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PowerFleet (PWFL)

Participants
Steve Towe Chief Executive Officer
Ned Mavrommatis Chief Financial Officer & Treasurer
Mike Walkley Canaccord Genuity
Jaeson Schmidt Lake Street
Scott Searle ROTH Capital
Call transcript
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Operator

Good morning. Welcome to PowerFleet's First Quarter 2022 Conference Call.

Joining us for today's presentation is the company's CEO, Steve Towe; and CFO, Ned Mavrommatis. [Operator Instructions] Before we begin the call, I would like to provide PowerFleet's safe harbor statement that include cautions regarding forward-looking statements made during this call.

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

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

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

Steve Towe

Welcome, everyone, joining thanks and call. for our

quarter, first revenue the encouraging on of Intermodal major quarter first American Management. quarter further from growth a we solid by commitment from growth an growth. across customers, uplift we some core and saw months since XX% my international a continue our and generated and and existing in strong little technology, solid delivered The world-class my base and particularly are our team. And pointer I revenue Albertsons the growth new global solid company in built and joined partners. expectations. operations, the interactions and now prior in X year-over-year including PowerFleet, double-digit the we During more markets, has momentum both realizing broadly, our was a a Walmart, exceed and committed been reputation, over It's to customer The which verticals with Mexico experience of driven

updated partners received very has by alike. strategy been customers, Our well and employees

partners and PowerFleet excited chain the our high key our unparalleled business customer are about through increasing their of role and insight the solve operations. and unifying the for direction Additionally, need to team visibility is playing supply across the

our financial Ned opportunities next his completed. partner capitalize help team, operations Global behalf leader search since global Joaquin initiatives we horizon. made with of results on business financial and the business endeavor. turn and until for manage of greatly has discuss joined a finance leadership next I the that, and the Ned the Fong CFO interim, great growth for his first a search wish on strategy, his to Controller, our would day-to-day In contributions PowerFleet great I us financial Board company, support On has Ned growth to thank I'll will XXXX. success I been like the Before on And for the our over is I operational to the I momentum the Ned? valuable to quarter years. the our cover outlook, he in to and operation and build appreciate the Ned as

Ned Mavrommatis

years but the Thank PowerFleet's the and supporting in over for to ahead. only I a you word, for shareholder not coming the friend of consulting look kind a the company Steve. months, capacity as forward family also the a

on million product recurring total ended last $XX.X XX% a revenue or or revenue. revenue revenue ago was revenue revenue mix, $XX.X XX% QX and XX% in or which higher was $XX XX% to profit increased total the Product in issues total $XX.X from compared XX% was future or revenue basis XX, supply drives or revenue March an Turning XX% million million year. services or This XX% same and to impacted of dollar compared component total year ago with revenue $XX.X revenue, period. or Services an total financial profit compared negatively period. million million same million XXXX, results year. year costs year first of of total XX% same ago to $XX total of in to High-margin was of product was of $XX.X to last in $XX.X profit $X.X the quarter was QX period. shortages in services gross Product QX by Product Gross XX% $XX.X service associated million our of of million was to total or XXXX. profit million of $X.X service total of or of total chain electronic QX million XX% revenue product million the million in compared for inflation. gross $XX.X of to XXXX revenue. total This revenue gross revenue, and compares or improvement the improvement in XX% of

component X%. incurred of QX we issues or impacted price supply During PPV approximately and million in which chain our $X.X shortages electronic to gross product purchase related variance XXXX, profit by

costs last of expenses. at were of benefit $XX.X our to down areas, year. strategy expect $XX.X A million we our is operating million, in which see from up noncore quarter, $XX.X the in prior in expense in QX. to million Looking QX starting transformation key from but rationalize the Total of initiative

net loss year. concludes Looking compares and and cash to per million working attributable million end, non-GAAP and per That diluted At loss million of net same $X.XX year $X.XX Non-GAAP income million or or the of Steve? at of $X.X totaled $XXX,XXX diluted ago equivalents year compared metric quarter This diluted and $X.XX share in non-GAAP to $XX.X million million period. stockholders $X.X adjusted and share. capital. share $X.X to $X $XX.X basic or compared common net loss basic per company of $XX,XXX and in metric per non-GAAP our QX remarks. or ago EBITDA share profitability in prepared basic and net last and GAAP basic had diluted to metrics. same cash the EBITDA stockholders in totaled to my attributable $X.XX common loss period. Adjusted the GAAP totaled of

