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MiX Telematics (MIXT)

Participants
John Granara Chief Financial Officer
Stefan Joselowitz President & Chief Executive Officer
Matt Pfau William Blair
Call transcript
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Operator

Greetings. Welcome to the MiX Telematics Fiscal First Quarter 2021 Earnings Results. [Operator Instructions] Please note, this conference is being recorded. At this time, I will turn the conference over to John Granara, Chief Financial Officer.

You may begin.

John Granara

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

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

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

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

Stefan Joselowitz

Thanks, and and I families hope the I call all would you for thank like today. all John. you safe healthy. joining are your to

was subscribers, discipline was on a the which April very The a XXX,XXX subscribers still solid, June was million, Our And Due or our pandemic. June additions revenue subscriber our expectations and months To presented two a well the $X.X improvement XX% year-over-year, EBITDA the in the reflects were of financial to for subscribers. Adjusted saw the in XX,XXX given quarter XXXX. was of million, May, first quickly in well X% global ended ability biggest activity first an quarter little business. and of although across year-over-year compared we and the to decline which quarter. was currency. cost an fourth margin, new shutdowns, our sign $XX.X XX,XXX constant quarter was ahead We new to economic good by with below performance COVID from relatively Subscription the was first in period: summarize challenges decrease the up impact the COVID-XX quarter. operational but increase of results of

negative other in both fleet contended affected key number our which subscription we The subscriber revenue and count impact with contraction was verticals, lines. a of

As we In when improve, the and the uncertainty pandemic the will COVID many improve, fleets. more is will of making towards customers the to expanding to return. expect due effects investments these conditions approach new on subside the cautious of or likely and take eventually subscriptions conditions economic telematics their near-term, many slowdown a to cause

While our pipeline we fleet high opportunities. believe have that investment business recent is long run, wins on fleet will seeing a of and our that mission-critical management intelligence, promote significant businesses. efficiency end for new believe In particular, many safety, we from provide activity amount market companies markets. driver focus are can are a ROI a growing In we increase platform the events customer underscored increased benefit various an their the in of comprehensive by very currently larger encouraged down, telematics amongst are fleets. We for and

invest step part our that sharp growth. objectives against As taken overhead as our are focus XXXX we and and call, our investments strategic cost discussed reinforce partner; to portfolio first product firstly, to organization to to strategic prioritize long-term positioned each value growth customer steps in perspective, earnings in for challenging We in of our expenses of the very staff to, well This our we and in go-to-market are plan; again dedication of I our their fiscal and to We and have these off and are on medium trying in difficult priorities manage our These approximately preserve ultimately the these and take opportunity ensure decision key of all laying times. a continuing quarter. order a team revenue success weather our times, thirdly, tough initiatives. our we initiatives. made profitability and for objectives. to of last the it secondly, adjust are well on we our maintain good in necessary we best thank From members structure, one long-term while did offices. of our one we believed took achieve from to investment growth on was once like storm the various strategic actions this XX take that across didn't would was globe the progress our lightly, was focus but many a and to

coming are to and programs investments We quarters. continue projects scale track R&D key scheduled digital our on the all marketing of in in deliver our to

and We our to grow, conditions position normalize. will enhance economic ability are once investments these market confident especially

Our and quarter of free share. X helped QX cash. the better-than-expected million The dividend a our sheet flow balance with strong and ordinary the performance cash to confidence recently African declare cash ended generated of We million the to $XX.X performance profitability $X.X per South strength cents of gave drive us in our quarter net cash flow. of

this verticals. conditions. fiscal still market evaluate what we and basis on quarter-by-quarter like on would year a of a in I business are based seeing some will provide dividend to moment We key update our an to our on take

bottom First, were this we current most by macro increased believe which sector dormant that a important did and of in have Remember not to history, our as in expected, relationships do any strong It's fallout this note as customers. economic challenging significant in our yet lose for customers the revenue in the quarter not vehicles will in we market, COVID. from this to would and experienced to we on drive expect we impacted us. multiple conditions returned gas we with and trends, had through oil the been these and customers market service, sector. that contraction reached that Based have we have cycles severely as improve be subscriber market

