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MiX Telematics (MIXT)

Participants
John Granara Chief Financial Officer
Stefan Joselowitz President & Chief Executive Officer
Matt Pfau William Blair
Mike Walkley Canaccord Genuity
Alex Sklar Raymond James
Call transcript
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Operator

Greetings and welcome to the MiX Telematics Fiscal Third Quarter 2022 Earnings Results 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 would now like to turn this conference over to your host Mr. Officer. Financial Chief Granara, John Thank you presentation. begin you may your sir,

John Granara

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

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

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

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

Stefan Joselowitz

and mother of I have John, reached passing offering South joining would to out thanking recent for thanks of in today. Thanks, my who you all on Africa. like call by the you of many to start back condolences the

results. Turning to our third quarter

strong Our by team. execution performance the MiX entire reflected

in increasing of our business and we’re improve revenue objectives our return in sustainable in key Underlying meet most encouraged deal growth. regions sales and our to momentum to continue activity to we by the markets. As continues to

solution have the of And the quarter categories new the continued fleet a over best to impact presence performance the so before some end subscribers including since solid three our of quarter, done on all with strong did base emergence growth, is which despite our pandemic. and premium contributed have We We performance. additions. XXX,XXX. XX,XXX during This customer Omicron the added of COVID of the to

executed to our return to we ability XX% the objectives successfully sustainable longer deliver our are margins. have revenue revenue targets And EBITDA over optimistic constant increasingly on of XX% on growth term We XX%-plus growth. subscription financial currency and to adjusted to our

manage Of the balanced will business a to approach. course, continue with we

the summarize quickly and results support up for impacted to two our growth our far However, performance note the fiscal our that business giving targets. quarter indicators year-to-date. at million, I term XXXX sequentially, financial Annual items. so confidence and lean key result us the our would ended revenue the across long X.X% we I now by will would and that priorities in demand into like to see $XXX operational are our ARR quarter. third was recurring X.X% investment

energy process, Firstly, in sizable its as $XXX,XXX U.S. the liquidated of customer ARR. removing a approximately from part bankruptcy

at the a strong end period. but bookings much Secondly, the coming we it of had of with quarter,

Subscription typical. to committed hardware customer below modestly a the which to currency. X.X% expectations year-over-year constant unbundled be margin, million, is increase As the a our $X.X backlog at was the quarter, for in have very where was paying is EBITDA than was revenue we waiting more million, result, $XX.X upfront. win large due XX.X% implemented a Adjusted a for

converting low subscribers. was we hardware high margin fleet, steadily to sale this this As out rolled margin

was fleet couple particularly Our important of a premium reflected and performance encouraging trends.

solution largest over the contract waste for fleet lower the MiX over an in the efficiency, together significant partner, customer this partner. one based quarter, The has an best-in-class AI and the Under example this XX,XXX solution their vehicle QX. signed companies our In of enterprise opportunity company company mobility this by choice with to been make video telematics add AI be differentiator value technology efficient chosen we for In and deal that vehicles, is QX South hardware Kingdom, solution in telematics be fuel customer Contractors, significant a support leading are recent they transport management public doing quarters, purchasing saw a improved and driver an MiX XX emerging of transaction noted X,XXX. fintech adding was has Brazil, enable This MiX an more consumption verticals. management key vision for XXX a is edge and pipeline who multiple Monks new the both Europe the provides years, existing disruptive and entrepreneurs will for safety. of A will expansion a and utility across an we who reliability in deploy to vehicles to we opportunities lead signed our expansion wanted We multiple delivers of United we cutting as more premium strong geographies. a safety. renewals with the ways large and their in In following including of awarded opportunity vehicles. Africa, additional Africa, as to XX,XXX of multi-year telematics with solution the financing as passenger parts to than revenue would meaningful to in our MiX partner to contract, Asia. latest operated country's associated introducing can solution road by in company provider, coaching move driver provide and across wins premium growth, new an real-time vision were our fleet increase demand upfront. to Firstly, fleet activity, that business and increase the in subscriber MiX a evidenced company and fleet MiX And finally, chose that

relating now solution driver continue leveraging performance, model scoring launched algorithms, also further dashboard client product last roadmap. integrated as well scorecards. progress are configurable specifically In we the make solution to We standard quarter. our good our as unique analytics, embedded The to in QX, extended includes

ahead analytics AI base, and over operations. investment MiX's and the We our ramp ongoing and internal subscriber data to continue in will years to insights to up provide engineering, value our

