PWFL - Earnings call transcript Q4 2021

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Operator

Good morning. Welcome to PowerFleet's Fourth Quarter and Full Year 2021 Conference Call.

Joining us for today's presentation is the company's CEO, Steve Towe; and CFO, Ned Mavrommatis.

Following their remarks, we will open up the call for questions.

Before we begin the call, I would like to provide PowerFleet's safe harbor statement that includes cautions regarding forward-looking statements made during this call.

will future statements financial there events, regarding call, PowerFleet's including performance. the be made forward-looking future During All statements future other offering other business for include forward-looking financial any growth, than considered anticipated industry strategy, present and regarding position, the expectations statements. company's trends historical competitive the demand position, are plans regarding of for and for results operations, company's future statements anticipated operation, facts opportunities which product company's for to, statements beyond. XXXX but expectations not company's Such and limited the include financial are All the such the imply presence of many of risks, contingencies, forward-looking statements uncertainties which company's and are beyond control. The in may differ any actual materially assumed performance statement. or projected company's or forward-looking results, from achievements those and to materially the the actual that for amongst competitive business company's cause products Factors and economic position. emergence cash could and conditions, differ technologies could of new services, demand others, results include, factors, company's overall SEC filings, duty to The undertake to any any company circumstances. or update events statements not does future to forward-looking intend reflect

like would in the I replay this website the section of be Relations at for to company's will that Finally, available Investor made remind everyone www.powerfleet.com. call

Now, Steve Sir, proceed. I over the turn Towe. please CEO, PowerFleet's would to to like Mr. call

Steve Towe

call. thanks everyone joining Welcome, our for and

to For early joined had pleasure those or year. company, of the that our are this as of I've to January speaking new in not I CEO

unified Masternaut. Officer at IoT the as Commercial global in organizations. five space, leading and for the I Over leader retail highly XX scale solutions served Aptos, provider, last most years XX years, Most recently, software the I had years’ President experience enterprise helped market. telematics global technology in I valuable have in as the Aptos, SaaS of Prior to commerce Chief market notably

to of thought nine held and the I Fleetstar been Trafficmaster in strong I energetic the joined and their approximately the chain. supply organization. market busy joined PowerFleet executive has full It's be great time those impressive to a world-class pressure PowerFleet our the senior technical Cybit play subsidiary our to challenges Through a base mission unprecedented digital Group, highly a confirm high-velocity, customers fully team with has the and as highly Before company for create since an transformations our productive solutions industry, integrated at due and of acquisitive My of fleet headwinds ago. through known and now unified notably Teletrac. evolution and at bases customers what their management to to set I rising the when as the that, times, by business reputation Information become PowerFleet next the change, results. operations highly the a Systems, more the a true consolidator, We're roles period created going talented across here IP, weeks most I globe. visibility across observations early a effective business obtain cost are critical clear. accelerate pandemic customer role about and even utilization in deliver of data capabilities increased their

strategic and roadmap new solutions fully months coming in a plan team the at begun I market. cement billion the the our have mission-critical initial IoT high but last the for Over leadership $XX data level, a phase roadmap as designed the software roadmap. more two provide of long-term global this on months, the provider PowerFleet to implementing details to I is and

our of results initiatives to our strokes discuss strategy. I'm our around our key over centered and Before into I for to transformational Ned to quarter plan, discuss going I'll Ned? our and early the turn dive XXXX. fourth the vision it full-year of growth Afterwards, broad strategic some

