MIXT MiX Telematics Limited

Second Quarter Highlights:

• Net subscriber additions of 47,400, bringing the total base to over 1,089,000 subscribers
• Total revenue of $37.8 million, up 12% year-over-year (constant currency)
• Subscription revenue of $32.4 million, up 10% year-over-year (constant currency)
• Net income of $0.2 million, up from the $1.2 million loss in the prior year
• Adjusted EBITDA up 41% year-over-year to $8.5 million, at an adjusted EBITDA margin of 22.5% (up 550 basis points from the prior year)
• Cash and cash equivalents of $29.5 million at quarter end
• Net cash provided by operating activities of $8.5 million during the quarter
• Free cash flow of $2.1 million generated during the quarter

MiX Telematics Limited (“MiX Telematics” or the “Company”) (NYSE: MIXT, JSE: MIX), a leading global Software-as-a-Service (“SaaS”) provider of connected fleet management solutions, today announced financial results, in accordance with accounting principles generally accepted in the United States (“GAAP”), for the second quarter of fiscal year 2024, which ended September 30, 2023.

Management Commentary

“We delivered another strong quarter with record subscriber growth, increased profitability and solid free cash flow,” said MiX Group CEO Stefan Joselowitz. “With the macro-environment remaining uncertain and volatility persisting across many of our markets, our model continues to be resilient, and our balance sheet remains a strategic asset. Our subscriber base is now well over the one million mark and adjusted EBITDA has increased in line with our profitability objectives. We are making steady and sustainable progress towards achieving a Rule of 40 performance in the medium-term.”

Joselowitz continued, “On the 10th of October, we announced a transformative business combination with Powerfleet (Nasdaq: PWFL). This merger will result in one of the largest global providers of connected vehicle SaaS solutions and I firmly believe that this is the ideal path forward for our organization and shareholders. Post close, we anticipate the direct Nasdaq listing will provide us with significantly increased market exposure and an expanded investor base. The combination is expected to unlock further shareholder value through its meaningfully increased scale, enhanced R&D activities, and leveraging our combined best-in-class SaaS solutions to further capitalize on the significant global market opportunity.”

Financial Results for the Three Months Ended September 30, 2023

Subscription Revenue: Subscription revenue increased to $32.4 million, compared to $30.7 million for the second quarter of fiscal year 2023. The Field Service Management (“FSM”) business acquired on September 2, 2022 contributed $1.9 million to the subscription revenue for the second quarter of fiscal year 2024, compared to $0.9 million for the second quarter of fiscal year 2023. Subscription revenue increased by 10.4% on a constant currency basis, year over year, of which 2.9% is attributable to the FSM business acquisition. During the second quarter of fiscal year 2024, the Company’s subscriber base increased by a net 47,400 subscribers, mainly due to the Africa segment. Subscription revenue represented 85.9% of total revenue during the second quarter of fiscal year 2024.

The majority of the Company’s total revenue and subscription revenue are derived from currencies other than the U.S. Dollar. Accordingly, the strengthening of the U.S. Dollar against these currencies (in particular against the South African Rand), has negatively impacted the Company’s revenue and subscription revenue reported in U.S. Dollars. Compared to the second quarter of fiscal year 2023, the South African Rand weakened by 10% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate averaged R18.65 in the second quarter of fiscal year 2024 compared to an average of R17.01 during the second quarter of fiscal year 2023. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the second quarter of fiscal year 2024 led to a 4.7% decrease in reported U.S. Dollar subscription revenue.

Total Revenue: Total revenue increased to $37.8 million, compared to $35.3 million for the second quarter of fiscal year 2023. During the second quarter of fiscal year 2024, total revenue increased by 11.5% on a constant currency basis, year over year. Hardware and other revenue increased to $5.3 million, an increase of 16.7%, compared to $4.6 million for the second quarter of fiscal year 2023. On a constant currency basis, hardware and other revenue increased by 18.9%.

The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the second quarter of fiscal year 2024 led to a 4.4% decrease in reported U.S. Dollar total revenue.

