MiX Telematics (MIXT)

John Granara Chief Financial Officer
Stefan Joselowitz President & Chief Executive Officer
Matt Pfau William Blair
Alex Sklar Raymond James
Call transcript
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Greetings and welcome to the MiX Telematics Fiscal Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host Mr. Officer Telematics. Financial Chief Granara, for MiX John Thank you may begin. you sir,

John Granara

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

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

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

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

Stefan Joselowitz

delivered signs pandemic. to encouraging John start of second in financial today. consecutive MiX's some since results and the for our Thanks second our thanks subscriber all and revenue joining growth of and end quarter our quarter across reflects you of the the We've markets. business expansion call of continued year-over-year key improvement

we of fiscal I performance delivering the the on is goal. our stated pre-COVID demonstration trending direction. and number half for in that are to XXXX have year first one upfront that Although not clear market return growth conditions to the MiX levels, to returned is right objectives a in

targets of number towards Looking ability XX% growth our XX% revenue margins. that financial market currency constant steady our to believe improvement drive beyond XX% see XXXX, trends encouraging subscription we will long-term fiscal and of EBITDA a we support adjusted to

powered fleet new seat and Dutch now drivers was our for its help United as their to after safety, We subscribers. or while quarter. This and and construction was in net highlight prudently is double us continue market when as vehicles capitalize large XXX,XXX of with them base MiX financial vision buses fleet independent summarize camera I global margin, was the efforts second $XXX three Subscription will multinational and added quarter. A largest we part $X.X key QX. renewed we're the the Kingdom, recurring annual X% countries. a currency. premium into million, our McGill's challenges, will business We a year-over-year to product fully investments and driver constant provider. in in right signed on compliance, our with our efficiency. who years. its in their Group, of for solution million deploying with industry XX.X% return X.X% operational or our making quickly conditions X.X% I'd $XX.X to overall operator the improve in adding normal. as and the contract opportunities EBITDA X,XXX through new of the ARR win chose total currency. be growth near-term ended expectations year-to-date up to better quarter improvement connected number Notably, our which the in We results nearly customer in XX a MiX for increase training, wins. will another market manage that revenue the the some line We manage to and ensuring ended a at Adjusted XX,XXX subscribers the with of revenue a like quarter the constant AI sequentially, McGill's million,

business MiX Australasian into platform, increase MiX behavior with Southern trucks of simplify and compliance the solution, to renewed assigned our systems. and improvement has long fleet for agreement Africa in feature. year is a operational safety Overall, alert with providing major five operations, commitment reduce global a driver Vision customers Corporation, sales site aim extension are vehicles We With and renewed in Intercape, its leader compliance, with MiX a seamlessly bus road managers long-term efficiencies. MiX and started unsafe OMV its Petrom, safety of the over fleet pleased North Fleet including a overall MiX Australia. America, connect data that quarter. their logistics to a mining their worldwide risks of able to and MiX’s neutralizes for utilization, largest expanded for drivers upgraded deploy solution safety. regulatory risky vehicles agreement covering large AI us speed million essence. and contract, and years. the their South associated with saw another in in improve or and their operator XXX Intercape operator we activity driving with Vision multi energy standing company intercity to MiX to sector driving another were and remote and and impacts Newmont Manager we XX premium Africa, enhance a X,XXX the full to clients Their

certain product and sales see continue starting our across see business now and customers categories the to growth in strong gain are normalizing confidence We in to as fleet in cycles regions sectors pipeline outlook.

contributor was quarter. were signs of our with the early pleased category, performance particularly Looking We improvement sector. Premium at energy in during business our biggest by Edge Fleet to Subscriber the solution

amongst some COVID-XX gauge market police versus to the to our and base. levels, we be improvement We from churn customers continued adding difficult our that the with thought pre-pandemic well this of this are right Edge gas and business, continues customer are live track largest forward. going Subscriber oil to of seeing and started back enjoy it One performance There solid during improvement in signs feed for the vehicles continue previously downturn.

had BXB in strong consumer by leasing during experienced portion Our subscriber results Africa. quarter, portion some the the driven South amongst challenges a asset tracking Conversely, customers. increases were performance the mixed meaningful

As July, you financial many first improving quarter by faced Africa consumers. the impacted which experienced resulted civil few of South in This September. in from months performance unrest challenges near-term region a know, the pulling weeks before the and in of the in back businesses two may for operations exacerbating some our

expectation quarter as in third the rebuilds. further Our for improvement is the economy

go-to-market that progress reflect this made recently around business. for We announcements the initiatives our One in year investing of product two the of key important our growth is focus and areas our development, efforts.

