MIXT - Earnings call transcript Q1 2022

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Operator

Thank you for standing by. This is the conference operator. Welcome to the MiX Telematics Fiscal First Quarter 2022 Earnings Results Conference Call.

As a reminder, all are in listen mode, and the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to John Granara, Chief Financial Officer. ahead. go Please

John Granara

Chief XX, good to and first We you in on appreciate of discussing will Thank results the MiX morning, Telematics us announced June ended which review our year is you joined the Today, Officer John Joselowitz, by Executive earnings joining MiX's press or we fiscal be you, few President know Financial Chief as I'm issued ago. XXXX, a of everyone. him, Stefan He Joss. Officer, XXXX. results quarter and release many Telematics. MiX hours Granara, for and of I'm

differ During which make are will uncertainties forward-looking business, material to to to risks and our our today's materially. call, subject cause that statements we could related results actual

of our other could and Form discussion report a of the our important refer those Investor risks our including material Relations our section X-K affect was which XX-K today, contained the filings, current on that Form SEC to all available in please website. of results, filed are on that other factors and For

referring website also the And measures. press results call the with which We I Joss. our There's on available be schedule with detailing will non-GAAP these certain a currently located is turn will release, and in to filed our reconciliation financial that, SEC. over to

Stefan Joselowitz

subscriber year-over-year that and and top highlight results our joining expansion today. the to revenue MiX call line. operational The you ahead began on the our and with sequential quarter John, for for all XXXX improved to growth was bottom of Thanks, financial of thanks of return base. and fiscal the both were expectations

our feel about we quarter for worst due in certain to to year to and we first COVID-XX of of achieve continuing the this growth primary us. our Returning that is performance good the focus conditions in is and XXXX confident our remainder based the now fiscal the the While on challenging are impact ability objective. behind markets remain pandemic, outlook

to long-term in financial XX.X% currency market. growth, growth in environment. quarter total X.X% able a will continued close are of adding remains the a to the we begin We XX%-plus the confident subscribers XX% results hard constant million, that business. was $X.X which and increasingly up Notably, at by do of I revenue $XX.X the margins a targets so expectations our return in good X.X% ahead to we'll quarter annual adjusted reflects of cost revenue better our XXX,XXX. EBITDA normalized economic financial and to Adjusted our recurring quickly discipline EBITDA How million, end XX% increase to operational of the across constant can given year-over-year base with quickly uncertainty gauge than a well to steadily expected for margin, returned $XXX.X million our revenue currency. performance quarter. revenue first sequentially. be subscriber was positive summarizing and was to and X,XXX We the Subscription subscription at ended

healthy a positive wins these and pipeline and the We verticals to different outlook in which companies close were utility wins as contracts new economic quarter. I'd during across the in on conditions more secured sizable several trajectory continue noted continued growing million United in and these same signed recent signed provide color reinforce have with important X first and to in enterprise States we've We like we successes large quarter. geographies of our As quarters, opportunities ARR. to improve. some $X the the that

for a our Iberdrola, is in success were pioneer telco which apart for highly a to the Renewables, the quarter. industry was whom X,XXX provider with global where us leverage competitive deal vendors. technology renewables, signed signed a of We recovery Qualtek, subsidiary with labor able deal a of a initial our prior program to process subscribers. and And set to Firstly, technical than energy secondly, a more and management global Iberdrola we driving from has greater U.S. Avangrid Spain we This other secure in operational have large market customer interest many in fleet contract firstly, amount opportunity great secondly, significant and the X,XXX fleets. a a vehicles the additional from attractive successful; the safety an attributes real-time of us. and by vertical, growing employee become the These the where This significant for U.S. has in Avangrid leveraging operational that of vertical historically been examples efficiency with are data wins utility which market has their of complexity; in

also MaxMind, with who in signed and logistics a MSI markets. in Logistics, leaders X Rep operating contracts City Africa substantial South are throughout partnership MiX City Logistics Van leading Africa respective signed strategic assets. We a industry provider X,XXX support their mobile Southern long-term the all with to

in for factors key one. efficiency safety driver solutions improving Our were long and decades and proven this experience the

