentum and create a larger entity with enhanced capabilities to capitalize on such markets. However, investors should be aware of the complexities and risks involved in cross-border mergers, including integration challenges and potential cultural and regulatory differences that could affect the anticipated synergies and financial benefits.
Third Quarter Highlights:
- Net subscriber additions of 52,400, bringing the total base to over 1,142,000 subscribers
-
Total revenue of
$39.1 million 6% year-over-year (constant currency) -
Subscription revenue of
$33.7 million 6% year-over-year (constant currency) -
Net income of
$1.5 million -
Adjusted EBITDA up
13% year-over-year to$9.5 million 24.4% (up 220 basis points from the prior year) -
Cash and cash equivalents of
$25.4 million
MIDRAND,
Management Commentary
“We delivered a strong third quarter and added a record number of net subscribers, bringing our total base to over 1.1 million,” said MiX Telematics CEO Stefan Joselowitz. “Our Africa segment was the primary subscription-growth driver, while continued demand for our solutions globally also resulted in strong hardware revenues. We maintained strict cost discipline throughout our organization, driving further expansion of our adjusted EBITDA margin.”
Joselowitz added, “We continue to progress the previously announced merger with Powerfleet. We’ve crossed a number of important regulatory hurdles including receiving most of the pre-requisite approvals to proceed, and to this end we have set the date of the formal vote by shareholders for February 28th, 2024. This is a very exciting time for both companies, and our entire organization is eager to hit the ground running and start executing our combined strategic growth initiatives. As a large shareholder, I strongly believe that the combined leadership group under Steve Towe’s stewardship, Powerfleet’s Unity strategy, and our combined scale will undoubtedly accelerate the achievement of our shared strategic and financial goals.”
Financial Results for the Three Months Ended December 31, 2023
Subscription Revenue: Subscription revenue increased to
The majority of the Company’s total revenue and subscription revenue are derived from currencies other than the
Total Revenue: Total revenue increased to
The impact of translating foreign currencies to
Gross Margin: Gross profit was
Income From Operations: Income from operations was
Net Income and Earnings Per Share: Net income was
Earnings per diluted ordinary share was 0.3
Adjusted EBITDA and Adjusted EBITDA Margin: Adjusted EBITDA, a non-GAAP measure, increased to
Adjusted Net Income and Adjusted Net Income Per Share: Adjusted net income, a non-GAAP measure, was
Adjusted Effective Tax Rate: The Company’s effective tax rate was
Cash and Cash Equivalents, Cash Flow and Free Cash Flow: At December 31, 2023, the Company had
Net cash provided by operating activities, before
Net cash used in investing activities for the third quarter of fiscal year 2024 was
Net cash from financing activities amounted to
During the quarter, the South African Rand strengthened against the
Quarterly Dividend
The last recent dividend payment of 4.50000 South African cents (0.2
The details with respect to the dividends declared for holders of our ADSs are as follows:
Ex dividend on New York Stock Exchange (NYSE) |
Thursday, February 22, 2024 |
Record date |
Friday, February 23, 2024 |
Approximate date of currency conversion |
Monday, February 26, 2024 |
Approximate dividend payment date |
Thursday, March 7, 2024 |
Share Repurchases
No shares were repurchased during the three months ended December 31, 2023.
As a result of signing the Implementation Agreement with Powerfleet, we have discontinued repurchases under the share repurchase program.
Recent Developments
As previously reported in a Current Report on Form 8-K on October 10, 2023, the Company entered into an Implementation Agreement (the “Agreement”), by and among the Company, PowerFleet, Inc., a
The implementation of the Scheme will result in the delisting of the Company’s ordinary shares from the Johannesburg Stock Exchange (the “JSE”) and the delisting of the Company’s ADSs from the New York Stock Exchange. The Powerfleet Common Stock will continue to be listed on The Nasdaq Global Market and will additionally be listed on the JSE by way of a secondary inward listing.
As announced on January 30, 2024, MiX Telematics has distributed a circular in respect of the Scheme (the “Scheme Circular”), together with the Powerfleet prospectus in respect of the secondary inward listing of Powerfleet on the JSE to MiX Telematics shareholders. The Scheme Circular incorporates a notice of scheme meeting convened for the purposes of approving the resolutions required to implement the Scheme, and will be held at 2:30 p.m. (South African Time) on Wednesday, February 28, 2024, for the purpose of considering and, if deemed fit, passing with or without modification the resolutions required to be approved by MiX Telematics shareholders in order to authorize and implement the Scheme. In connection with the PowerFleet Transaction, PowerFleet has filed, and the
The Powerfleet Transaction is expected to close in the first half of calendar year 2024, subject to satisfaction of customary closing conditions including, but not limited to, approval from the Company’s shareholders and approval from Powerfleet’s stockholders.
Conference Call Information
MiX Telematics management will host a conference call and audio webcast at 8:00 a.m. (Eastern Daylight Time) and 3:00 p.m. (South African Time) on Thursday, February 1, 2024 to discuss the Company’s financial results and current business outlook.
- The live webcast of the call will be available at the “Investor Information” page of the Company’s website, http://investor.mixtelematics.com.
-
To access the call, dial 1-888-886-7786 (within
the United States ) or 0-800-994-942 (withinSouth Africa ) or 1-416-764-8658 (outside ofthe United States ). The conference ID is 49731850. -
A replay of this conference call will be available for a limited time at 1-844-512-2921 (within
the United States ) or 1-412-317-6671 (withinSouth Africa or outside ofthe United States ). The replay conference ID is 49731850. - A replay of the webcast will also be available for a limited time at http://investor.mixtelematics.com.
About MiX Telematics Limited
MiX Telematics is a leading global provider of fleet and mobile asset management solutions delivered as SaaS to over 1,142,000 global subscribers spanning more than 120 countries. The Company’s products and services provide enterprise fleets, small fleets and consumers with efficiency, safety, compliance and security solutions. MiX Telematics was founded in 1996 and has offices in
Forward-Looking Statements
This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding our position to execute on our growth strategy, and our ability to expand our leadership position. These forward-looking statements include, but are not limited to, the Company’s beliefs, plans, goals, objectives, expectations, assumptions, estimates, intentions, future performance, other statements that are not historical facts and statements identified by words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in, or suggested by, these forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved.
Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of known and unknown risks and uncertainties, some of which are beyond our control including, without limitation:
- our ability to attract, sell to and retain customers;
- our ability to improve our growth strategies successfully, including our ability to increase sales to existing customers;
- our ability to adapt to rapid technological change in our industry and the use of artificial intelligence;
- competition from industry consolidation and new entrants into the industry;
- loss of key personnel or our failure to attract, train and retain other highly qualified personnel;
- the satisfaction of the closing conditions to the Powerfleet Transaction in the anticipated timeframe or at all including, but not limited to, the ability to obtain approval of the shareholders of the Company and stockholders of Powerfleet, the ability to obtain financing, and the ability to obtain necessary regulatory approvals;
- the ability to integrate businesses and realize the anticipated benefits of the Powerfleet Transaction;
- the introduction of new solutions and international expansion;
- the impact of the global component shortage and supply chain disruptions;
- our dependence on key suppliers and vendors to manufacture our hardware;
- our dependence on our network of dealers and distributors to sell our solutions;
- our ability to navigate and adapt in adverse global economic and market conditions;
- the impact of climate change and increased focus on environmental, social and governance matters;
- businesses may not continue to adopt fleet management solutions;
- our future business and system development, results of operations and financial condition;
- expected changes in our profitability and certain cost or expense items as a percentage of our revenue;
- changes in the practices of insurance companies;
- the impact of laws and regulations relating to the Internet and data privacy;
- our ability to ensure compliance with export laws, customs and import regulations, economic sanctions and Export Administration Regulations;
- our ability to protect our intellectual property and proprietary technologies and address any infringement claims;
- our ability to defend ourselves from litigation or administrative proceedings relating to labor, regulatory, tax or similar issues;
- significant disruption in service on, or security breaches of, our websites or computer systems;
- our dependence on third-party technology;
- fluctuations in the value of the South African Rand;
-
our reliance on electricity generated and supplied by Eskom (the South African Power Utility) and the impact of intermittent electricity supply in
South Africa ; -
economic, social, political, labor and other conditions and developments in
South Africa and globally; - our ability to issue securities and access the capital markets in the future; and
- other factors discussed in the Company’s and Powerfleet’s filings with the SEC, which include their Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and in the joint proxy statement/prospectus on Form S-4 to be filed in connection with the Powerfleet Transaction.
For more information, see the section entitled “Risk Factors” and the forward-looking statements disclosure contained in the Company’s and Powerfleet’s Annual Reports on Form 10-K and in other filings. The forward-looking statements included in this press release are made only as of the date hereof and we assume no obligation to update any forward-looking statements contained in this press release and expressly disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law.
Use of Non-GAAP Financial Measures
This press release and the accompanying tables include references to adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per share, adjusted effective tax rate, free cash flow and constant currency, which are non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses these measures, please see Annexure A titled “Non-GAAP Financial Measures and Key Business Metrics”. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP is provided in Annexure A.
MIX TELEMATICS LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Unaudited) |
||||||||
|
|
March 31, 2023 |
|
December 31, 2023 |
||||
ASSETS |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
29,876 |
|
|
$ |
25,419 |
|
Restricted cash |
|
|
781 |
|
|
|
863 |
|
Accounts receivables, net |
|
|
24,194 |
|
|
|
28,264 |
|
Inventory, net |
|
|
4,936 |
|
|
|
5,137 |
|
Prepaid expenses and other current assets |
|
|
9,950 |
|
|
|
9,470 |
|
Total current assets |
|
|
69,737 |
|
|
|
69,153 |
|
Property, plant and equipment, net |
|
|
36,779 |
|
|
|
40,865 |
|
Goodwill |
|
|
39,258 |
|
|
|
39,060 |
|
Intangible assets, net |
|
|
21,895 |
|
|
|
21,247 |
|
Deferred tax assets |
|
|
2,090 |
|
|
|
583 |
|
Other assets |
|
|
6,804 |
|
|
|
10,614 |
|
Total assets |
|
$ |
176,563 |
|
|
$ |
181,522 |
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Short-term debt |
|
$ |
15,253 |
|
|
$ |
21,136 |
|
Accounts payables |
|
|
6,120 |
|
|
|
4,897 |
|
Accrued expenses and other liabilities |
|
|
21,486 |
|
|
|
23,614 |
|
Contingent consideration |
|
|
3,569 |
|
|
|
312 |
|
Deferred revenue |
|
|
5,295 |
|
|
|
6,487 |
|
Income taxes payable |
|
|
298 |
|
|
|
288 |
|
Total current liabilities |
|
|
52,021 |
|
|
|
56,734 |
|
Deferred tax liabilities |
|
|
12,357 |
|
|
|
13,506 |
|
Long-term accrued expenses and other liabilities |
|
|
3,368 |
|
|
|
3,265 |
|
Total liabilities |
|
|
67,746 |
|
|
|
73,505 |
|
|
|
|
|
|
||||
Stockholders’ equity: |
|
|
|
|
||||
MiX Telematics Limited stockholders’ equity |
|
|
|
|
||||
Preference shares: 100 million shares authorized but not issued |
|
|
— |
|
|
|
— |
|
