UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

—————————

FORM 10-Q

—————————

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period ____ to ____

Commission File Number: 001-36027

MIX TELEMATICS LIMITED

(Exact name of Registrant as specified in its charter)

Republic of South Africa Not Applicable
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
750 Park of Commerce Blvd
Suite 100 Boca Raton
Florida 33487
(Address of principal executive offices) (Zip Code)
1- 877 — 585-1088
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Republic of South Africa

Not Applicable

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

750 Park of Commerce Blvd

Suite 100

Boca Raton

Florida

33487

(Address of principal executive offices)

(Zip Code)

(877)

585-1088

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

American Depositary Shares, each representing
25 Ordinary Shares, no par value

MIXT

New York Stock Exchange

Ordinary Shares, no par value

New York Stock Exchange (for listing purposes only)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July ~~24, 2020,~~ 23, 2021, the registrant had ~~601,018,597~~ 606,079,803ordinary shares, of no par value, outstanding.

TABLE OF CONTENTS


						Page

Part I - FINANCIAL INFORMATION						3
Item 1. Financial Statements						3
Condensed Consolidated Balance Sheets (unaudited)						3
Condensed Consolidated Statements of Income (unaudited)						4
Condensed Consolidated Statements of Comprehensive Income (unaudited)						5
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)						6
Condensed Consolidated Statements of Cash Flows (unaudited)						87
Notes to Condensed Consolidated Financial Statements (unaudited)						98
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						2019
Item 3. Quantitative and Qualitative Disclosures About Market Risk						3533
Item 4. Controls and Procedures						3634
Part II - OTHER INFORMATION
Item 1. Legal Proceedings						3735
Item 1A. Risk Factors						3836
Item 6. Exhibits						3938
~~SIGNATURES~~Signatures						4039

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)

March 31,
2020 June 30,
2020
ASSETS
Current assets:
Cash and cash equivalents $ 17,953 $ 24,513
Restricted cash 699 757
Accounts receivables, net of allowances for doubtful accounts of $3.6 million and $4.6 million, respectively 24,100 21,554
Inventory, net 3,271 3,674
Prepaid expenses and other current assets 7,375 6,774
Total current assets 53,398 57,272
Property and equipment, net 30,019 28,317
Goodwill 37,923 38,825
Intangible assets, net 15,007 15,772
Deferred tax assets 3,108 3,533
Other assets 4,200 4,009
Total assets $ 143,655 $ 147,728
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt $ 2,367 $ 2,550
Accounts payables 5,251 4,299
Accrued expenses and other liabilities 14,839 17,860
Deferred revenue 5,077 4,563
Total current liabilities 27,534 29,272
Deferred tax liabilities 11,436 10,537
Long-term accrued expenses and other liabilities 5,660 5,312
Total liabilities 44,630 45,121
Commitments and contingencies
Stockholders’ equity:
MiX Telematics Limited stockholders’ equity
Preferred stock: 100 million shares authorized but 0t issued — —
Common stock: 600.9 million and 601.0 million no-par value shares issued and outstanding as of March 31, 2020 and June 30, 2020, respectively 66,522 66,522
Less treasury stock at cost: 54 million shares as of March, 31, 2020 and June 30, 2020 (17,315) (17,315)
Retained earnings 67,482 68,687
Accumulated other comprehensive loss (11,070) (8,986)
Additional paid-in capital (6,599) (6,306)
Total MiX Telematics Limited stockholders’ equity 99,020 102,602
Non-controlling interest 5 5
Total stockholders’ equity 99,025 102,607
Total liabilities and stockholders’ equity $ 143,655 $ 147,728


	March 31, 2021		June 30, 2021

ASSETS
Current assets:
Cash and cash equivalents	$	45,489	$	46,127
Restricted cash	854		1,054
Accounts receivables, net of allowances for doubtful accounts of $5.6 million and $6.3 million, respectively	19,265		20,381
Inventory, net	3,109		3,541
Prepaid expenses and other current assets	8,509		9,826
Total current assets	77,226		80,929

Property and equipment, net	23,463		24,531
Goodwill	43,938		45,284
Intangible assets, net	18,303		19,422
Deferred tax assets	3,782		4,607
Other assets	4,434		4,556

Total assets	$	171,146	$	179,329
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	1,674	$	2,998
Accounts payables	6,560		5,111
Accrued expenses and other liabilities	17,330		19,169
Deferred revenue	5,788		5,749
Income taxes payable	1,345		2,940
Total current liabilities	32,697		35,967

Deferred tax liabilities	9,187		8,610
Long-term accrued expenses and other liabilities	5,863		5,857



Total liabilities	47,747		50,434

Stockholders’ equity:
MiX Telematics Limited stockholders’ equity
Preference shares: 100 million shares authorized but 0t issued	0		0
Ordinary shares: 605.6 million and 606.1 million no-par value shares issued and outstanding as of March 31, 2021 and June 30, 2021, respectively	67,401		67,401

Less treasury stock at cost: 53.8 million shares as of March 31, 2021 and June 30, 2021	(17,315)		(17,315)
Retained earnings	76,710		78,679
Accumulated other comprehensive income	1,924		5,087

Additional paid-in capital	(5,326)		(4,962)
Total MiX Telematics Limited stockholders’ equity	123,394		128,890
Non-controlling interest	5		5
Total stockholders’ equity	123,399		128,895

Total liabilities and stockholders’ equity	$	171,146	$	179,329

The accompanying notes are an integral part of these condensed consolidated financial statements.

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)


		Three Months Ended June 30,
		2019			2020			Three Months Ended June 30,
								2020		2021
Revenue	Revenue						Revenue
Subscription	Subscription	$	31,638		$	25,875	Subscription	$	25,875	$	31,090
Hardware and other	Hardware and other	4,645			1,622		Hardware and other	1,622		3,808
Total revenue	Total revenue	36,283			27,497		Total revenue	27,497		34,898
Cost of revenue	Cost of revenue						Cost of revenue
Subscriptions		9,295			7,349
Subscription							Subscription	7,349		9,127
Hardware and other	Hardware and other	2,933			1,229		Hardware and other	1,229		2,916
Total cost of revenue	Total cost of revenue	12,228			8,578		Total cost of revenue	8,578		12,043
Gross profit	Gross profit	24,055			18,919		Gross profit	18,919		22,855

Operating expenses	Operating expenses						Operating expenses
Sales and marketing	Sales and marketing	3,581			2,746		Sales and marketing	2,746		3,512

Administration and other	Administration and other	14,786			13,491		Administration and other	13,491		15,007
Total operating expenses	Total operating expenses	18,367			16,237		Total operating expenses	16,237		18,519
Income from operations	Income from operations	5,688			2,682		Income from operations	2,682		4,336
Other income/(expense)		375			(98)
Net interest income/(expense)		73			(70)
Other expense							Other expense	98		135
Net interest expense							Net interest expense	70		78
Income before income tax expense	Income before income tax expense	6,136			2,514		Income before income tax expense	2,514		4,123
Income tax expense	Income tax expense	1,140			92		Income tax expense	92		592
Net income	Net income	4,996			2,422		Net income	2,422		3,531
Less: Net income attributable to non-controlling interest	Less: Net income attributable to non-controlling interest	—			—		Less: Net income attributable to non-controlling interest	0		0
Net income attributable to MiX Telematics Limited	Net income attributable to MiX Telematics Limited	$	4,996		$	2,422	Net income attributable to MiX Telematics Limited	$	2,422	$	3,531

Net income per ordinary share	Net income per ordinary share						Net income per ordinary share
Basic	Basic	$	0.01		$	0.004	Basic	$	0.004	$	0.01
Diluted	Diluted	$	0.01		$	0.004	Diluted	$	0.004	$	0.01

Net income per American Depository Share	Net income per American Depository Share						Net income per American Depository Share
Basic	Basic	$	0.22		$	0.11	Basic	$	0.11	$	0.16
Diluted	Diluted	$	0.21		$	0.11	Diluted	$	0.11	$	0.16

Ordinary shares	Ordinary shares						Ordinary shares
Weighted average	Weighted average	562,060		��	547,124		Weighted average	547,124		551,860
Diluted weighted average	Diluted weighted average	579,241			558,702		Diluted weighted average	558,702		565,020

American Depository Shares	American Depository Shares						American Depository Shares
Weighted average	Weighted average	22,482			21,885		Weighted average	21,885		22,074
Diluted weighted average	Diluted weighted average	23,170			22,348		Diluted weighted average	22,348		22,601

The accompanying notes are an integral part of these condensed consolidated financial statements.

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


		Three Months Ended June 30,							Three Months Ended June 30,
		2019		2020			2020		2021
Net income	Net income	$	4,996	$	2,422	Net income	$	2,422	$	3,531
Other comprehensive income	Other comprehensive income	1,727		2,084		Other comprehensive income
Foreign currency translation adjustments, net of tax	Foreign currency translation adjustments, net of tax	1,727		2,084		Foreign currency translation adjustments, net of tax	2,084		3,163

Total comprehensive income	Total comprehensive income	6,723		4,506		Total comprehensive income	4,506		6,694
Less: Total comprehensive income attributable to non-controlling interest	Less: Total comprehensive income attributable to non-controlling interest	—		—		Less: Total comprehensive income attributable to non-controlling interest	0		0
Total comprehensive income attributable to MiX Telematics Limited	Total comprehensive income attributable to MiX Telematics Limited	$	6,723	$	4,506	Total comprehensive income attributable to MiX Telematics Limited	$	4,506	$	6,694

The accompanying notes are an integral part of these condensed consolidated financial statements.

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Three Months Ended June 30, 2020 and 2021
	Common Stock			Treasury Stock		Accumulated Other Comprehensive Income/(Loss)		Additional Paid-In Capital		Retained Earnings		Total MiX Telematics Limited Stockholders’ Equity		Non-Controlling Interest		Total Stockholder’s Equity
	Shares	Amount
Balance as of April 1, 2020	600,934	$	66,522	$	(17,315)	$	(11,070)	$	(6,599)	$	67,482	$	99,020	$	5	$	99,025



Net income	—	—		—		—		—		2,422		2,422		—		2,422
Other comprehensive loss	—	—		—		2,084		—		—		2,084		—		2,084


Issuance of common stock in relation to stock options and SARs exercised	85	—		—		—		—		—		—		—		—
Stock-based compensation	—	—		—		—		293		—		293		—		293

Dividends of 4 South African cents (0.2 U.S. cents) per ordinary share declared	—	—		—		—		—		(1,217)		(1,217)		—		(1,217)



Balance as of June 30, 2020	601,019	$	66,522	$	(17,315)	$	(8,986)	$	(6,306)	$	68,687	$	102,602	$	5	$	102,607

Balance as of April 1, 2021	605,579	$	67,401	$	(17,315)	$	1,924	$	(5,326)	$	76,710	$	123,394	$	5	$	123,399
Net income	—	—		—		—		—		3,531		3,531		—		3,531
Other comprehensive income	—	—		—		3,163		—		—		3,163		—		3,163
Issuance of common stock in relation to SARs exercised	501	—		—		—		—		—		—		—		—
Stock-based compensation	—	—		—		—		364		—		364		—		364
Dividends of 4 South African cents (0.3 U.S. cents) per ordinary share declared	—	—		—		—		—		(1,562)		(1,562)		—		(1,562)


Balance as of June 30, 2021	606,080	$	67,401	$	(17,315)	$	5,087	$	(4,962)	$	78,679	$	128,890	$	5	$	128,895

Three Months Ended June 30, 2019
Common Stock Treasury Stock Accumulated Other Comprehensive Income/(Loss) Additional Paid-In Capital Retained Earnings Total MiX Telematics Limited Stockholders’ Equity Non-Controlling Interest Total Stockholder’s Equity
Shares Amount
Balance as of April 1, 2019 601,948 $ 68,200 $ (9,227) $ 2,115 $ (6,902) $ 62,750 $ 116,936 $ 5 $ 116,941
Adjustment on initial application of ASC 326, net of tax — — — (22) — (240) (262) — (262)
Net income — — — — — 4,996 4,996 — 4,996
Other comprehensive income — — — 1,727 — — 1,727 — 1,727
Issuance of common stock in relation to stock options and SARs exercised 524 — — — — — — — —
Stock-based compensation — — — — 111 — 111 — 111
Dividends of 4 South African cents (0.3 U.S. cents) per ordinary share declared — — — — — (1,563) (1,563) — (1,563)
Balance as of June 30, 2019 602,472 $ 68,200 $ (9,227) $ 3,820 $ (6,791) $ 65,943 $ 121,945 $ 5 $ 121,950

Three Months Ended June 30, 2020
Common Stock Treasury Stock Accumulated Other Comprehensive Income/(Loss) Additional Paid-In Capital Retained Earnings Total MiX Telematics Limited Stockholders’ Equity Non-Controlling Interest Total Stockholder’s Equity
Shares Amount
Balance as of April 1, 2020 600,934 $ 66,522 $ (17,315) $ (11,070) $ (6,599) $ 67,482 $ 99,020 $ 5 $ 99,025
Net income — — — — — 2,422 2,422 — 2,422
Other comprehensive income — — — 2,084 — — 2,084 — 2,084
Issuance of common stock in relation to stock options and SARs exercised 85 — — — — — — — —
Stock-based compensation — — — — 293 — 293 — 293
Dividends of 4 South African cents (0.2 U.S. cents) per ordinary share declared — — — — — (1,217) (1,217) — (1,217)
Balance as of June 30, 2020 601,019 $ 66,522 $ (17,315) $ (8,986) $ (6,306) $ 68,687 $ 102,602 $ 5 $ 102,607

The accompanying notes are an integral part of these condensed consolidated financial statements.