Gross Margin: Gross profit was $23.3 million, compared to $22.1 million for the second quarter of fiscal year 2023. Gross profit margin decreased 110 basis points to 61.6%, compared to 62.7% for the second quarter of fiscal year 2023. The subscription revenue margin during the second quarter of fiscal year 2024 was 65.4%, compared to 67.9% for the second quarter of fiscal year 2023 and declined primarily due to higher in-vehicle device depreciation charged to the Condensed Consolidated Statements of Income during the current quarter.

Income From Operations: Income from operations was $2.5 million, compared to $1.5 million for the second quarter of fiscal year 2023. Operating income margin increased 240 basis points to 6.6%, compared to 4.2% for the second quarter of fiscal year 2023. Operating expenses of $20.8 million increased by $0.2 million, or 0.8%, compared to the second quarter of fiscal year 2023. Operating expenses in the second quarter of fiscal year 2024 included $0.8 million in strategic costs related to the proposed Powerfleet Transaction (as defined below). See the “Recent Developments” section below for more information about the Powerfleet Transaction.

Net Income and Earnings Per Share: Net income was $0.2 million, compared to the net loss of $1.2 million in the second quarter of fiscal year 2023. During the second quarter of fiscal year 2024, net income included a net foreign exchange loss of $0.1 million before tax and a $0.1 million charge from the income tax effect of net foreign exchange losses (which includes a $0.2 million deferred tax charge on a U.S. Dollar intercompany loan between MiX Telematics and MiX Telematics Investments Proprietary Limited (“MiX Investments”), a wholly-owned subsidiary of the Company, offset by a $0.1 million deferred tax credit on other foreign exchange losses). During the second quarter of fiscal year 2023, net loss included a net foreign exchange gain of $0.7 million before tax and a $2.0 million charge from the income tax effect of net foreign exchange gains (which includes a $1.8 million deferred tax charge on a U.S. Dollar intercompany loan between MiX Telematics and MiX Investments and a $0.2 million deferred tax charge on other foreign exchange gains).

Earnings per diluted ordinary share was positive 0.04 U.S. cents, compared to negative 0.2 U.S. cents in the second quarter of fiscal year 2023. For the second quarter of fiscal year 2024, the calculation was based on diluted weighted average ordinary shares in issue of 554.0 million compared to 552.2 million diluted weighted average ordinary shares in issue during the second quarter of fiscal year 2023. On a ratio of 25 ordinary shares to one American Depositary Share (“ADS”), earnings per diluted ADS were positive 1.1 U.S. cents compared to negative 5 U.S. cents in the second quarter of fiscal year 2023.

Adjusted EBITDA and Adjusted EBITDA Margin: Adjusted EBITDA, a non-GAAP measure, increased to $8.5 million, compared to $6.0 million for the second quarter of fiscal year 2023. Adjusted EBITDA margin, a non-GAAP measure, for the second quarter of fiscal year 2024 increased 550 basis points to 22.5%, compared to 17.0% for the second quarter of fiscal year 2023.

Adjusted Net Income and Adjusted Net Income Per Share: Adjusted net income, a non-GAAP measure, was $0.9 million, compared to $0.8 million for the second quarter of fiscal year 2023. Adjusted net income per diluted ordinary share was 0.2 U.S. cents, compared to 0.1 U.S. cents in the second quarter of fiscal year 2023. At a ratio of 25 ordinary shares to one ADS, the adjusted net income per diluted ADS was 4 U.S. cents compared to 3 U.S. cents in the second quarter of fiscal year 2023.

Adjusted Effective Tax Rate: The Company’s effective tax rate was 90.2%, compared to 161.5% in the second quarter of fiscal year 2023. Adjusted effective tax rate, a non-GAAP measure which excludes the impact of net foreign exchange gains and losses, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement, net of tax, is the tax rate used in determining adjusted net income. Adjusted effective tax rate was 71.3% compared to 63.4% in the second quarter of fiscal year 2023.

Cash and Cash Equivalents, Cash Flow and Free Cash Flow: At September 30, 2023, the Company had $29.5 million of cash and cash equivalents, compared to $29.9 million at March 31, 2023.