Looking category, In and light at premium notable reduction a contraction. seen solution we important have all particular, in fleet to an we returned churn quarter performance milestone the business tracking, fleet across gross reached our by asset fleet, as in pre-pandemic premium levels.

see portfolio levels pressure to for during light business within Gross the this of ADS and continued to remained are certain Gross XX% the quarters. improvement of the in Premium fastest seen geographies. light performed pre-COVID levels. improvements the before have the its saw is trend continued back but strong year. fleet Our given fleet market now quarter ongoing recent the remainder in and pre-COVID fleet XX% improvement, quarter. COVID, growing to below well have onset consistent our now in in The ADS we of of a pipeline

a quarter, recent oil reduction in primarily gross during quarters. due we've the in experienced saw the we to reset mentioned, and significant churn As sector the gas in

Our energy more stable now are a in customers and environment. predictable operating

investments this too for will position once next contraction they tailwind to great now are again clearer positive a read the optimistic about in new in clients growth, to premature volatility. but a fleets accelerate. cycle for and benefit premium become that cycle. with but increasingly when have themselves We begin when know we on will the It's given our started fleet through to this largely investments position trends these a have recent the know continued we're are good vertical, it's becoming to about expand discussions market to the current sector the outlook of growth as it's Overall, and business we pace and improvement soon

impact is Our to of most travel this down in is asset driver business fleets. The biggest through impact levels pre-pandemic from trends. remain related below has still South of continues lock business, to our which tracking largest market. lock well subscriber feel acute COVID-XX the still our terms Gross as ADS COVID African and multiple tracking asset been rental restrictions downs

asset reminder, is lowest a As ARPU our business tracking $X at month. per

smaller a will a impact have trends relatively growth. So, weakness market subscriber in on to bigger this and impact revenue typically

to growth continued good while Turning margins, job initiatives. in continuing adjusted invest a we to profitability, strong our do to effectively delivering EBITDA

initiatives. good investment driven approach the Adjusted MiX the progress EBITDA was From throughout served marketing an we investment sales made and balanced in better has perspective, and XX.X% quarter operational discipline consistent margin primarily on our was by and Our expected revenue well outperformance. of than multiple cycles.

our talent to increasing high We and are channel expanding the demand a investments team, adding quality generation. indirect in

on but make environment improving we sure on performed of our opportunity. we maximize performance To well business quarter earnings last remainder wrap the tracking and and outlook the quarter. believe to we will positioned invest noted, is we we against MiX to are best call. targets well Based the for out up, financial first this set first I've As in year, are the on our the

are quarters. have to We relationships, efforts of the growth returned in recent realizing customer the and our benefits go-to-market in and products we investments

like thank our time the increasingly to I and successful. who results review as from financial economic faster John? generate expanding call turn to execute outlook. to world John improved ability confident now in I make would more to we to teams our over our to over in around our the customers work strategy to take detail. like our growth tirelessly an opportunity and are this We on would benefit margins

John Granara

quarter. Thanks, mind to for otherwise. QX. all first Joss. unless that reiterate XXXX in I our the all on financial and to to of growth like turn revenue say I'd to now refer to in quarter excitement keep for year-over-year comparisons Please results in I'd returning subscriber changes, figures the our subscription like the

sequentially that $XXX.X hardware not our this growth our subscriber provided subscribers, which year. quarter has several million, constant be Hardware XX% in at total $X.X to contract new quarter, ended subscription the subscribers currency be our the will a were base and revenue came X%. by in XX% other As the increase fully later with basis, enterprise were Hardware for I this more reported $XX.X revenue South quarter pandemic our fleet other pricing in to XXXX, million year positively wins revenues subscription attributable X.X% ARPU X.X% the over which the ARPU, impact increase Joss currencies subscriber would The and been our constant $X.X was growth for growing derived reminder, light revenue included from discounts African earlier rand and year indicator solution The to are other meaningful was revenue ARR first this XXX.X% net a strengthens against of the fiscal value change of once of the fleet a of of I of quarter as fiscal to XX% mix year-over-year. million of premium and our sequential the was our U.S. an contributing million. growth majority the compared in a shift, compared year-over-year primarily due were with The and ARR and basis. X.X% we pandemic. all and revenues driven revenues. respectively. year. year the deployed the total The end increase currency the of in does above.ARR, other Prior of to Starting ultimately ongoing revenue noted XXX,XXX dollar. note in quarters, primarily categories. spoke impacted a over a represented by U.S. concessions of revenue We are prior X,XXX. dollar the believe and strengthened in will at reflect which base in in those increase The than increase total and the they was million, was P&L, $XX.X first on in the our on up wins by