Ned Mavrommatis

everyone. Thank morning, you, good Steve and

of quarter in a At XXXX. margin, the XX% our to top Turning the year the full a for growth a fourth in increase ended XX, and fourth year-over-year and quarter. a December strong by line high year, highlighted marked and XX% results 'XX recurring high finish quarter the revenue to level, services

driven along international the customer in Our with broad-based our quarter from robust domestic our market, demand by was continued base. sales growth in

in Now Total to fourth let's look revenue million of at XX% to our more million the $XX.X increased in QX results quarter detail. for compared year. $XX.X last

record to or for XX% $XX.X For million, revenue of full $XXX.X or increased the total XX% services 'XX revenue revenue revenue, recurring of fourth QX year. total million XX% in of from last the quarter year, in and $XX.X a to million, $XXX.X High-margin, XXXX. of from XX% total million increased

year revenue of revenue XX% future of service the improvement 'XX, of million, the was million, year. full $XX.X revenue and revenue, or to revenue $XX.X in or of of which drives of revenue million, quarter XX% fourth same $XX.X XX% last in year QX compared for of an total from to services total $XX.X For Product period. recurring 'XX, XX% increased total revenue, or X% ago and high-margin, the million, or total

the revenue profit Product of million, Product of revenue, product service compared the gross higher chain product of in to of XXXX million, or for to $XX.X compared total or $XX.X revenue total the million, service XX% quarter issues in with of revenue, supply $XX of associated or inflation. of revenue, for total QX $XX.X million, compared margin $XX.X improvement Gross impacted XX% fourth total 'XX of costs mix, million, or shortages in and of XX% XX% and compared million, electronic $XX.X or gross revenue total revenue component QX an of last revenue of of million, For year. $X.X $X.X revenue, profit by Service of was QX fourth year. was profit product last full XX% in of XXXX. total or total XXXX the for to was was 'XX or XX% year, profit million, or product quarter was to fourth XX% last year. gross quarter total XX% in

progress we progress of start as and efforts are product our efficiencies. profit chain margin on expect through we issues gross and operating We improving improving supply as to XXXX

to in QX and expenses severance-related the million for prior of $X the compared costs to Turning of approximately million million and quarter departure the worth in fourth last one-time to in Total expenses. our $XX.X It's noting year. XXXX quarter fees recruiting of prior were recorded CEO's million quarter. operating fourth we that $XX.X the $XX.X

and important million the operating of comparable compared implemented were periods $XX.X expenses For year XXXX, note the full year to XXXX ago we the total reflect cost-cutting that period. to to $XX.X the quarter same of COVIN-XX. million measures full-year in response in It's

expect level of into in XXXX. quarterly our reported move QX we consistent remain to XXXX, OpEx the relatively same we As we at

our costs rationalize we areas, and non-core of benefit initiative key strategy seeing transformation the expect a start to is beyond. QX However, to in in which of

non-GAAP non-GAAP GAAP to of share. the of XXXX, $X.XX attributable basic $X.XX to of million, $X.XX per net $XXX,XXX, quarter diluted per basic and share or last EBITDA $X.X the same net year-ago totaled diluted and per compared metrics. or quarter a metric, in and per $X at Looking diluted totaled year. attributable compares or million EBITDA, year. million, diluted our for to QX in income common fourth and million, QX of $X diluted basic common loss of a and Adjusted $X.X totaled XXXX million period. loss net the adjusted net share $X.XX loss for stockholders per to of stockholders Non-GAAP share, profitability or in compared This fourth last to basic of $X.X $X.XX

position working remained million Our capital. in with end liquidity million $XX.X strong quarter of at $XX.X cash and

Annual Capital XX. Annual Conference XXth Lastly, Conference ROTH be also Research we'll Barrington Monday. remarks. And May in the at concludes Steve? PowerFleet XXth the attending That will Spring Beach next my on prepared Virtual Laguna be

Steve Towe

you, Thank Ned.