Net cash provided by operating activities for the second quarter of fiscal year 2024 increased to $8.5 million compared to $2.3 million net cash provided by operating activities for the second quarter of fiscal year 2023. The Company invested $6.4 million in capital expenditures (including investments in in-vehicle devices of $4.5 million), leading to free cash flow of $2.1 million, a non-GAAP measure, in the quarter. The Company incurred negative free cash flow of $5.1 million for the second quarter of fiscal year 2023 when the Company invested $7.4 million in capital expenditures (including investments in in-vehicle devices of $5.8 million).

Net cash used in investing activities for the second quarter of fiscal year 2024 was $6.6 million, compared to $11.1 million net cash used in investing activities for the second quarter of fiscal year 2023, which included $3.7 million paid by MiX Telematics North America for the acquisition of the FSM business.

Net cash from financing activities amounted to $0.9 million for the second quarter of fiscal year 2024, compared to $4.9 million net cash from financing activities during the second quarter of fiscal year 2023. The cash from financing activities during the second quarter of fiscal year 2024 mainly consisted of short-term debt facilities utilized of $2.3 million, offset by dividends paid of $1.3 million. The cash from financing activities during the second quarter of fiscal year 2023 consisted of short-term debt facilities utilized of $6.3 million, offset by dividends paid of $1.3 million and ordinary shares repurchased of $0.1 million.

During the quarter, the South African Rand weakened against the U.S. Dollar from R18.73 at June 30, 2023 to R18.90 at September 30, 2023 and as a result, cash decreased by $0.4 million due to foreign exchange losses.

Quarterly Dividend

The last recent dividend payment of 4.50000 South African cents (0.2 U.S. cents) per ordinary share and 1.12500 South African Rand (6 U.S. cents) per ADS was paid on September 7, 2023 to ADS holders on record on August 25, 2023. A dividend of 4.50000 South African cents per ordinary share and 1.12500 South African Rand per ADS will be paid on December 14, 2023 to ADS holders on record as of the close of business on December 1, 2023.

The details with respect to the dividends declared for holders of our ADSs are as follows:

Ex dividend on New York Stock Exchange (NYSE)

Thursday, November 30, 2023

Record date

Friday, December 1, 2023

Approximate date of currency conversion

Monday, December 4, 2023

Approximate dividend payment date

Thursday, December 14, 2023

Share Repurchases

No shares were repurchased during the three months ended September 30, 2023.

Recent Developments

As previously disclosed in a Current Report on Form 8-K on October 10, 2023, the Company, entered into an Implementation Agreement (the “Agreement”), by and among the Company, PowerFleet, Inc., a Delaware corporation (“Powerfleet”), and Main Street 2000 Proprietary Limited, a private company incorporated in the Republic of South Africa and a wholly owned subsidiary of Powerfleet (“Powerfleet Sub”), pursuant to which, subject to the terms and conditions thereof, Powerfleet Sub will acquire all of the issued ordinary shares of the Company, including the ordinary shares represented by the Company’s ADSs, through the implementation of a scheme of arrangement (the “Scheme”) in accordance with Sections 114 and 115 of the South African Companies Act, No. 71 of 2008, in exchange for shares of common stock, par value $0.01 per share, of Powerfleet (the “Powerfleet Common Stock”). As a result of the transactions, including the Scheme, contemplated by the Agreement (the “Powerfleet Transaction”), the Company will become an indirect, wholly owned subsidiary of Powerfleet.

The implementation of the Scheme will result in the delisting of the Company’s ordinary shares from the Johannesburg Stock Exchange (the “JSE”) and the delisting of the Company’s ADSs from the New York Stock Exchange. The Powerfleet Common Stock will continue to be listed on The Nasdaq Global Market and will additionally be listed on the JSE by way of a secondary inward listing.

The Powerfleet Transaction is expected to close in the first quarter of calendar year 2024, subject to satisfaction of customary closing conditions including, but not limited to, approval from the Company’s shareholders and approval from Powerfleet’s stockholders.

The Company will also be hosting a joint investor and analyst day with the Powerfleet team on Thursday, November 16, 2023 in New York City. For those who would like to attend the event in-person, please contact MiX’s investor relations team at MIXT@gateway-grp.com. A live webcast will be available on the investor relations section of each company's website. A replay of the webcast will be available shortly after the event concludes.