the approach have of steps tracking the for end in the performed and to fiscal forward. the indication position and are we underlying the expectations year, performance good taken is our In which we has health how we for XXXX, our better business about feel business. going of the particular, momentum believe we the bookings As financial ahead best of company even

growth bookings to ARR mid towards we beginning will in growth discuss X% the laid to In single-digits, the at terms XX%. the are more subscription year, in of specific low and detail this solely are ARR function and revenue time of of some of we to clear is out of contribute goals now the a to timing. John tracking a lag want the causing that and the between it takes a be subscription that revenue. expansion near-term dynamics to I

philosophy the served efforts. low more in That EBITDA will In time, telematics future. to year-to-date in recent to profitability to to customer fact, encouraged digit pace implemented reiterating the demand this end profitability invest revenue investment if fiscal are can in has benefit growth have out past generate we're we in objectives over I'd growth booked well margins, product we go-to-market years. cycle the and investments meet as At a for be to it the to as bulk multiple comfortably is entering enough from are are tracking confident and XX by contracted months. of focus mix improvements ARR the same lead on by that we well-positioned it on targeted trend. target like And increased and that XXXX. our are end. double we believe improved through our We consistent development adjusted to year mid of by we we and cost And cycles laid discipline even well XX% the we of

are John We in to contribute ability world we shareholders. around want generate the to detail. value in to for long-term for like financial targets results of to to to review call ongoing MiX’s confident the our believe would I all the over more I significant thank that our achieve efforts can and turn success. financial our John? our now employees

John Granara

turn Josh. results to our like to financial for I'd QX. now Thanks,

to And all XXXX. of that strong mind quarter figures in Please quarter changes We the are fiscal another all are keep for of results. third comparisons year-over-year report refer say pleased to otherwise. I the unless

X% than by of and this of new X% million, $XX.X increase subscribers, reported year the came quarter respectively. reminder, US currency a US XXXX, a subscription including revenues $XX.X on majority The million, at the XXX,XXX in dollar, the in fleet African quarter the currencies increase areas, were solution subscribers ended X.X% compared was in an against We premium constant strength increase As revenue contributing XX,XXX. fiscal third the our of customer strengthened of and revenues. P&L, to to solid dollar. with rand are a a The our all derived from by Starting of growth three driven South total revenues with X.X% additions. other sequential quarter basis, the

sequentially speaks ARR, which customer the meaningful million fiscal broad We was demand additions, the of $XXX telematic on of constant trends subscriber appetite basis. more to indicator this end solutions. are strength be the improve quarter, growth of a we our will X.X% growing by invest encouraged and which our to base third in a year believe currency at

noted, To was quarter. there expectations our that Josh takes ARR. few during for bookings and the were be well-above As our quarter clear, impacted a performance the puts

MiX bankruptcy and on reported longtime business. developments two weighed in However, declared QX. Energy, liquidated customer Basic a its ARR

$XXX,XXX. the approximately turned While was over reducing approximately a part process, by X,XXX taken portion as ARR other platform, our of of off subscribers operators its by fleet liquidation

mentioned two portion the late quarter, those only the Second, small have of that been wins implemented. large signed in a Josh and relatively fleets were

not enter until a calculation build AR does is our As network. a and on reminder, active subscriber our installed, it

significantly larger a has $X.X revenue wins quarterly wins new Key the into couple and the layer also were year-over-year, quarters subscription. of up Vision did recent we hardware AI which of of the hardware pending in grown This have seeing While installations, the timing We've for strong contracted backlog years. in of matter performance XX% and this that MiX in into a total revenue, highest been is hardware has most signed our recent million not Hardware previous quarters. a XX.X% ARR bundle recent of in representing these quarter. will driver strength the four coming is of adoption. solely Solution, always other our

We over as of see we units these strong shipped quarters expect large the wins. couple the for next remaining hardware to performance

the increased XX.X% the and and from period. due prior gross The by was hardware in driven margin ago mix. in revenue year margin value mix other subscription hardware Moving Recurring costs. represents margin and gross XX.X%, strong majority and expenses. year. to XX.X% other operating our XX% up Gross margin entirely for gross reduction on was compared the margin is is mainly down was vast and XXX quarter, business. our due product to the higher basis supply XX.X% to of to compared the margin revenue somewhat to revenue points and Hardware Subscription lower remained chain of driver at and third primary

the We the AI the mentioned, blended to some our next worked gross Vision include devices. which of the through as we for wins and larger few expect backlog hardware revenue quarters current at our remain margin new we've level of