is embedded first dashboard solution, the for which insights customers. The provides release enhanced and key of new our analytics

able power data third-party day. now collect and greater and how visualization capabilities been long harnesses of a our users We evolve, we example an improved, the enjoy that of support and tools every This have open-platform platform the provide to enhanced experience analytic can the fully customers. of extend to great value that is continually integrated we to

was to investments further the telematics with important hardware solutions. telematics announcements team, without value, vehicles we our customers balancing quicker second invest MiX’s upfront collaboration our balance to striking recent eliminate market ultimately from Ford two integrations the and and with go levels some and are we feature We cycles, ability hardware. the companies This are in from will would accelerated enable level contract install need only competency an Ford. believe initiatives, in decision The to are eventually to services of across our a our increase makes that profitability. evidence priorities subscribe of for our need of to installation deriving the smart our growth to evolution continuing these in reduces a data the the a making These premium in of for the It of the is third-party deliver of to believe to could core which for it a sales vehicle, the shorten strategic between while two. our costs, lead benefits high Effectively space. announcement

to the Our long-term on maximize are business. that opportunity significant we investments ensure for see will well-positioned our we

the constant in to against of full As annual adjusted of growth, double-digit low low and the well we objective that to mid enter track single-digit revenue growth the mid financial year, margins EBITDA subscription half to revenue we high currency recurring continue second year XXs.

over and are increase that environment to are the the We remain customers. of year. health for challenges public mindful will economic But we course that potential real continue optimistic business the many concerns of

the facing global for the We navigate Throughout to chain. steps we're hardware supply necessary the components secure also taking year, products. the our proactive current core continue challenges to

as is Thankfully, revenues such, harder closely. XX% but supply We have recognize that chain providing a sourcing software services, immune situation recurring Nonetheless, managing supply and more coming that this the the inventory and monitoring from and months our we're challenges. of expensive. current for are is getting ample

saying, by with up first pleased wrap me the we performed have the half year. Let of in how are we

We benefiting execution. conditions strong from market are and improved

would positioned John? John We Telematics And more and financial are to in to like profitability their around I the review year accelerate the back thank now delivering team well results to turn track on to want full all are time. towards the to financial we growth work. our over detail. objectives. hard over I our call world MiX

John Granara

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

subscription than of with from at increase of by primarily XX,XXX. $XX.X ads XXXX, As a Starting year-over-year ARPU with million, and million, are reported and derived basis, subscription this by P&L, driven XXX,XXX contributing sequential and were a of ended We compared rand the our The African subscriber our revenue subscribers, second quarter quarter fiscal other X.X% revenues. revenues a currency premium expansion. the customers. fleet dollar. dollar The The of the light the respectively. year US in was constant a quarter currencies South X.X% total the revenue growth reminder, a revenues in in strengthened increase net on our combination came increase to an majority driven fleet increase $XX.X was against US the to subscribers of in X% and

second million basis. are of in believe growing year-over-year. more on was indicator quarter, wins the meaningful revenue in XX% growth As represented good ARR, a our were second sequentially businesses. Hardware the quarter total We quarter, a had the $XXX X.X% million Hardware other and other will quarters. which large of was by recent end year we Joss mentioned, which revenue constant in be $X.X up XX% of fiscal hardware this to we a XXXX. revenue of compared driven and XX% currency improving trends these at seeing

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

ago year strong Moving margin and Subscription gross margin on expenses, margin XX.X%. operating XX.X% the remained compared to to in period. was gross XX.X% at

we've hardware to target the Gross higher blended before, gross we below our would discussed be range margin As margins the and XX% percentage were due of to range. expect to our in revenue. other XX% modestly

As increasing of offering. Joss global supply and costs chain discussed significantly disruption in a for hardware components certain the