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Three Months Ended June 30,										Three Months Ended June 30,
		2019			2020				2020			2021
Cash flows from operating activities	Cash flows from operating activities						Cash flows from operating activities
Cash generated from operations	Cash generated from operations	$	5,775		$	9,189	Cash generated from operations		$	9,189		$	5,419
Interest received	Interest received	218			112		Interest received		112			123
Interest paid	Interest paid			(59)			(83)	Interest paid			(83)			(81)
Income tax (paid)/received		(203)			139
Income tax received/(paid)							Income tax received/(paid)		139			(735)
Net cash provided by operating activities	Net cash provided by operating activities	5,731			9,357		Net cash provided by operating activities		9,357			4,726

Cash flows from investing activities	Cash flows from investing activities						Cash flows from investing activities
Acquisition of property and equipment - in-vehicle devices		(3,605)			(992)
Acquisition of property and equipment - other		(231)			(84)
Acquisition of property and equipment – in-vehicle devices							Acquisition of property and equipment – in-vehicle devices		(992)			(2,946)
Acquisition of property and equipment – other							Acquisition of property and equipment – other		(84)			(64)
Proceeds from the sale of property and equipment	Proceeds from the sale of property and equipment	29			—		Proceeds from the sale of property and equipment		0			12
Acquisition of intangible assets	Acquisition of intangible assets	(1,340)			(1,044)		Acquisition of intangible assets		(1,044)			(1,342)

Net cash used in investing activities	Net cash used in investing activities	(5,147)			(2,120)		Net cash used in investing activities		(2,120)			(4,340)

Cash flows from financing activities	Cash flows from financing activities						Cash flows from financing activities

Cash paid on dividends to MiX Telematics stockholders		(1,554)			(1,216)
Cash paid on dividends to MiX Telematics Limited stockholders							Cash paid on dividends to MiX Telematics Limited stockholders		(1,216)			(1,549)
Movement in short-term debt	Movement in short-term debt	(596)			147		Movement in short-term debt		147			1,290
Net cash used in financing activities	Net cash used in financing activities	(2,150)			(1,069)		Net cash used in financing activities		(1,069)			(259)

Net (decrease)/increase in cash and cash equivalents, and restricted cash		(1,566)			6,168
Net increase in cash and cash equivalents, and restricted cash							Net increase in cash and cash equivalents, and restricted cash		6,168			127
Cash and cash equivalents, and restricted cash at beginning of the period	Cash and cash equivalents, and restricted cash at beginning of the period	27,838			18,652		Cash and cash equivalents, and restricted cash at beginning of the period		18,652			46,343
Effect of exchange rate changes on cash and cash equivalents, and restricted cash	Effect of exchange rate changes on cash and cash equivalents, and restricted cash	376			450		Effect of exchange rate changes on cash and cash equivalents, and restricted cash		450			711
Cash and cash equivalents, and restricted cash at end of the period	Cash and cash equivalents, and restricted cash at end of the period	$	26,648		$	25,270	Cash and cash equivalents, and restricted cash at end of the period		$	25,270		$	47,181

The accompanying notes are an integral part of these condensed consolidated financial statements.

MIX TELEMATICS LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Summary of Significant Accounting Policies

Nature of the Business

MiX Telematics Limited (the ~~"Company"~~“Company”) is a ~~leading~~ global provider of connected fleet and mobile asset ~~management~~ solutions delivered as Software-as-a-Service ~~("SaaS"~~(“SaaS”). The Company’s ~~solutions~~products and services provide enterprise fleets, small fleets and consumers with solutions for efficiency, safety, ~~efficiency, risk~~compliance and security.

The Company is incorporated and domiciled in South Africa, with the principal ~~executives offices~~executive office in Boca Raton, Florida.

Basis of preparation and consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with ~~U.S.~~ generally accepted accounting principles ~~("GAAP"~~in the United States (“GAAP”) and reflect, in the opinion of management, all adjustments, consisting of normal recurring adjustments and accruals, which are necessary for a fair statement of the results of the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission ~~("SEC"~~(“SEC”). The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated on consolidation.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended March 31, ~~2020~~2021 filed with the SEC on ~~July 23, 2020.~~June 14, 2021.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported and disclosed. Significant estimates include, but are not limited to, allowances for doubtful accounts, the assessment of expected cash flows used in evaluating goodwill and long-lived assets for impairment, the amortization period for deferred commissions, the determination of useful lives of the Company’s customer relationships, contingencies, the classification of devices and other hardware as in-vehicle devices (equipment) versus inventory based on the future expectation of the different types of customer contracts, income and deferred taxes, unrecognized tax benefits and valuation allowances on deferred tax assets. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements.

As of June 30, ~~2020,~~2021, the global outbreak of COVID-19 has had and, we believe, will continue to have an adverse impact on global economies and financial markets. We have taken into account the impact of COVID-19 on expected credit losses to the extent ~~possible, on our financial statements.~~possible. Our expected credit losses have increased as a result. However, future changes in economic conditions related to COVID-19 could have an impact on future estimates and judgements used, particularly those relating to goodwill sensitivities and impairment assessments.

Summary of significant accounting policies

There have been no changes to the Company’s significant accounting policies disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, ~~2020,~~2021, filed with the SEC on ~~July 23, 2020,~~June 14, 2021, that have had a material impact on the Company’s Condensed Consolidated Financial Statements and related notes.

2. Revenue from contracts with customers

The Company provides fleet and mobile asset management solutions. The principal revenue streams are (1) Subscription and (2) Hardware and other. Subscription revenue is recognized over time and hardware and other revenue is recognized at a point-in-time.

To provide services to customers, a device ~~is required~~ which collects and transmits information collected from the vehicle or other ~~asset.~~asset is required. Fleet customers may also obtain other items of hardware, virtually all of which are functionally-dependent on the device. Some customers obtain control of the device and other hardware (where legal title transfers to the customer); while other customers do not (where legal title remains with the Company). A contract arises on the acceptance of a customer’s purchase order, which is typically executed in writing.

~~Contract modifications~~

As a result of the adverse impact that the COVID-19 pandemic has had on certain of the Company’s customers, various pricing concessions relating to subscriptions, in the form of payment holidays and discounts on monthly billings, were granted during the quarter ended June 30, 2020. These pricing concessions were accounted for as contract modifications under ASC 606 ~~Revenue from Contracts with Customers~~ ("ASC 606"), which had the effect of reducing the transaction prices allocated to the remaining distinct performance obligations in the contracts. Accordingly, the effect of the pricing concessions is being recognized as those remaining subscription services are provided. A contract asset of $0.5 million, representing amounts that will only be billed in future periods, has been recognized as of June 30, 2020, and is included in Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheet.

Contract liabilities

When customers are invoiced in advance for subscription services that will be provided over periods of more than one month, or pay in advance of service periods of more ~~than~~than one month, ~~contract~~deferred revenue liabilities are recorded. Deferred revenue as of March 31, ~~2020~~2021 and June 30, ~~2020~~2021 was ~~$5.1~~$5.8 million and ~~$4.6~~$5.7 million, respectively. During the quarter ended June 30, ~~2019~~2020 and June 30, ~~2020,~~2021, revenue of ~~$1.9~~$1.1 million and ~~$1.1~~$1.2 million, respectively, was recognized which was included in the deferred revenue balances at the beginning of each quarter.

Contract acquisition costs

Commissions payable to sales employees and external third parties which are incurred to acquire contracts are capitalized and amortized, unless the amortization period is 12 months or less, in which instance they are expensed immediately. Deferred commissions were ~~$3.6~~$3.7 million and ~~$3.4~~ $3.8 million as of March 31, ~~2020~~2021 and June 30, ~~2020,~~2021, respectively, and are included in Other assets on the Condensed Consolidated Balance ~~Sheet.~~Sheets.

The following is a summary of the amortization expense recognized (in thousands):


		Three Months Ended June 30,					Three Months Ended June 30,
		2019		2020			2020		2021

Amortization recognized during the quarter:		$	(811)	$	(692)
Amortization recognized during the period:						Amortization recognized during the period:	$	(692)	$	(910)
–Cost of revenue (external commissions)	–Cost of revenue (external commissions)	(580)		(484)		–Cost of revenue (external commissions)	(484)		(675)
–Sales and marketing (internal commissions)	–Sales and marketing (internal commissions)	(231)		(208)		–Sales and marketing (internal commissions)	(208)		(235)

3. Credit risk related to accounts ~~receivables~~receivable

The movements in the allowance for doubtful accounts are as follows (in thousands):

Three Months Ended June 30,
2019 2020
Balance at April 1, $ 3,019 $ 3,602
Bad debt provision 595 855
Write-offs, net of recoveries (60) (8)
Foreign currency translation differences 83 132
Balance at June 30, $ 3,637 $ 4,581


	Three Months Ended June 30,
	2020		2021
Balance at April 1	$	3,602	$	5,575



Bad debt provision	855		571
Write-offs, net of recoveries	(8)		(16)
Foreign currency translation differences	132		194
Balance at June 30	$	4,581	$	6,324

Overview of the Company’s exposure to credit risk from customers

The maximum exposure to credit risk at the reporting date is the carrying value of each receivable and loan to external parties, net of impairment losses where relevant. ~~Other than 15% of the gross receivable balance relating to four debtors as of June 30, 2020 (as~~As of March 31, ~~2020: 15% of the gross receivable balance relating to four debtors)~~2021 and June 30, 2021, the Company ~~has~~had no significant concentration of credit risk, due to its spread of customers across various operations and geographical locations.

The Company does not hold any collateral as security.

Net accounts ~~receivables~~receivable as of March 31, ~~2020~~2021 and June 30, ~~2020~~2021 of ~~$2.9~~$2.3 million and ~~$3.0~~$3.2 million, respectively, are pledged as security for the Company’s overdraft facilities.

4. Property and equipment

Property and equipment comprises owned and right of use assets. The Company leases many assets including property, vehicles, machinery and IT equipment.

The cost and accumulated depreciation of owned equipment are as follows (in thousands):


		March 31, 2020		June 30, 2020			March 31, 2021		June 30, 2021
Owned equipment	Owned equipment					Owned equipment

Equipment, vehicles and other	Equipment, vehicles and other	$	6,114	$	6,335	Equipment, vehicles and other	$	6,877	$	7,200
In-vehicle devices	In-vehicle devices	52,824		53,440		In-vehicle devices	53,448		56,239
Less: accumulated depreciation and impairments	Less: accumulated depreciation and impairments	(35,397)		(37,847)		Less: accumulated depreciation and impairments	(42,955)		(44,888)

Owned equipment, net	Owned equipment, net	$	23,541	$	21,928	Owned equipment, net	$	17,370	$	18,551

Total depreciation expense related to owned equipment during the three months ended June 30, ~~2019~~2020 and ~~2020~~2021 was ~~$3.3~~ $2.8 million and ~~$2.8~~$2.7 million, respectively. Depreciation expense related to in-vehicle devices is included in subscription cost of revenue.

The cost and accumulated depreciation of right-of-use property and equipment are as follows (in thousands):


		March 31, 2020		June 30, 2020			March 31, 2021		June 30, 2021
Right-of-use assets	Right-of-use assets					Right-of-use assets
Property	Property	$	7,724	$	7,969	Property	$	8,348	$	8,200
Equipment, vehicles and other	Equipment, vehicles and other	250		252		Equipment, vehicles and other	226		227

Less: accumulated depreciation	Less: accumulated depreciation	(1,496)		(1,832)		Less: accumulated depreciation	(2,481)		(2,447)

Right of use property and equipment, net	Right of use property and equipment, net	$	6,478	$	6,389	Right of use property and equipment, net	$	6,093	$	5,980

5. Intangible assets

Intangible assets comprise the following (in thousands):


			As of March 31, 2020										As of June 30, 2020
		Useful life (in years)	Gross Carrying amount		Accumulated amortization		Net		Gross Carrying amount		Accumulated amortization		Net				As of March 31, 2021						As of June 30, 2021
																Useful life (in years)	Gross Carrying amount		Accumulated amortization		Net		Gross Carrying amount		Accumulated amortization		Net
Patents and trademarks	Patents and trademarks	3 - 20	$	76	$	(45)	$	31	$	50	$	(20)	$	30	Patents and trademarks	3 - 20	$	115	$	(82)	$	33	$	90	$	(58)	$	32
Customer relationships	Customer relationships	2 - 15	2,600		(2,068)		532		2,566		(2,070)		496		Customer relationships	2 - 15	2,687		(2,271)		416		2,667		(2,280)		387
Internal-use software, technology and other	Internal-use software, technology and other	1 - 18	26,508		(12,064)		14,444		28,440		(13,194)		15,246		Internal-use software, technology and other	1 - 18	35,618		(17,764)		17,854		38,330		(19,327)		19,003

Total	Total		$	29,184	$	(14,177)	$	15,007	$	31,056	$	(15,284)	$	15,772	Total		$	38,420	$	(20,117)	$	18,303	$	41,087	$	(21,665)	$	19,422

For the three months ended June 30, ~~2019~~2020 and ~~2020,~~2021, amortization expense of $0.8 million, and $1.0 million, ~~and $0.8 million~~respectively, has been ~~recognized, respectively.~~

recognized.

6. Accrued expenses and other liabilities

Accrued expenses and other liabilities comprise the following (in thousands):


		March 31, 2020		June 30, 2020			March 31, 2021		June 30, 2021
Current:	Current:					Current:
Product warranties	Product warranties	$	601	$	622	Product warranties	$	605	$	607
Maintenance	Maintenance	357		454		Maintenance	609		621
Employee-related accruals	Employee-related accruals	5,296		6,665		Employee-related accruals	6,166		6,512
Lease liabilities	Lease liabilities	1,094		1,404		Lease liabilities	1,395		1,353
Accrued income tax payable		736		2,216

Accrued commissions						Accrued commissions	2,199		2,650
Other accruals	Other accruals	6,755		6,499		Other accruals	6,356		7,426
Total current	Total current	$	14,839	$	17,860	Total current	$	17,330	$	19,169

Non-current:	Non-current:					Non-current:
Lease liabilities	Lease liabilities	$	5,413	$	5,092	Lease liabilities	$	4,895	$	4,848
Other liabilities	Other liabilities	247		220		Other liabilities	968		1,009
Total non-current	Total non-current	$	5,660	$	5,312	Total non-current	$	5,863	$	5,857

Product warranties

The Company provides warranties on certain products and undertakes to repair or replace items that fail to perform satisfactorily. Management estimates the related provision for future warranty claims based on historical warranty claim information, the product lifetime, as well as recent trends that might suggest that past cost information may differ from future claims. The table below provides details of the movement in the accrual ~~in thousands:~~(in thousands):


		Three Months Ended June 30,
		2019		2020			As of June 30,
							2020		2021
Product warranties	Product warranties					Product warranties
Balance at April 1,		$	777	$	616
Statement of Income charge		60		26
Opening balance						Opening balance	$	616	$	612
Warranty expense						Warranty expense	26		56
Utilized	Utilized	(117)		(31)		Utilized	(31)		(61)
Foreign currency translation difference	Foreign currency translation difference	13		22		Foreign currency translation difference	22		18
Balance at June 30,		$	733	$	633
Balance as of June 30						Balance as of June 30	$	633	$	625
Non-current portion (included in other liabilities)	Non-current portion (included in other liabilities)	$	15	$	11	Non-current portion (included in other liabilities)	$	11	$	18
Current portion	Current portion	$	718	$	622	Current portion	$	622	$	607

7. Development expenditure

Development expenditure comprises the following (in thousands):


	Three Months Ended June,
	2020			2021
Costs capitalized (1)	$	736		$	971
Costs expensed (2)	994			1,437
Total costs incurred	$	1,730		$	2,408
Percentage capitalized	42.5		%	40.3		%

(1) Costs capitalized relate only to the development of internal-use software. Product development costs are expensed when incurred.
(2) Costs expensed are included in Administration and other expenses in the Condensed Consolidated Statement of Income.