an transformational and benefit on sustainable our we of pace As for PowerFleet are customers. at I opening mentioned exciting growth my in both remarks, and set delivering the

of to organizations have role was recent hold General R&D as Patrick develop led and US Patrick of SaaS the and Maley, and industry, go-to-market Jim teams delivering Xx market, has Europe, will Software, dollar career, bring and Engineering in my Software, multi-billion a most industry-leading Manager automotive for our Vice week. across supply the products who's Some marketing of a strategy, revolved focused he and senior size in in this SaaS improving to leadership PowerFleet company the Jim of Patrick records BluJay, new served focuses Revenue he global team at experience aftermarket, our data over joined also new wealth best-in-class years President delighted of chain title experience company executive of development to our Jim's additions go-to-market helped of us further Over software and Maley driven our recently Throughout deeper business. the our rapidly, Asia over at his to as brings company vision, applications. of new Prior messaging and and track that Patrick the BluJay and platform bolstered BluJay that, involved MAM in Coupa as strengthening growing profitable XX company's increase of North brand Chief technology around Zeitunian the world-class high CRO, Patrick to experience, AI Marketing most building announce where companies. Officer Technology Chief SaaS emphasis rebranding revenue. our supply global years software experienced chain the growth. We C-suite on transformation by an for of Jim's BluJay, led At reorganization expansive Officer; a LLamasoft. innovative with solution teams and Solutions. also bring five a Chief and to leadership market-leading PowerFleet Officer. organic drive market-leading I'm help EXopen. levels early Patrick recently an recently of a valuation. highly in Previous led Kewill and transformation with BluJay, acquired Jim as the served trade sources sales to as at science provider. and President publicly Solutions, framework on This traded doubled America. new the has

Kinaxis to truly Jim company. Associates. hardware-centric and telematics world-class leadership and Patrick roles a has platform sales enterprise AI Both software and guide transition help PowerFleet's and leadership Additionally, into Patrick's experience held from and Manhattan at a provider RedPrairie, marketing will

data but around and leverages insights business business AI market-leading hardware value-add science not vision and unify where business a capture solve help that a for a for assets partner strategically, customers PowerFleet, high just mobile their to business our deepening change to critical unparalleled in need centers Our as relationship view data our critical provide with usable vendor their more and data format operations. true visibility to

which vision of will a in months. Our over data-centric the go-forward next articulate involves few we initiatives number detail

customers in we serve, to enterprises are to of them increase purchase enterprise the started customer on we at to business upsell our suits driving their the within chain allow our application pace transformations customer we the allow capabilities significant capitalize our our individual will second problems This increased prioritize across As the rapid unparalleled our C-suite. a is visibility create This them. operations. with we of roadmaps we and taking to creates industry solve to software they across modular elements place on to business the approach and business focus initiative are thirst for strategic A opportunity that as our rich solve furthermore, approach. verticals will clients. of forward supply performance looking for role play change their It the

operators insights into employees, in deep chain into for customers more provide will safer end-to-end. business its Information their integration year, of creates set This to asset line. valuable to intuitive its increased end the goal customers' capabilities makes and effective [indiscernible], customers business. the customers' other and whole a business more go-forward highly improve supply across investments through platforms our information single manage and a interfaces the our deep to through bottom its operating way our transforming to efficiency, untapped harmonization our access across for single operation data unify systems and the estate and is that enable Our opportunity can

been have these transformational with fully accelerate our we in provider IoT can foundation to platform market. the highly future. and wallet scalable, maximize share evolving mission-critical in the our foundational a PowerFleet we as and derive steps primes for as impact establish strategy and a to fleet software will make for commitment capability together, AI provider important be designed customers The world-class in increases an focus harmony much increased a Taken which initiatives the the SaaS ultimately we our to expanded

solid to successful highly the profitable international most the types, our an mobile camera continued a evolution of our QX implemented through working in operating through operations, and capabilities all the rental delivering growth of providing capabilities repeatable capabilities market and gross a make solutions our continue space. comprehensive in XXXX, and set ready now and market. organization. propositions user multiple the division telemetry last and of of US industrial logistics the video hard and to traditional have chains, and solutions Despite and good of our of set of will bringing have developed believe execution for will customers manage our traction vehicle offering vehicle our supply strategy a momentum are in to to proposition We're closer We across global reduce For vehicle subscription global geographies US revenue behavior, of expenses in space single the we business PowerFleet saw as vehicle margins set enterprise the alongside the the their build set connected verticals, also car revenue and we assets vehicle having translate will we for driver in year. market market by underpinned data our assets on interfaces. significant the our expand of revenues be electric new scalable, confident around for challenges of one to all servicing position we all very term, enhancing in growth, extended safety pointed market our to global and look These through the and been we types units. harmonized Longer to to integration visible these recurring in rich