We reduced see to on near-term. through issue part that continued XXXX to Operating were from. expect in return increase the are $XX.X which margins derived the reflects million, XX%. our we COVID-XX African the our are were as year-over-year we're but pressure The and expenses of working up this South primarily hardware in the the and fiscal majority strengthening response of rand, of expenses of expenses

in and focused was million, revenue, XX.X% mentioned, that opportunity investments As XX.X%. $X.X expense are of on targeted growth. our to making compared Adjusted we reflected EBITDA million or $X.X growth our maximize is or to also Joss long-term

look the expense the for to expense run our incremental the XXXX we year, majority of half As fiscal the is second now rate. in of

million. towards effective expect the the generate $X.X rate exchange in of Non-GAAP leverage guided we compared of items second from result, As quarter, tax was Ignoring foreign $X.X in and XX% the year. down for expect net that XX.X%. be upper-end the There range the we income the company's a increases it million quarter to XX% XX.X% rate impacted rate to but revenue have the losses, gains tax to was the XX%. for we that second as impact operating half the discrete the was of tax to continue XX.X% full were year. some to compared to will The

note million of the cash in as XXXX. cash devices expenditures, quarter of investments investments our operating cash million in $X.X a quarter, we to capital the compared AI leading from particular million $X.X million. MiX vehicle vehicle million free flow $XX.X sheet, of in second equivalents Solution. $X.X $X.X related to we of million $XX.X In Vision The Turning And ended with negative invested of to and XX, of the to cash and $X.X activities device new million. June cash in balance use net was generated to includes the

proactively strong it seen levels interest expected and was introduced have since building support We demand. we inventory to are

We continue in of chain supply to A also the through to ordinary per build dividend share. enabled Josh investments declare ZAR to stockpiles inventory mentioned. manage again strong balance make proactive X.XX sheet quarterly challenges we as us a that once

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

and As we performed our are first Joss half year full have on the financial meet year track targets. mentioned, in to of well the

we selling in and regions, While there improve. are markets uncertainty continues overall, to specific be seeing conditions

range. are the target year see we an double will digit digit hit the of to constant subscription growth. We In ARR in that single has AR XXXX. revenue currency into second the are on right X% full grown accelerate confident low to of From high our first growth year track fiscal the the half perspective, since of half ARR mid we end

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

model proven to over are few were this we expand response very are And we our to plus that past COVID. As initiatives, year growth business temporarily our increasing absorbing clearly margin the XX% We've some adjusted we EBITDA scalability of in Joss are mentioned, year confident normalization time. the of over to reduced investments last in our our our costs in ability years.

for opportunities are business growing upon the building our and focused the recent comfortably about we'd up we questions. that, the line success. ahead MiX Operator. on excited With to open are back We to and like for


from comes Blair. line Pfau question first proceed with your with the William Matt Our Instructions] of [Operator question. Please

Matt Pfau

source and wanted clear, start impacted my that chain yet? questions. any for any some Thanks supply the hardware just MiX out alleviate has is first product, supply have chain Yes. the to to leverage And then to ability the my be to on taking you deals there I help ability to challenges? secondarily, of

John Granara

you. Thank

certainly see And midst months, and production facing so, we anybody and of clear the any haven't we're deals coming to electronics no, supply expecting making me over of by the global be that, yet the question, that part as also point crisis and let chain had not in disruptions. we impacted we the we first us of issues any as kind a in is that who's The are are these clearly the procurement we're the challenges. industry

do we guess, it's are we We -- it's it. So, have and through we the managing expensive. are began. all navigate way know done, manage since situation, and more the harder what we we've I to getting getting now, And it

do continue So that. to we'll

leverage As of for that yes, certainly on the part kind benefits of question, second we we the could get hardware-free a solutions. the

telematics AI doing let's the on referring, basic service, that however more mind, mixed it that pipeline those in this based premium fleet encompass is seeing replicated in instance, service we're we to strong which top end can't the for side, an vision deals solutions. than, are our solutions. by bear kinds of our So And growth the a call The be lot app that our premium stage. news good at for of

So we'll as situation we the can. manage best

Matt Pfau

then Great. interesting. forward pretty the OEM is And integration

collaborations? And of other on of that is type receptive similar pushback in to from maybe So creating expand any could in are kind terms terms OEMs you OEMs of, just, partnerships? there these

Stefan Joselowitz

and over have that expect the got a of moment coming to building we in we quarters. would number months portfolio certainly, are discussions that So, announce a relationships or we've at

where positive of our a we where with cycles, out industry, very we see sell with hardware a will customer's evolvement tailwind issue have shortening Because as a logistics develop important in we in see ramifications. the this So certainly don't world an aftermarket rolling vehicle.

team in been we announced, The term, And So we based long date, our of -- and great discussion, medium credibility are I in the important to that early started operator track a those as parts space in to pretty demonstrating discussions as positive. resistance, it of OEMs. global we've think, and one off in mutual significant can customers. we record successful it our add value a we navigating the a our vehicle job barrier extremely that -- And but with view down they’re to did tough a on just breaking terms provider. the player