7.8. Income taxes

Our income tax provision ~~for the three months ended June 30, 2019 and 2020~~ reflects our estimate of the effective tax rates expected to be applicable for the full fiscal years, adjusted for any discrete events which are recorded in the period they occur. The estimates are re-evaluated each quarter based on our estimated tax expense for the full fiscal year.

Our effective tax rate was ~~18.6% for the three months ended June 30, 2019 compared to~~ 3.7% for the three months ended June 30, ~~2020.~~2020 compared to 14.4% for the three months ended June 30, 2021. Ignoring the impact of foreign exchange gains and losses net of tax, the ~~effective~~effective tax rate for the three months ended June 30, ~~2019~~2020 and ~~2020,~~2021, was ~~27.4%~~30.2% and ~~30.2%~~31.8%, respectively.

The Company files income tax returns in South Africa, the US federal jurisdiction, many US states, as well as many foreign jurisdictions. The tax year 2020 remain open to examination by the various jurisdictions in which the Company is subject to tax. Fiscal years outside the normal statutes of limitation remain open to audit by tax authorities due to tax attributes generated in those early years which have been carried forward and may be audited in subsequent years when utilized. Our federal, and state, income tax returns have been examined or are closed by statute for all years prior to fiscal ye~~ar 2020.~~

Tax authorities for certain non-U.S. jurisdictions are also examining returns. With some exceptions, we are generally not subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal year 2020.

8.9. Earnings per share

Basic

Basic earnings per share is calculated by dividing the income attributable to ordinary shareholders of the parent by the weighted average number of ordinary shares in issue during the period.

The net income and weighted average number of shares used in the calculation of basic and diluted earnings per share are as follows (in thousands, except per share data):


		Three Months Ended June 30,							Three Months Ended June 30,
		2019		2020			2020		2021
Numerator (basic)	Numerator (basic)					Numerator (basic)
Net income attributable to ordinary shareholders	Net income attributable to ordinary shareholders	$	4,996	$	2,422	Net income attributable to ordinary shareholders	$	2,422	$	3,531
Denominator (basic)	Denominator (basic)					Denominator (basic)
Weighted-average number of ordinary shares in issue	Weighted-average number of ordinary shares in issue	562,060		547,124		Weighted-average number of ordinary shares in issue	547,124		551,860
Basic earnings per share	Basic earnings per share	$	0.01	$	0.004	Basic earnings per share	$	0.004	$	0.01

American Depository Shares*:	American Depository Shares*:					American Depository Shares*:
Net income attributable to ordinary shareholders	Net income attributable to ordinary shareholders	$	4,996	$	2,422	Net income attributable to ordinary shareholders	$	2,422	$	3,531
Weighted-average number of American Depository Shares in issue	Weighted-average number of American Depository Shares in issue	22,482		21,885		Weighted-average number of American Depository Shares in issue	21,885		22,074
Basic earnings per American Depository share	Basic earnings per American Depository share	$	0.22	$	0.11	Basic earnings per American Depository share	$	0.11	$	0.16
*One American Depository Share is the equivalent of 25 ordinary shares.	*One American Depository Share is the equivalent of 25 ordinary shares.					*One American Depository Share is the equivalent of 25 ordinary shares.

Diluted

Diluted earnings per share is calculated by dividing the diluted income attributable to ordinary shareholders by the diluted weighted average number of ordinary shares in issue during the period. Stock options, retention shares and stock appreciation rights ~~performance shares and restricted share units~~ granted to ~~employees under the TeliMatrix Group Executive Incentive Scheme~~directors and ~~the MiX Telematics Long-Term Incentive Plan ("LTIP")~~employees are considered to be potential ordinary shares. They have been included in the determination of diluted earnings per share if the required ~~performance condition (if~~target share price or annual shareholder return hurdles (as applicable) would have been met based on the performance up to the reporting date, and to the extent to which they are dilutive.


	Three Months Ended June 30,
	2020		2021
Numerator (diluted)
Diluted net income attributable to ordinary shareholders	$	2,422	$	3,531
Denominator (diluted)
Weighted-average number of ordinary shares in issue	547,124		551,860
Adjusted for:
– potentially dilutive effect of stock appreciation rights	9,696		11,840
– potentially dilutive effect of restricted share units	637		1,320
– potentially dilutive effect of stock options	1,245		0
Diluted-weighted average number of ordinary shares in issue	558,702		565,020
Diluted earnings per share	$	0.004	$	0.01

American Depository Shares*:
Diluted net income attributable to ordinary shareholders	$	2,422	$	3,531
Diluted weighted-average number of American Depository Shares in issue	22,348		22,601
Diluted earnings per American Depository share	$	0.11	$	0.16
*One American Depository Share is the equivalent of 25 ordinary shares.

Three months ended June 30,
2019 2020
Numerator (diluted)
Diluted net income attributable to ordinary shareholders $ 4,996 $ 2,422
Denominator (diluted)
Weighted-average number of ordinary shares in issue 562,060 547,124
Adjusted for:
– potentially dilutive effect of stock appreciation rights 15,234 9,696
– potentially dilutive effect of stock options and restricted share units 1,947 1,882
Diluted-weighted average number of ordinary shares in issue 579,241 558,702
Diluted earnings per share $ 0.01 $ 0.004
American Depository Shares*:
Diluted net income attributable to ordinary shareholders $ 4,996 $ 2,422
Diluted weighted-average number of American Depository Shares in issue 23,170 22,348
Diluted earnings per American Depository share $ 0.21 $ 0.11
*One American Depository Share is the equivalent of 25 ordinary shares.

9.10. Segment information

The Company has 6 reportable segments, which are based on the geographical location of the 5 Regional Sales Offices ~~("RSOs"~~(“RSOs”) and also includes the Central Services Organization ~~("CSO"~~(“CSO”). CSO is the central services organization that wholesales products and services to RSOs ~~who,~~which, in turn, interface with our end-customers, distributors and dealers. CSO is also responsible for the development of hardware and software platforms and provides common marketing, product management, technical and distribution support to each of the other reportable segments. CSO is a reportable segment because it produces discrete financial information which is reviewed by the chief operating decision maker ~~("CODM"~~(“CODM”) and has the ability to generate external revenues.

The CODM has been identified ~~collectively~~ as ~~the executive committee and~~ the Chief Executive Officer who ~~make~~makes strategic ~~decisions.~~decisions for the Company. The performance of the reportable segments ~~have~~has been measured and evaluated by the CODM using Segment Adjusted EBITDA, which is a measure ~~which~~that uses net income ~~determined under International Financial Reporting Standards ("IFRS") as issued by~~excluding net interest income/(expense), foreign exchange gains or losses, operating lease expenses, stock-based compensation costs, restructuring costs, and gains or losses on the ~~International Accounting Standards Board, as a starting point.~~disposal or impairments of long-lived assets and subsidiaries. Product development costs are capitalized and amortized and this amortization is excluded from Segment Adjusted EBITDA.

Segment assets are not disclosed because such information is not reviewed by the CODM.

The following table provides revenue and Segment Adjusted EBITDA (in thousands):


		Three Months Ended June 30, 2019
		Subscription revenue ⁽¹⁾		Hardware and other revenue ⁽²⁾		Total revenue		Segment Adjusted EBITDA			Three Months Ended June 30, 2020
											Subscription revenue (1)		Hardware and other revenue (2)		Total revenue		Segment Adjusted EBITDA
Regional Sales Offices	Regional Sales Offices									Regional Sales Offices
Africa	Africa	$	17,686	$	1,381	$	19,067	$	8,357	Africa	$	13,923	$	601	$	14,524	$	7,245
Europe	Europe	2,787		557		3,344		1,071		Europe	2,850		134		2,984		1,302
Americas	Americas	5,662		886		6,548		2,358		Americas	4,175		155		4,330		1,408
Middle East and Australasia	Middle East and Australasia	4,261		1,623		5,884		2,754		Middle East and Australasia	3,881		709		4,590		1,918
Brazil	Brazil	1,217		161		1,378		623		Brazil	1,031		23		1,054		410
Total Regional Sales Offices	Total Regional Sales Offices	31,613		4,608		36,221		15,163		Total Regional Sales Offices	25,860		1,622		27,482		12,283
Central Services Organization	Central Services Organization	25		37		62		(2,645)		Central Services Organization	15		0		15		(1,863)
Total Segment Results	Total Segment Results	$	31,638	$	4,645	$	36,283	$	12,518	Total Segment Results	$	25,875	$	1,622	$	27,497	$	10,420

1.Subscription revenue is recognized over time.

2.Hardware and other revenue is recognized at a point in time.


		Three Months Ended June 30, 2020
		Subscription revenue ⁽¹⁾		Hardware and other revenue ⁽²⁾		Total revenue		Segment Adjusted EBITDA			Three Months Ended June 30, 2021
											Subscription revenue (1)		Hardware and other revenue (2)		Total revenue		Segment Adjusted EBITDA
Regional Sales Offices	Regional Sales Offices									Regional Sales Offices
Africa	Africa	$	13,923	$	601	$	14,524	$	7,245	Africa	$	18,711	$	1,215	$	19,926	$	8,904
Europe	Europe	2,850		134		2,984		1,302		Europe	3,373		1,261		4,634		1,751
Americas	Americas	4,175		155		4,330		1,408		Americas	3,623		195		3,818		539
Middle East and Australasia	Middle East and Australasia	3,881		709		4,590		1,918		Middle East and Australasia	4,349		1,105		5,454		2,543
Brazil	Brazil	1,031		23		1,054		410		Brazil	1,020		32		1,052		317
Total Regional Sales Offices	Total Regional Sales Offices	25,860		1,622		27,482		12,283		Total Regional Sales Offices	31,076		3,808		34,884		14,054
Central Services Organization	Central Services Organization	15		—		15		(1,863)		Central Services Organization	14		0		14		(2,587)
Total Segment Results	Total Segment Results	$	25,875	$	1,622	$	27,497	$	10,420	Total Segment Results	$	31,090	$	3,808	$	34,898	$	11,467

1.Subscription revenue is recognized over time.

2.Hardware and other revenue is recognized at a point in time.

A reconciliation of the segment results to income before income tax expense is disclosed below (in thousands).:


		Three Months Ended June 30,
		2019		2020			Three Months Ended June 30,
							2020		2021
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	12,518	$	10,420	Segment Adjusted EBITDA	$	10,420	$	11,467
Corporate and consolidation entries	Corporate and consolidation entries	(1,756)		(2,330)		Corporate and consolidation entries	(2,330)		(2,376)
Operating lease costs ⁽¹⁾	Operating lease costs ⁽¹⁾	(308)		(392)		Operating lease costs (1)	(392)		(407)
Product development costs ⁽²⁾	Product development costs ⁽²⁾	(391)		(243)		Product development costs (2)	(243)		(363)
Depreciation and amortization	Depreciation and amortization	(4,252)		(3,628)		Depreciation and amortization	(3,628)		(3,679)

Stock-based compensation costs	Stock-based compensation costs	(111)		(293)		Stock-based compensation costs	(293)		(364)
Increase in restructuring costs ⁽³⁾	Increase in restructuring costs ⁽³⁾	—		(844)		Increase in restructuring costs (3)	(844)		(1)
Net profit on sale of equipment		316		(1)
Net foreign exchange gains/(losses)		47		(105)
Net interest income/(expense)		73		(70)
Net loss on sale of property and equipment						Net loss on sale of property and equipment	(1)		0
Net foreign exchange losses						Net foreign exchange losses	(105)		(76)
Net interest expense						Net interest expense	(70)		(78)
Income before income tax expense for the period	Income before income tax expense for the period	$	6,136	$	2,514	Income before income tax expense for the period	$	2,514	$	4,123

1.For the purposes of calculating Segment Adjusted EBITDA, operating leases have been capitalized, except for leases with a term of no more than 12 months or leases of low value assets. Where operating leases are capitalized for segment purposes, the amortization of the right-of-use asset and the interest on the operating lease liability are excluded from the Segment Adjusted EBITDA. Therefore, in order to reconcile Segment Adjusted EBITDA to income before taxes, the total lease expense in respect of operating leases needs to be deducted.
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 net income before taxes, the total lease expense in respect of operating leases needs to be deducted.						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 net income before taxes, 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 net income before taxes, product development costs capitalized for segment reporting purposes need 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 net income before taxes, product development costs capitalized for segment reporting purposes need 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 net income before taxes, product development costs capitalized for segment reporting purposes need to be deducted.

3.$0.6 million and $0.2 million of the restructuring costs related to the Central Service Organization (CSO) and the Africa reporting segment, respectively.
3.For the first quarter of fiscal 2021, $0.6 million and $0.2 million of the restructuring costs related to the CSO and Africa reporting segments, respectively.						3.For the first quarter of fiscal 2021, $0.6 million and $0.2 million of the restructuring costs related to the CSO and Africa reporting segments, respectively.

No single customer accounted for 10% or more of the Company’s total revenue for the three months ended June 30, ~~2019~~2020 and ~~2020.~~2021. No single customer accounted for 10% or more of the Company’s accounts ~~receivables~~receivable as of March 31, ~~2020 and~~2021 or June 30, ~~2020.~~2021.

~~10.~~

11. Stock-based compensation plan

The Company has issued equity-classified share incentives under ~~2 equity-classified incentive plans, the TeliMatrix Group Executive Incentive Scheme and~~ the MiX Telematics Long-Term Incentive Plan ~~("LTIP"~~(“LTIP”), to directors and certain key employees within the Company. ~~Since the introduction of the LTIP during 2014, no further awards have been made in terms of the TeliMatrix Group Executive Incentive Scheme.~~

The LTIP provides for three types of grants to be issued, namely performance shares, restricted share units ~~("RSUs"~~(“RSUs”) orand stock appreciation rights ~~("SARs"~~(“SARs”).