a As can reminder, other hardware be volatile revenue quarter-to-quarter. and

expenses, in gross on of the was margin year and compared hardware higher Moving period revenues. the operating due ago XX.X% gross percentage margin to to other to XX.X% and

inventory X.X%. EBITDA of revenue of XX.X% income our quarter normal million, growth incremental $X.X XX.X% effective at compared our cost The Non-GAAP strong levels. Subscription we to to of when in the company's gross or to was which $X.X tax expect tax of balance capital blended and As in-vehicle the first $XX.X were revenue $X.X cash free operating before, March increase base expenditures, the One we would the from leading compared would gains stock-based million million approximately in the or that navigate some quarter impact XX.X%. use equivalents the XX.X%. lead million. strategy range for to the investments. in as was secures quarters compensation and net Ignoring and were as we margin the was parts $X.X XXXX. of components cash XX% $XX.X complexities is significant be Operating exchange our in devices cash invested in need supply of of million. as The we to approach cash note to we XX, This compared million components. chain. flow a global current from before planned million the million XX% expenses $XX.X long the million activities primarily of investments in of $X.X we've XX.X%.Turning are net restructuring the purchase $X.X represents foreign cash million. investment invested up and quarter, The $X.X strategic $X.X Adjusted to majority thing remained to of reflects rand, part $X.X part includes quarter, year-over-year coming build time XX.X% hardware and compared margin with to losses, discussed to to XX%. some the of generated at the rate our will In was million other of I hardware to ended rate XX.X% and sheet, the and of million strengthening and up the compared

dividend quarterly us per declare share. ordinary a Our strong balance enabled once sheet of again to ZARX.XX

like would remainder the our XXXX. I provide Before fiscal additional for I wrap to up, expectations some perspective on of

in an and to the important As revenue for first Joss company. the was growth subscriber milestone constant quarter return currency the mentioned,

to is the parts are While in behind forecast, the us. that a there the of difficult uncertainty now of be and impact of to we impact significant the worst continues of market amount confident COVID delta variance is

relates our than compare and to As to were and year-over-year mentioned we to we it concessions in first ARR further half discounts in and fiscal QX, in currency a to high did I in double-digit is currency mid XXXX last we single-digit a basis. by levels improvement would constant ability revenue minimal end see due of also ARR that the in in expect quarter XXXX were to earlier the QX QX This on to year fact growth. the the range. growth challenging in the from remain trends and low first quarter second we faced more QX.We fiscal the growth constant confident concentrated into primarily expect as subscription began generate return revenue encouraging the of

profitability, are the in margins low track to to terms adjusted strong year we with In deliver EBITDA on another mid-XXs. of

over XX and been months the The durability has margins past prudent as from year are curtailed were the certain demonstration well our across Our pending. our that scalability normalization expenses the some business. business last an year the its the COVID-XX discipline to we of important of company margins reflects this investments due making of incremental the model in has impact growth of as

build quarters. XXXX again exceptionally circumstances in move success great year through expanding business we target. into our the we and towards In we QX a we've XX fiscal over the past margins successfully long-term we see EBITDA move would to to as adjusted to beyond, are begin in coming back challenging navigated months, closing, position expect the As and upon XX%-plus

for would the like open to Now, I Operator? line questions.