other to Secondly, response we has reopenings and and COVID-XX in longer geographies, been to The gradual. see originally This have vertical. in coach lasted certain bus more rebound a not our have slowdown ease. expected, our in than global the yet temporary that change economy. and does shutdowns pandemic shutdown the in market finally, sharp we are verticals, track as a is in see broader we expectation this rebound these generally related will seeing customers with business And our that

recovery June. The decline these in in are number trips a ahead but significant customer and trips still April in April well of data revealed the Our in lows. a pre-pandemic markets of levels and below May beginning are

win a included sugarcane Some we had exciting producers most Brazil. prestigious in with the the of one wins in quarter new

will to We telematics efforts improve its customer implementing superior This support availability. with proof-of-concept be the as our demonstrated provider our existing behavior their project. in in performance, and is to vehicle MiX solution commercial vehicles driver XXX to replacing due

operational one important of of world's MiX's reduce in XXX maintenance who will and with at of its prominent solution its assets. its the and ore was the fuel while optimized Another operating cranes MiX preventing core is Brazil one mines. overuse rely costs, enhance for safety most part win of on a efforts of management to largest customer's engineering companies, also

of countries restrictions place successfully prior We our wins, despite most in been the quarter. rolling some the in have out during also

For this an to example, in of X,XXX vehicles European region turn, us, deemed businesses postal customer value quarter. essential-service proceed. we this example closed we parcel the customers. the and last excellent to successfully implemented being we us allowing essential to discussed in from new this quarter, is the service close most think provide during their delivery the operations, of to Despite We

the challenging look continue environment. year, the to of balance ahead a to we we As expect

of and could the The fiscal is flow, show the which XXXX, global first We and period of that a XX% currency in between XX% under plus flexibility wrap Based now current one quarter the better quarter we of our the revenues to We to up, further current teens. trends, anticipate XX%. business a the that the are be we margins our able continuing over normalized the by manage revenue. but ability of XX% mid year. we quarter first fiscal adjusted in and even will margins will decline. scalability from in positive of of do performance business more on declining of are cash to we on are up the remain reflect trends, business recovery can than back quarter, our EBITDA model the EBITDA that is high course confident our We in gradual To expense grow to profitability Mix's plus to confident our facing half strengths, and the second prior targeting of target and XX% backdrop subscription were business revenue first constant challenging expect and current generate results decline subscription in based XX% meaningful adjusted environment. in Longer core economic economy. term, assumption MiX's

job good areas. focused on executing long-term to a the can we doing growth things our control continuing staying are We in invest on and

of now We results. and John over economy call improved begins review financial to for expansion like the positioned improve. hand our believe I pipeline as quality to by are performance would our well are to and the John? encouraged the we to

John Granara

financial results figures Please for I Thanks, XXXX, for all I all now that are to say comparisons Joss. year-over-year our keep and QX. first refer turn to mind the changes, quarter unless of will otherwise. in the

other U.S. dollar. revenues the currencies reminder, of and derived are a our the majority than subscription As from revenues

the in to The decrease on $XX.X due the a the to was by ended and result of contraction as South disruption constant rand The reduction certain revenue subscription the currency total to XX% on subscriber company's first basis. our an $XX.X base quarter, of As negative were base We well total in increase contributing concessions subscriber had came quarter by dollar revenues our total, a at revenues the revenue. quarter in XX% a subscription with the from X% year the decrease reduction the attributable conditions a in of temporary year-over-year, subscribers with against U.S. first pandemic, weakened XX% XXXX, in this P&L, expected, compared constant-currency of granted decline due constant sequentially. of a the subscription fiscal customers economic African reported a impact to XX% to but in reported the South XX,XXX X% a weakening subscribers, COVID. as pricing the contracted or million, reported primarily of an Of revenue COVID-XX as X.X% rand XXX,XXX million, currency over revenues on impact verticals. to African in to basis. of Starting the

has customers our and overall $X.X XX%, revenue fleet disproportionate million premium As XX% of a by and from reminder, down a and impact respectively. other contraction were ARPU. sequentially Hardware on year-over-year

quarter year first reductions to and and XX.X%, expenses, the were XX% Moving of total taken freeze reflecting XX% on operating down spend. sequentially, increased significant quarter, year expenses last the the was had margin charges prior compared we last compared gross business, before margin XX% in gross revenue. hiring Overall, gross to and discretionary the the headcount salary quarter, up impact subscription year. increases, XX.X% during restructuring of in revenue were reductions, by from a XX% driven deferred a and cost partial including actions to of Operating strong mix across of the revenue, margin