As of June 30, ~~2020,~~2021, there were ~~47,090,000~~47,090,000 shares reserved for future issuance under the LTIP.

The total stock-based compensation expense recognized during the three months ended June 30, ~~2019~~2020 and ~~2020,~~2021 was ~~$0.1~~$0.3 million and ~~$0.3~~$0.4 million, respectively.

Stock appreciation rights granted under the LTIP

The following table summarizes the activities for the ~~unvested~~outstanding SARs:

Number of SARs Weighted-
Average
Award Price in U.S. Cents* Weighted Average Contractual Remaining Term ( years) Aggregate Intrinsic Values (in thousands)
Outstanding as of April 1, 2020 32,943,750 30
Granted 11,200,000 34
Exercised (175,000) 17
Forfeited (33,905) 18
Outstanding as of June 30, 2020 43,934,845 31 3.97
Vested and expected to vest as of June 30, 2020 42,310,470 31 3.19 3,313
Vested as of June 30, 2020 11,447,345 18 2.10 1,945

* The award price is denominated in South African cents. U.S. currency amounts are based on a ZAR:USD exchange rate of

~~R17.279 as of June 30, 2020.~~

~~The weighted-average grant-date fair value of SARs granted during the quarter ended June 30,~~ ~~2020, was14 U.S. cents. The~~ ~~grant-date fair value was determined using a combination of the Monte Carlo Simulation option pricing model and the Binomial Tree option pricing model. U.S. currency amounts are based on a ZAR:USD exchange rate of R17.279 as of June 30, 2020.~~


	Number of SARs	Weighted- Average Exercise Price in U.S. Cents*	Weighted Average Contractual Remaining Term (years)	Aggregate Intrinsic Values (in thousands)
Outstanding as of April 1, 2021	40,567,917	38

Exercised	(818,750)	22

Forfeited	(50,000)	41
Outstanding as of June 30, 2021	39,699,167	39	3.08

Vested and expected to vest as of June 30, 2021	38,436,355	38	2.27	7,377
Vested as of June 30, 2021	14,442,917	23	1.22	4,866

As of June 30, ~~2020,~~2021, there was ~~$2.7~~$1.8 million of unrecognized compensation cost related to unvested SARs. This amount is expected to be recognized over a weighted-average pperiod o~~eriod~~f 3.5 years.

*U.S. currency amounts are based on a ZAR:USD exchange rate of ~~4.81~~ ~~years.~~R14.318 as of June 30, 2021.

Restricted share units granted under the LTIP

~~Under the LTIP, RSUs may be issued to certain directors and key employees. The scheme rules allow for a maximum of~~ 2 million RSUs ~~to be granted in any financial year~~were outstanding and ~~for a maximum~~unvested as of ~~12 million RSUs to be granted in aggregate over the life~~April 1, 2021, and remain as such as of ~~the plan.~~

~~2 million time-based RSUs were granted for the first time under the scheme on~~ June ~~1, 2020, and will vest in tranches of 50% per annum, commencing on the second anniversary of the grant date. Vesting is conditional upon remaining within the employment of the Company.~~30, 2021. Management estimates forfeiture to be approximately 5%. Settlement will take place in the Company’s shares. The Company has no legal or constructive obligation to settle the RSUs in cash. The weighted average grant date fair value per RSU granted during the quarter ended June 30, 2020 was 29 U.S. cents. The grant date fair value was determined by deducting the present value of expected dividends to be paid per share prior to vesting from the closing market price of the Company’s shares on grant ~~date.~~ ~~U.S. currency amounts are based on a ZAR:USD exchange rate of R17.2790 as of~~

~~June 30, 2020.~~ The unrecognized compensation cost related to unvested RSUs as of June 30, ~~2020~~2021 was ~~$0.5~~$0.4 million, which will be recognized over a weighted average period of ~~2.75 years.~~1.75 years, which is the same period as the weighted average remaining contractual term.

~~11.~~12. Debt

~~The Company and its subsidiaries have unlimited borrowing capacity as specified in their respective Memorandums of Incorporation.~~

As of March 31, ~~2020~~2021 and June 30, ~~2020,~~2021, debt ~~comprises~~comprised bank overdrafts of ~~$2.4~~$1.7 million and ~~$2.5 million,~~ $3.0 million, respectively. Net accounts ~~receivables~~receivable as of March 31, ~~2020~~2021 and June 30, ~~2020~~2021 of ~~$2.9~~$2.3 million and ~~$3.0~~$3.2 million, respectively, are pledged as security for the Company’s overdraft facilities.

Details of undrawn facilities are shown below:


		Interest rate	March 31, 2020		June 30, 2020
								Interest rate	March 31, 2021		June 30, 2021
Undrawn borrowing facilities at floating rates include:	Undrawn borrowing facilities at floating rates include:						Undrawn borrowing facilities at floating rates include:
– Standard Bank Limited:	– Standard Bank Limited:						– Standard Bank Limited:
Overdraft	Overdraft	SA Prime* less 1.2%	$	1,204	$	1,154	Overdraft	SA Prime* less 1.2%	$	2,616	$	1,472
Vehicle and asset finance	Vehicle and asset finance	SA Prime* less 1.2%	474		492		Vehicle and asset finance	SA Prime* less 1.2%	570		594
Working capital facility	Working capital facility	SA Prime* less 0.25%	1,395		—		Working capital facility	SA Prime* less 0.25%	1,676		1,746
– Nedbank Limited overdraft	– Nedbank Limited overdraft	SA Prime* less 2%	558		579		– Nedbank Limited overdraft	SA Prime* less 2%	670		698
			$	3,631	$	2,225			$	5,532	$	4,510

*South African prime interest rate

As of March 31, ~~2020~~2021 and June 30, ~~2020,~~2021, the South African prime interest rate was ~~8.75~~7.0% ~~and 7.25%, respectively.~~. The Standard Bank Limited and Nedbank Limited facilities have no fixed renewal date and are repayable on demand. The facility from Nedbank Limited is unsecured.

~~12. Restructuring costs~~

13. Contingencies

~~During~~Service agreement

In terms of an amended network services agreement with Mobile Telephone Networks Proprietary Limited (“MTN”), MTN is entitled to claw back payments from MiX Telematics Africa Proprietary Limited, a subsidiary of the ~~quarter ended~~Company, in the event of early cancellation of the agreement or certain base connections not being maintained over the term of the agreement. No connection incentives will be received in terms of the amended network services agreement. The maximum potential liability under the arrangement as of March 31, 2021 and June 30, ~~2020,~~2021 was $2.0 million. No loss is considered probable under this arrangement.

Competition Commission of South Africa matter

On April 15, 2019 the Competition Commission of South Africa (“Commission”) referred a matter to the Competition Tribunal of South Africa (“Tribunal”). The Commission contends that the Company ~~committed to plans to restructure certain parts~~and a number of its ~~business as a measure~~channel partners have engaged in market division. Should the Tribunal rule against MiX Telematics, the Company may be liable to ~~minimize the adverse economic and business effect~~an administrative penalty in terms of the ~~COVID-19 pandemic and to re-align resources to~~Competition Act, No. 89 of 1998. The Company had cooperated fully with the Commission during its ~~current business outlook and cost structure. Following~~preliminary investigation. We cannot predict the ~~announcement~~timing of a resolution or the ultimate outcome of the ~~plans to affected parties, which occurred prior to June 30, 2020,~~matter, however, the Company ~~recognized $0.8 million of restructuring costs, which related~~and its external legal advisers continue to ~~employee termination benefits. Restructuring costs are included in Administration~~believe that we have consistently adhered to all applicable laws and ~~other expenses in~~regulations and that the ~~Condensed Statement of Income. $0.6 million and $0.2 million of~~referral from the ~~restructuring costs related to the Central Service Organization (CSO) and the Africa reporting segment, respectively.~~Commission is without merit. As of June 30, ~~2020, virtually all~~2021, we have not made any provisions for this matter as we do not believe that an outflow of ~~the CSO restructuring costs had been paid. The restructuring in the Africa reporting segment~~economic resources is ~~expected to be completed by September 30, 2020.~~probable.

~~13.~~14. Subsequent events

Other than the ~~items~~item below, the directors are not aware of any matter material or otherwise arising since June 30, ~~2020~~2021 and up to the date of this report, not otherwise dealt with herein.

Dividend declared

The Board of Directors declared, in respect of the three months ended June 30, ~~2020,~~2021, a dividend of 4 South African cents per ordinary share and 1 South African Rand per ADS, which will be paid on September~~September 8, 2020~~ 2, 2021 to shareholders on record as of the close of business on August~~August 21, 202~~ 20, 20210..

1817

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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, 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. ~~Forward-looking statements also include statements regarding the projected impact of the global COVID-19 pandemic on our business activities, operating results, cash flows and financial position.~~ 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:~~control.

•
~~our ability~~

We believe that these risks and uncertainties include, but are not limited to, ~~attract, sell~~those described in Part II, Item 1A. “Risk Factors”. These risk factors should not be considered as an exhaustive list and should be read in conjunction with the other cautionary statements and information in this report. These risk factors may also be intensified as a result of circumstances outside of control such as the events related to ~~and retain customers;~~

•~~the severity and duration of~~ the COVID-19 pandemic, the pandemic’s economic impact on the geographical locations of our regional service organizations and central service organization, the impact of the pandemic on our customers’ ability to meet their financial obligations, our ability to implement cost containment and business recovery strategies during the pandemic, local and foreign government regulations implemented to combat the pandemic and any future developments on the pandemic;

•~~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;~~

•~~competition from industry consolidation;~~

•~~loss of key personnel or our failure to attract, train and retain other highly qualified personnel;~~

•~~our ability to integrate any businesses we acquire;~~

•~~the introduction of new solutions and international expansion;~~

•~~our dependence on key suppliers and vendors to manufacture our hardware;~~

•~~our dependence on our network of dealers and distributors to sell our solutions;~~

•~~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 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;~~

•~~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 risks set forth under “Item 1A. Risk Factors” and in our other filings with the U.S. Securities Exchange Commission.~~pandemic.

We assume no obligation to update any forward-looking statements contained in this Quarterly Report on Form 10-Q and expressly disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law.

1918

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes included in Item 1 of this Quarterly Report on Form 10-Q.

This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our future results may vary materially from those indicated as a result of the risks that affect our business, including, among others, those identified in “Forward-Looking Statements” and Part II “Item 1A. Risk Factors”.

Overview

We are a leading global provider of connected fleet and mobile asset ~~management~~ solutions delivered as SaaS. Our solutions deliver a measurable return by enabling our customers to manage, optimize and protect their investments in commercial fleets ~~mobile assets~~ or personal vehicles. We generate actionable ~~intelligence~~insights that ~~enables~~enable a wide range of customers, from large enterprise fleets to small fleet operators and consumers, to reduce fuel and other operating costs, improve efficiency, enhance regulatory compliance, ~~promote~~enhance driver safety, manage risk and mitigate theft. Our solutions mostly rely on our proprietary, highly scalable technology platforms, which ~~allows~~allow us to collect, analyze and deliver information based on data from our customers’ vehicles. Using an intuitive, web-based interface, ~~reports~~dashboards or mobile applications, our fleet customers can access large volumes of real-time and historical data, monitor the location and status of their drivers and vehicles and analyze a wide number of key metrics across their fleet operations.

We were founded in 1996 and we have offices in South Africa, the United Kingdom, the United States, Uganda, Brazil, Australia, Romania, Thailand and the United Arab Emirates, as well as a network of more than 130 fleet partners worldwide. MiX ~~Telematics~~Telematics’ shares are publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and MiX ~~Telematics~~Telematics’ American Depositary Shares are listed on the New York Stock Exchange (NYSE: MIXT).

We derive the majority of our revenues from subscriptions ~~from~~to our fleet and mobile asset management solutions. Our subscriptions generally include access to our SaaS solutions, connectivity, and in many cases, use of an in-vehicle device. We also generate revenues from the sale of in-vehicle devices, which enable customers to use our subscription-based solutions, installation services of our in-vehicle-devices and driver training for fleet customers. We generate sales through the efforts of our direct sales teams, staffed in our regional sales offices, and through our global network of distributors and dealers. Our direct sales teams focus on marketing our fleet solutions to global and multinational enterprise accounts and to other large customer accounts located in regions of the world where we maintain a direct sales presence. Our direct sales teams have industry expertise across multiple industries, including oil and gas, transportation and logistics, government and municipal, bus and coach, rental and leasing, and utilities. In some markets, we rely on a network of distributors and dealers to sell our solutions on our behalf. Our distributors and dealers also install our in-vehicle devices and provide training, technical support and ongoing maintenance for the customers they support.

Impact of COVID-19

In December 2019, a novel strain of coronavirus was reported in China (“COVID-19”). In January 2020, the World Health Organization (“WHO”) declared this outbreak a Public Health Emergency of international concern and, subsequently, it was declared a pandemic in March 2020. The outbreak continued to spread globally, affecting global economic activity and financial markets. We ~~are unable to accurately predict~~have considered the impact ~~that~~of COVID-19 ~~will have due to~~including its impact on expected credit losses and potential goodwill impairments, however numerous uncertainties remain, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact on our customers and other factors identified in Part II Item 1A. “Risk Factors”.

Business, employees and operations

Due to extensive measures implemented by various governments, all of our employees were required to work remotely, ~~with the exception of~~except for our staff working in our monitoring centers, which were classified as an essential service. We have implemented appropriate safeguards for these centers. In addition, we have modified certain business and workforce practices (including extended work from home requirements, suspension of certain business travel and cancellation of certain physical participation in meetings, events and conferences) and implemented new protocols to promote social distancing and enhance sanitary measures in our offices and facilities to conform to government restrictions and best practices encouraged by governmental and regulatory authorities.