Ordinary shares: 608.8 million and 607.8 million no-par value shares issued as of March 31, 2023 and December 31, 2023, respectively |
|
|
64,001 |
|
|
|
63,455 |
|
Less treasury stock at cost: 53.8 million shares as of March 31, 2023 and December 31, 2023 |
|
|
(17,315 |
) |
|
|
(17,315 |
) |
Retained earnings |
|
|
79,024 |
|
|
|
78,334 |
|
Accumulated other comprehensive loss |
|
|
(13,399 |
) |
|
|
(13,790 |
) |
Additional paid-in capital |
|
|
(3,499 |
) |
|
|
(2,672 |
) |
Total MiX Telematics Limited stockholders’ equity |
|
|
108,812 |
|
|
|
108,012 |
|
Non-controlling interest |
|
|
5 |
|
|
|
5 |
|
Total stockholders’ equity |
|
|
108,817 |
|
|
|
108,017 |
|
|
|
|
|
|
||||
Total liabilities and stockholders’ equity |
|
$ |
176,563 |
|
|
$ |
181,522 |
|
MIX TELEMATICS LIMITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) |
|||||||||||||
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
||||||||||
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
Revenue |
|
|
|
|
|
|
|
||||||
Subscription |
$ |
32,469 |
|
|
$ |
33,655 |
|
$ |
94,132 |
|
$ |
98,303 |
|
Hardware and other |
|
5,338 |
|
|
|
5,430 |
|
|
13,996 |
|
|
14,895 |
|
Total revenue |
|
37,807 |
|
|
|
39,085 |
|
|
108,128 |
|
|
113,198 |
|
Cost of revenue |
|
|
|
|
|
|
|
||||||
Subscription |
|
9,864 |
|
|
|
11,942 |
|
|
29,769 |
|
|
33,373 |
|
Hardware and other |
|
3,595 |
|
|
|
3,645 |
|
|
10,176 |
|
|
9,938 |
|
Total cost of revenue |
|
13,459 |
|
|
|
15,587 |
|
|
39,945 |
|
|
43,311 |
|
Gross profit |
|
24,348 |
|
|
|
23,498 |
|
|
68,183 |
|
|
69,887 |
|
Operating expenses |
|
|
|
|
|
|
|
||||||
Sales and marketing |
|
4,589 |
|
|
|
3,537 |
|
|
12,974 |
|
|
10,512 |
|
Administration and other |
|
15,728 |
|
|
|
17,507 |
|
|
47,275 |
|
|
50,052 |
|
Total operating expenses |
|
20,317 |
|
|
|
21,044 |
|
|
60,249 |
|
|
60,564 |
|
Income from operations |
|
4,031 |
|
|
|
2,454 |
|
|
7,934 |
|
|
9,323 |
|
Other (expense)/income |
|
(748 |
) |
|
|
66 |
|
|
859 |
|
|
(234 |
) |
Interest income |
|
106 |
|
|
|
307 |
|
|
994 |
|
|
774 |
|
Interest expense |
|
378 |
|
|
|
604 |
|
|
1,002 |
|
|
1,645 |
|
Income before income tax expense |
|
3,011 |
|
|
|
2,223 |
|
|
8,785 |
|
|
8,218 |
|
Income tax expense |
|
223 |
|
|
|
762 |
|
|
6,525 |
|
|
4,900 |
|
Net income |
|
2,788 |
|
|
|
1,461 |
|
|
2,260 |
|
|
3,318 |
|
Less: Net income attributable to non-controlling interest |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
Net income attributable to MiX Telematics Limited |
$ |
2,788 |
|
|
$ |
1,461 |
|
$ |
2,260 |
|
$ |
3,318 |
|
|
|
|
|
|
|
|
|
||||||
Net income per ordinary share |
|
|
|
|
|
|
|
||||||
Basic |
$ |
0.005 |
|
|
$ |
0.003 |
|
$ |
0.004 |
|
$ |
0.006 |
|
Diluted |
$ |
0.005 |
|
|
$ |
0.003 |
|
$ |
0.004 |
|
$ |
0.006 |
|
|
|
|
|
|
|
|
|
||||||
Net income per American Depositary Share |
|
|
|
|
|
|
|
||||||
Basic |
$ |
0.13 |
|
|
$ |
0.07 |
|
$ |
0.10 |
|
$ |
0.15 |
|
Diluted |
$ |
0.13 |
|
|
$ |
0.07 |
|
$ |
0.10 |
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
||||||
Ordinary shares |
|
|
|
|
|
|
|
||||||
Weighted average |
|
552,865 |
|
|
|
554,021 |
|
|
552,148 |
|
|
554,086 |
|
Diluted weighted average |
|
555,811 |
|
|
|
554,021 |
|
|
556,047 |
|
|
554,294 |
|
|
|
|
|
|
|
|
|
||||||
American Depositary Shares |
|
|
|
|
|
|
|
||||||
Weighted average |
|
22,115 |
|
|
|
22,161 |
|
|
22,086 |
|
|
22,163 |
|
Diluted weighted average |
|
22,232 |
|
|
|
22,161 |
|
|
22,242 |
|
|
22,172 |
|
MIX TELEMATICS LIMITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
||||||||
|
|
Nine Months Ended December 31, |
||||||
|
|
|
2022 |
|
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
|
||||
Cash generated from operations |
|
$ |
13,551 |
|
|
$ |
15,659 |
|
Interest received |
|
|
590 |
|
|
|
697 |
|
Interest paid |
|
(601 |
) |
|
|
(1,252 |
) |
|
Income tax paid |
|
|
(745 |
) |
|
|
(1,587 |
) |
Net cash provided by operating activities |
|
|
12,795 |
|
|
|
13,517 |
|
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
|
||||
Acquisition of property, plant and equipment – in-vehicle devices |
|
|
(14,521 |
) |
|
|
(12,140 |
) |
Acquisition of property, plant and equipment – other |
|
|
(788 |
) |
|
|
(701 |
) |
Proceeds from the sale of property, plant and equipment |
|
|
71 |
|
|
|
65 |
|
Acquisition of intangible assets |
|
|
(4,086 |
) |
|
|
(4,254 |
) |
Cash paid for business combination |
|
|
(3,739 |
) |
|
|
— |
|
Deferred consideration paid |
|
|
— |
|
|
|
(1,414 |
) |
Net cash used in investing activities |
|
|
(23,063 |
) |
|
|
(18,444 |
) |
|
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
|
||||
Cash paid for ordinary shares repurchased |
|
|
(107 |
) |
|
|
(546 |
) |
Cash paid on dividends to MiX Telematics Limited stockholders |
|
|
(3,955 |
) |
|
|
(4,002 |
) |
Movement in short-term debt |
|
|
7,562 |
|
|
|
5,946 |
|
Net cash from financing activities |
|
|
3,500 |
|
|
|
1,398 |
|
|
|
|
|
|
||||
Net decrease in cash and cash equivalents, and restricted cash |
|
|
(6,768 |
) |
|
|
(3,529 |
) |
Cash and cash equivalents, and restricted cash at beginning of the period |
|
|
34,719 |
|
|
|
30,657 |
|
Effect of exchange rate changes on cash and cash equivalents, and restricted cash |
|
|
(2,142 |
) |
|
|
(846 |
) |
Cash and cash equivalents, and restricted cash at end of the period |
|
$ |
25,809 |
|
|
$ |
26,282 |
|
Segment Information
Our operating segments are based on the geographical location of our Regional Sales Offices (“RSOs”) and also include our Central Services Organization (“CSO”). CSO is our central services organization that wholesales our products and services to our RSOs who, in turn, interface with our end-customers, distributors and dealers. CSO is also responsible for the development of our hardware and software platforms and provides common marketing, product management, technical and distribution support to each of our other operating segments.
