Earnings call transcript Q3 2023

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Operator

Good morning, everyone, and thank you for participating in today's conference call to discuss MiX Telematics' Financial Results for the Fiscal Third Quarter 2023 ended December 31, 2022.

Joining us today are MiX Telematics President and CEO, Stefan Joselowitz; and the company's CFO, Paul Dell.

Following their remarks we’ll open the call up for any questions you may have.

I'd now like to turn the conference over to Chief Financial Officer, Paul Dell, as he reads the company's safe harbor statement regarding forward-looking statements.

Please go ahead, Paul.

Paul Dell

morning, good and you, everyone. Thank

subject I'd Before our that to actual remind and are participants results to to today's we our that call, cause which related continue, during statements we all forward-looking risks materially. like will could material to differ business, uncertainties make

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

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

MiX and With Joselowitz. Telematics' Stefan that, would over President to I CEO, like turn the to call

Joss?

Stefan Joselowitz

Paul, Thank for good you you, and everyone. all morning, us. joining Thank

our strong another we quarter quarter results. of of For fiscal XXXX, operational and delivered third financial

with organic sequential strong adjusted a highlighted another Our growth, XXX subscriber record were positive quarter XXX,XXX growth up to return year-over-year. margin point basis subscribers, of in quarter, XX,XXX end net more At subscriber driven was generation. by EBITDA cash organic of increase free by We growth of results primarily flow Africa. had achieved we the our in subscribers, and record improvement the an which than over new XX% a

quarter basis, the revenue XX% revenue. growth year-over-year ending on $XXX.X annual delivered constant of and we generated $XX.X currency total million Financially, in ARR million a recurring with of

Trimble second and our strategy. Services as which we to implementing steady making FSM, the customer Management the progress quarter from business, acquired are on which now retention Field We integrating are we refer in

achieve next still we the goal to to believe the X is XX% within continue conversion can we transition X it process, previously in a of set quarters. that rate early our While

the cross-sell the sign with in upside. potential future FSM of also an of with This early is XXX cameras MiX AI this an acquisition. for Vision additional success We closed deal customer potential inherent

XX.X%, of our increase $X.X performance, last the the in We believe terms with expansion of quarter. we XXXX. significant the a margins adjusted margin adjusted expansion quarter with a In from will further we generated EBITDA normalized sequential towards of in EBITDA our million at expected mid-XXs margins XXXX quarter month each moving fourth in in margin that exit and fiscal fiscal saw

we continue an M&A company, important a strategy. and of business grow as our evolve remains As to component strategic

in acquisition value and We are that committed end, adding to on portfolio. that and evaluating identifying place potential base team focused technology attractive finding to subscriber we Through of means is dedicated a our have opportunities.

Our the in assets team the to with for can align U.S. and scale and our market and is our monitoring strategic continuously abroad. that goals companies help us that presence

even MiX upgrade features our more provide Vision telematics focus includes a experience well We solution to to the flexibility This recently early integrated easier support unveiled development. our significant dash customers. as and to to smaller December. Shifting AI as install and that to are and update package feed to cams enhance quicker for existing new in software user our product video

video growing of solutions. fleet includes proposition technology Telematics' MiX enhance our the We of driver and believe the portfolio seamlessly risk. will integrates an improve of the safety value AI-powered portfolio trend products that business, mobile with to option broader now recorder reduce video premium addressing multi-camera by Our this digital advanced of leveraging

and Connect another in as solutions well our quarter, of America as Ford is North to regards MiX our major completed telematics last integration that we strategy, With commercialization represents the ongoing multiple of corporation brands. Europe vehicle OEM automotive with our The services Europe. Connect OEM

future. to represents a small gateway high-margin OEM we in strategy continue business, overall to While view as our the a portion this currently our recurring of revenue

industry our of innovation. demands nature The ongoing

varied grow essential is our to organically competitive the we and in preserve our ability our market by across share maintain that strengthen vital long and enables to retain in dedicated our for endeavours This our Investing our forward-thinking customers edge us a it enhancing So solutions. constantly offerings. these approach is term.

regional key the our to customer turning performance Now during and wins quarter.