Steve Towe

you, Thank Ned.

suite our laser-focused wallet platform. a increase history to data, maximize applications innovative the AI company's due our need positioned well capitalize SaaS Our that opportunity for in and to of coupled software sensors, this across make on share the AI-based and XXXX with of specifically for of world-class the the SaaS our and PowerFleet devices solutions, depth platform breadth platform customers impact our solutions and growing the rich real-time and is we in on establishing future. we can the derive to

road several data-centric with strategic finessed has initiatives. map been Our go-forward

methodology As help It we their taking a our implement our industry, their transformations prioritize and place on a we're customers capitalize to started organization. the forward enterprise at pace suit transformations application driving modular digital rapid they and customers to to will collaborate focus as business C-suite. business problems are to create this change significant the turn, upsell In on looking them road across with opportunities to solve allow prioritize maps. the our strategic we to will in create

which entire transforming to business. intuitive customers remain highly Another track a a initiative is to way unification this glass, our asset of enable on The deliver unifying across manage access to PowerFleet single their will their set single pane of information state will the year. based operators platforms through interfaces, can

key In enjoyed IoT significantly end-to-end PowerFleet enhance our catering provider, have fruitful ability as technology global major customers strategic will asset in the map. completion organization. broader all to we for across our road will partners pipeline unification our are and conversations The a the with a parallel, types ramping unification platforms about leading fashion. several position already of cross-sell which We solutions of cohesive the to up

Our become mission their a of to cornerstone unify is customer to operations. strategy our

effort, data to and now have have best-of-breed also pivotal and third-party global our than rapidly our manage which of supply we more data their and operations. integration integrations customer galvanized offer partners, services with part As business this XX chains other capabilities

We will growing the points quarters. add the significantly continue to coming integration of over number key to

to and operations. on products global deliver our business for they the chain supply solutions supplying that rely issues electronic navigate and component on their and customer continue commitments, through We

our attended our met vehicle Along within the As optimizing recently confident XXXX, us MODEX the recurring excitement we're PowerFleet's having damage we longer market well on we strategy with reducing advanced profitable safety, measures is will supply a The segment. chain team better global we while step these the and our company's we The safety, operating strategic cost are closer on IoT on and launched with reengineering demand units. a leaders scalable, were business growth to most of show the create execution are vision expand the prepared across industrial sustainability customer capabilities perspective, in business our revenues improve very expenses responsive integration comprehensive accidents newly fully gross initiatives. go-to-market sales There From improve the product promoting prospects XXXX, vision. uses SaaS one in successful begin intuitive through trade through event. set line, efficiency and executing repeatable we and this, progress focused as PowerFleet's facilities. accelerating road to to innovative customers productivity, from positioning reduce of warehouse organization. fully capabilities driving working and give remarks. operations I operational to of control our and AI of and concludes better and and product we That our chain. the for team prevent premier solutions. warning even industrial in to and to that leadership The our is pedestrian a term, In management benefits profit which and gradually In manage global will realize hard focused expect our transformation for map as system, highly our supply

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

Operator

Canaccord [Operator coming today question Genuity. Instructions] first from Walkley from Your for Mike is

Mike Walkley

to and in solid Congrats your future wishes on start a Ned, endeavors. the best year

very me, the margins how this? slope from several over quarters? should challenging. Can the on supply chain, what just it's manage just question to doing hardware know is is think further Steve, elaborate you for next the recovery PowerFleet about And we on of First we gross