Each RSO’s results reflect the external revenue earned, as well as its performance before the remaining CSO and corporate costs allocations. Segment performance is measured and evaluated by the chief operating decision maker (“CODM”) using Segment Adjusted EBITDA, which is a measure that uses income before income tax expense excluding the contingent consideration remeasurement, non-recurring transitional service agreement costs, strategic costs, acquisition-related costs, interest expense, interest income, net foreign exchange losses/gains, net loss/profit on sale of property, plant and equipment, restructuring costs, stock-based compensation costs, depreciation, amortization, onerous contract costs, operating lease costs and corporate and consolidation entries. Product development costs are capitalized and amortized and this amortization is excluded from Segment Adjusted EBITDA.
The segment information provided to the CODM is as follows (in thousands and unaudited):
|
Three Months Ended December 31, 2022 |
|||||||||||
|
Subscription Revenue |
|
Hardware and Other Revenue |
|
Total Revenue |
|
Segment Adjusted EBITDA |
|||||
Regional Sales Offices |
|
|
|
|
|
|
|
|||||
|
$ |
18,029 |
|
$ |
1,460 |
|
$ |
19,489 |
|
$ |
8,121 |
|
|
|
3,051 |
|
|
748 |
|
|
3,799 |
|
|
1,402 |
|
|
|
5,842 |
|
|
308 |
|
|
6,150 |
|
|
1,378 |
|
|
|
4,013 |
|
|
2,382 |
|
|
6,395 |
|
|
2,308 |
|
|
|
1,516 |
|
|
440 |
|
|
1,956 |
|
|
614 |
|
Total Regional Sales Offices |
|
32,451 |
|
|
5,338 |
|
|
37,789 |
|
|
13,823 |
|
Central Services Organization |
|
18 |
|
|
— |
|
|
18 |
|
|
(2,570 |
) |
Total Segment Results |
$ |
32,469 |
|
$ |
5,338 |
|
$ |
37,807 |
|
$ |
11,253 |
|
|
Three Months Ended December 31, 2023 |
|||||||||||
|
Subscription Revenue |
|
Hardware and Other Revenue |
|
Total Revenue |
|
Segment Adjusted EBITDA |
|||||
Regional Sales Offices |
|
|
|
|
|
|
|
|||||
|
$ |
19,408 |
|
$ |
1,512 |
|
$ |
20,920 |
|
$ |
8,869 |
|
|
|
3,014 |
|
|
368 |
|
|
3,382 |
|
|
1,113 |
|
|
|
5,062 |
|
|
561 |
|
|
5,623 |
|
|
1,321 |
|
|
|
4,361 |
|
|
2,318 |
|
|
6,679 |
|
|
2,802 |
|
|
|
1,805 |
|
|
671 |
|
|
2,476 |
|
|
782 |
|
Total Regional Sales Offices |
|
33,650 |
|
|
5,430 |
|
|
39,080 |
|
|
14,887 |
|
Central Services Organization |
|
5 |
|
|
— |
|
|
5 |
|
|
(2,504 |
) |
Total Segment Results |
$ |
33,655 |
|
$ |
5,430 |
|
$ |
39,085 |
|
$ |
12,383 |
|
|
Nine Months Ended December 31, 2022 |
|||||||||||
|
Subscription Revenue |
|
Hardware and Other Revenue |
|
Total Revenue |
|
Segment Adjusted EBITDA |
|||||
Regional Sales Offices |
|
|
|
|
|
|
|
|||||
|
$ |
55,163 |
|
$ |
4,545 |
|
$ |
59,708 |
|
$ |
23,586 |
|
|
|
9,215 |
|
|
1,747 |
|
|
10,962 |
|
|
3,737 |
|
|
|
13,535 |
|
|
1,471 |
|
|
15,006 |
|
|
2,496 |
|
|
|
12,095 |
|
|
5,156 |
|
|
17,251 |
|
|
6,295 |
|
|
|
4,065 |
|
|
1,077 |
|
|
5,142 |
|
|
1,457 |
|
Total Regional Sales Offices |
|
94,073 |
|
|
13,996 |
|
|
108,069 |
|
|
37,571 |
|
Central Services Organization |
|
59 |
|
|
— |
|
|
59 |
|
|
(8,029 |
) |
Total Segment Results |
$ |
94,132 |
|
$ |
13,996 |
|
$ |
108,128 |
|
$ |
29,542 |
|
|
Nine Months Ended December 31, 2023 |
|||||||||||
|
Subscription Revenue |
|
Hardware and Other Revenue |
|
Total Revenue |
|
Segment Adjusted EBITDA |
|||||
Regional Sales Offices |
|
|
|
|
|
|
|
|||||
|
$ |
56,606 |
|
$ |
3,997 |
|
$ |
60,603 |
|
$ |
26,016 |
|
|
|
9,184 |
|
|
1,377 |
|
|
10,561 |
|
|
3,639 |
|
|
|
14,503 |
|
|
1,286 |
|
|
15,789 |
|
|
2,403 |
|
|
|
12,757 |
|
|
6,441 |
|
|
19,198 |
|
|
8,338 |
|
|
|
5,237 |
|
|
1,790 |
|
|
7,027 |
|
|
2,629 |
|
Total Regional Sales Offices |
|
98,287 |
|
|
14,891 |
|
|
113,178 |
|
|
43,025 |
|
Central Services Organization |
|
16 |
|
|
4 |
|
|
20 |
|
|
(7,321 |
) |
Total Segment Results |
$ |
98,303 |
|
$ |
14,895 |
|
$ |
113,198 |
|
$ |
35,704 |
|
The following table (unaudited and shown in thousands) reconciles total Segment Adjusted EBITDA to income before income tax expense for the periods shown:
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
||||||||||||
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Segment Adjusted EBITDA |
$ |
11,253 |
|
|
$ |
12,383 |
|
|
$ |
29,542 |
|
|
$ |
35,704 |
|
Corporate and consolidation entries |
|
(2,267 |
) |
|
|
(2,267 |
) |
|
|
(7,219 |
) |
|
|
(7,179 |
) |
Operating lease costs (1) |
|
(298 |
) |
|
|
(285 |
) |
|
|
(933 |
) |
|
|
(888 |
) |
Product development costs (2) |
|
(280 |
) |
|
|
(293 |
) |
|
|
(972 |
) |
|
|
(976 |
) |
Onerous contract costs |
|
— |
|
|
|
(4 |
) |
|
|
— |
|
|
|
35 |
|
Depreciation and amortization |
|
(4,012 |
) |
|
|
(5,254 |
) |
|
|
(11,208 |
) |
|
|
(14,024 |
) |
Stock-based compensation costs |
|
(273 |
) |
|
|
(262 |
) |
|
|
(324 |
) |
|
|
(827 |