to a and sales team as opportunities thousands is new reference of global to fast and will steady identify new just this locations a has we food quarter subsequent for North working of hopeful diligently we have with corporation Our presence contract been customer to important the This to do enhance start the as and us. it has continue America, to become a which an flow expansion In our further outside existing large of of gas. of we customer, and but oil upsell out, are vertical work our customers. led will States, build our relationships. This end, current with opportunities this can subscribers United strengthen that to diversify signing footprint across contract with signed with relationship well the

We including a a in implemented telematics This with mining potential our solutions. customer of over seeks fleet X,XXX XX,XXX additions to over maintenance costs by in implementing America, Brazil our to of fleet and upsell premium Latin a company improve has safety solution vehicles new connections. and supplying X,XXX

with to company, X,XXX subscribers X,XXX Brazilian We adding connections bus new a coach premium customer. fleet to this over our also existing and provided

Travel Europe, Linde customers, in our of the premier across transporting further soccer proposition is U.K., expanding The of AI. are to specializes league safety gaining compelling result with in solution with connections Gas new orders fans for over as Europe, from the with Vision in MiX countries value connections and traction rapidly In a who our games. we six Swans XXX including

agreements. to and teams that believe received multiyear customer FMCG in And for to Overall, on combat are customer for first improvement coming path MiX we and over renewed East, player sustained XXX order a towards I'm with lastly, sales of new the and marketing our customer contracts with progress our countries. phase added a pleased an we make continue for agricultural major subscribers out In extended right base the we in the a from Vision Middle additional Australia existing the key seven and fatigue pandemic. two large AI

Looking the recurring closer fiscal at revenue in us high we digits. for end to guidance year for likely single low to annual percentage end would growth the we XXXX, expectation put of the organic set which are our range, previous the

Looking towards fiscal year XXXX.

the uncertainties which into While to like complicates globe, our our pipeline in expect the sight robust, objectives. macroeconomic across everyone, environment remains line we, our of somewhat growth face broader

to positions telematics the broad product our to truly growth. well However, take us positive and of diverse global drive customer in base the advantage portfolio industry and trends

the confident fiscal for control to our performance. cash is flow. restoring initiatives our uncertainties to within continue macro environment, improving Rule and bottom remain Given highly driving free and prioritize reaching goal our operating XX margins, ability We in the ultimately line of XXXX our within our

hold more upcoming like plan we Investor depth. Day the to regarding April provided announce Further to details Analyst I that in event coming our will would be the initiatives discuss in an to and strategic in ongoing months.

the review Paul? I'll call to detail. financial in results more our turn now Paul to over

Paul Dell

Joss. Thanks,

third financial which quarter our XXXX. December Turning for XXXX, to of XX, fiscal results the ended

revenue year-over-year, $XX.X or of XX% total to period. FSM basis the or period. a year-ago this in $XX.X business, top of on line. XXXX same contributed quarter to million of $X.X Subscription in of compared XX% million total X.X% million revenue attributable we the second for fiscal fiscal the increased Subscription increased acquisition. by to quarter in currency subscription revenue constant which to is quarter the compared acquired Total the to increased XX% of revenue. The FSM year, with the same the third third revenue million $XX.X $XX.X revenue to Starting year-ago million which

our dollar. as led translations We the currency revenue subscription than U.S. last subscribers a net subscribers a consequence, the is a revenues. foreign with to currencies headwind over year the quarter U.S. to reported of of has bulk in of organic result dollar And impact of the added. in The XX,XXX The as top our our XXX,XXX X.X% provided the other the over a ended record decrease results. derived strengthening line

year-over-year. strong our tracking growth our has organic growth from Our by with business. large increased XX% in fleet positive in driven base subscriber record subscriber contributions and The all lines, Africa service solutions was asset

was or increased million. $XXX.X of is third organic up fiscal year. our and revenue constant sequentially attributable X% is has XX%, X.X% quarter On a ARR ARR in grown constant Year-over-year, the ARR to start currency basis, currency the recurring Annual since which FSM. of X%

indicator strength across In addition in projections came all organic record are sales, our further our growth leading of geographies. a growth subscriber in hardware internal showed our and to above which QX, subscriber

the fiscal to second Our XX.X% of XX% XXXX XXXX. gross fiscal for margin XX.X% period in to and increased of quarter in compared the same year-ago QX

areas sequentially points extracted basis improved in as Importantly, our across efficiencies our in number a XXX revenue subscription the margin XX.X% of quarter we by business. to

supply to our to gross subscription expect We easing cost on chain due stabilize pressures around margins and continued at management. focus XX%

