Segment information | Segment information The Company has six reportable segments, which are based on the geographical location of the five Regional Sales Offices (“RSOs”) and also includes the Central Services Organization (“CSO”). The RSOs provide fleet and mobile asset management solutions and predominantly generate external revenue. CSO is the central services organization that wholesales products and services to RSOs who, 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”) and has the ability to generate external revenue. The CODM has been identified as the Chief Executive Officer who makes strategic decisions for the Company. The performance of the reportable segments has been measured and evaluated by the CODM using Segment Adjusted EBITDA, which is a measure that uses income before income tax expense excluding the contingent consideration remeasurement, non-recurring transitional service agreement costs, strategic costs, acquisition-related costs, interest expense, interest income, net foreign exchange losses/gains, net loss/profit on sale of property, plant and equipment, restructuring costs, stock-based compensation costs, depreciation, amortization, onerous contract costs, operating lease costs and corporate and consolidation entries. Product development costs are capitalized and amortized and this amortization is excluded from Segment Adjusted EBITDA. Segment assets are not disclosed because such information is not reviewed by the CODM. The following tables provide revenue and Segment Adjusted EBITDA (in thousands): Three Months Ended December 31, 2022 Subscription revenue (1) Hardware and other revenue (2) Total revenue Segment Adjusted EBITDA Regional Sales Offices Africa $ 18,029 $ 1,460 $ 19,489 $ 8,121 Europe 3,051 748 3,799 1,402 Americas 5,842 308 6,150 1,378 Middle East and Australasia 4,013 2,382 6,395 2,308 Brazil 1,516 440 1,956 614 Total Regional Sales Offices 32,451 5,338 37,789 13,823 Central Services Organization 18 — 18 (2,570) Total Segment Results $ 32,469 $ 5,338 $ 37,807 $ 11,253 1. Subscription revenue is recognized over time. 2. Hardware and other revenue is recognized at a point in time. Three Months Ended December 31, 2023 Subscription revenue (1) Hardware and other revenue (2) Total revenue Segment Adjusted EBITDA Regional Sales Offices Africa $ 19,408 $ 1,512 $ 20,920 $ 8,869 Europe 3,014 368 3,382 1,113 Americas 5,062 561 5,623 1,321 Middle East and Australasia 4,361 2,318 6,679 2,802 Brazil 1,805 671 2,476 782 Total Regional Sales Offices 33,650 5,430 39,080 14,887 Central Services Organization 5 — 5 (2,504) Total Segment Results $ 33,655 $ 5,430 $ 39,085 $ 12,383 1. Subscription revenue is recognized over time. 2. Hardware and other revenue is recognized at a point in time. Nine Months Ended December 31, 2022 Subscription revenue (1) Hardware and other revenue (2) Total revenue Segment Adjusted EBITDA Regional Sales Offices Africa $ 55,163 $ 4,545 $ 59,708 $ 23,586 Europe 9,215 1,747 10,962 3,737 Americas 13,535 1,471 15,006 2,496 Middle East and Australasia 12,095 5,156 17,251 6,295 Brazil 4,065 1,077 5,142 1,457 Total Regional Sales Offices 94,073 13,996 108,069 37,571 Central Services Organization 59 — 59 (8,029) Total Segment Results $ 94,132 $ 13,996 $ 108,128 $ 29,542 1. Subscription revenue is recognized over time. 2. Hardware and other revenue is recognized at a point in time. Nine Months Ended December 31, 2023 Subscription revenue (1) Hardware and other revenue (2) Total revenue Segment Adjusted EBITDA Regional Sales Offices Africa $ 56,606 $ 3,997 $ 60,603 $ 26,016 Europe 9,184 1,377 10,561 3,639 Americas 14,503 1,286 15,789 2,403 Middle East and Australasia 12,757 6,441 19,198 8,338 Brazil 5,237 1,790 7,027 2,629 Total Regional Sales Offices 98,287 14,891 113,178 43,025 Central Services Organization 16 4 20 (7,321) Total Segment Results $ 98,303 $ 14,895 $ 113,198 $ 35,704 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 December 31, Nine Months Ended December 31, 2022 2023 2022 2023 Segment Adjusted EBITDA $ 11,253 $ 12,383 $ 29,542 $ 35,704 Corporate and consolidation entries (2,267) (2,267) (7,219) (7,179) Operating lease costs (1) (298) (285) (933) (888) Product development costs (2) (280) (293) (972) (976) Onerous contract costs — (4) — 35 Depreciation and amortization (4,012) (5,254) (11,208) (14,024) Stock-based compensation costs (273) (262) (324) (827) Restructuring costs (84) — (84) (30) Net (loss)/profit on sale of property, plant and equipment (1) 45 32 49 Net foreign exchange (losses)/gains (755) (493) 743 (1,346) Interest income 106 307 994 774 Interest expense (378) (604) (1,002) (1,645) Acquisition-related costs — — (784) — Strategic costs (3) — (1,200) — (1,996) Non-recurring transitional service agreement costs (4) — (361) — (482) Contingent consideration remeasurement — 511 — 1,049 Income before income tax expense $ 3,011 $ 2,223 $ 8,785 $ 8,218 1. For the purposes of calculating Segment Adjusted EBITDA, operating lease expenses are excluded from the Segment Adjusted EBITDA. Therefore, in order to reconcile Segment Adjusted EBITDA to income before income tax expense, the total lease expense in respect of operating leases needs to be deducted. 2. For segment reporting purposes, product development costs, which do not meet the capitalization requirements under ASC 730 Research and Development or under ASC 985 Software , are capitalized and amortized. The amortization is excluded from Segment Adjusted EBITDA. In order to reconcile Segment Adjusted EBITDA to income before income tax expense, product development costs capitalized for segment reporting purposes need to be deducted. 3. Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in note 18 to the condensed consolidated financial statements. 4. Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 were incurred on a temporary basis from September 2023 to December 2023 and have been excluded from Adjusted EBITDA. No single customer accounted for 10% or more of the Company’s total revenue for the three months ended December 31, 2022 and 2023. No single customer accounted for 10% or more of the Company’s accounts receivable as of March 31, 2023 or December 31, 2023. |