) |
Restructuring costs |
|
(84 |
) |
|
|
— |
|
|
|
(84 |
) |
|
|
(30 |
) |
Net (loss)/profit on sale of property, plant and equipment |
|
(1 |
) |
|
|
45 |
|
|
|
32 |
|
|
|
49 |
|
Net foreign exchange (losses)/gains |
|
(755 |
) |
|
|
(493 |
) |
|
|
743 |
|
|
|
(1,346 |
) |
Interest income |
|
106 |
|
|
|
307 |
|
|
|
994 |
|
|
|
774 |
|
Interest expense |
|
(378 |
) |
|
|
(604 |
) |
|
|
(1,002 |
) |
|
|
(1,645 |
) |
Acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
(784 |
) |
|
|
— |
|
Strategic costs (3) |
|
— |
|
|
|
(1,200 |
) |
|
|
— |
|
|
|
(1,996 |
) |
Non-recurring transitional service agreement costs (4) |
|
— |
|
|
|
(361 |
) |
|
|
— |
|
|
|
(482 |
) |
Contingent consideration remeasurement |
|
— |
|
|
|
511 |
|
|
|
— |
|
|
|
1,049 |
|
Income before income tax expense |
$ |
3,011 |
|
|
$ |
2,223 |
|
|
$ |
8,785 |
|
|
$ |
8,218 |
|
| Description of reconciling items: | |
1. |
For the purposes of calculating Segment Adjusted EBITDA, operating lease expenses are excluded from the Segment Adjusted EBITDA. Therefore, in order to reconcile Segment Adjusted EBITDA to income before income tax expense, the total lease expense in respect of operating leases needs to be deducted. |
2. |
For segment reporting purposes, product development costs, which do not meet the capitalization requirements under ASC 730 Research and Development or under ASC 985 Software, are capitalized and amortized. The amortization is excluded from Segment Adjusted EBITDA. In order to reconcile Segment Adjusted EBITDA to income before income tax expense, product development costs capitalized for segment reporting purposes need to be deducted. |
3. |
Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above. |
4. |
Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 were incurred on a temporary basis from September 2023 to December 2023 and have been excluded from Adjusted EBITDA. |
Annexure A: Non-GAAP Financial Measures and Key Business Metrics
We use certain measures to assess the financial performance of the business. Certain of these measures are termed “non-GAAP measures” because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with GAAP, or are calculated using financial measures that are not calculated in accordance with GAAP. These non-GAAP measures include adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per share, adjusted effective tax rate, free cash flow and constant currency information.
An explanation of the relevance of each of the non-GAAP measures, a reconciliation of the non-GAAP measures to the most directly comparable measures calculated and presented in accordance with GAAP and a discussion of their limitations is set out below. We do not regard these non-GAAP measures as a substitute for, or superior to, the equivalent measures calculated and presented in accordance with GAAP or those calculated using financial measures that are calculated in accordance with GAAP.
In addition to providing the non-GAAP financial measures mentioned above, we disclose ARR to give investors supplementary indicators of the value of our current recurring revenue contracts. ARR represents the estimated annualized value of recurring revenue for subscription contracts that have commenced revenue recognition as of the measurement date.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and adjusted EBITDA margin are two of the profit measures reviewed by the CODM. We define adjusted EBITDA as net income before income taxes, interest expense, interest income, net foreign exchange losses/gains, depreciation of property, plant and equipment including capitalized customer in-vehicle devices, amortization of intangible assets including capitalized internal-use software development costs and intangible assets identified as part of a business combination, stock-based compensation costs, net loss/profit on sale of property, plant and equipment, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and the contingent consideration remeasurement. We define adjusted EBITDA margin as adjusted EBITDA divided by total revenue.
We have included adjusted EBITDA and adjusted EBITDA margin in this press release because they are key measures that the Company’s management and Board of Directors use to understand and evaluate its core operating performance and trends; to prepare and approve its annual budget; and to develop short and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA and adjusted EBITDA margin can provide a useful measure for period-to-period comparisons of the Company’s core business. Accordingly, the Company believes that adjusted EBITDA and adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating its operating results.