While margin XX%. gross range normal see the in of XX% depending the expect an in overall cycle, volatility we may a level operating some revenues, we'll hardware that on maintain of to we

in reported of $X.X million second quarter the Adjusted to third in compared year-ago the EBITDA increased the $X $X.X to the the fiscal quarter year. million current and period million in

XXX fiscal aforementioned margin revenue, XX.X% quarter sequential the the XX% As to the with margin including leverage. and driven was by in fiscal to EBITDA operating XXXX adjusted quarter a subscription EBITDA together point of adjusted increased of in compared total growth third revenues, percentage in subscription of XX.X% in expansion second cost our ongoing our increase The basis continued XXXX.

the We as EBITDA are to also that expected, report our acquisition been to pleased has FSM performance. accretive

balance $XX.X cash We the the to sheet. to equivalents of with quarter cash of ended at XXXX. end March compared Turning million the and million $XX

from quarter the chain significant free cash EBITDA invested well million. expenditures, and of in $XX.X both a With million of positioned to the flow full are expanding global resulting XXXX easing and operating margins in for free fourth in capital cash pressures, XXXX generate net quarter, adjusted we in the third the positive fiscal flow, the and During we cash activities $X.X of year. fiscal supply million gained $X.X

current business considering the expectations quarter, last the double-digit XXXX we that year. report fiscal year subscription and growth for revenue FSM fiscal we'll our Regarding the of constant continue acquisition anticipate for to the currency

We in subscription single stay to growth expect revenue mid-to-high organic digits. the our

currency focused growth single-digit constant We're XX%, fiscal we Joss mentioned, recurring while reaching in fourth provide guidance of approaching our XXXX. achieving will in EBITDA performance adjusted the year also margin and finalized plan. As of mid-XXs. the on an exiting actual margin high terms next QX our earnings operating annual revenue, call, annual organic quarter XXXX the On we more fiscal on detailed with a anticipate based

fourth free the margin we particularly the Heading company, the and of the are expansion trajectory performance. quarter, into pleased with cash

for Q&A. operator I'll our prepared and now back call concludes over the remarks, the That turn to

Operator

first [Operator comes Our of Raymond with your Please James. Sklar the line Instructions] with proceed question question. from Alex

Alex Sklar

Joss alluded clarify, Paul, or march or want comment rule you longer of was I towards kind continue 'XX specifically when of FY the that to XX of to to term? target affirmation an you that that just just outlook, kind

Stefan Joselowitz

our this But yes. stage, obviously year, out way give the stage, we'll this about the thinking we'll flesh -- more that's Certainly, the fiscal at around at 'XX. -- we're view

currently are control. the see we is terms operating fiscal have And things, out the rule and that bit, ourselves guess, we are strong focusing we're cycles than As been we XX something we're we environment 'XX, approximating a of of sales setting can in what a objectives on for we in -- murkier a little targeting. certainly, elongate definitely I

Alex Sklar

And just the then, looks the hardware particular. dig year. line, really mix wanted the in Paul, into of half given margin It actually versus the impressive first of just gross I increased to

you you've it like could gained in talk that there? you just Is It recurring? of talked just the about? what that will sounds else about carrier line. renegotiations some Curious efficiencies some So the be is of

Paul Dell

point we quarter. So expansion a the current basis XXX saw in

XX%. end at think terms a quarter, that expect don't of around -- QX, we'll level, it in expansion, think little but probably I the definitely bit to of see that I not we and

item and And in terms just have at costs. we every looked we our think line what I of did, --

the call, said. on we last we As we on mentioned what executed

in the renegotiated continued our and Africa costs certain operating major processes, of carrier doing have We additional make we're business including automation where volumes. improvements have to big and in we a

volumes, if given line. changes, that of lot the to think bottom drops a make that I leverage you you get the and small

next are quarter. we But I won't -- improvement. pleased it's around the the big be it yes, margin XX% that caution would level. So end to as would with It going