to second of benefit or million or part an quarter XX.X% that we EBITDA was full $X.X these headcount actions year. the Adjusted last the charge. realize and XX.X% reductions quarter, the in beyond. $XX.X the note of as $XXX,XXX I in incur did restructuring will of million, compared would revenue, of revenue We

was which revenue. proactive lower pleased impact the mentioned effective with the which Ignoring non-GAAP We are XX.X% in income Non-GAAP exchange first XXXX. the $X.X the quarter, first losses, compared our of the in performance of reflects tax cost net and above, from quarter million much in rate in for the quarter X.X%, XX.X% offsetting net $X.X the year-ago with quarter steps, tax was of net margin structure, fiscal XXXX. to compared was foreign used in the impact XX.X%, determining the income, of down million, was fiscal the Company's gains of rate, to period.

improved cash, ended million restricted $XX.X with remains XXXX. balance to March cash, strong, equivalents, of Turning quarter and sheet, million we DSO the of which but cash receivable $XX.X Accounts remains XX, as compared to the sequentially, elevated.

million. activities million appropriately generated believe expenditures, to from $X.X investments and in the continue for well we’ve includes capital use significant for The of free installations. devices made cash $X.X recorded. in in in uncollectible fewer cash have quarter, we the any investments accounted flow flow a increase amounts in-vehicle working the to $X to due cash The allowances million. as device $X.X reflects first We in-vehicle free capital of cash capital with net operating lower as of a cash we benefits, flow perspective, leading intensity, From million

up, play wrap I provide expect out. like on how year to the additional I Before perspective to some would we

mentioned, Joss the business As assuming as currency XX%. revenue we decline subscription to constant continue much manage as XX% could to

continue We the half the of that to of subscriber in be first will the majority expect year. contraction the

with expect manage to the very are perspective, we while across quarters. for balanced first and now contraction we expenses cost From more how However, a be the we pleased investing two profitability growth. our discipline

thereafter. be than are expected costs flat As QX think you relatively quarter costs, about to and second lower

margins deliver current executing well. core we the business the our priorities managing We are can in we adjusted least To year. the through XX% on summarize, confident EBITDA for at are environment

the market With profitability conditions the our normalize. to our discipline our your target would strength questions. Operator? we growth long-term remain confident deliver that, business We updated on objectives Our take of for operating like now as reflects year we will profitability and model. and

Operator

the Instructions] with line first you. Thank Blair. from [Operator Our Matt comes question of William Pfau

Matt Pfau

thanks guys, questions. my Hey taking for

made wanted And pipeline. with I that Maybe around trend geographies detail of with there? there types us comments any you seeing a on in start some give specific What can traction fleets? more just that strengthened? to seeing Joss, you're First, comment. large Is you you're the that off fleets the the

Stefan Joselowitz

a in exciting we're almost counterintuitive, are very circumstances conversations that geographies of as is it's our it. verticals, the of we various the many Yes, kind with probably, having but considering large fleets pipeline in facing, but in bids. I I've mean, and exciting, ever we're involved from as seen lot various

it's always them considering the get that particularly situation. line, we Of kind world in. the course, to but pretty we’ve this ourselves of across we And got in when we’ve backed are currently are encouraging,

Matt Pfau

driving anything they a is of Got economic solution one regulation there of sort or viewing these it. a And discussions? to opportunity out, as good that's sort time these else implement driving slower fleet or change anything specifically maybe management discussions? a Are that's

Stefan Joselowitz

unlocks Yes, we realization accretive to these And particularly centralized positioned as mobile think is in of growing perspective, this them. pieces solve I significant conversations. among to, from And that that mobile and recognition puzzle from a larger it's that exciting guess, to think some I able industry think applies to a perspective fleets, there's a asset an driving it data businesses. fleets I and value perspective, uniquely and is and almost the it recognition that exciting for from be global are I our their

Matt Pfau

on then I you And to the ask it. that pricing one Got mentioned. wanted concessions

near discussion the customers or some operations you were that around shut being that? completely breaks? to I are some vertical, related those pricing think those if was a coach some the that they bus and of Is back with giving go earnings broad-based we what there concessions specifically than to, are the more of call, last in down,