prior XX% to the year-over-year as year solutions. due our of the quarter were Through EBITDA. tax blended to which with to when Adjusted year, net expenses revenue. as of million costs to was growth reduced that revenue income $X.X and XX.X% the high representing normalizes. the EBITDA from prior $XXX,XXX, expenses investment XX% are to by XX% challenges year. in development return XX% expenses of in quarter expenses marketing and and has and the we’ve XX% and XX.X% year. of our that Administrative we million, primarily other to ago further up the research costs legal increased of product negative were months effective and $X.X gross the XX% to of percentage down million and fiscal year sequential Operating sales adjusted quarter year. go-to-market exchange period. development represent rate of COVID-XX the development over in revenue include part million, million to GAAP XX.X%, we or last marketing the non-recurring and no during compared expect the excluded compared the administrative $X.X losses, year, in third was were compared of in increase Ignoring sales supply from EBITDA was fiscal increase of in margin the to the third and year-ago initiatives. XX.X% reflects $X.X Non efforts first continue been for adjusted year. revenue the our of line XX.X% drive XXXX. within included XX.X% other and XXXX. return prior tax nine and full-year XX% in of range Sales EBITDA nine was to million foreign marketing our X.X% margin first margin we're to decrease $X the response compared outlook. and hardware was Research was to company's revenue expenses adjusted our Assuming hardware were chain, the negative previous the with the investments would investments and period, The gains and or an million The in the the mix continuing The months Through $XX.X quarter the other the rate impact global in compared compared in to the or compared of $X.X in investments in

strong leading Turning million cash generated cash capital activities million of In negative to which third million to and the ended cash from a us net leading of invested the free and flow we $X the $X.X business. equivalents. use enterprise forward. a New remains our quarter, is our of in, in operating balance We our million in includes and cash with significant IBD with vehicle expenditures quarter with flexibility On of $XX.X $X.X in going sheet, provides it for $X.X investments growth includes AI The The expenditures devices customers, year-to-date billion. subscriber $X cameras. positive cash basis, in trends, the million. reflects cash use of a approximately particularly improving for indicator Vision

ZAR Our declare us company's that allows to X.XX quarterly December, share. million a again up strong announced of of dividend balance ordinary repurchase stock sheet approximately million once outstanding in which our increased enabled us shares. We to or repurchase per the we RXXX to $XX program,

During million. we X.X repurchased ordinary for million the shares quarter, $X.X

our like to expectations fourth I'd the some up, wrap I Before on for quarter. provide additional perspective

We first have nine months performed of well year. during the the

orders. a significant several signed contracted resulted and has important have backlog We and large enterprise wins that in

implementation we deploy As deals, in the nature timing, the size three devices two Joss next and mentioned, over due these to to of are for the to some field expecting quarters.

growth we result, a the digits. mid expecting now As are constant currency low revenue in subscription single to

think recall we to of related we the please As non-recurring fourth-year was renewal about included a subscription contract a that that one-time approximately X.X in revenue. had million comparison, fee

mid the that, ARR expectations we for the low profitability quarter X% attracting delivered customer remain deliver seeing in for are improvement wrap our track to we of growing in adjusted results the future wins and strong in year. the comfortably full we’re earlier, we above the we for our year. year. is If to double items on XXs mentioned ARR, for for visibility towards up, backlog As XX% The quarter attracting third line to some of demand. adjust From To perspective, good pending the The and provides would to installations bottom perspective, new growth be full sales margins from digit EBITDA growth. large delivering we a a growth. clear

questions, like operator. Now, the open we'd line to up for

Operator

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

question. proceed may You your with

Matt Pfau

a bit And improving absolutely. would there break drivers helpful, quarter mother. onto then Hey, my were subscriber Yeah, little just, additions, the it of which terms if sorry guys, new down maybe In strong, about platform? the and taking thanks the for to in could hear between you be subscribers Joss just attrition gross for it questions. quite the your coming

Stefan Joselowitz

are are are are that The referred Sure. subscriber to that coming we And seeing the new ones our majority indicators yet in to not subscriber we're the certainly wins number. John, that, in of or think as seeing not business. the big into strong our two numbers I them is alluded

balanced three contribution really pretty from So is our what portfolios. all strike – from we that, pleased we're product of about

in, in we've seen we're contracts – seeing coming of definitely the same guess an the of at So increase new I the churn time, normalization process.

