Powerfleet and MiX Telematics Close Business Combination, Creating New Top-Tier Global AIoT SaaS Provider

Rhea-AI Summary

Powerfleet, Inc. (PWFL) and MiX Telematics have completed their business combination, forming a global AIoT SaaS provider with total revenue of $284 million and recurring high-margin SaaS revenues of $215 million. The combination is expected to unlock a $25m+ EBITDA expansion within two years and deliver cross-sell opportunities to a joint base of 7,500 enterprise customers.

Positive

• Total revenue of $284 million, including $215 million of recurring high-margin SaaS revenues
• Combined service gross margins of 65%
• More than 1.8 million subscribers in the customer base
• Expected $25m+ EBITDA expansion within the first two years
• Significant cross-sell and upsell opportunities for joint customer base
• Virtual Investor Fireside Chat scheduled for April 30, 2024

Negative

• None.

Insights

Market Research Analyst

The newly formed entity resulting from the merger of Powerfleet, Inc. and MiX Telematics Limited represents a significant consolidation within the mobile asset AIoT SaaS market. With a stated total revenue of $284 million and $215 million in high-margin recurring revenues, there's a clear indication of a robust financial foundation. The combined service gross margins of 65% are notably strong, suggesting operational efficiency that could be appealing to investors looking for stable growth prospects.

The anticipated EBITDA expansion of over $25 million within the first two years post-merger signals aggressive cost synergy targets. This level of EBITDA growth is ambitious and implies that the management has a confident outlook on the financial integration and cost-saving measures. The cross-sell and upsell opportunities within their sizable joint customer base of 7,500 enterprise customers could serve as a catalyst for further revenue growth, potentially leading to a Rule of 40 performance—a benchmark where the combined growth rate and profit margin exceed 40%, often used as a measure of success for SaaS companies.

Financial Analyst

From an investment perspective, the merger between Powerfleet and MiX Telematics could be seen as a strategic move to leverage scale and enhance shareholder value. The focus on recurring SaaS revenues is critical, as it provides a predictable revenue stream that can lead to higher company valuations. The claim of more than 1.8 million subscribers provides a substantial base for revenue generation and market penetration.

However, investors should be cautious and look for concrete evidence of synergy realization post-merger. The management's execution of the integration strategy will be key to achieving the projected financial benefits. Furthermore, the ability to deliver on the promise of a compelling $25 million+ EBITDA expansion will be closely monitored, as it will be a significant determinant of the merger's success. The stated goal to achieve Rule of 40 performance is an ambitious one and meeting this target will likely be a focal point for current and prospective investors.

SaaS Industry Expert

The merger's emphasis on creating a unified platform with device-agnostic data ingestion and third-party integration capabilities is indicative of a strategic shift towards interoperability and flexibility in the SaaS space. This approach can be particularly effective in differentiating the company in a fragmented market. The Unity platform's ability to provide a single source of truth for business operations aligns with current industry trends, where businesses seek comprehensive solutions that can streamline operations and drive data-driven decision-making.

Powerfleet's aim to utilize its combined geographical footprint and deep vertical expertise to maximize revenue opportunities demonstrates an understanding of the importance of tailored solutions in the SaaS industry. The expanded software solution sets should ideally cater to the nuanced needs of their diverse enterprise customer base, which could lead to increased customer retention and a stronger competitive position in the market.

A Scaled Day-One Business with Total Revenue of $284 Million, Including $215 Million of Recurring High-Margin SaaS Revenues and Combined Service Gross Margins of 65%

Combined Customer Base Begins with More than 1.8m Subscribers

In Addition to a Significant Growth Opportunity, Combination Expected to Unlock a Compelling $25m+ EBITDA Expansion Within First Two Years

Expected to Deliver Significant Cross-Sell and Upsell Opportunities for Combined Solution Portfolio into Joint Base of 7,500 Enterprise Customers

Virtual Investor Fireside Chat Scheduled for 9:30 AM ET on Tuesday, April 30, 2024

WOODCLIFF LAKE, N.J., April 2, 2024 /PRNewswire/ -- Powerfleet, Inc. (Nasdaq: PWFL) and MiX Telematics Limited have successfully closed their previously announced business combination, forming one of the world's largest mobile asset Artificial Intelligence of Things (AIoT) Software-as-a-Service (SaaS) providers. This powerful combination creates a scaled, global entity of choice focused on unifying business operations by simplifying how customers manage, analyze, and utilize data to drive improved business performance.