Conference Call Information

MiX Telematics management will host a conference call and audio webcast at 8:00 a.m. (Eastern Daylight Time) and 3:00 p.m. (South African Time) on Wednesday, November 8, 2023 to discuss the Company’s financial results and current business outlook.

• The live webcast of the call will be available at the “Investor Information” page of the Company’s website, http://investor.mixtelematics.com.
• To access the call, dial 1-877-300-8521 (within the United States) or 0-800-999-739 (within South Africa) or 1-412-317-6026 (outside of the United States). The conference ID is 10183846.
• A replay of this conference call will be available for a limited time at 1-844-512-2921 (within the United States) or 1-412-317-6671 (within South Africa or outside of the United States). The replay conference ID is 10183846.
• A replay of the webcast will also be available for a limited time at http://investor.mixtelematics.com.

About MiX Telematics Limited

MiX Telematics is a leading global provider of connected fleet and mobile asset solutions delivered as SaaS to over 1,089,000 subscribers in over 120 countries. The Company’s products and services provide enterprise fleets, small fleets and consumers with solutions for efficiency, safety, compliance and security. MiX Telematics was founded in 1996 and has offices in South Africa, the United Kingdom, the United States, Uganda, Brazil, Australia, Romania and the United Arab Emirates as well as a network of more than 130 fleet value-added resellers worldwide. MiX Telematics shares are publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and MiX Telematics American Depositary Shares are listed on the New York Stock Exchange (NYSE: MIXT). For more information, visit www.mixtelematics.com.

Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding our position to execute on our growth strategy, and our ability to expand our leadership position. These forward-looking statements include, but are not limited to, the Company’s beliefs, plans, goals, objectives, expectations, assumptions, estimates, intentions, future performance, other statements that are not historical facts and statements identified by words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in, or suggested by, these forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved.

Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of known and unknown risks and uncertainties, some of which are beyond our control including, without limitation:

• our ability to attract, sell to and retain customers;
• our ability to improve our growth strategies successfully, including our ability to increase sales to existing customers;
• our ability to adapt to rapid technological change in our industry and the use of artificial intelligence;
• competition from industry consolidation and new entrants into the industry;
• loss of key personnel or our failure to attract, train and retain other highly qualified personnel;
• the satisfaction of the closing conditions to the Powerfleet Transaction in the anticipated timeframe or at all including, but not limited to, the ability to obtain approval of the shareholders of the Company and stockholders of Powerfleet, the ability to obtain financing, and the ability to obtain necessary regulatory approvals;
• the ability to integrate businesses and realize the anticipated benefits of the Powerfleet Transaction;
• the introduction of new solutions and international expansion;
• the impact of the global component shortage and supply chain disruptions;
• our dependence on key suppliers and vendors to manufacture our hardware;
• our dependence on our network of dealers and distributors to sell our solutions;
• our ability to navigate and adapt in adverse global economic and market conditions;
• the impact of climate change and increased focus on environmental, social and governance matters;
• businesses may not continue to adopt fleet management solutions;
• our future business and system development, results of operations and financial condition;
• expected changes in our profitability and certain cost or expense items as a percentage of our revenue;
• changes in the practices of insurance companies;
• the impact of laws and regulations relating to the Internet and data privacy;
• our ability to ensure compliance with export laws, customs and import regulations, economic sanctions and Export Administration Regulations;
• our ability to protect our intellectual property and proprietary technologies and address any infringement claims;
• our ability to defend ourselves from litigation or administrative proceedings relating to labor, regulatory, tax or similar issues;
• significant disruption in service on, or security breaches of, our websites or computer systems;
• our dependence on third-party technology;
• fluctuations in the value of the South African Rand;
• our reliance on electricity generated and supplied by Eskom (the South African Power Utility) and the impact of intermittent electricity supply in South Africa;
• economic, social, political, labor and other conditions and developments in South Africa and globally;
• our ability to issue securities and access the capital markets in the future; and
• other factors discussed in the Company’s and Powerfleet’s filings with the U.S. Securities and Exchange Commission (the “SEC”), which include their Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and in the joint proxy statement/prospectus on Form S-4 to be filed in connection with the Powerfleet Transaction.