Stefan Joselowitz

it's it's think certainly more vertical. than I a more broad-based just Well, necessarily particular sometimes

of the is but So partner and generally, with and we've achieving dividends. just of the generally to where a contract, and we crisis we cooperating, customer previous situations, customer we've in And and part think way this are customers, from show to long-term get through process. the future not empathy and on working of cooperating been I generally, generally customers. I is We've the learned showing not the empathetic in one worked fallout think finding that pays unique. necessarily that all on found course, have times cement acquired you're relying hard through that are are with opportunity situation. a that we're to concessions of together that but appropriate, instances, relationships absolute But economic I other get willing letter we really to this we it's We as through pretty our before, endeavor that. And although help our successful in an guess and time there's

Matt Pfau

Got it. taking questions, guys. my for Thanks

Stefan Joselowitz

it. I appreciate

Operator

of Thank is with line from you. the [Operator Raymond Instructions] question Brian next Our James. Peterson

Unidentified Analyst

Brian. call. Hi taking for for guys. on here my Thanks Kevin

retention I of activity I'm new and you think quarter, the verticals? toward your the you of cadence you wondering end subscriber there's key maybe, said trend some improved that for anything quarter. have else say the around the seen if how And, across could

Stefan Joselowitz

unprecedented. I really running the In can of months as opening almost cadence, guess to at was something terms a shutdown want a, to so an guess you do probably, I were John. I June, will of started like activity geographies. the XX% certainly new in in cadence, kind give something that Yes, roughly, two view, facing that's you we the to I’m resembling of brushstroke broad normal. comment it And of John, in the on were it, was a We saw of terms of idea pass feel first a total giving churn normal. multiple terms retention, some contraction? geographies you of cadence. XX% just up, and economic And versus But in over of the rising

John Granara

majority with and of the say customers. customer. I the actually lose not regards did just qualitatively contraction, where would the we subscriber large fleets to We customers the came from the And say Absolutely. -- retained contraction the with

customers operators. consumer-based terms or those very the lost, were small In of fleet of majority

at as come would just expect, back be important we’ve the past and more it the point, point recoveries, during reducing pandemic. seen we that majority some with was there would vehicles to fleets the the online. importantly those is their before result importantly, in -- them So, the for us, really of retained we customers, a And we of

Stefan Joselowitz

Yes, finish No down, that so let's par, it, can that asset-tracking I ran significant was on activity regular call suppose and normal. answer if far businesses, consumer the new regular as of as that is, contraction our about I change was up was as so churn, just that. And smaller in significantly up. kind economic of to cadence particularly

Unidentified Analyst

helpful. one That’s it. one. other Got Maybe

I products? you're the bigger or any previously, that call the quarter, of contractions. between this some was case were there and asset seeing it previously to differences versus some light out think where fleet still Was said you of that that the

Stefan Joselowitz

So from differentiating contraction churn the is with happy. a customer -- contraction that perspective, is and again, from

relationship experienced, with months other if We and our fleet? we did fleet see quarter, it's in be they with a in a it as to them. who of rental of continue car out absence been have We same been pain -- a size. expansion XX contraction, most all primarily out vertical, our ago, of whereas due tourism this And contraction. would And to quarter lot positioning the our companies year-ago, premium were the of there's related verticals business, reduction contributed key our our compare our Was obviously, asset-tracking No. shutdowns. leasing to the through of from expected significant pandemic

Unidentified Analyst

Thanks, Very guys. helpful.

Stefan Joselowitz

Thank it. you. appreciate I

Operator

you. for session, remarks. this back floor the At of I Stefan turn Thank closing Joselowitz question-and-answer time, Mr. we've to the our come will to end and over

Stefan Joselowitz

today. thank the be going are events. And everybody just I near seeing in for but future, to, participating are some conferences we want so virtual the speak, in call we at not to to Yes, anybody, again, joining

look mistaken, one we're got and meantime, for of forward I think Thanks John. this we wish we've And I'm all if talk everybody looking best their up time, the coming please to Canaccord, -- in to world is to future. next in the and everybody. that, and not until the again, with your a families we through forward normality wish crisis returning the not-too-distant

Operator

today's Thank This conference. will you. conclude

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