Steve Towe

for question. start. question the A Thank you good to

So potential through. for And of reengineer the us medium have to time that looked takes work term, a in terms of to obviously estate. of we challenges component the number out

taken implement customers that got is are that. you've the There in to of We've hit a life market back And end components So products. components. in are end nearing can gross margin. the philosophy to of sent the a prices practically we And or our where the in of where those there to of that's seen being there with are the solutions life. continue off meantime, shortage provide -- are

work. reengineering we to slight in over I seeing because are coming So plus start ease situation a say, improvement, the that the the will quarters, would

kind the to of we see our steadily. quite sales glide as the of we So rebound end should year,

Mike Walkley

Great. can focus And AI your adopting sales team in on I of growing how might you know terms discussions changing customers? and more What strategy talk about is your your to this? be elaborate Maybe SaaS revenue. go-to-market and with is or

Steve Towe

Yes.

talked strategy. we've on-demand this before, an think I So is

as we with we the data all, and and of really kind first then on of to the strategy -- into subscribers it's solutions let's expand that So market can get many the ourselves provide. as devices focus cement

both a make obviously So sure asset sets is the solutions all to this very shop also to of across of now to asset has provide, good data across because customers, we breadth and very are able term those more What we're from that to team types. in sales types. a go we the looking they but received perspective, be do well been different can longer sell have one-stop terms

C-suite make of on within now a a So in going looking particular of business as than number maybe we're rather the solutions a to at sure conversations segment. the different appropriate with organizations the we have whole that members across

Mike Walkley

pass line. I'll Great. question and me, Last from back to

the about some guess, of revenue want model, term, initiatives going mix but greater think you cutting, longer you cost also or there's obviously, as initiatives I on. Just SaaS efficiency

team operating course with hire the year? about of strategy? do expense changing over to think go-to-market new you declining the need sales the a should Or So overall dollars we

Steve Towe

Yes, of it's a a both. of bit balancing

before really market feel quite opportunity, the need talked there's an to for feet market a bringing the some put large as the a about way. street good we example So we've U.S. solutions to market further on in Pointer obviously, the we and segments

the I So time, integration we'll come same will cost the to At be efforts time and reductions think take people. adding in.

go quick up costs perspective. But fruit same So be there full the some the cost might there we the time, reductions. wins well see at from are before as a of reduction some

Operator

Jaeson from with today coming Schmidt Your is next Lake question Street. for

Jaeson Schmidt

March. in line on the momentum nice Really revenue

Just you're standpoint seeing and here an early curious what in from April May? order pattern

Steve Towe

Yes.

our seeing in So pipelines. remain we're good momentum

demand quarter, the and strong QX we're a quarter, was strong a revenue revenue that seeing think QX was I continue.

customers a I again, are, thinking light. us in now think different of

but to also broader pipeline So be not a pipeline basis. on can as longer-term partner only near-term how a PowerFleet

in the that term short those are the said both I long note, As feeling term. helps conversations fruitful we're and that and the

Jaeson Schmidt

that's expect initiatives supply But really helpful. just line. improvement of this some if then improves? kind equipment of just curious gross as know you flow I at No, assuming improvement of this Okay. the the -- overall also through. looking And margin some the is chain backdrop year

Steve Towe

of last year. through is we've our reengineering, execution from act said, rest into been this putting lot it, of midyear as obviously A I've that and year the

that, this pattern confident seeing but makes at We say point slight to totally feel in that improvement, wouldn't I going is continue are time. anything that us

Jaeson Schmidt

from just out other in jump in And from last one and positive know perspective, But the back either you Okay. the spelled out, Mexico jump a in any or areas I'll I that me, then negative? geographical release. queue.