Alex Sklar

I'll maybe one And in. squeeze just more

of been to you talked Has still size quarters? there the pretty kind any booked in Or historically kind it's kind about You've you prior have of change the similar backlog of of terms deals backlog? of of haven't implemented. that that

Stefan Joselowitz

start to certainly seeing normalization. are trend towards it We

elevated I to certainly that. ability think eating global still we've roll seen an transactions. as levels, at So steadily we've ease, on start chain our It's into out having that booked been impact issues to supply but been

Operator

question comes Please Blair. the William Pfau with your next Matt Our question. from line proceed of with

Matt Pfau

that of result that saw your wondering Africa, standout drove some performance you the On the just in to geo relative geographies? what other in

Stefan Joselowitz

asset as said pipeline drives that one geographies; well. economy seeing ARPU certainly of we stressed I've on growth of so trend. security needs, that our to that on of we're we see of some before lower in geography impact a from opportunities Southern overweight portfolio, kind tracking a premium some a great Having and contracyclical being uplift fleet that, continue Certainly Africa do customers. where them in have mentioned our kind

our they're in. doing considering overall is a there environment operating So fantastic job team that the

Matt Pfau

your something some seeing sales there any cycles you that have have -- how those in conversations new? Is or changes been of comment, gone? then customer and have Joss, And seen elongate. on And terms

Stefan Joselowitz

doubt to caution increased cetera, recession, guess, the verticals, et around really I that potential pertaining spectrum we're et cetera. no across There's of customer the seeing concerns,

far it a we're cautious -- in as kind enterprise a So to as seeing newish starting of of is customers. large see we where cycle concerned, more certainly buying is development are from decisions terms this approach

Matt Pfau

And of margin that should improvement, the coming about from? we then in future terms where think

Stefan Joselowitz

or we're to referring the margins? adjusted margins talking You're EBITDA when -- about EBITDA EBITDA

Matt Pfau

correct. Yes,

Stefan Joselowitz

Yes.

a on cost nonstrategic focus would of deem specifically combination a big control, certainly we it's think what I costs.

our happens. so. Combined, revenue, magic belt increased we we'll certainly tightening course, of I guess, have to and been where So continue do with which the that's

as we're line unlock can than we're in business, on over costs faster And continue. and grow impact that added couple our certainly margin the expansion that you top certainly expansion. drive efficiency reported seeing If of expecting we've are business in you the your and to last being quarters, the

Matt Pfau

Last me. one for

You the assets of team, called terms willingness there What to sell of potentially Joss. M&A in and out you are pipeline themselves? seeing

Stefan Joselowitz

So I'd the having, it somewhat we're valuation certainly, assets moderated expectations are of we're terms the think looking at. terms the improvement. -- -- conversations the setting I I that we of in call have size we're guess in of

that as to of are cash might good cash these So times generation kind such to unleveraged as I And opportunities does have sheets think into strong hands of again. take organizations starting do are in phase balance favorably along. advantage we play think that a enter ourselves that positive it of thankfully, us I the a put potentially relatively come strong of position flow

that's the pipeline. conversations, certainly, building we is clear interesting as speak, team and but having nice interesting certainly We're So a nothing some stuff. present

Operator

session. to gentlemen, for floor I'll back and any comments. question-and-answer concludes Ladies that turn final our Mr. the Joselowitz

Stefan Joselowitz

fourth today's regarding again Day report call of and, our for quarter job. Great many with stay thank fiscal Investor we and listening Thank our look speaking there. course, to full Also, you please to we year forward XXXX you, tuned you shortly. Melissa. We'd to like details and upcoming results see Analyst as for when hope everyone to we of

Thank provider Last, of of a for in like I Their and Thank goal commitment worldwide have successful in mobile contributions advancing day. being were you, solutions. MiX acknowledge quarter. top would tireless you, role a guys, management of and instrumental our to and the our team. asset to your wonderful our efforts fleet everyone,

Operator

today's Thank you. This call. concludes conference

lines You this disconnect time. participation. for may at you your Thank your

MiX Telematics (MIXT) 26 Jan 232023 Q3 Earnings call transcript