For more information, see the section entitled “Risk Factors” and the forward-looking statements disclosure contained in the Company’s and Powerfleet’s Annual Reports on Form 10-K and in other filings. The forward-looking statements included in this press release are made only as of the date hereof and we assume no obligation to update any forward-looking statements contained in this press release and expressly disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include references to adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per share, adjusted effective tax rate, free cash flow and constant currency, which are non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses these measures, please see Annexure A titled “Non-GAAP Financial Measures and Key Business Metrics”. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP is provided in Annexure A.

 

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

 

 

 

March 31,

2023

 

September 30,

2023

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

29,876

 

 

$

29,460

 

Restricted cash

 

 

781

 

 

 

755

 

Accounts receivables, net

 

 

24,194

 

 

 

24,389

 

Inventory, net

 

 

4,936

 

 

 

4,438

 

Prepaid expenses and other current assets

 

 

9,950

 

 

 

9,114

 

Total current assets

 

 

69,737

 

 

 

68,156

 

Property, plant and equipment, net

 

 

36,779

 

 

 

38,844

 

Goodwill

 

 

39,258

 

 

 

37,939

 

Intangible assets, net

 

 

21,895

 

 

 

21,005

 

Deferred tax assets

 

 

2,090

 

 

 

1,284

 

Other assets

 

 

6,804

 

 

 

8,972

 

Total assets

 

$

176,563

 

 

$

176,200

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Short-term debt

 

$

15,253

 

 

$

16,935

 

Accounts payables

 

 

6,120

 

 

 

6,694

 

Accrued expenses and other liabilities

 

 

21,486

 

 

 

23,283

 

Contingent consideration

 

 

3,569

 

 

 

1,076

 

Deferred revenue

 

 

5,295

 

 

 

6,792

 

Income taxes payable

 

 

298

 

 

 

609

 

Total current liabilities

 

 

52,021

 

 

 

55,389

 

Deferred tax liabilities

 

 

12,357

 

 

 

12,924

 

Long-term accrued expenses and other liabilities

 

 

3,368

 

 

 

3,281

 

Total liabilities

 

 

67,746

 

 

 

71,594

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

MiX Telematics Limited stockholders’ equity

 

 

 

 

Preference shares: 100 million shares authorized but not issued

 

 

—

 

 

 

—

 

Ordinary shares: 608.8 million and 607.8 million no-par value shares issued as of March 31, 2023 and September 30, 2023, respectively

 

 

64,001

 

 

 

63,455

 

Less treasury stock at cost: 53.8 million shares as of March 31, 2023 and September 30, 2023

 

 

(17,315

)

 

 

(17,315

)

Retained earnings

 

 

79,024

 

 

 

78,203

 

Accumulated other comprehensive loss

 

 

(13,399

)

 

 

(16,808

)

Additional paid-in capital

 

 

(3,499

)

 

 

(2,934

)

Total MiX Telematics Limited stockholders’ equity

 

 

108,812

 

 

 

104,601

 

Non-controlling interest

 

 

5

 

 

 

5

 

Total stockholders’ equity

 

 

108,817

 

 

 

104,606

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

176,563

 

 

$

176,200

 

 

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended September 30,

 

Six Months Ended September 30,

 

 

2022

 

 

 

2023

 

 

2022

 

 

 

2023

 

Revenue

 

 

 

 

 

 

 

Subscription

$

30,700

 

 

$

32,437

 

$

61,663

 

 

$

64,648

 

Hardware and other

 

4,562

 

 

 

5,325

 

 

8,658

 

 

 

9,465

 

Total revenue

 

35,262

 

 

 

37,762

 

 

70,321

 

 

 

74,113

 

Cost of revenue

 

 

 

 

 

 

 

Subscription

 

9,852

 

 

 

11,218

 

 

19,905

 

 

 

21,431

 

Hardware and other

 

3,308

 

 

 

3,268

 

 

6,581

 

 

 

6,293

 

Total cost of revenue

 

13,160

 

 

 

14,486

 

 

26,486

 

 

 

27,724

 

Gross profit

 

22,102

 

 

 

23,276

 

 

43,835

 

 

 

46,389

 