in the it's at global still work and ability to capitalize hard we data confident helm While the our I lot more of us, the days for have say can market. me early I'm providers opportunity in a on for ahead IoT that extensive strategic increasingly

the to back for it turn I'll Q&A. Now, operator

Operator

Please your question announce Your then Walkley. affiliation, coming is your [Operator Instructions] first from Mike question. pose

Mike Walkley

in guess, Hi, can you with for thanks. what roadmap a people this place means with salespeople for the Mike have to I'm right first roadmap just Walkley question PowerFleet as Steve, market, new to of your strategic establish Canaccord also I for going Do R&D this? Are strategy? your long-term to provider how for go-to-market software IoT you, also? Genuity. in mission-critical have you changes the discuss hire impacts terms the you and this maybe

Steve Towe

you. Thank question. Great Yes.

expertise and out appointment our as world-class broaden we're and think to our Jim, already go-to-market I with seen So, you've scope deliver ability the of software Patrick some adding to platforms.

not it's So, I think an evolution, a revolution.

basis. adding roadmap that software software side, the be the want very on global And will logistics those we we capabilities In to got within terms of have some our some salespeople industrial but resources support that in team a market and with I the some to effective we've sectors the particular accelerate but other think growth we to our vertical where we've the of need of adding will some fleets, to some maybe verticals specialization. do been on able so impressed particular be our be very we and resources some

Mike Walkley

building focus continue design question. hardware? maybe Or become Great. own you to on that the And outsource important, on more software hardware less Will this your does and roadmap? just

Steve Towe

we core So, of those look always should and believe types be will we PowerFleet to unit our develop part ourselves. always

have in IP some great that We space.

trust provider. think as us people I a

of deliver will able that heritage. be we're to think of quality always our part core obtain and the part that of we premiums as because I that

smaller of our side on devices kind ourselves our into number I element. and it's focus is up say really our want best-of-breed more So we put beefing the to And of would of efforts then we're What elements can we of software match hardware to and we adding business, volume. strategic will work our bring which devices the are from so. if be devices with to ancillary along that partners those will there our do a

Mike Walkley

for the we last margins? to question update the we're any And Just pass chain the through kind Obviously, then quarter? of demand how shipping, are can just the recovery and Thanks. But et the meet And supply think Thanks. quarter, line. gross hardware. should supply? March on on how And now for you cetera. that about I'll the the for me seasonal quarter. March supply hardware for the two-thirds of expedites meet March slope trends Ned,

Ned Mavrommatis

Yes.

how We especially saw in the at the a make to first as expect supply continue through So I to because we to part getting margins, the quarter think to we year, to issues are beyond. deliver product of get Mike. you to to work go we're we're the looking gross those demand quarter. a that meet implementing gross be better the due on we in the product of improving efficiencies throughout But XXXX. lot similar did also When -- fourth and look just on which you quarter, fourth not we product yield able specifically go first focused some they're better XXXX, going operating the but to in thanks, as quarter only and start gradually sure that we should we the in the as expect better early chain things margin

Mike Walkley

Thanks my Great. for taking questions.

Operator

Your pose announce from for Searle. is coming your next then question Please your Scott question. today affiliation,

Scott Searle

that to of we improvement, XXXX exiting it you're thinking of about and related? are. gradual should Thanks address front, ROTH pressure taking on gross with some Hey, Searle the a build questions. questions if a your points a freight all for of Scott Ned, Is from as the Mike's little standpoint? margin then Are components? this about morning, wondering specific where they I'm how To margin on the year bit you couple could gross some And Yes. thinking guys. be Capital. of

Ned Mavrommatis

Yes.