2019

During the first quarter of fiscal 2021, we implemented various cost-saving measures, including headcount reductions, deferred salary increases, a hiring freeze across the business, and significant reductions in discretionary spending. We expect to realize the full benefit of these actions in the second quarter and beyond. As part of the headcount reductions in the quarter, we incurred a $0.8 million restructuring charge as we committed to plans to restructure certain parts of our business as a measure to minimize the adverse economic and business effect of the COVID-19 pandemic and to re-align resources to our current business outlook and cost structure. The restructuring activities mainly related to the Central Service Organization (“~~CSO~~”~~) and the Africa reporting segment.~~

COVID-19 has disrupted the operations of our customers and channel partners, our operations and the results of our operations. COVID-19 currently has had and, we believe, will continue to have an adverse impact on global economies and financial markets. For example the continued economic uncertainty in the oil and gas sector has resulted in significant declines in our customer’s fleet sizes whilst similar disruption is evident in our bus and coach vertical following significantly reduced demand for public transport as a result of various governmental shut downs in multiple jurisdictions in which we operate in. This has and will continue to have a negative impact on our revenue and our results of operations, the size and duration of which we are currently unable to predict. During the first ~~quarter~~three months of fiscal ~~2021~~year 2022, we experienced a ~~contraction~~growth of ~~30,700~~ 8,800 subscribers as a result of the ~~impact~~easing of COVID-19 ~~and~~pandemic restrictions in certain jurisdictions in which we ~~expect this~~operate. The net ~~contraction to continue throughout fiscal year 2021. The net contraction~~growth in subscribers ~~together with certain pricing concessions, resulted in a decrease in~~increased our reported subscription revenues.

Cash resources and liquidity

Based on our internal projections, we believe that we have sufficient cash reserves to support us for the foreseeable future. Further details on our cash resources and borrowings available under our credit facilities are provided in the liquidity and capital resources section below.

Financial position and impairments

We have taken into account the impact of COVID-19, to the extent possible, on our financial statements as atof the reporting date. However, future changes in economic conditions related to COVID-19 could have an impact on future estimates and judgements used, particularly those relating to goodwill sensitivities and impairment assessments, as well as expected credit losses. We will continue to evaluate the nature and extent of the impact toon our business, consolidated results of operations, and financial condition.

Key Financial Measures and Operating Metrics

In addition to financial measures based on our consolidated financial statements, we monitor our business operations using various ~~financially~~financial and ~~non-financially derived~~non-financial metrics.

Subscription Revenue

Subscription revenue represents subscription fees for our solutions, which include the use of our SaaS fleet management solutions, connectivity, and in many cases, our in-vehicle devices. Our subscription revenue is driven primarily by the number of subscribers and the monthly price per subscriber, which varies depending on the services and features customers require, hardware options, customer size and geographic location.

Subscription revenue has ~~increased~~decreased as a percentage of total revenue due to ~~a reduction~~an increase in hardware and other revenue. In the three months ended June 30, ~~2019~~2020 and ~~2020,~~2021, subscription revenue represented ~~87.2%~~94.1% and ~~94.1%~~89.1% respectively, of our total revenue.

Subscribers

Subscribers represent the total number of discrete services we provide to customers at the end of the period.

Three Months Ended June 30,
2019 2020
Subscribers 766,888 787,750


	As of June 30,
	2020	2021
Subscribers	787,750	753,474

~~As shown in the table above subscribers increased from June 2019 to June 2020, however as discussed in the~~ ~~Results of Operations for the Three Months Ended June 30, 2019 and 2020~~ ~~section below, the number of subscribers decreased by 30,700 during the three months ended June 30, 2020.~~

Basis of Presentation and Key Components of Our Results of Operations

In the first quarter of fiscal year ~~2021,~~2022, we managed our business in six segments which include Africa, Americas, Brazil, Europe and the Middle East and Australasia (our regional sales offices (“RSOs”)), and our ~~CSO.~~central services organization (“CSO”). CSO is ~~our~~the central services organization that wholesales ~~our~~ products and services to ~~our~~ RSOs which, 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~~the other reportable segments. CSO is a reportable segment because it produces discrete financial information which is reviewed by the chief operating ~~segments.~~decision maker (“CODM”) and has the ability to generate external revenues.

The CODM has been identified as the Chief Executive Officer who ~~is responsible for allocating resources and assessing~~makes strategic decisions. The performance of the reportable segments has been ~~identified collectively as the executive committee and the Chief Executive Officer who make strategic decisions. Segment performance is~~ measured and evaluated by the CODM using Segment Adjusted EBITDA, which is a ~~non-GAAP~~

measure ~~which~~that uses net income ~~determined under International Financial Reporting Standards (“IFRS”) as issued by~~excluding net interest income/(expense), foreign exchange gains or losses, operating lease expenses, stock-based compensation costs, restructuring costs, and gains or losses on the ~~International Accounting Standards Board, as a starting point. Prior to the publication~~disposal or impairments of ~~the financial results for the year ended March 31, 2020, we published results under IFRS only, which~~long-lived assets and subsidiaries. Product development costs are capitalized and amortized and this amortization is ~~the reason for the CODM continuing to use a segment performance measure based on IFRS.~~excluded from Segment Adjusted EBITDA.

In determining Segment Adjusted EBITDA, the margin generated by CSO, net of any unrealized intercompany profit, is allocated to the geographic region where the external revenue is recorded by our RSOs. The costs remaining in CSO relate mainly to research and development of hardware and software platforms, common marketing, product management and technical and distribution support to each of the RSOs.

Each RSO’s results ~~therefore reflects~~reflect the external revenue earned, as well as the Segment Adjusted EBITDA earned (or loss incurred) before the remaining CSO and corporate costs allocations. Segment assets are not disclosed ~~as this~~because such information is not reviewed by the CODM.

Revenue

The majority of our revenue is subscription-based. Consequently, growth in subscribers influences our subscription revenue growth. However, other factors, including, but not limited to, the types of new subscribers we add and the timing of entry into subscription contracts also play a significant role. The price and terms of our customer subscription contracts vary based on ~~a number of~~many factors, including fleet size, hardware options, geographic region and distribution channel. In addition, we derive revenue from the sale of in-vehicle devices, which are used to collect, generate and transmit the data used to enable our SaaS solutions.

Our customer contracts typically have a three to five year initial term. Following the initial term, most fleet customers elect to renew for fixed terms ranging from one to five years. Our third party dealers are typically billed monthly based on active connections. Some of our customer agreements, including our consumer subscriptions, provide for automatic monthly or yearly renewals unless the customer elects not to renew its subscription. Our consumer customer contracts in South Africa are governed by the Consumer Protection Act, which allows customers to cancel without paying the full balance of the contract amount. Our fleet contracts and our customer contracts outside of South Africa are generally non-cancellable.

Cost of Revenue

Cost of revenue associated with our subscription revenue consists primarily of costs related to cellular communications, infrastructure hosting, third-party data providers, service contract maintenance costs, commission expense related to third party dealers or distributors (commission is capitalized and amortized unless the amortization period is 12 months or less) and depreciation of our capitalized installed in-vehicle devices. Cost of sales associated with our hardware revenue includes the cost of the in-vehicle devices, cost of hardware warranty, shipping costs, custom duties, and commission expense related to ~~third party~~third-party dealers or distributors. We capitalize the cost of in-vehicle devices utilized to service customers, for customers selecting our bundled option, and we depreciate these costs from the date of installation over their expected useful lives.

We expect that cost of revenue as a percentage of revenue will vary from period to period depending on our revenue mix, including the proportion of our revenue attributable to our subscription-based services. The majority of the other components of our cost of revenue are variable and are affected by the number of subscribers, the composition of our subscriber base, and the number of new subscriptions sold in the period.

Operating Expenses

Sales and Marketing

Sales and marketing expenses consist primarily of salaries and wages to sales and marketing employees, commissions paid to employees, travel-related expenses, and advertising and promotional costs. We pay our sales employees commissions based on achieving subscription targets and we capitalize commission and amortize it (unless the amortization period is 12 months or less). Advertising costs consist primarily of costs for print, radio and television advertising, promotions, public relations, customer events, tradeshows and sponsorships. We expense advertising costs as incurred. We plan to continue to invest in sales and marketing ~~in order~~ to grow our sales and build brand and category awareness.

Administration and Other Charges

Administration and other charges consist primarily of salaries and wages for administrative staff, travel costs, professional fees (including audit and legal fees), real estate leasing costs, unbillable customer support, expensed research and development costs and depreciation of fixed assets including vehicles and office equipment and amortization of intangible assets. We expect that administration and other charges will increase in absolute terms as we continue to grow our business.

Research and Development

For additional disclosures in respect of research and development, technology and intellectual property please refer to “Item 1. Business” in our Annual Report on Form 10-K for the year ended March 31, ~~2020,~~2021, which we filed with the Securities and Exchange Commission on ~~July 23, 2020.~~June 14, 2021.

Taxes

During the three months ended June 30, ~~2019~~2020 and ~~2020~~2021 our effective tax rates were ~~18.6% and~~ 3.7% and 14.4% respectively, compared to a South African statutory rate of 28%. Taxation mainly consists of normal st~~atutory~~statutory income tax paid or payable and deferred tax on any temporary differences.

Our effective tax rate may vary primarily according to the mix of profits made in various jurisdictions and the impact of certain non-deductible/(non-taxable) foreign exchange movements, net of tax. Further information on this is disclosed in ~~note 7~~ Note 8. Income Taxes contained in the “Notes to Condensed Consolidated Financial Statements” included in Part I of this Quarterly Report on Form 10-Q. As a result, significant variances in future periods may occur.

Results of Operations

The following table sets forth certain consolidated statement of income data:


	Three Months Ended June 30,
	2020			2021

	(In thousands)



Total revenue	$	27,497		$	34,898
Total cost of revenue	8,578			12,043
Gross profit	18,919			22,855
Sales and marketing	2,746			3,512
Administration and other	13,491			15,007
Income from operations	2,682			4,336
Other expense	98			135
Net interest expense	70			78
Income tax expense	92			592
Net income for the period	2,422			3,531
Net income attributable to MiX Telematics Limited stockholders	2,422			3,531
Net income attributable to non-controlling interest	—			—
Net income for the period	$	2,422		$	3,531

The following table sets forth, as a percentage of revenue, consolidated statement of income data:

	Three Months Ended June 30,
	2020			2021
	(Percentage)
Total revenue	100.0		%	100.0		%
Total cost of revenue	31.2			34.5
Gross profit	68.8			65.5
Sales and marketing	10.0			10.1
Administration and other	49.1			43.0
Income from operations	9.8			12.4
Other expense	0.4			0.4
Net interest expense	0.3			0.2
Income tax expense	0.3			1.7
Net income for the period	8.8			10.1
Net income attributable to MiX Telematics Limited stockholders	8.8			10.1
Net income attributable to non-controlling interest	—			—
Net income for the period	8.8			10.1

Results of Operations for the Three Months Ended June 30, 2020 and 2021

Revenue


	Three Months Ended June 30,
	2020		2021		% Change		% Change at constant currency
	(In thousands, except for percentages)
Subscription revenue	$	25,875	$	31,090	20.2	%	3.5	%
Hardware and other revenue	1,622		3,808		134.8	%	106.9	%
	$	27,497	$	34,898	26.9	%	9.6	%

Our total revenue increased by $7.4 million or 26.9%, from the first quarter of fiscal year 2021. The principal factors affecting our revenue growth included:

•Subscription revenues increased by 20.2% to $31.1 million, compared to $25.9 million for the first quarter of fiscal year 2021. Subscription revenues represented 89.1% of total revenues during the first quarter of fiscal year 2022. Subscription revenues increased by 3.5% on a constant currency basis, year over year.From March 31, 2021 to June 30, 2021, our subscriber base grew by a net 8,800 subscribers to 753,400 subscribers at June 30, 2021.

The majority of our revenues and subscription revenues are derived from currencies other than the U.S. Dollar. Accordingly, the weakening of the U.S. Dollar against these currencies (in particular against the South African Rand) following currency volatility arising from the economic disruption caused by COVID-19, has positively impacted our revenue and subscription revenues reported in U.S. Dollars. Compared to the first quarter of fiscal year 2021, the South African Rand strengthened by 21% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate averaged R14.14 in the current quarter compared to an average of R17.97 during the first quarter of fiscal year 2021. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the first quarter of fiscal year 2022 led to a 16.7% increase in reported U.S. Dollar subscription revenues.

•Hardware and other revenue increased by $2.2 million, or 134.8%, from the first quarter of fiscal year 2021.

The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the first quarter of fiscal year 2022 led to a 17.3% increase in reported U.S. Dollar revenues.

A breakdown of third-party revenue by segment is shown in the table below:


	Three Months Ended June 30,
	2020		2021		2020		2021		2020		2021
	(In thousands)
	Total Revenue				Subscription Revenue				Hardware and Other Revenue
Africa	$	14,524	$	19,926	$	13,923	$	18,711	$	601	$	1,215
Americas	4,330		3,818		4,175		3,623		155		195
Europe	2,984		4,634		2,850		3,373		134		1,261
Middle East and Australasia	4,590		5,454		3,881		4,349		709		1,105
Brazil	1,054		1,052		1,031		1,020		23		32
CSO	15		14		15		14		—		—
Total	$	27,497	$	34,898	$	25,875	$	31,090	$	1,622	$	3,808

In the Africa segment, subscription revenue increased by $4.8 million, or 34.4%. On a constant currency basis, the increase in subscription revenue was 8.2%. Subscribers decreased by 6.7% since July 1, 2020. Hardware and other revenue increased by $0.6 million, or 102.2%. Total revenue increased by $5.4 million, or 37.2%. Total revenue increased by 10.7% on a constant currency basis.

In the Americas segment, subscription revenue declined by $0.6 million, or 13.2% as a result of a 20.4% decrease in subscribers since July 1, 2020. Hardware and other revenue increased by $0.1 million, or 25.8%. Total revenue declined by $0.5 million, or 11.8%.

In the Europe segment, subscription revenue increased by $0.5 million, or 18.4%. On a constant currency basis, subscription revenue increased by 10.0%. Subscribers increased by 19.6% since July 1, 2020. Total revenue increased by $1.7 million, or 55.3%, also due to an increase in hardware and other revenues of $1.1 million compared to the three months ended June 30, 2020. Total revenue increased by 44.1% on a constant currency basis.

Subscription revenue in the Middle East and Australasia segment increased by $0.5 million or 12.1%. On a constant currency basis, the increase in subscription revenue was 2.2%. Subscribers increased by 1.3% since July 1, 2020. Hardware and other revenue increased by $0.4 million or 55.9%. Total revenue increased by $0.9 million or 18.8%. Total revenue in constant currency increased by 7.1%.