A reconciliation of net income (the most directly comparable financial measure presented in accordance with GAAP) to adjusted EBITDA for the periods shown is presented below (in thousands and unaudited):
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
||||||||||||
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Net income |
$ |
2,788 |
|
|
$ |
1,461 |
|
|
$ |
2,260 |
|
|
$ |
3,318 |
|
Plus: Income tax expense |
|
223 |
|
|
|
762 |
|
|
|
6,525 |
|
|
|
4,900 |
|
Plus: Interest expense |
|
378 |
|
|
|
604 |
|
|
|
1,002 |
|
|
|
1,645 |
|
Less: Interest income |
|
(106 |
) |
|
|
(307 |
) |
|
|
(994 |
) |
|
|
(774 |
) |
Plus/(less): Net foreign exchange losses/(gains) |
|
755 |
|
|
|
493 |
|
|
|
(743 |
) |
|
|
1,346 |
|
Plus: Depreciation (1) |
|
2,419 |
|
|
|
3,636 |
|
|
|
7,216 |
|
|
|
9,404 |
|
Plus: Amortization (2) |
|
1,593 |
|
|
|
1,618 |
|
|
|
3,992 |
|
|
|
4,620 |
|
Plus: Stock-based compensation costs |
|
273 |
|
|
|
262 |
|
|
|
324 |
|
|
|
827 |
|
Plus/(less): Net loss/(profit) on sale of property, plant and equipment |
|
1 |
|
|
|
(45 |
) |
|
|
(32 |
) |
|
|
(49 |
) |
Plus: Restructuring costs |
|
84 |
|
|
|
— |
|
|
|
84 |
|
|
|
30 |
|
Plus: Acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
784 |
|
|
|
— |
|
Plus: Strategic costs (3) |
|
— |
|
|
|
1,200 |
|
|
|
— |
|
|
|
1,996 |
|
Plus: Non-recurring transitional service agreement costs (4) |
|
— |
|
|
|
361 |
|
|
|
— |
|
|
|
482 |
|
Less: Contingent consideration remeasurement |
|
— |
|
|
|
(511 |
) |
|
|
— |
|
|
|
(1,049 |
) |
Adjusted EBITDA |
$ |
8,408 |
|
|
$ |
9,534 |
|
|
$ |
20,418 |
|
|
$ |
26,696 |
|
Adjusted EBITDA margin |
|
22.2 |
% |
|
|
24.4 |
% |
|
|
18.9 |
% |
|
|
23.6 |
% |
1. |
Includes depreciation of owned assets (including in-vehicle devices). |
2. |
Includes amortization of intangible assets (including capitalized internal-use software development costs and intangible assets identified as part of a business combination). |
3. |
Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above. |
4. |
Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 were incurred on a temporary basis from September 2023 to December 2023 and have been excluded from Adjusted EBITDA. |
Our use of adjusted EBITDA and adjusted EBITDA margin have limitations as analytical tools, and should not be considered as performance measures in isolation from, or as a substitute for, analysis of our results as reported under GAAP.
Some of these limitations are:
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
- Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to the Company;
- other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure; and
- certain of the adjustments (such as restructuring costs, impairment of long-lived assets and others) made in calculating adjusted EBITDA are those that management believes are not representative of our underlying operations and, therefore, are subjective in nature.
Because of these limitations, adjusted EBITDA and adjusted EBITDA margin should be considered alongside other financial performance measures, including income from operations, net income and our other results.
Adjusted Net Income
Adjusted net income is defined as net income excluding net foreign exchange losses/gains, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement, net of tax.
We have included adjusted net income in this press release because it provides a useful measure for period-to-period comparisons of our core business by excluding net foreign exchange losses/gains, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement, net of tax and associated tax consequences, from earnings. Accordingly, we believe that adjusted net income provides useful information to investors and others in understanding and evaluating our operating results.
The following table (in thousands, except per share data, and unaudited) reconciles net income to adjusted net income for the periods shown:
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
||||||||||||
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Net income |
$ |
2,788 |
|
|
$ |
1,461 |
|
|
$ |
2,260 |
|
|
$ |
3,318 |
|
Net foreign exchange losses/(gains) |
|
755 |
|
|
|
493 |
|
|
|
(743 |
) |
|
|
1,346 |
|
Income tax effect of net foreign exchange (losses)/gains |
|
(1,267 |
) |
|
|
(644 |
) |
|
|
2,792 |
|
|
|
(110 |
) |
Restructuring costs |
|
84 |
|
|
|
— |
|
|
|
84 |
|
|
|
30 |
|
Income tax effect of restructuring costs |
|
(18 |
) |
|
|
— |
|
|
|
(18 |
) |
|
|
(7 |
) |
Acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
784 |
|
|
|
— |
|
Income tax effect of acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
(182 |
) |
|
|
— |
|
Strategic costs (1) |
|
— |
|
|
|
1,200 |
|
|
|
— |
|
|
|
1,996 |
|
Non-recurring transitional service agreement costs (2) |
|
— |
|
|
|
361 |
|
|
|
— |
|
|
|
482 |
|
Contingent consideration remeasurement |
|
— |
|
|
|
(511 |
) |
|
|
— |
|
|
|
(1,049 |
) |
Adjusted net income |
$ |
2,342 |
|
|
$ |
2,360 |
|
|
$ |
4,977 |
|
|
$ |
6,006 |
|
1. |
Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above. |
2. |
Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 were incurred on a temporary basis from September 2023 to December 2023 and have been excluded from Adjusted net income. |
Adjusted Net Income Per Share
Adjusted net income per share is defined as adjusted net income divided by the weighted average number of ordinary shares or ADSs in issue during the period.
We have included adjusted net income per share in this press release because it provides a useful measure for period-to-period comparisons of our core business by excluding net foreign exchange losses/gains, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement, net of tax and associated tax consequences, from earnings. Accordingly, we believe that adjusted net income per share provides useful information to investors and others in understanding and evaluating our operating results.