the pressure I think chain related issue. points, all the obviously, to supply are

price. components. with well. components And where higher the a are at a you have lot also much freight PPV have situation to certain There's costs associated higher buy you So, as

As going the gradual to-high look, to improvement want XXs. QX. we to margins gross the in this year start with in is mid- exit product the We

Scott Searle

helpful. about think And reappropriating correct? resources, also flattish that to clarify, Is you this to over talking be from particularly Very we're year Okay. hardware-centric of software-centric R&D course the just up follow initiatives. I on more to OpEx said and expected the front, and

Ned Mavrommatis

Yes.

correct. is that So

keep the the quarter. in especially first is OpEx goal to So flat,

initiatives. We cost in second start beyond to and improvement put are are in see quarter the some to saving to OpEx because we going going starting significant

those resources ensure we're So, of maybe have reappropriate we seeing start to to where going we resources need some some going to start to are and benefits we them.

Scott Searle

capability. those P&L terms things benefit actual an of It Steve, a at when the sounds And in and you're well good. a sounds out approach, of in a internal you've terms like I little relatively up time. could Very other XX was opportunities. I But modular a in sciences it investing impacting see days couple you're know with and perspective? from assets of have. line that whole in to we top point start this do a the existing like and you in wondering as if opening you But data AI happy bit as expand laid portfolio the

Steve Towe

Yes.

I think, able obviously, we're to of when capability. down future and terms laying our XX we're days just in in we're execute plans

totality within where some our advantage wanted to bring marketplace probably QX months take are But in expect overall team internally product we an to we exactly strategy, into this the we QX in counting this terms will year. be. Now of to to the on be XX

to new kind We capabilities, to have But year, revenue put sales how execute. to much a of in very months. well. We're this whether freeze XX not to see we're well for for depends ourselves do confident to upsell within want execute any wait opportunities we our see. we It So ultimately, XXXX. and we'll team going in new impact develop want we on

Scott Searle

great. hop been if have I pipeline. could line. and of Okay, a and lastly, the lot back I'll initiatives percolating then in in And there But opportunities

some terms You I to auto and us other fleet otherwise, opportunities overall on looking has kind when wonder But you is and the in warehouse think the give forklift if of XXXX? market about company rental of as demand of could made demand Thanks. within that what that those looking the into had head opportunities and some the quick reference initiatives additional you and are we start of kind to of update how some a front. characteristics historically like

Steve Towe

Yes.

So, we're all cautiously fronts. encouraged on

if QX. we're verticals, that that a in the performance. we at got you that by QX, that's we that seeing new think we're in line would space. all in And I the logistics was vehicle I be and some across that look say industrial, top And warehouse, think so seeing I the what whether the good are lines growth encouraged far

going to I a in around with is think what customers solutions, on fuel particularly data we all safety, around more the our from are order create in the demand seeing further particularly world. usage challenges

of by So, coming to that much actually But I capitalize months. the I we sales out think it advantage will us think broadened be on and we're particularly in opportunities. for I the can force, our take weeks encouraged in US those and some increasing how demand we've is of think how

Scott Searle

Thanks so much.

Operator

from next coming then announce Please is question affiliation, pose Schmidt. question. Your your your Jaeson

Jaeson Schmidt

with taking my questions. for Lake Street. Thanks Jaeson

software following Just on the of sort SaaS refocused on of new previous and that. on this up are initiative questions some

really go-to-market you of model it the wasn't a to a the and that assume pricing and that product approach, issue, given on modular products think So this pricing your with is be software combined? issue more fair comments may

Ned Mavrommatis

an sell categorize probably would I our of that as terms to in we customers. evolution it way the

being a done I can of at insights end think well a that lot across sell vertical. we within we've and But positioned of the think data of I of to C-suite. transport business kind the have the lot So, we

that to tackle will to us increase it holder. depending business that moving share. that different transformation the change So capitalize will wallet modular do the individual kind way looking with And over really that the of allow and on should the we're suite work time company on our and we're C-suite to issues to allow business we

that we're top margin. our able would gross with revenues any think and So, line to modular hope approach, we our improve I

we that perspective. So, think able to us that weren't gives had that product challenges way, demonstrate be value on our to capitalizing any that in I the think it's just create a effectively. actually, for clients' approach investment, don't more able But I And on. refreshed we're we a return we'll broader