-- of a year. negative faced and we're impact subscriber, in subscriber as the much headwind not financial the our bankruptcy as of That of our quarter. had was our seeing we referred the one – So being that which in both prior exception, big – that in kind the to, a John course,

Matt Pfau

that you. their bankruptcy customer customers the and, in high. holding overall, attrition out there's the demand and, that back for of there segment, has any that energy helped online? of obviously, bringing helpful. up that energy Got with That's But, one terms in fleets excluding stop segment, Has some staying called-out. And you in the – then prices

John Granara

Yeah. Matt, this John. is

have seen made I've we the We've which energy, seen, yeah, gas, including So growth quarter. current in oil so absent and both reference basic to. actually

there's we're starting the within growth and within still not starting still So should the some return – customer there we customer some base. base existing base. are headroom levels, for see growth move mention see well we – But to levels, at positive oil customer I pre-pandemic existing forward. It gas to and oil to growth still now the so as so below historic additional

Matt Pfau

then, functionality? offering, customer the – with fleet per average to of AI to that just subscriber? of, a And you idea is what is Great. what out Okay. deals sort percent of the us for impact one adopting decent premium of this me that picking the revenue vision are an And the Maybe just product, amount last then could on seem quarter. you call the this give

Stefan Joselowitz

increasingly starting to becoming – certainly to become – It's Thanks. significant. impact is the

the portfolio on impacts thinking to another the traditional on that deals include mentioned Vision. big the – certainly just – of did, our for premium a deal we also and the clearly quarter, customer on So, And Telematics included large offering. the upgrading vision one requirement majority portfolio back at where of top we for any increase we've

well. US a So around that as the ARPU of out we're kind impact an is more of and on of all we deal, of depending could uplift kind that the The seeing of mid-teens more size average expect run product. you on the would Vision dollars three

Matt Pfau

helpful. Very it. Appreciate Thanks, guys.

Operator

with Canaccord of comes question Walkley from Mike next Our a Genuity. line

question. You your may with proceed

Mike Walkley

And, Thanks. family. condolences Great. and yeah, you your Joss, to

Stefan Joselowitz

you, Thank Mike.

Mike Walkley

and and maybe who of momentum bit? some other loves several and little sounds quarter strong Omicron large even expect quarters somebody trend exiting as given we Just off activated? these growth to the Should the the like results get next deals higher over things deals a coming some

Stefan Joselowitz

certainly see. hoping that's the Well, what pleased to performance, the been we're this I've performance with year. And steady

our confident we're long traditional history -- so certainly it our first year we've returned to financial phase, contraction, we've topline negative So, seen remember, that a think really that growth in I back year in previous the of out quarter-on-quarter reporting, in subscriber growth see zone. comfort terms at we're numbers. progressed we And back absolute look improvement -- was our as steady of currently the years the as when year we we that

So, are make call than in we our bookings would earlier be did higher mention this -- that typical.

installed doesn't are bear subscriber line. bookings clear, time, haven't that these our John hit our make at made ARR contracted mind, doesn't same the it line in yet. it hit So, as doesn't even that And been

fact, And subscribers. it count these we're don't implemented. we it's fully in So, until billing

of had us on as we build course nice into year. recorded increased giving and And the momentum. to as fiscal platform that's it progresses certainly So, we head a next for

Mike Walkley

you supply to any challenges, in it guess global that causing demand. Thanks. how out, next of then, able up quarters? large talk taking there the given issues? these And can three shortages deals you're backlog hardware Then supply front just similar meet I John about the the for some of model sounds hardware-only two to should like sales have as levels Are we

John Granara

Yes, thanks, Mike.

issues that items of the to we've that So, quarters. from as components, we steps a long anticipating in earlier stand the not rest done next which we're us any significant few I we today, in protected the we said before taken through and where lead-time think we had believe year. purchase supply the standpoint And year

it's daily I has but on you Beyond as that, it on a as mentioned and very still we're Joss monitoring not basis, a only basis. evolving before said, an hourly think where

secured saying to our I things But right inventory believe -- and that -- preface meet our So, hit backlog enough or moment. by can have -- now, to preface change contracted a I'll backlog. that at we we've

hardware. So, as that's we forward, going the you reference to made how move to impact

what we hardware. paying will what unbundled. with the are typically and quarter these saw large particular, and had for So, some where is the we bundled shipments this are unbundled But to some are some related the was in happen wins customers deals

show two are after that continue in hardware the an to We -- month, happens, typically, quarters. installation month the start following show and for as see expecting one the next you'll up trend then you'll you'll up see to And three revenue subscriber. that the and ARR

not is significant there current yet and yet -- hardware scenario so deployed. there is a installed a in is quarter, shown that the been So, amount revenue including -- not of