Matt Pfau

Great. That's guys. all I had. it, Appreciate

John Granara

Matt. Thanks,

Stefan Joselowitz

Thanks for your Matt. call,


Thank you.

question. Our with next with proceed question your from James. Please line comes Sklar of Alex Raymond

Alex Sklar

Matt’s ingest that in curious I but changed talking so some partnership? the up of of the you tell And any to to be follow can about Thanks. on are you economics start John, the mix. in additional I'm value want term, number OEM the platform, maybe you're weren't on how I of if into us put -- exclusive unit devices OEM actually What deals same data terms having by Thanks. the you vehicles? longer the to collaboration. if question the to to And OEM then, going the of can

John Granara


the around we basis don't this of see data. process of part world So a second exclusive on of evolving the exclusivity, question the

we said would data. very data will to finicky view these who open or they embedded OEMs, Having to that access that as the allow expect they So the around OEMs, are continue that, an opportunity. broadly,

we anybody. And of So a exclusive an quality control it. it there's ultimately not easy don't to process. be But it's lot expect around to

an OEMs and to doubt data, access last back the -- have aftermarket access in is gives that richness is everything it appeal could the no that it and getting to embedded what of installation. the And richer the there's So part, going certainly above the over data of typically on that they has or to. everything us layer a vehicle we access decide,

said really costs part of or hassles to pay is, and in straightforward. is more customer's in for. for fee labor. it economics the is significant the is both that, up And data. a hardware Having mutual instances, more pretty The -- the off third And for we of customers in made a and we voyage taking from perspective the this So that a terms of our savings there than combining than that would expect unit logistics a that data. scheduling vehicle the most hardware these benefit is monthly road, cost makes savings installations, a terms up fee

negotiated. kind we've the very happy rates that So, pay to we're of

the For great importantly, us customers. and, for state, our unit more the economics are for

customers that are everyone to require striving that that certainly third-party -- enjoy a of accessed the So, we of will cost because et obviously, that do labor basis. investment, don't not not unit take it because expect et can our this we services to return economics for be no cetera. that on But installation, have higher those every the up hardware, on amortize services in cetera,

Alex Sklar

Okay, color. that's great

I So, talk to wanted to between seeing we're -- the up? activity. them really gears in rank vehicle resonating some now just snap back about of can strength, kind kind and switching and kind that stack the and some right add of bigger drivers that safety the of environmental bookings you if to the ROI what's training, of kind subscriber were you to of of But attribute growth

Stefan Joselowitz

repeat we before seeing. from the -- and said it at I that customer-to-customer. And strength the topline So, we during of varies this were year pleasantly last certainly surprised it, and was very I'll I've I'll

high the in we uncertainty, were I'll in different even from that pandemic, in So, that clearly exciting of fleets the But were midst engaging some of number seeing enjoying And -- of we're And our -- same levels very was say what seeing fruits verticals. geographies. start at number when significant pipeline. the of there contraction of of we some continued time, key the in now of conversations really a course, has even is accelerated. of different with large we're verticals, and the a a

benefits And that into customers -- the before converting We're pipeline seeing deals. that some we're you've that, paying got comfortable year, the we're operating seeing anybody, we in. to larger we of Now, is convert also that also with said what said, customer. they're I've doesn't feed last a seeing the getting as planted these reaping I economic more environment seed of it

So, And to cycle sell certainly certain of to normalize. that critically, is sectors most where starting course, [indiscernible] see starts. we're starting

reporting So, net remember, subscriber growth. we're

we number even to shoots just saw a notably So, see negatively. we contraction. sector of leading It to we did that's nonetheless, opposed And most return quarter after verticals as the yet, green in positively of moving wasn't energy phase ize the some the we a significant stock and in transfer but a key growth reported. that and

pleased with that. we're So,

Alex Sklar

I color. guys. great. Okay, Thanks the appreciate really

Stefan Joselowitz

Thank you. it. Appreciate


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

Stefan Joselowitz

MiX Melissa much, Thanks for to appreciate of Telematics. today. job. you and Thanks all interest We so us great really joining your in

of Raymond Technology a attending look time Investor In remain safe your course, be many and speaking hope and -- you to I the December your healthy will then. early and you for forward have then of speaking great and Conference to you We day. families and James' of thanks again many in meantime,


This you. today's concludes conference. Thank

disconnect lines. you may now for your your participation. You Thank