Jaeson Schmidt

the that's office, timeline if macro? Okay, the shifted with looking given curious then opportunity just And that has all background post helpful. just the at at in the just all noise

Ned Mavrommatis

Jason, we it's to with We postal implemented Yes, work site the them. continue and Ned. to with continue service. work we'll a

it So still obviously, a see them see we that an with -- it's to working in agency takes -- little bit them contributing longer. we're revenue But no, we don't XXXX. and

Jaeson Schmidt

Thanks right. All guys. lot, a

Operator

[Operator question Your your Gary next Instructions] from then Please pose question. affiliation, is your coming Prestopino. announce

Gary Prestopino

morning, Barrington A everyone. of Research. couple Good questions.

When OpEx, $XX.X $X of it's on you fee, flat QX, with it? is one-time Just million backing $XX [ph], the that Ned. million would the look you million, of to so out say be that way going at about mean get to the kind

Ned Mavrommatis

That's correct. Yes.

Gary Prestopino

dramatically with question picture get I'm here of in the then what company. software you're here, things company changed the at to you Steve, strategically bigger look more into couple last the saying. and understanding somewhat want you months a And the because have just Okay. realm as as

US so these new, be are And First will I follow-ups. some to of up then pointer? develop new more some the products? in Or if of to you these do have software initiatives, at fully really most they staff all, developed of have

Steve Towe

Okay.

team. software So actually globalized we our last year,

colleagues and territories. into in geographies other multiple our US supporting have we So,

global So, model we continue. to expect that

be but to adding, to will around as we've to wanted be said bring up some the market for resources time and solutions quickly. of to that sure in-house, will we developing some that order in scales the we accelerate some repurposing beef We

Gary Prestopino

Okay.

mentioned with are end and software data time capture, of another SaaS line key? be the over at going what monetize mean, all that, the talking AI, is looking to of of that analytics can company you user about adding along and possibly the So data in through sell terms with is you that we and revenue software majority kind to you're thrust the of data a platform, software the services.? I to with

Steve Towe

Yes.

core the go-to-market applications, opportunities One elements sell to mid-market enterprise So issues and to enterprise business is we directly selling have. and there is different three the solving to so modular that today. we that

of of market power months. are bring joint over propositions and we partners will with calling things their the operations. where coming or that's to systems chain integrations we our And a systems, Secondly, working weeks and other we'll why strategic supply either data number those we're on will unified offer

So how two. And also us each we lot number collect performance scale, more parties. third supply for of systems can offer operations and That's important chains. power and what our alongside ultimately becoming other data is, seamless to to systems an more solutions which awful other’s and incremental customers and affect we do obviously, at more is we

that data But different how monetize that data and as use line. we with down a So to see third parties. much down third step it will further and further that's be the the line. very look We'll can

are most two The first strategies the immediate.

Gary Prestopino

Okay, thank you.

Operator

to further for are floor would back queue. in comments. any questions There like I Steve the to over no turn closing

Steve Towe

June and event our the customers forward talented Analyst this and thank strategy. us will detail early vision of will enhanced joining mid-May and greater to announced by our Investor late like an morning. for that May. growth to details everyone, PowerFleet's to provide I'd support you, efforts on host investors vision. an confidence We execution, We in In Thank in for look our valued ability and Day to putting new be our for you speaking thank realize The to thank closing, for again extended you their and diligent to your continued soon. in trust all our their to operational employees PowerFleet plan

Operator

and conclude ladies you, gentlemen. This conference Thank does call. today's

Thank and time phone this at you for participation. your wonderful lines disconnect may You have a day. your

PowerFleet (AIOT) 9 Mar 222021 Q4 Earnings call transcript