The following tables (unaudited) reconcile diluted net income per ordinary share or ADS to diluted adjusted net income per ordinary share or ADS for the periods shown:
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
||||||||||||
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Net income per ordinary share – diluted |
$ |
0.005 |
|
|
$ |
0.003 |
|
|
$ |
0.004 |
|
|
$ |
0.006 |
|
Effect of net foreign exchange losses/(gains) to net income |
|
0.001 |
|
|
# |
|
|
|
(0.001 |
) |
|
|
0.002 |
|
|
Income tax effect of net foreign exchange (losses)/gains |
|
(0.002 |
) |
|
|
(0.001 |
) |
|
|
0.005 |
|
|
# |
|
|
Restructuring costs |
# |
|
|
|
— |
|
|
# |
|
|
# |
|
|||
Income tax effect of restructuring costs |
# |
|
|
|
— |
|
|
# |
|
|
# |
|
|||
Acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
0.001 |
|
|
|
— |
|
Income tax effect of acquisition-related costs |
|
— |
|
|
|
— |
|
|
# |
|
|
|
— |
|
|
Strategic costs (1) |
|
— |
|
|
|
0.002 |
|
|
|
— |
|
|
|
0.004 |
|
Non-recurring transitional service agreement costs (2) |
|
— |
|
|
|
0.001 |
|
|
|
— |
|
|
|
0.001 |
|
Contingent consideration remeasurement |
|
— |
|
|
|
(0.001 |
) |
|
|
— |
|
|
|
(0.002 |
) |
Adjusted net income per ordinary share – diluted |
$ |
0.004 |
|
|
$ |
0.004 |
|
|
$ |
0.009 |
|
|
$ |
0.011 |
|
1. |
Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above. |
|||||||
2. |
Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 were incurred on a temporary basis from September 2023 to December 2023 and have been excluded from adjusted net income per diluted ordinary share. |
|||||||
# |
Amount less than |
|||||||
|
Three Months Ended December 31, |
Nine Months Ended December 31, |
|||||||||||||
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Net income per ADS – diluted |
$ |
0.13 |
|
|
$ |
0.07 |
|
|
$ |
0.10 |
|
|
$ |
0.15 |
|
Effect of net foreign exchange losses/(gains) to net income |
|
0.03 |
|
|
|
0.02 |
|
|
|
(0.03 |
) |
|
|
0.06 |
|
Income tax effect of net foreign exchange (losses)/gains |
|
(0.06 |
) |
|
|
(0.02 |
) |
|
|
0.12 |
|
|
* |
|
|
Restructuring costs |
* |
|
|
|
— |
|
|
* |
|
|
* |
|
|||
Income tax effect of restructuring costs |
* |
|
|
|
— |
|
|
* |
|
|
* |
|
|||
Acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
Income tax effect of acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
(0.01 |
) |
|
|
— |
|
Strategic costs (1) |
|
— |
|
|
|
0.05 |
|
|
|
— |
|
|
|
0.09 |
|
Non-recurring transitional service agreement costs (2) |
|
— |
|
|
|
0.02 |
|
|
|
— |
|
|
|
0.02 |
|
Contingent consideration remeasurement |
|
— |
|
|
|
(0.03 |
) |
|
|
— |
|
|
|
(0.05 |
) |
Adjusted net income per ADS – diluted |
$ |
0.10 |
|
|
$ |
0.11 |
|
|
$ |
0.22 |
|
|
$ |
0.27 |
|
1. |
Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above. |
|||||||
2. |
Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 were incurred on a temporary basis from September 2023 to December 2023 and have been excluded from adjusted net income per diluted ADS. |
|||||||
* |
Amount less than |
|||||||
Adjusted Effective Tax Rate
The adjusted effective tax rate is defined as income tax expense excluding the income tax effect of net foreign exchange losses/gains, restructuring costs and acquisition-related costs divided by income before income tax expense excluding net foreign exchange losses/gains, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement.
We have included adjusted effective tax rate in this press release because it provides a useful measure for period-to-period comparisons of our core business by excluding net foreign exchange losses/gains, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement, and associated tax consequences, from our effective tax rate.
A reconciliation of the effective tax rate (the most directly comparable financial measure presented in accordance with GAAP) to the adjusted effective tax rate for the periods shown is presented below (in thousands and unaudited):
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
||||||||||||
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Income before income tax expense |
$ |
3,011 |
|
|
$ |
2,223 |
|
|
$ |
8,785 |
|
|
$ |
8,218 |
|
Net foreign exchange losses/(gains) |
|
755 |
|
|
|
493 |
|
|
|
(743 |
) |
|
|
1,346 |
|
Restructuring costs |
|
84 |
|
|
|
— |
|
|
|
84 |
|
|
|
30 |
|
Acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
784 |
|
|
|
— |
|
Strategic costs (1) |
|
— |
|
|
|
1,200 |
|
|
|
— |
|
|
|
1,996 |
|
Non-recurring transitional service agreement costs (2) |
|
— |
|
|
|
361 |
|
|
|
— |
|
|
|
482 |
|
Contingent consideration remeasurement |
|
— |
|
|
|
(511 |
) |
|
|
— |
|
|
|
(1,049 |
) |
Income before income tax expense excluding net foreign exchange losses/(gains), restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement |
$ |
3,850 |
|
|
$ |
3,766 |
|
|
$ |
8,910 |
|
|
$ |
11,023 |
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense |
$ |
(223 |
) |
|
$ |
(762 |
) |
|
$ |
(6,525 |
) |
|
$ |
(4,900 |
) |
Income tax effect of net foreign exchange (losses)/gains |
|
(1,267 |
) |
|
|
(644 |
) |
|
|
2,792 |
|
|
|
(110 |
) |
Income tax effect of restructuring costs |
|
(18 |
) |
|
|
— |
|
|
|
(18 |
) |
|
|
(7 |
) |
Income tax effect of acquisition-related costs |
|
— |
|
|
|
— |
|
|
|
(182 |
) |
|
|
— |
|
Income tax expense excluding income tax effect of net foreign exchange (losses)/gains, restructuring costs and acquisition-related costs |
$ |
(1,508 |
) |
|
$ |
(1,406 |
) |
|
$ |
(3,933 |
) |
|
$ |
(5,017 |
) |
|
|
|
|
|
|
|
|
||||||||
Effective tax rate |
|
7.4 |
% |
|
|
34.3 |
% |
|
|
74.3 |
% |
|
|
59.6 |
% |
|
|
|
|
|
|
|
|
||||||||
Adjusted effective tax rate |
|
39.2 |
% |
|
|
37.3 |
% |
|
|
44.1 |
% |
|
|
45.5 |
% |
1. |
Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above. |
2. |
Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 were incurred on a temporary basis from September 2023 to December 2023 and have been excluded from Adjusted EBITDA. |
Free Cash Flow
Free cash flow is determined as net cash provided by operating activities, excluding strategic costs, less capital expenditure for investing activities. We believe that free cash flow provides useful information to investors and others in understanding and evaluating the Company’s cash flows as it provides detail of the amount of cash the Company generates or utilizes after accounting for all capital expenditures including investments in in-vehicle devices as well as costs that do not relate to our core business operations.