Steve Towe

So great I mean, globe. is the spread around is the being improvement what's

we our So good well. team Mexican our Israeli U.S. and said, growth, as team also team, our as saw

X negative way out market the say, for getting standing us. say gain. and wouldn't anything but share really I market territories, leading they're are I from a as So those would perspective,

Operator

is coming Scott ROTH today for Capital. question next Searle Your with from

Scott Searle

on start wondering And exit targets then 'XX? up think at the going ultimate Ned, over you gross subject used still best of front. the going working entails could to a time of should to the of XX%. that? to I'm from want are fun what you be in redesigns. XX% I It's Steve, on kind that the we product we're product plus, wish in that what ran all years. side, earlier a around an here? margin And you what to Is questions through the the that number frames be been Maybe recovery we process, -- just about to couple as expecting you're what business luck follow This the at rate mix? certification some put achievable are on with a forward. if

Steve Towe

Okay.

X in those take let's So separation.

do So of we designs we need in terms the minor we're in everything some certifications, and certification, the of some that terms don't, changing.

of in to take it We QX the full all needs to to will and place So that the taken work see that where this has really place engineering place. continue year. fruits -- of take

plus. the a a getting But that's to I year. that be forward. be to early the at in to that mid-XXs In the able first So need target year look on that part. part, macroeconomics second us, lot short-term and improve moving good think back mean, later there's to certain XX% to expect of is of for we I we mid-XXs next

Scott Searle

the any terms there that front, beginning like is highlight Got FICA of But anything you year, you. base onetime level on and of there the out? are up I if Very starting things know otherwise. helpful. to items OpEx if And I'm the in there that sequentially, OpEx we're to from? call in at wondering got

Steve Towe

that Ned, do one? take you want to

Ned Mavrommatis

actually to down QX, but anything It's compared not specific. Sure. slightly

there's During hundred there onetime items hit second that in the be should the first thousand not that gets quarter, quarter. first in few quarter the of

Scott Searle

Got you.

if I lastly, Steve, And could. Okay.

some It partners. a those gotten think second And those tracking? about an of fourth sounds is in the talked betas I quarter third past, metric we into marketplace And reporting looking along about I'm lines of the you You've that forward about? time also quarter, in initial Analyst business you before more be Or identifying that be how to wondering kind Is guys think know platform had, Day. standpoint further kind you're those half. Are should if I the the starting of from thinking the metrics, front. business to see going on something rolling are with going the the partners as And and that still about that frame? could, like of modular forward? going talked still some evolution in like time lastly, about of the more talked I the you've you had

Steve Towe

X now. first live And of from in are those terms integrations the one the integrations,

So fantastic done very to team quickly. the have a move job

that second a now for it. So our start the that's and I half think of fantastic be we'll year us, behind from and getting really teams publishing the go-to-market

business? In terms just of reporting more of the in -- explain can you of your terms question

Scott Searle

that forward? be the terms I'm internally going business, but the any subscribers side? and I guess, working in metrics I early thoughts how we early of of Yes, enterprises the reporting little with tenure, on about Steve, it's otherwise, the you're to of or thinking there Street in just SaaS know both measuring is be terms in how -- thinking to going business a what you're you're about your particularly should

Steve Towe

the saying I I making be quality organization recurring to we've something game. of strong don't different or think sure very the our that Obviously, at different internally, revenues on the and before that. metrics the is going anything saying organization would we're way. at go to in around the that throughout we're And think we're across top we what business looking a been

So the general business, around think of the we mix. metrics have maybe good bit particular a those strength running I But more today.

yes, question, terms In Analyst of are June in Day Investor City. York of XXth on hosting we third your our New the

Operator

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

Steve Towe

and for to call. thanks the everyone questions, you the insightful joining Thank today for

In The Time. their spend operational drivers the our efforts for gain RSVP insight extend some their business. ability the to for vision. via event leadership an Analyst and of and are just I'd heart your long-term to for outlook, XX, support our our mentioned, in thank to time please to The As p.m. to expanded event, strategic thanks Day you our an investors diligent the the with team growth our Glover and execution, customers putting really to Mark contact Investor in City in thank and into PowerFleet, York on for trust realize closing, and will XX June meet from our valued Tuesday, PWFL@gatewayir.com. New employees Eastern opportunity hosting to and and like a we X I continued noon confidence provide

Operator

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

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