In the Brazil segment, subscription revenue declined by 1.1%. On a constant currency basis, subscription revenue decreased by 2.1%. Subscribers increased by 6.8% since July 1, 2020. Hardware and other revenue increased by 39.1%. Total revenue declined by 0.2%. On a constant currency basis, total revenue decreased by 1.3%.

Cost of Revenue


	Three Months Ended June 30,
	2020			2021
	(In thousands, except for percentages)




Cost of revenue - subscription	$	7,349		$	9,127
Cost of revenue - hardware and other	1,229			2,916

Gross profit	$	18,919		$	22,855
Gross profit margin	68.8		%	65.5		%
Gross profit margin - subscription	71.6		%	70.6		%
Gross profit margin - hardware and other	24.2		%	23.4		%

Compared to an increase in total revenue of $7.4 million, cost of revenues increased by $3.5 million, or 40.4%, from the first quarter of fiscal year 2021. This together with the higher levels of hardware and other revenue resulted in a lower gross profit margin of 65.5% in the first quarter of fiscal year 2022 compared to 68.8% in the first quarter of fiscal year 2021.

Subscription revenue, which generates a higher gross profit margin than hardware and other revenue, contributed 89.1% of total revenue in the first quarter of fiscal year 2022 compared to 94.1% in the first quarter of fiscal year 2021.

During the first quarter of fiscal year 2022, hardware and other margins were lower than in the first quarter of fiscal year 2021, mainly due to the geographical sales mix and the distribution channels. Hardware sales via our dealer channel generate lower gross margins.

Sales and Marketing


	Three Months Ended June 30,
	2020			2021
	(In thousands, except for percentages)



Sales and marketing	$	2,746		$	3,512
As a percentage of revenue	10.0		%	10.1		%

Sales and marketing costs increased by $0.8 million, or 27.9%, from the first quarter of fiscal year 2021 to the first quarter of fiscal year 2022 against a 26.9% increase in total revenue. The increase in the first quarter of fiscal year 2022 was primarily as a result of increases of $0.3 million in advertising costs, $0.3 million in employee costs and $0.1 million in bonuses. In the first quarter of fiscal year 2022, sales and marketing costs represented 10.1% of revenue compared to 10.0% of revenue in the first quarter of fiscal year 2021.

Administration and Other Expenses


	Three Months Ended June 30,
	2020			2021
	(In thousands, except for percentages)



Administration and other	$	13,491		$	15,007
As a percentage of revenue	49.1		%	43.0		%

Administration and other expenses increased by $1.5 million, or 11.2%, from the first quarter of fiscal year 2021 to the first quarter of fiscal year 2022.

The increase mainly relates to increases of $1.2 million in salaries and wages, $0.3 million in information & technology costs, $0.3 million in professional fees, $0.2 million in training and recruitment costs and $0.1 million in insurance costs and other increases of $0.2 million, none of which were individually significant, offset by $0.8 million saving due to restructuring costs incurred during the first quarter of fiscal year 2021.

Taxation


	Three Months Ended June 30,
	2020			2021
	(In thousands, except for percentages)


Income tax expense	$	92		$	592
Effective tax rate	3.7		%	14.4		%

Taxation expense increased by $0.5 million. In the first quarter of fiscal year 2022, the income tax expense included a $0.8 million deferred tax credit on a U.S. Dollar intercompany loan between MiX Telematics Limited and MiX Telematics Investments Proprietary Limited (“MiX Investments”), a wholly-owned subsidiary. During the first quarter of fiscal 2021, the income tax expense included a $0.7 million deferred tax credit on a U.S. Dollar intercompany loan between MiX Telematics Limited and MiX Investments. Ignoring the impact of net foreign exchange losses net of tax, the tax rate which was used in determining non-GAAP net income, was 31.8% in the first quarter of fiscal year 2022 compared to 30.2% in the first quarter of fiscal year 2021.

Non-GAAP Financial Information

We use certain measures to assess the financial performance of our 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, non-GAAP net income, ~~and~~ non-GAAP net income per ~~share.~~share 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 ~~U.S.~~ GAAP.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA and Adjusted EBITDA margin are two of the profit measures reviewed by the ~~chief operating decision maker (“CODM”).~~CODM. We define Adjusted EBITDA as the income before income taxes, net interest ~~income,~~income/(expense), net foreign exchange gains/(losses), depreciation of property 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, restructuring costs and profits/(losses) on the disposal or impairments of assets or subsidiaries. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue.

We have included Adjusted EBITDA and Adjusted EBITDA margin in this Quarterly Report on Form 10-Q because they are key measures that our management and Board of Directors use to understand and evaluate ~~its~~our 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 ~~our~~the Company's core business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating our operating results.

A reconciliation of net income (the most directly comparable financial measure presented in accordance with ~~U.S.~~ GAAP) to Adjusted EBITDA for the periods shown is presented below.


Reconciliation of net income to Adjusted EBITDA for the period
Reconciliation of Net Income to Adjusted EBITDA for the Period									Reconciliation of Net Income to Adjusted EBITDA for the Period
			Three Months Ended June 30,										Three Months Ended June 30,
			2019			2020				2020			2021
		(In thousands)											(In thousands)

Net income	Net income		$	4,996		$	2,422		Net income	$	2,422		3,531
Plus: Income tax expense	Plus: Income tax expense		1,140			92			Plus: Income tax expense	92			592
(Less)/plus: Net interest (income)/expense			(73)			70
(Less)/plus: Foreign exchange (gains)/losses			(47)			105
Plus: Net interest expense									Plus: Net interest expense	70			78
Plus: Foreign exchange losses									Plus: Foreign exchange losses	105			76
Plus: Depreciation ⁽¹⁾	Plus: Depreciation ⁽¹⁾		3,277			2,836			Plus: Depreciation (1)	2,836			2,694
Plus: Amortization ⁽²⁾	Plus: Amortization ⁽²⁾		975			792			Plus: Amortization (2)	792			985

Plus: Stock-based compensation costs	Plus: Stock-based compensation costs		111			293			Plus: Stock-based compensation costs	293			364

(Less)/plus: Net (profit)/loss on sale of property and equipment			(316)			1
Plus: Net loss on sale of property and equipment									Plus: Net loss on sale of property and equipment	1			—

Plus: Restructuring costs	Plus: Restructuring costs		—			844			Plus: Restructuring costs	844			1

Adjusted EBITDA	Adjusted EBITDA		$	10,063		$	7,455		Adjusted EBITDA	$	7,455		$	8,321
Adjusted EBITDA margin	Adjusted EBITDA margin		27.7		%	27.1		%	Adjusted EBITDA margin	27.1		%	23.8		%

(1)

⁽¹⁾ Includes depreciation of owned equipment (including in-vehicle devices).

⁽²⁾ Includes amortization of intangible assets (including intangible assets identified as part of a business combination).

Our use of Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and ~~you~~ should not ~~consider these~~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 us;

•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, ~~you should consider~~ Adjusted EBITDA and Adjusted EBITDA margin should be considered alongside other financial performance measures, including ~~operating profit, profit for the period~~income from operations, net income and our other results.

Basic and Diluted ~~non-GAAP net income per share~~Non-GAAP Net Income Per Share

Non-GAAP net income is defined as net income excluding net foreign exchange gains/(losses) net of ~~tax.~~tax divided by the weighted average number of ordinary shares in issue during the period.

We have included non-GAAP net income per share in this quarterly report because it provides a useful measure for period-to-period comparisons of our core business by excluding net foreign exchange gains/(losses) net of tax and associated tax consequences from earnings. Accordingly, we believe that non-GAAP net income per share provides useful information to investors and others in understanding and evaluating our operating results.

Reconciliation of net income to non-GAAP net income
Three Months Ended June 30,
2019 2020
(In thousands)
Net income for the period $ 4,996 $ 2,422
Net foreign exchange (gains)/losses (47) 105
Income tax effect of net foreign exchange gains (532) (698)
Non-GAAP net income $ 4,417 $ 1,829
Weighted average number of ordinary shares in issue
Basic 562,060 547,124
Diluted 579,241 558,702


Reconciliation of net income to non-GAAP net income
	Three Months Ended June 30,
	2020		2021
	(In thousands)

Net income for the period	$	2,422	$	3,531
Net foreign exchange losses	105		76

Income tax effect of net foreign exchange gains	(698)		(742)
Non-GAAP net income	$	1,829	$	2,865

Weighted average number of ordinary shares in issue
Basic	547,124		551,860
Diluted	558,702		565,020

Constant Currency Information

Constant currency information has been presented in the sections below to illustrate the impact of changes in currency rates on our results. The constant currency information has been determined by adjusting the current financial reporting quarter’s results to the prior quarter’s average exchange rates, determined as the average of the monthly exchange rates applicable to the quarter. The measurement has been performed for each of our currencies, including the ~~U.S. Dollar~~South African Rand and British Pound. The constant currency growth percentage has been calculated by utilizing the constant currency results compared to the prior quarter 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-U.S. Dollar denominated currencies, we also calculate our subscription revenue growth rate on a constant currency basis, thereby removing the effect of currency fluctuation on our results of operations.

The following tables provide the constant currency reconciliation to the most directly comparable GAAP measure for the periods shown:

Subscription Revenue

Three Months Ended June 30,
2019 2020 % Change
(In thousands, except for percentages)
Subscription revenue as reported $ 31,638 $ 25,875 (18.2) %
Conversion impact U.S. Dollar/other currencies — 3,833 12.1 %
Subscription revenue on a constant currency basis $ 31,638 $ 29,708 (6.1) %


	Three Months Ended June 30,
	2020		2021		% Change
	(In thousands, except for percentages)
Subscription revenue as reported	$	25,875	$	31,090	20.2	%
Conversion impact of U.S. Dollar/other currencies	—		(4,309)		(16.7)	%
Subscription revenue on a constant currency basis	$	25,875	$	26,781	3.5	%

Hardware and Other Revenue


		Three Months Ended June 30,											Three Months Ended June 30,
		2019		2020		% Change			2020		2021			% Change
		(In thousands, except for percentages)											(In thousands, except for percentages)
Hardware and other revenue as reported	Hardware and other revenue as reported	$	4,645	$	1,622	(65.1)	%	Hardware and other revenue as reported	$	1,622	$	3,808		134.8	%
Conversion impact U.S. Dollar/other currencies		—		91		2.0	%
Conversion impact of U.S. Dollar/other currencies								Conversion impact of U.S. Dollar/other currencies	—		(452)			(27.9)	%
Hardware and other revenue on a constant currency basis	Hardware and other revenue on a constant currency basis	$	4,645	$	1,713	(63.1)	%	Hardware and other revenue on a constant currency basis	$	1,622	$	3,356		106.9	%

Total Revenue


		Three Months Ended June 30,											Three Months Ended June 30,
		2019		2020		% Change			2020		2021			% Change
		(In thousands, except for percentages)											(In thousands, except for percentages)
Total revenue as reported	Total revenue as reported	$	36,283	$	27,497	(24.2)	%	Total revenue as reported	$	27,497	$	34,898		26.9	%
Conversion impact U.S. Dollar/other currencies		—		3,924		10.8	%
Conversion impact of U.S. Dollar/other currencies								Conversion impact of U.S. Dollar/other currencies	—		(4,761)			(17.3)	%
Total revenue on a constant currency basis	Total revenue on a constant currency basis	$	36,283	$	31,421	(13.4)	%	Total revenue on a constant currency basis	$	27,497	$	30,137		9.6	%

~~Results of Operations~~

~~The following table sets forth certain consolidated statement of income data:~~

Three Months Ended June 30,
2019 2020
(In thousands)
Total revenue $ 36,283 $ 27,497
Total cost of revenue 12,228 8,578
Gross profit 24,055 18,919
Sales and marketing 3,581 2,746
Administration and other 14,786 13,491
Income from operations 5,688 2,682
Other income/(expense) 375 (98)
Net interest income/(expense) 73 (70)
Income tax expense 1,140 92
Net income for the period 4,996 2,422
Net income attributable to MiX Telematics Limited stockholders 4,996 2,422
Net income attributable to non-controlling interest — —
Net income for the period $ 4,996 $ 2,422
The following sets forth, as a percentage of revenue, consolidated statement of income data:
2019 2020
(Percentage)
Total revenue 100.0 % 100.0 %
Total cost of revenue 33.7 31.2
Gross profit 66.3 68.8
Sales and marketing 9.9 10.0
Administration and other 40.8 49.1
Income from operations 15.7 9.8
Other income/(expense) 1.0 (0.4)
Net interest income/(expense) 0.2 (0.3)
Income tax expense 3.1 0.3
Net income for the period 13.8 8.8
Net income attributable to MiX Telematics Limited stockholders 13.8 8.8
Net income attributable to non-controlling interest — —
Net income for the period 13.8 8.8

~~Results of Operations for the Three Months Ended June 30, 2019 and 2020~~

~~Revenue~~

Three Months Ended June 30,
2019 2020 % Change % Change at constant currency
(In thousands, except for percentages)
Subscription revenue $ 31,638 $ 25,875 (18.2) % (6.1) %
Hardware and other revenue 4,645 1,622 (65.1) % (63.1) %
$ 36,283 $ 27,497 (24.2) % (13.4) %

~~Our total revenue decreased by $8.8 million or 24.2%, from the first quarter of fiscal year 2020. The principal factors affecting our revenue contraction included:~~

•Subscription revenues decreased by 18.2% to $25.9 million, compared to $31.6 million for the first quarter of fiscal 2020. Subscription revenues represented 94.1% of total revenues during the first quarter of fiscal 2021. Subscription revenues decreased by 6.1% on a constant currency basis, year over year. The decline in constant currency subscription revenue was primarily due to the impact of pricing concessions granted to customers combined with contraction in our subscriber base as a result of economic conditions attributable to the COVID-19 pandemic. From March 31, 2020 to June 30, 2020, our subscriber base contracted by 30,700 subscribers primarily due to significantly lower gross additions. In addition, we experienced fleet contraction in a number of key verticals such as the ~~oil and gas~~ ~~vertical and the public transport vertical which impacted both our subscriber-count and subscription revenue line.~~

The majority of our revenues and subscription revenues are derived from currencies other than the U.S. Dollar. Accordingly, the strengthening of the U.S. Dollar against these currencies (in particular against the South African Rand) following currency volatility arising from the economic disruption caused by COVID-19, has negatively impact our revenue and subscription revenues reported in U.S. Dollars. Compared to the first quarter of fiscal year 2020, the South African Rand weakened by 25.0% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate averaged R17.97 in the current quarter compared to an average of R14.38 during the first quarter of fiscal year 2020. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the first quarter of fiscal 2020 led to a 12.1% reduction in reported U.S. Dollar subscription revenues.