The following table (in thousands and unaudited) reconciles net cash provided by operating activities to free cash flow for the periods shown:
|
Three Months Ended December 31, |
|
Nine Months Ended December 31, |
||||||||||||
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
Net cash provided by operating activities |
$ |
11,213 |
|
|
$ |
79 |
|
|
$ |
12,795 |
|
|
$ |
13,517 |
|
Plus: Strategic costs paid (1) |
|
— |
|
|
|
1,644 |
|
|
|
— |
|
|
|
1,708 |
|
Net cash provided by operating activities excluding strategic costs paid |
|
11,213 |
|
|
|
1,723 |
|
|
|
12,795 |
|
|
|
15,225 |
|
Less: Capital expenditure payments |
|
(5,335 |
) |
|
|
(5,727 |
) |
|
|
(19,395 |
) |
|
|
(17,095 |
) |
Free cash flow |
$ |
5,878 |
|
|
$ |
(4,004 |
) |
|
$ |
(6,600 |
) |
|
$ |
(1,870 |
) |
1. |
Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above. |
Constant Currency
Constant currency information has been presented to illustrate the impact of changes in currency rates on the Company’s results. The constant currency information has been determined by adjusting the current financial reporting period results to the prior period average exchange rates, determined as the average of the monthly exchange rates applicable to the period. The measurement has been performed for each of the Company’s currencies, including the South African Rand and British Pound. The constant currency growth percentage has been calculated by utilizing the constant currency results compared to the prior period results.
The constant currency information represents non-GAAP information. We believe this provides a useful basis to measure the performance of our business as it removes distortion from the effects of foreign currency movements during the period.
Due to the significant portion of our customers who are invoiced in non-
The following tables (in thousands, except year over year change) provide the unaudited constant currency reconciliation to the most directly comparable GAAP measure for the periods shown:
Subscription Revenue: |
|
|
|
|
|
|||
|
Three Months Ended December 31, |
|
Year Over Year Change |
|||||
|
|
2022 |
|
|
2023 |
|
|
|
Subscription revenue as reported |
$ |
32,469 |
|
$ |
33,655 |
|
3.7 |
% |
Conversion impact of |
|
— |
|
|
892 |
|
2.7 |
% |
Subscription revenue on a constant currency basis |
$ |
32,469 |
|
$ |
34,547 |
|
6.4 |
% |
Hardware and Other Revenue: |
|
|
|
|
|
|||
|
Three Months Ended December 31, |
|
Year Over Year Change |
|||||
|
|
2022 |
|
|
2023 |
|
|
|
Hardware and other revenue as reported |
$ |
5,338 |
|
$ |
5,430 |
|
1.7 |
% |
Conversion impact of |
|
— |
|
|
22 |
|
0.4 |
% |
Hardware and other revenue on a constant currency basis |
$ |
5,338 |
|
$ |
5,452 |
|
2.1 |
% |
Total Revenue: |
|
|
|
|
|
|||
|
Three Months Ended December 31, |
|
Year Over Year Change |
|||||
|
|
2022 |
|
|
2023 |
|
|
|
Total revenue as reported |
$ |
37,807 |
|
$ |
39,085 |
|
3.4 |
% |
Conversion impact of |
|
— |
|
|
914 |
|
2.4 |
% |
Total revenue on a constant currency basis |
$ |
37,807 |
|
$ |
39,999 |
|
5.8 |
% |
Subscription Revenue: |
|
|
|
|
|
|||
|
Nine Months Ended December 31, |
|
Year Over Year Change |
|||||
|
|
2022 |
|
|
2023 |
|
|
|
Subscription revenue as reported |
$ |
94,132 |
|
$ |
98,303 |
|
4.4 |
% |
Conversion impact of |
|
— |
|
|
5,807 |
|
6.2 |
% |
Subscription revenue on a constant currency basis |
$ |
94,132 |
|
$ |
104,110 |
|
10.6 |
% |
Hardware and Other Revenue: |
|
|
|
|
|
|||
|
Nine Months Ended December 31, |
|
Year Over Year Change |
|||||
|
|
2022 |
|
|
2023 |
|
|
|
Hardware and other revenue as reported |
$ |
13,996 |
|
$ |
14,895 |
|
6.4 |
% |
Conversion impact of |
|
— |
|
|
476 |
|
3.4 |
% |
Hardware and other revenue on a constant currency basis |
$ |
13,996 |
|
$ |
15,371 |
|
9.8 |
% |
Total Revenue: |
|
|
|
|
|
|||
|
Nine Months Ended December 31, |
|
Year Over Year Change |
|||||
|
|
2022 |
|
|
2023 |
|
|
|
Total revenue as reported |
$ |
108,128 |
|
$ |
113,198 |
|
4.7 |
% |
Conversion impact of |
|
— |
|
|
6,283 |
|
5.8 |
% |
Total revenue on a constant currency basis |
$ |
108,128 |
|
$ |
119,481 |
|
10.5 |
% |
Key Business Metrics
Annual Recurring Revenue
We believe that ARR is a key indicator of the trajectory of our business performance and serves as an indicator of future subscription revenue growth. We define ARR as the annualized value of subscription contracts that have commenced revenue recognition as of the measurement date. ARR is calculated by taking the subscription revenue for the last month of the period, multiplied by 12. It provides a 12-month forward view of revenue, assuming unit numbers, pricing and foreign exchange rates (the average monthly exchange rates applicable to the last month of the period) remain unchanged during the year. Constant currency ARR growth has been determined by adjusting the prior financial reporting period results to the last month of the current period average exchange rates, determined as the average monthly exchange rates applicable to the last month of the period.
ARR does not have a standardized meaning and is not necessarily comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and is not intended to be combined with or to replace it. ARR is not a forecast and the active contracts at the date used in calculating ARR may or may not be extended or renewed.
ARR is included in the following table (in thousands and unaudited):
|
December 31, |
||||
|
|
2022 |
|
|
2023 |
Annual Recurring Revenue |
$ |
131,822 |
|
$ |
133,598 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240130113145/en/
Investor Relations Contact
Matt Glover and Cody Cree
Gateway Group, Inc.
MIXT@gateway-grp.com
+1-949-574-3860
Source: MiX Telematics Limited
FAQ
What were the net subscriber additions for MiX Telematics in the third quarter?
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What was the adjusted EBITDA for MiX Telematics in the third quarter?