So, there's to difference. that timing be going

is And obviously, large for quarters. hoping normal the expect which be higher our is that to we the to expect three to right normal. And so to hope to continue of back levels orders, hardware second keep absent now But that not probably than to fiscal quarter. I booking two it expected would level next revenue new continue get we any were ones. to until -- I

forward. provide with we'll move updates be you to So as we able

Mike Walkley

a the us you more, Thanks. the it basis term, can gross script for guess, just back great. the kind blended about I Okay, one me, goes of, remind to? then. to margins what said deals just bundle on on return margin in last you If the gross where back longer

John Granara

gross and as for includes two the -- hardware levels to which backlog, shift margins the we blended to the revenue. gross expect expect the I at quarters, significant of three we next be a margins, implement So, portion existing

what back is XX% would what and to -- these wins we after get which been large we to range, and we to the typically so deployed, it installed expect see. have XX% And

really always point levels the and we XXX that gross And same, been up the happy that margin And at. so that that with that's from the in -- margin, was which -- has been perspective. is it a has year-over-year, focus points were to subscription that we're the fact why basis

Mike Walkley

trends great Great. and see the to Thanks for taking improving. my question

Stefan Joselowitz

you, Mike Thank

John Granara

Mike. Thanks,

Operator

question of Our line comes James. with from Alex Sklar last a Raymond

You may question. proceed with your

Alex Sklar

Thanks. Also, add I’ll my well. condolences as

Stefan Joselowitz

you, Alex. Thank

Alex Sklar

Following about commentary Matt’s just solutions. the growth can on you pricing number subscriber solutions how of talk made your mix environment with update different you compares up then, on overall around question, the that just that, across balanced times, that a to recent And quarters. for an

Stefan Joselowitz

remarks So, the we growth, in our certainly I since leading hallmark point really make balanced it’s of earlier a did into investments. some terms are been in the of inception. business, that

So pick of, marketing our starting both R&D. terms and bear strategic have in into in investments, investment we and see mind, the expect that. sales to that in a to strategic convert we're we continue are increase and fruit some investments benefit seeing And in that off we

those And but back course, continue of we little and ramp one have these what the fiscal not when happy we as we're we’ll to a year, clearer previous I we I of all their this to certainly focus for of in of that our continue recognized that year sort that unbundled we the in the I deals, unbundled, this and as deal the the objectives progress. will as I to to to we've referred year. make of guess, remind the the significant next next sustainable deals on would picture the very bit QX doing set we of you large we're investments, course, up fiscal deals growth. year update give basis, expect views we been bundled of are We’ve I'll seeing out big up. quarters we on certainly beginning pluck are cut he this that and done we report ramp are I we So also We achieved we to with think impact returning needed our for a was this of that do by there. think, have hoping make and up our other And, fruit as that year point reiterate got we to idea would of our kind I'm -- fiscal continue -- deals fiscal at the investments. But everybody to. for couple to referring have has quarters, that hardware John customer big one and The balance

Alex Sklar

Okay, great.

channels Okay, phenomenon. But kind between on seem I'm more urgency increase great. just does how channels And conversations subscribers, short-term does increasing of a then that the spread those curious installed the booked OEM then partnerships? of it like that and progressing? number, so are your -- Thanks. around your

Stefan Joselowitz

we to fully to we with number channels, that in of our really having focus of mind, in We're future some were and positive be a on able We make of expect coming that meaningful into. Absolutely. -- how mutual see in quarters. to of no lot component terms at least of of OEM a business it's certainly And OEMs. conversations in certainly an announcements going there's the additional to more customers significant doubt it's we channel a additional can offer we translate my And into are our deals services. services putting those important

Alex Sklar

Okay, great. Thank you.

Stefan Joselowitz

Thanks. it. Appreciate

Operator

session. over to remarks. end answer gentlemen, today's and to I question call for closing reached and this would we Ladies Joss back like have of the turn

Stefan Joselowitz

hope quarter In healthy. And look continue MiX I the year. coming great do and during We so appreciate reiterate to in your in safe speaking much, And weeks. for of be you you a we forward to to have this have we time family in today. thanks the Telematics. throughout And of really many and and want day. interest again pleased all meantime, you your how with thanks made us to Laura. the joining your the for I and are Thanks progress we

Operator

Thank you for joining us today. This concludes today's conference.

disconnect at time. your lines may You this