•Hardware and other revenue decreased by $3.0 million, or 65.1%, from the first quarter of fiscal year 2020 primarily as a result of a global economic slowdown following the disruption caused by the COVID-19 pandemic. As shown in the table below hardware and other revenue was lower across all geographical segments.

~~The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the first quarter of fiscal 2021 led to a 10.8% reduction in reported U.S. Dollar revenues.~~

~~A breakdown of third party revenue is shown in the table below:~~

Three Months Ended June 30,
2019 2020 2019 2020 2019 2020
(In thousands)
Total Revenue Subscription Revenue Hardware and Other Revenue
Africa $ 19,067 $ 14,524 $ 17,686 $ 13,923 $ 1,381 $ 601
Americas 6,548 4,330 5,662 4,175 886 155
Europe 3,344 2,984 2,787 2,850 557 134
Middle East and Australasia 5,884 4,590 4,261 3,881 1,623 709
Brazil 1,378 1,054 1,217 1,031 161 23
CSO 62 15 25 15 37 —
Total $ 36,283 $ 27,497 $ 31,638 $ 25,875 $ 4,645 $ 1,622

~~In the Africa segment, subscription revenue declined by $3.8 million, or 21.3%. On a constant currency basis, the contraction in subscription revenue was 3.0%.~~ Subscribers increased by 4.0% since July 1, 2019. Pricing concessions granted due to COVID-19 combined with lower ARPUs due to economic conditions in South Africa resulted in the decline in subscription revenue compared to the three months ended June 30, 2019. ~~Hardware and other revenue declined by $0.8 million, or 56.4%. Total revenue declined by $4.5 million, or 23.8%. On a constant currency basis, the total revenue decline was 6.5%.~~

~~In the Americas segment, subscription revenue declined by $1.5 million, or 26.3% due to contraction, pricing concessions and lower ARPUs in the oil and gas vertical. Subscribers decreased by 9.1% since July 1, 2019 due to the contraction in the oil and gas vertical.~~ ~~Hardware and other revenue declined by $0.7 million, or 82.6%.~~ T~~otal revenue declined by $2.2 million, or 33.9%.~~

~~In the Europe segment, subscription revenue growth was $0.1 million, or 2.3%. On a constant currency basis, the growth in subscription revenue was 4.7%. Despite subscribers decreasing by 5.2% since July 1, 2019, the segment has added a significant number of high ARPU bundled premium subscribers since July 1, 2019. T~~otal revenue decreased by $0.4 million, or 10.8%, due to a decrease in hardware and other revenues of $0.4 million compared to the three months ended June 30, 2019. Total revenue declined by 8.6% on a constant currency basis.

~~Subscription revenue in the Middle East and Australasia segment declined by $0.4 million or 8.9%. On a constant currency basis, the decline in subscription revenue was 4.9% and was impacted by~~ ~~lower ARPU in the oil and gas vertical. Subscribers increased by 4.5% since July 1, 2019.~~ ~~Hardware and other revenue declined by $0.9 million or 56.3%.~~ ~~Total revenue declined by $1.3 million or 22.0%.~~ ~~Total revenue in constant currency declined by 19.0%.~~

~~In the Brazil segment, subscription revenue declined by $0.2 million or 15.4%. On a constant currency basis, subscription revenue increased by 15.9%.~~ ~~The increase was mainly due to an increase in subscribers of 11.5% since July 1, 2019.~~ ~~Hardware and other revenue declined by $0.1 million, or 85.4%. Total revenue declined by $0.3 million or 23.6%. On a constant currency basis, total revenue increased by 4.7%.~~

~~Cost of Revenue~~

Three Months Ended June 30,
2019 2020
(In thousands, except for percentages)
Cost of revenue - subscription $ 9,295 $ 7,349
Cost of revenue - hardware and other 2,933 1,229
Gross profit $ 24,055 $ 18,919
Gross profit margin 66.3 % 68.8 %
Gross profit margin - subscription 70.6 % 71.6 %
Gross profit margin - hardware and other 36.9 % 24.2 %

Compared to a decrease in total revenue of $8.8 million or 24.2%, cost of revenues decreased by $3.7 million, or 29.9%, from the first quarter of fiscal year 2020. This resulted in a higher gross profit margin of 68.8% in the first quarter of fiscal year 2021 compared to 66.3% in the first quarter of fiscal year 2020.

~~Subscription revenue, which generates a higher gross profit margin than hardware and other revenue, contributed 94.1% of total revenue compared to 87.2% in the first quarter of fiscal year 2020.~~

During the first quarter of fiscal 2021, hardware and other margins were lower than in the first quarter of fiscal 2020, mainly due to the geographical sales mix and the distribution channels. Hardware sales via our dealer channel generate lower gross margins.

~~Sales and Marketing~~

Three Months Ended June 30,
2019 2020
(In thousands, except for percentages)
Sales and marketing $ 3,581 $ 2,746
As a percentage of revenue 9.9 % 10.0 %

~~Sales and marketing costs decreased by $0.8 million, or 23.3%, from the first quarter of fiscal year 2020 to the first quarter of fiscal year 2021 against a 24.2% decrease in total rev~~enue. The decrease in the first quarter of fiscal year 2021 was primarily as a result of savings of $0.3 million in employee costs, $0.2 million in bonuses, $0.2 million in travel costs and a $0.1 million decrease in advertising spend. In the first quarter of fiscal year 2021, sales and marketing costs represented 10.0% of revenue compared to 9.9% of revenue in the first quarter of fiscal year 2020.

~~Administration and Other Expenses~~

For the three months ended June 30,
2019 2020
(In thousands, except for percentages)
Administration and other $ 14,786 $ 13,491
As a percentage of revenue 40.8 % 49.1 %

~~Administration and other expenses decreased by $1.3 million, or 8.8%, from the first quarter of fiscal year 2020 to the first quarter of fiscal year 2021.~~

The decrease mainly relates to savings of $0.9 million in salaries and wages, bonuses of $0.5 million primarily due to lower subscription revenue growth being achieved as a result of COVID-19, travel costs of $0.2 million and other decreases of $0.1 million, none of which were individually significant, offset by restructuring costs of $0.8 million and increases in expected credit loss provision of $0.3 million.

~~Taxation~~

For the three months ended June 30,
2019 2020
(In thousands, except for percentages)
Income tax expense $ 1,140 $ 92
Effective tax rate 18.6 % 3.7 %

~~Taxation expense decreased by $1.0 million, or 91.9%. In the first quarter of fiscal year 2021, the income tax expense decreased due to lower profitability and also included a~~ ~~$0.7 million deferred tax~~ ~~credit on a U.S. Dollar intercompany loan between MiX Limited and MiX Investments, a wholly-owned subsidiary. During the first quarter of fiscal 2020, the income tax expense included a~~ ~~$0.5 million deferred tax~~ credit on a U.S. Dollar intercompany loan between MiX Limited and MiX Investments. Ignoring the impact of net foreign exchange gains and losses net of tax, the tax rate which was used in determining non-GAAP net income below, was 30.2% compared to 27.4% in the first quarter of fiscal 2020.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP. Management believes that ~~the Notes to the Condensed Consolidated Financial Statements~~there have ~~had no~~not been any significant changes in our critical accounting policies and estimates during the first ~~quarter~~three months of fiscal ~~2021~~year 2022 as compared to the items that we disclosed as our critical accounting policies and estimates in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended March 31, ~~2020,~~2021, which we filed with the Securities and Exchange Commission on ~~July 23,~~June 14, ~~2020.~~2021.

3129

Liquidity and Capital Resources

We believe that our cash and borrowings available under our credit facilities will be sufficient to meet our liquidity requirements for the foreseeable future. ~~We have minimum liquidity~~Liquidity risk is reduced as a result of stable income due to the recurring nature of ~~its~~our income, ~~and the availability of the~~available cash resources, ~~set out below.~~as well as unutilized facilities which are available.

The following tables provide a summary of our cash flows for each of the three months ended June 30, ~~2019~~2020 and ~~2020:~~2021:

Three Months Ended June 30,
2019 2020
(In thousands)
Net cash provided by operating activities $ 5,731 $ 9,357
Net cash used in investing activities (5,147) (2,120)
Net cash used in financing activities (2,150) (1,069)
Net (decrease)/increase in cash and cash equivalents (1,566) 6,168
Cash and cash equivalents, and restricted cash at beginning of the period 27,838 18,652
Effect of exchange rate changes on cash and cash equivalents, and restricted cash 376 450
Cash, and cash equivalents and restricted cash at the end of the period $ 26,648 $ 25,270

~~The accounting policies applied in the first quarter of fiscal 2021 are consistent with those accounting policies applied in the preparation of the previous consolidated financial statements.~~


	Three Months Ended June 30,
	2020		2021
	(In thousands)
Net cash provided by operating activities	$	9,357	$	4,726
Net cash used in investing activities	(2,120)		(4,340)
Net cash used in financing activities	(1,069)		(259)
Net increase in cash and cash equivalents, and restricted cash	6,168		127
Cash and cash equivalents, and restricted cash at beginning of the period	18,652		46,343
Effect of exchange rate changes on cash and cash equivalents, and restricted cash	450		711
Cash and cash equivalents, and restricted cash at the end of the period	$	25,270	$	47,181

We fund our operations, capital expenditure and acquisitions through cash generated from operating activities, cash on hand and our undrawn borrowing facilities.

It is currently our policy to pay regular dividends, and we consider such dividend payments on a quarter-by-quarter basis.

On May 23, 2017, our Board approved a share repurchase program of up to R270 million ~~(equivalent~~(the equivalent of ~~$15.6~~ $18.9 million as of June 30, ~~2020)~~2021) under which we may repurchase our ordinary shares, including ADSs. We expect ~~any~~any repurchases under this share repurchase program to be funded out of existing cash resources. During the three months ended June 30, ~~2020,~~2021, there were no additional share repurchases. Refer to “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” in our Annual Report on Form 10-K for the year ended March 31, ~~2020,~~2021, which we filed with the Securities and Exchange Commission on ~~July 23, 2020,~~June 14, 2021, for information regarding our share repurchase program.

Operating Activities

Net cash provided by operating activities during the three months ended June 30, 2019 consisted of our cash generated from operations of $5.8 million, net interest received of $0.1 million and taxes paid of $0.2 million.

~~Net cash provided by operating activities during the three months ended June 30, 2020~~ increased to $9.4 million compared to $5.7 million in the three months ended June 30, 2019, which is primarily attributable to improved cash generated from operations of $3.4 million, lower net interest received of $0.1 million and decreased taxation paid of $0.3 million. The improved cash generated from operations is primarily as a result of improved working capital management of $6.0 million (specifically an improvement in accounts receivables of $7.4 million and foreign currency translation adjustments of $0.6 million offset by accounts payables of $2.1 million), offset by lower net income (after excluding non-cash charges) of $2.6 million.

Net cash provided by operating activities during the three months ended June 30, 2020 consisted of our cash generated from operations of $9.2 million, net interest received of $0.03 million and taxes refunded of $0.1 million.

~~Investing Activities~~

Net cash ~~used in investing~~provided by operating activities decreased from $9.4 million in the three months ended June 30, ~~2019 was $5.2 million. Net cash used in investing activities~~2020 to $4.7 million during the three months ended June 30, ~~2019~~2021. This is primarily ~~consisted~~attributable to lower cash generated from operations of $3.8 million and increased taxation paid of $0.9 million. The lower cash generated from operations is primarily as a result of a deterioration in working capital ~~expenditures~~management of ~~$5.1 million. Capital expenditures during the quarter included purchases~~$4.7 million (specifically an increase in accounts receivable of ~~intangible~~$3.4 million, an increase in inventories of $0.1 million, an increase in prepaid expenses and other current assets of $1.3 million, an increase in capitalized commissions of $0.4 million, and an adverse change in foreign currency translation adjustments of $2.0 million, partially offset by an increase in accounts payables of $0.5 million and an increase in accrued expenses of $2.0 million), offset by higher net income (after excluding non-cash charges) of $0.9 million.

Net cash provided by operating activities during the three months ended June 30, 2021 primarily consisted of our cash generated from operations of $5.4 million and taxes paid ~~to purchase property and equipment~~ of ~~$3.8 million, which included in-vehicle devices of $3.6~~$0.7 million. ~~Offset by proceeds on sale of property and equipment and intangible assets of $0.03 million.~~

Investing Activities

Net cash used in investing activities in the three months ended June 30, 2020 ~~decreased to~~was $2.1 ~~million from $5.1 million in the three months ended June 30, 2019.~~million. Net cash used in investing activities during the three months ended June 30, 2020 ~~primarily~~ consisted of capital expenditures of $2.1 million. Capital expenditures during the ~~quarter~~three months included purchases of intangible assets of $1.0 million, and cash paid to purchase property and equipment of $1.1 million, which included in-vehicle devices of $1.0 million. ~~The $2.6 million decline~~

Net cash used in ~~in-vehicle device purchases during the three months June 30, 2020 is primarily due to lower lower sales activity following the disruption caused by the COVD-19 pandemic.~~

~~Financing Activities~~

Ininvesting activities in the three months ended June 30, ~~2019,~~2021 increased to $4.3 million from $2.1 million in the three months ended June 30, 2020. Net cash used in ~~financing~~investing activities ~~of $2.2 million~~during the three months ended June 30, 2021 primarily consisted of ~~dividends paid~~capital expenditures of ~~$1.6~~$4.3 million. Capital expenditures during the three months included purchases of intangible assets of $1.3 million and ~~the repayment~~cash paid to purchase property and equipment of ~~short-term debt~~$3.0 million, which included in-vehicle devices of ~~$0.6~~$2.9 million.

InFinancing Activities

In the three months ended June 30, 2020, the cash used in financing activities of $1.1 million ~~includes share~~consisted of dividends paid of $1.2 million, offset by ~~proceeds from the increase in the bank overdraft~~facilities utilized of $0.1 million.

In the three months ended June 30, 2021, the cash used in financing activities of $0.3 million includes dividends paid of $1.6 million, offset by $1.3 million from facilities utilized.