"This transformative combination positions Powerfleet as a leading global AIoT SaaS company, setting the stage for accelerated growth in recurring revenues, increased profitability, and expanded avenues for creating shareholder value," said Steve Towe, Powerfleet's Chief Executive Officer. "We're swiftly executing a proven business integration strategy known for delivering concrete outcomes, underpinned firstly by a robust $25m+ EBITDA expansion program in concert with medium-term high growth. This approach is designed to accelerate the integration process, allowing us to promptly focus on driving increased shareholder value and enhancing our customers' experience."

A new board of directors of Powerfleet has now been appointed. The new board consists of Michael Brodsky, Chairman, Steve Towe, CEO, and Ian Jacobs, the previous MiX Chairman. Powerfleet is also pleased to announce Mike McConnell as a new board member. Mike has a strong history as a corporate director, focused on enhancing shareholder value.

"On behalf of the entire board, we are delighted by the successful completion of the business combination between Powerfleet and MiX," shares Michael Brodsky, Chairman of the Powerfleet board. "We are highly confident the combined entity will emerge as a strongly unified, differentiated, and efficient company."

Steve Towe added, "Amidst a fragmented market where consolidation and scale continue to be a strong driver, Powerfleet possesses a clear vision and mission, anchored by our compelling Unity platform. Our device-agnostic data ingestion engine and third-party integration capabilities, unique to Unity, deliver unparalleled value for our customers. We unify their operations, providing a single source of truth for their people, their assets, and business processes – enabling impactful business change and enhanced performance."

The combined geographical footprint, deep vertical expertise, and expanded software solution sets coupled with the extensive direct and indirect sales channel capabilities should enable Powerfleet to maximize significant cross-sell and upsell opportunities within the impressive joint customer base, promoting recurring SaaS revenue. This positions Powerfleet to move towards Rule of 40 performance within two years of closing this transaction.

Powerfleet plans to hold a Virtual Investor Fireside Chat on Tuesday, April 30, 2024, at 9:30am ET. Details for this event will follow.

TRANSACTION ADVISORS
William Blair & Company, L.L.C. acted as financial advisor, and Olshan Frome Wolosky LLP and Webber Wentzel acted as legal advisors to Powerfleet. Raymond James and Java Capital acted as financial advisors to MiX Telematics, and DLA Piper LLP (US) and Java Capital acted as legal advisors to MiX Telematics. Gateway Group acted as investor relations advisor to Powerfleet and MiX Telematics.

ABOUT POWERFLEET
Powerfleet (Nasdaq: PWFL; 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.

ABOUT MIX TELEMATICS
MiX Telematics is a leading global provider of fleet and mobile asset management solutions delivered as SaaS to over one million 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 South Africa, the United Kingdom, the United States, Uganda, Brazil, Mexico and Australasia as well as a network of more than 130 fleet partners worldwide. For more information, visit www.mixtelematics.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, Powerfleet's expectations with respect to its beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions and future performance, as well as anticipated financial impacts of the 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 Powerfleet's 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; and (ix) such other factors as are set forth in the periodic reports filed by Powerfleet with the Securities and Exchange Commission ("SEC"), including but not limited to those described under the heading "Risk Factors" in its 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, Powerfleet assumes no obligation, nor does Powerfleet intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

Powerfleet Investor Contacts
Jody Burfening and Carolyn Capccio
LHA Investor Relations
AIOTIRTeam@lhai.com

Powerfleet Media Contact
Andrea Hayton
ahayton@powerfleet.com
+1 (610) 401-1999

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SOURCE Powerfleet

FAQ

What is the total revenue generated from the business combination?

The total revenue from the business combination is $284 million.

How many subscribers are in the combined customer base?

The combined customer base has more than 1.8 million subscribers.

What is the expected EBITDA expansion within the first two years?

The combination is expected to unlock a compelling $25m+ EBITDA expansion within the first two years.

When is the Virtual Investor Fireside Chat scheduled?

The Virtual Investor Fireside Chat is scheduled for April 30, 2024, at 9:30 AM ET.

What are the gross margins of the combined services?

The combined service gross margins are 65%.