Operating expenses

 

 

 

 

 

 

 

Sales and marketing

 

4,053

 

 

 

3,469

 

 

8,385

 

 

 

6,975

 

Administration and other

 

16,572

 

 

 

17,330

 

 

31,547

 

 

 

32,545

 

Total operating expenses

 

20,625

 

 

 

20,799

 

 

39,932

 

 

 

39,520

 

Income from operations

 

1,477

 

 

 

2,477

 

 

3,903

 

 

 

6,869

 

Other income/(expense)

 

708

 

 

 

409

 

 

1,607

 

 

 

(300

)

Interest income

 

138

 

 

 

198

 

 

888

 

 

 

467

 

Interest expense

 

361

 

 

 

539

 

 

624

 

 

 

1,041

 

Income before income tax expense

 

1,962

 

 

 

2,545

 

 

5,774

 

 

 

5,995

 

Income tax expense

 

3,168

 

 

 

2,296

 

 

6,302

 

 

 

4,138

 

Net (loss)/income

 

(1,206

)

 

 

249

 

 

(528

)

 

 

1,857

 

Less: Net income attributable to non-controlling interest

 

—

 

 

 

—

 

 

—

 

 

 

—

 

Net (loss)/income attributable to MiX Telematics Limited

$

(1,206

)

 

$

249

 

$

(528

)

 

$

1,857

 

 

 

 

 

 

 

 

 

Net (loss)/income per ordinary share

 

 

 

 

 

 

 

Basic

$

(0.002

)

 

$

0.0004

 

$

(0.001

)

 

$

0.003

 

Diluted

$

(0.002

)

 

$

0.0004

 

$

(0.001

)

 

$

0.003

 

 

 

 

 

 

 

 

 

Net (loss)/income per American Depositary Share

 

 

 

 

 

 

 

Basic

$

(0.05

)

 

$

0.01

 

$

(0.02

)

 

$

0.08

 

Diluted

$

(0.05

)

 

$

0.01

 

$

(0.02

)

 

$

0.08

 

 

 

 

 

 

 

 

 

Ordinary shares

 

 

 

 

 

 

 

Weighted average

 

552,210

 

 

 

554,021

 

 

551,792

 

 

 

554,119

 

Diluted weighted average

 

552,210

 

 

 

554,021

 

 

551,792

 

 

 

554,430

 

 

 

 

 

 

 

 

 

American Depositary Shares

 

 

 

 

 

 

 

Weighted average

 

22,088

 

 

 

22,161

 

 

22,072

 

 

 

22,165

 

Diluted weighted average

 

22,088

 

 

 

22,161

 

 

22,072

 

 

 

22,177

 

 

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended September 30,

 

 

 

2022

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

Cash generated from operations

 

$

2,005

 

 

$

14,930

 

Interest received

 

 

471

 

 

 

449

 

Interest paid

 

(355

)

 

 

(786

)

Income tax paid

 

 

(539

)

 

 

(1,155

)

Net cash provided by operating activities

 

 

1,582

 

 

 

13,438

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Acquisition of property, plant and equipment – in-vehicle devices

 

 

(10,642

)

 

 

(7,972

)

Acquisition of property, plant and equipment – other

 

 

(554

)

 

 

(479

)

Proceeds from the sale of property, plant and equipment

 

 

73

 

 

 

26

 

Acquisition of intangible assets

 

 

(2,864

)

 

 

(2,917

)

Cash paid for business combination

 

 

(3,739

)

 

 

—

 

Deferred consideration paid

 

 

—

 

 

 

(267

)

Net cash used in investing activities

 

 

(17,726

)

 

 

(11,609

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Cash paid for ordinary shares repurchased

 

 

(107

)

 

 

(546

)

Cash paid on dividends to MiX Telematics Limited stockholders

 

 

(2,708

)

 

 

(2,673

)

Movement in short-term debt

 

 

7,380

 

 

 

2,332

 

Net cash from/(used in) financing activities

 

 

4,565

 

 

 

(887

)

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents, and restricted cash

 

 

(11,579

)

 

 

942

 

Cash and cash equivalents, and restricted cash at beginning of the period

 

 

34,719

 

 

 

30,657

 