Operator

Instructions] Blair. first William [Operator question Pfau of Our comes from Matt

Matt Pfau

to expand the see to start subscriber Good base again.

back was On to any the fleet just come contracted Joss, that expand fleets? started those and fleet their see have you wondering, contractions, to customers start

Stefan Joselowitz

We've the sector. positive specifically to customers, certainly conversations, I'm starting to some energy with conversations referring have

more around feedback that there's getting previous will cycle. cycles a fiscal that seeing they we've is the between that is this some at expecting sentiment do viewing from the are make. often But customers. there's are from they one. been point. we're bullish So at certainly a know through we know with from of and a a investments that make year, multiyear is for growth lag them turning And those we that always industry -- lag the tailwind industry baked But that The we I it clear we that haven't a much beginning are what we

So we're start ideally to benefit they positioned reinvesting. when

Matt Pfau

be have and perspective. if customer just helpful give on perspective details you and certainly any the geographies while And some would normalized just a from geographic more they've had that's some could it conversations a a those impact in others up geographies. operate opened various more of in, the COVID from if Maybe gone become perhaps bit backwards you

Stefan Joselowitz

summarized mixed a can do dealt. you've the we is and play the it that As hand that bag is best we

we've the that. deals. our some we've reflected delighted deals bottom referring to see announced in that we're pipeline deals the to earlier form think some been in better of the about results. out we're at the from steadily Certainly, been that And of of that What now pop starting So we've are you've seeing I I've front and was done calls building in contracted big of -- some than our heard is others. the geographies extremely that pleased performed that, and

that's in geography, exciting. have to pretty even deals related significant some quarter the particular COVID. not harder been announced of a example, hit by that's in we've reporting we're on. an that that as And In the geographies Africa some So South

pleased we're overall, So, that. with

Matt Pfau

one on just the last And for light fleet segment. me

more that you stride macro improvement are consistent address how of Is your perspective? sales that a starting there. segment out or hit from to in to figuring So seen you've you that sort mentioned driven properly

Stefan Joselowitz

to We're those close improvements in in continue latter. in quality and it's digital our lead rates. see the certainly generation of think probably leads the I the

at pleased with we with get that we're yet improvements to, still we we're not made change So we that. -- definitely the happy the to some step We're but trend. and intend pace

Operator

Our question next comes Mike of Genuity. from Canaccord Walkley

Mike Walkley

subs I guess, expect some stabilize still grow you that are slowly? John, losing the growth. maybe It's clarify on for of the the they return And activating September the starting see to energy to terms subs return to great are in again -- you of we're vertical, to vertical or can in kind longer or linearity help to seeing growth us the it do And just just is maybe the to quarter no quarter? you subs so of sub-additions.

John Granara

the So we cadence, subsequent did part question the as the your of of the went first see terms on. improvement quarter in a quarter and

June, higher a in saw actually look usage, we our sequential did improvement. from fleet when activity we saw and April. at actually And net perspective, than see usage growth So, our was we we customer

So, in we terms net quarter line as what a saw the higher exited that growth was we with of the at rate. in

we expecting a earlier, Joss to here. alluded As this growth be to are

continue difficult, will remains which at Mike, the grow. pace growth. expecting What we the is the amount and are We which to is

fact, So as or would growth we in planning or higher grow. much to but it's significantly uncertain how or to be than quarter, this lower the whether not are,

not to certainty. constant be a we a tough on compare So expecting subscription currency the prepared year prior have we will a basis But be did I because significant. revenue that are I in my QX than tougher compare with QX in say caution do growth can't remarks we had year-over-year that,

the growth. minimal grow, stabilize. so be subscriber gas oil year-over-year that seen a will one, that And the still difficult With we and perspective, so planning compare from regards to but have activity, to

improvement fact, so. last seen we've over or steady quarter a In somewhat the of

they're The would last lower one thing in terms of but their say much lower. do pre-pandemic levels. levels. to I should the regards our quite or activity they construction, energy mention But goods, year we are I last that other one top field I the still than of and to year, were transportation, logistics, verticals, want should back because sector, because about Higher consumer utilities, all However, it's above than retail, talk where mention, do we pre-COVID with verticals. lot a those the services, was of

we to portfolio. able are balanced a have So -- we good

that And mention so want perspective. I to did from that

Mike Walkley

And for maybe question Joss. just a follow-up

Just asset on in business in the in better given returns business, in Africa South Africa that the is of what's South business discuss near-term see maybe you dynamics low going the this tracking for asset also tracking maybe you? or the the competitive business, in kind just impacting the can growth to ARPU, unrest it