Credit Facilities

AtAs of June 30, ~~2020,~~2021, our principal sources of liquidity were net cash balances of ~~$22.0~~$43.1 million ~~(consisting~~(consisting of cash and cash equivalents of ~~$24.5~~$46.1 million less short-term debt (bank overdraft) of ~~$2.5~~$3.0 million) and an unutilized borrowing capacity ~~of $2.2~~of $4.5 milli~~million~~on available through our credit facilities.

Our principal sources of credit are our facilities with Standard Bank Limited and Nedbank Limited.

We have an overdraft facility of R64.0 million (the equivalent of ~~$3.7~~$4.5 million as of June 30, ~~2020)~~2021), aan unutilized working capital facility of R25.0 million (the equivalent of ~~$1.4~~$1.7 million as of June 30, ~~2020)~~2021) and an unutilized vehicle and asset finance facility of R8.5 million (the equivalent ~~of $0.4~~of $0.6 million asas of June 30, ~~2020)~~2021) with Standard Bank Limited that bear interest at South African Prime less 1.2% except for the working capital facility that bears interest at South African Prime less 0.25%.

AtAs of June 30, 20~~20,~~21, $~~2.5~~3.0 million was utilized under the overdraft facility. We use this facility as part of our foreign currency hedging strategy. We draw down on this facility in the applicable foreign currency in order to fix the exchange rate on the existing balance sheet foreign currency exposure that we anticipate settling in that foreign currency. Our obligations under the overdraft facility with Standard Bank Limited are guaranteed by MiX Telematics Limited and our wholly-owned subsidiaries, MiX Telematics Africa Proprietary Limited and MiX Telematics International Proprietary Limited, and secured by a pledge of accounts receivable by MiX Telematics Limited and MiX Telematics International Proprietary Limited.

During fiscal year 2020, we entered into a R25.0 million ~~(equivalent of $1.4~~(the equivalent of $1.7 million as of June 30, ~~2020)~~2021) working capital facility from Standard Bank Limited that bears interest at South African Prime less 0.25%. As of June 30, ~~2020,~~2021, the facility was ~~fully utilized.~~undrawn. We use this facility for working capital purposes in our Africa operations.

During fiscal year 2014, we entered into a R10.0 million ~~(equivalent~~(the equivalent of ~~$0.6~~ $0.7 million as of June 30, ~~2020)~~2021) facility from Nedbank Limited that bears interest at South African Prime less 2%. As of June 30, ~~2020,~~2021, the facility was undrawn. We use this facility for working capital purposes in our Africa operations.

Our credit facilities with Standard Bank Limited and Nedbank Limited contain certain restrictive clauses, including without limitation, those limiting our and our guarantor subsidiaries’, as applicable, ability to, among other things, incur indebtedness, incur liens, or sell or acquire assets or businesses. These facilities are not subject to any financial covenants such as interest coverage or gearing ratios.

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Off-balance sheet arrangements

We do not engage in any off-balance sheet financing activities. We do not have any interest in entities referred to as variable interest entities, which include special purpose entities and other structured finance entities which are not consolidated.

~~Tabular disclosure of contractual~~

Contractual and other obligations

As ~~a “smaller reporting company”, we are not required to provide this information.~~

of June 30, 2021, there have been no material changes in contractual and other obligations as disclosed under the caption “Contractual and other obligations” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item 3.

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Item 4. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures, as defined in Rules 13a – 15(e) and 15d – 15(e) under the Exchange Act, that are designed to ensure information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the periods specified by the SEC, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures ~~(as defined in Rules 13a – 15(e) and 15d – 15(e) under the Exchange Act)~~ as of June 30, ~~2020.~~2021. Based on that evaluation, we concluded that ~~as of such date,~~ our disclosure controls and procedures were ~~not~~ effective as ~~a result~~ of a material weakness in our internal control over financial reporting that was disclosed in our Annual Report on Form 10-K for fiscal year ended March 31, 2020. The material weakness related to ineffective design and operation of the financial statement close and reporting controls in areas of management review of financial statement information and independent review of journal entries in our Africa operating segment.

~~Remediation~~

As described in “Item 9A. Controls and Procedures” in Part II of our Annual Report for the fiscal year ended March 31, 2020, we began implementing a remediation plan to address the material weakness mentioned above. This plan includes:

•~~Investigating and understanding the root causes of the control weakness that resulted in the material weakness;~~

•~~The development of policies and procedures to enhance the precision of management review of financial information;~~

•~~Updating management review control descriptions;~~

•~~Developing and adopting guidelines regarding the control documentation requirements;~~

•~~Review the capabilities and capacity of the financial teams in the respective reporting segments and align roles and responsibilities accordingly; and~~

•~~Implementing policies and procedures to enhance independent review of journal entries.~~

~~We have already updated the configuration of the journal workflow in the ERP system to enforce independent review and release of journal entries.~~

Management will continue to reassess and test the design and operating effectiveness of controls. The material weakness will not be considered remediated, until applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect the remediation of this material weakness to be completed prior to the end of fiscalJune 30, 2021.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

~~Other than the changes intended to remediate the material weakness noted above, there~~There were no changes in ~~controls for~~ the ~~period covered by this Quarterly Report on Form 10-Q to our~~Company's internal control over financial reporting, as defined in Rule 13a - 15(f) and 15d - 15(f) promulgated under the Exchange Act, during the three months ended June 20, 2021, that ~~has~~have materially affected, or are reasonably expected to materially affect our controls over financial reporting. We have not experienced any material impact on our internal controls over financial reporting despite the fact that most of our employees were working remotely due to the COVID-19 pandemic. We continue to assess and monitor the COVID-19 situation, the impact thereof on our operations and financial results and on the controls over financial reporting.

As required by Rule 13a-15(d), under the Securities Exchange Act of 1934, as amended, our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the period covered since the last annual report that has materially affected, or is reasonably likely to materially affect ~~our internal control over financial reporting. Based on this evaluation, management determined that there has been no change during~~ the ~~period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our~~Company's internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

~~Competition Commission Matter~~

On April 15, 2019, the Competition Commission of South Africa (the “Commission”) referred a matter to the Competition Tribunal of South Africa (“Tribunal”). The Commission contends that we and a number of our channel partners have engaged in market division. Should the Tribunal rule against us, we may be liable for an administrative penalty under the Competition Act, No. 89 of 1998. We had cooperated fully with the Commission during its preliminary investigation. We cannot predict the timing of a resolution or the ultimate outcome of the matter, however, we and our external legal advisers continue to believe that we have consistently adhered to all applicable laws and regulations and that the referral from the Commission is without merit. We have therefore not made any provisions for this matter as yet as we do not believe that an outflow of economic resources is probable.

~~The Ugandan Value Added Tax ("VAT") matter~~

The Ugandan Revenue Authorities (“URA”) have reviewed MiX Telematics’ cross-border services and assert that VAT is payable on these imported services in terms of the place of supply rules included within its local VAT legislation. On January 18, 2018, MiX East Africa instituted proceedings in the Tax Appeals Tribunal to challenge the URA’s decision on this matter based on the interpretation of the law and calculation errors by the URA. MiX East Africa appeared in front of the Tax Appeals Tribunal on a number of occasions to present its defense, but the Tax Appeals Tribunal ruled in favor of the URA. On September 19, 2019, MiX East Africa appealed the decision to the High Court of Uganda. This matter is ongoing, and provisionsThere have been ~~made based on current information at hand.~~

~~From time to time, we have been and may become involved~~no material developments in ~~further~~our legal proceedings ~~arising~~since we filed our Annual Report on Form 10-K for the fiscal year ended March 31, 2021. Refer to “Part I. Item 3. Legal Proceedings” in our Annual Report on Form 10-K for the ~~ordinary course of our business and, while there can be no assurance, we currently believe that the ultimate outcome of these other~~fiscal year ended March 31, 2021 for additional information regarding legal ~~actions will not have a material adverse effect on our business, results of operations, financial condition or cash flows.~~proceedings.

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Item 1A. Risk Factors

~~Our business is subject to a number~~As of ~~risks, including those identified in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March~~June 31, 2020, that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. The risks identified are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition or operating results in the future. There2021, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form ~~10-K.~~10-K for the year ended March 31, 2021. except for the following risk factor under the heading “Risks related to Our Business” and replaced in its entirety with the following:

The extent to which the COVID-19 outbreak and measures taken in response thereto impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and are difficult to predict.

The global impact of the COVID-19 outbreak and measures taken to reduce the spread of the virus have had an adverse effect on the global macroeconomic environment and have significantly increased economic uncertainty and reduced economic activity. Governments globally, including the foreign jurisdictions in which we have offices, have declared a state of emergency related to the spread of COVID-19. The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place or total lock-down orders, and business limitations and shutdowns. Although governments around the globe have taken steps to mitigate some of the more severe economic effects of the virus and the impact of the outbreak on the economic activity globally is unfolding, there can be no assurance that such steps will be effective or achieve their desired results in a timely and sustainable manner or at all.

Nearly all of our employees were required to work remotely, except for our staff working in our monitoring centers, which were classified as an essential service. Some employees have subsequently returned to our offices; however, many employees continue to work from home. In addition, we have modified certain business and workforce practices (including suspension of the majority of business travel and cancellation of physical participation in certain meetings, events and conferences) and implemented new protocols to promote social distancing and enhance sanitary measures in our offices and facilities to conform to government restrictions and best practices encouraged by governmental and regulatory authorities. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, in which case our employees or other individuals may become sick, our ability to perform critical functions could be harmed, and we may be unable to respond to some of the needs of our global business. Further, our increased reliance on remote access to our information systems increases our exposure to potential cybersecurity breaches. We continue to monitor the design and effectiveness of internal controls, taking into account that employees may be working remotely. We may ~~disclose changes~~take further actions as government authorities require or recommend or as we determine to ~~any risk~~be in the best interests of our employees, customers, suppliers and other business counterparties.

The extent to which the COVID-19 outbreak impacts our business, results of operations and financial condition in the longer term will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration, spread and severity of the outbreak, the actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions broadly resume.

In particular, we may experience reduced revenues and/or financial losses as a result of a number of operational factors, ~~presented or disclose additional factors from time to time in our future filings with the Securities and Exchange Commission.~~including:

•

Customer pricing pressure, payment term extensions, contract amendments and insolvency risk – As our customers face reduced demand for their products and services, reductions in their business activity and face increased financial pressure on their businesses, we have faced downward pressure on our pricing and gross margins as a result of making pricing concessions to customers. In addition, in response to the requests of some of our customers, we have granted extended payment terms. We expect that some of our customers will continue to make such requests, which may have an adverse effect on our cash flows from operations. We may also face a significantly elevated risk of customer insolvency, bankruptcy or liquidity challenges, which may result in a failure to be paid for services we have performed and expenses we have incurred, which could, in turn, result in us having to take a charge in the period in which the related receivable was written down or written off.

•Reduced customer demand for services – As a result of the pandemic’s impact on our customers, we have experienced reduced demand for our services. Among other things, a number of our customers have postponed, canceled or scaled back existing and potential projects with us.

•Increased costs – We face increased costs from the pandemic, including as a result of mitigation efforts such as enabling increased work-from-home capabilities and additional health and safety measures.

•Reduced/delayed supply of components - We rely on contract manufacturers and other companies to provide electronic components and products that we use. The ongoing impact of COVID-19 on the global economy

could impact the operations at our third-party manufacturers, which could result in delays or disruptions in the supply of our products and could impact our ability to meet customer demand. If we are unable to implement alternatives or other mitigations with respect to suppliers that may have potential delivery impacts due to COVID-19, our sales and financial results could be negatively impacted.

•Diversion of and strain on management and other corporate resources – Addressing the significant personnel and business challenges presented by the pandemic, including various business continuity measures and the need to enable work-from-home arrangements for our employees, has demanded significant management time and attention and strained other corporate resources, and is expected to continue to do so. Among other things, this may adversely impact our recruitment and retention, our customers and employee development and our ability to execute our strategy and various transformation initiatives and may increase our exposure to security breaches or cyberattacks.

In addition, COVID-19 has resulted in, and may continue to result in, significant economic volatility and uncertainty in U.S. and international financial markets, which could adversely affect our access to capital markets and investment activity, negatively impacting the availability of capital, the terms and conditions of financing arrangements and the related costs of such financing. This could result in situations where financing may not be available to us at all, or at terms formerly available to us.

There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 and the measures taken in response thereto may have on our business, and, as a result, the ultimate impact of the outbreak is highly uncertain and subject to change. The nature and extent of the crisis, multiple variants and waves of the virus, the public health measures to contain it, the progress and effectiveness of vaccination programs, different levels of restrictions and the resultant economic impact may differ between regions and remain uncertain. We continue to monitor the effects of the outbreak on our business, results of operations, financial condition and liquidity as well as on our risk factors and the effectiveness of the control environment.

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Item 6. Exhibits


Exhibit No.			Description

31.1			C ~~ertifica~~te Certificate of C ~~hief~~ E ~~xecutive~~ O ~~fficer~~p ~~ursuant~~Chief Executive Officer pursuant to Securities Exchange Act R ~~ules 13a--14(a)~~Rules 13a--14(a) and 15d--14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			~~Certificat~~e Certificate of Chief Financial Officer pursuant to Securities Exchange Act ~~Rule~~s ~~13a--14(~~a)Rules 13a--14(a) and 15d--14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*			~~Certificat~~e Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			XBRL Taxonomy Extension Schema Document.
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.
104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* The certification attached as Exhibit 32 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

3938

SIGNATURES

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			MIX TELEMATICS LIMITED

			By: /s/ Stefan Joselowitz
			Stefan Joselowitz
			Chief Executive Officer

			By: /s/ John Granara
			John Granara
			Chief Financial Officer

Date: August ~~10, 2020~~5, 2021

4039


	Number of SARs	Weighted- Average Award Price in U.S. Cents*	Weighted Average Contractual Remaining Term ( years)	Aggregate Intrinsic Values (in thousands)
Outstanding as of April 1, 2020	32,943,750	30
Granted	11,200,000	34
Exercised	(175,000)	17

Forfeited	(33,905)	18
Outstanding as of June 30, 2020	43,934,845	31	3.97

Vested and expected to vest as of June 30, 2020	42,310,470	31	3.19	3,313
Vested as of June 30, 2020	11,447,345	18	2.10	1,945


	For the three months ended June 30,
	2019			2020
	(In thousands, except for percentages)



Administration and other	$	14,786		$	13,491
As a percentage of revenue	40.8		%	49.1		%