Stefan Joselowitz

observe did quickly. tamping We government production. demonstration days. it event, relatively situation some early a about They've bringing very also down unrest dealing by was and in mentioning on month. it's in by It's that probably clear affecting triggered It positive unrest a is It was control. our serious with worth dealt remarkable the restraint this that under with exercised

pretty And that observation period. have busy over country clearly to of about we're, perspective, were extremely from things disrupt just week. that. It back for normal So did kind an pleased settled much We now. a the

impacted operators transport organization weren't customers writing, logistic directly of the many So and were. as significant in of by the operators country that are an we any whilst our

our number that I've provided a conversations, we're So having to And expanding our that recognize have heightened business we is fact, the services about conversations element this contra-cyclical with event has this a in we before, that during the and at event triggered of there services valuable services. services. demand customers mentioned for

moment. even the tell might economy that probably to see question bit to So, answer But is coming to over the early a of we impacts medium a see We'll too short have term. tailwind at the months. that the over the on impact the your is

Mike Walkley

Do constraints me, have have support question for for to out sheet seen year able it like the you like bottlenecks last enough your to balance or sounds telematics just getting secure use some you devices with been of components. there all you components? your supply strong feel initiatives that the still to in growth you've the And remainder

Stefan Joselowitz

we made But that closely. I we through Based believe we today, of it the very year. do on Mike, us a the where will monitoring mention that this rest And obviously, that should the very is purchases this we're are fluid quarter situation. situation get

So, if through But are we as rest necessary, the will, purchases of the we make we feel to. the of that in think we have today strategic future we covered year. if

Operator

Our next James. Raymond comes question from Peterson Brian of

Brian Peterson

Congrats on the strong results.

just and of like talk follow-up you're wanted terms on the maybe markets you're we you demand some some premium your in the of diversity Joss, what Could to pricing So, environment mentioned in fleet something end seeing curious I what terms of you levels be are from markets. deals. seeing there? that in those of pipeline the or healthy about seeing I'd there And -- of the sales also of terms

Stefan Joselowitz

pleased we're very and that in our deal our the diversity diversity flow. about pipeline -- We're in seeing in

significant in announced customers. the we we've the recent of it's So period, deals diverse of contracted which bunch nice some in a that major

[Technical full whether did of field everybody utility was public you response field getting logistics trust that? So, sure transportation the or Difficulty] transport to the field, and get not my it's feedback. I'm And in energy that

Brian Peterson

some I'm in macro I just we're any that a environment. M&A are better on end. somewhat if know here. definitely size things where efforts the an uncertain markets, not. increasing was of thoughts the my did, maybe question. think are making But we hope an on of I I update still really Joss. reading sounds perspective. or just given an in follow-up that I that overall it tone Look, on don't just But right, Joss from like

that, to Just on get curious Joss. thoughts your

Stefan Joselowitz

and knew we the shoring of and what focus well the cash we we the the was up could full do that could that sure going to as making to difficult year. sheet period strong our of our between the quarter fact, strategy, guess, extremely a as year, an in clear reported, end of did balance think be and was cash the I year balance ago, the In then cash, we that tripled right I and we we year, preserving get possibly conservation we it our pandemic almost on was in start terms made

we So position. pretty ended a in strong

Our focus now is clearly very different.

We that organic that in -- growth you're business. bear love starting growth, the to investments. are of clearly would and investing I in see some those the We've fruit also it on starting think to up phase bulk we in to a

looking a have of We we're M&A pipeline that opportunities at.

of an of potential And size and certainly interesting some us them are good. looks for fit the

if So but that's there's keeping now if color we're looking nothing keeping regard. and at as to opportunity that we speaking, comes both and the execute. see clear in appropriate our -- opened things And been we certainly along right eyes present that we can up bulk we're have we're

Operator

to I turn Joss conference This back any concludes closing over to session. for like would the remarks. question-and-answer the

Stefan Joselowitz

joining all call you today. you, thank Thank Ariel, and for the

will to We to look be you some to you the please attending all forward week it and soon. forward look after Canaccord Conference think of stay next, meantime, speaking I to safe then. and we getting In is, the

Operator

conference This concludes today's call.

disconnect a for participating, Thank and pleasant may You you lines. your day. have

MiX Telematics (MIXT) 31 Jul 212022 Q1 Earnings call transcript