Effect of exchange rate changes on cash and cash equivalents, and restricted cash

 

 

(2,727

)

 

 

(1,384

)

Cash and cash equivalents, and restricted cash at end of the period

 

$

20,413

 

 

$

30,215

 

 

Segment Information

Our operating segments are based on the geographical location of our Regional Sales Offices (“RSOs”) and also include our Central Services Organization (“CSO”). CSO is our central services organization that wholesales our products and services to our RSOs who, in turn, interface with our end-customers, distributors and dealers. CSO is also responsible for the development of our hardware and software platforms and provides common marketing, product management, technical and distribution support to each of our other operating segments.

Each RSO’s results reflect the external revenue earned, as well as its performance before the remaining CSO and corporate costs allocations. Segment performance is measured and evaluated by the chief operating decision maker (“CODM”) using Segment Adjusted EBITDA, which is a measure that uses income before income tax expense excluding the contingent consideration remeasurement, non-recurring transitional service agreement costs, strategic costs, acquisition-related costs, interest expense, interest income, net foreign exchange gains/losses, net profit on sale of property, plant and equipment, restructuring costs, stock-based compensation costs, depreciation, amortization, onerous contract costs, operating lease costs and corporate and consolidation entries. Product development costs are capitalized and amortized and this amortization is excluded from Segment Adjusted EBITDA.

The segment information provided to the CODM is as follows (in thousands and unaudited):

 

Three Months Ended September 30, 2022

 

Subscription

Revenue

 

Hardware and

Other Revenue

 

Total Revenue

 

Segment Adjusted

EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

18,073

 

$

1,413

 

$

19,486

 

$

7,528

 

Europe

 

3,019

 

 

510

 

 

3,529

 

 

1,099

 

Americas

 

4,281

 

 

473

 

 

4,754

 

 

945

 

Middle East and Australasia

 

3,983

 

 

1,889

 

 

5,872

 

 

2,149

 

Brazil

 

1,314

 

 

277

 

 

1,591

 

 

408

 

Total Regional Sales Offices

 

30,670

 

 

4,562

 

 

35,232

 

 

12,129

 

Central Services Organization

 

30

 

 

—

 

 

30

 

 

(2,692

)

Total Segment Results

$

30,700

 

$

4,562

 

$

35,262

 

$

9,437

 

 

Three Months Ended September 30, 2023

 

Subscription

Revenue

 

Hardware and

Other Revenue

 

Total Revenue

 

Segment Adjusted

EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

18,823

 

$

1,330

 

$

20,153

 

$

8,631

 

Europe

 

3,078

 

 

652

 

 

3,730

 

 

1,388

 

Americas

 

4,614

 

 

440

 

 

5,054

 

 

549

 

Middle East and Australasia

 

4,243

 

 

2,316

 

 

6,559

 

 

2,948

 

Brazil

 

1,675

 

 

583

 

 

2,258

 

 

877

 

Total Regional Sales Offices

 

32,433

 

 

5,321

 

 

37,754

 

 

14,393

 

Central Services Organization

 

4

 

 

4

 

 

8

 

 

(2,355

)

Total Segment Results

$

32,437

 

$

5,325

 

$

37,762

 

$

12,038

 

 

Six Months Ended September 30, 2022

 

Subscription

Revenue

 

Hardware and

Other Revenue

 

Total Revenue

 

Segment Adjusted

EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

37,134

 

$

3,085

 

$

40,219

 

$

15,465

 

Europe

 

6,164

 

 

999

 

 

7,163

 

 

2,335

 

Americas

 

7,693

 

 

1,163

 

 

8,856

 

 

1,118

 

Middle East and Australasia

 

8,082

 

 

2,774

 

 

10,856

 

 

3,987

 

Brazil

 

2,549

 

 

637

 

 

3,186

 

 

843

 

Total Regional Sales Offices

 

61,622

 

 

8,658

 

 

70,280

 

 

23,748

 

Central Services Organization

 

41

 

 

—

 

 

41

 

 

(5,459

)

Total Segment Results

$

61,663

 

$

8,658

 

$

70,321

 

$

18,289

 

 

Six Months Ended September 30, 2023

 

Subscription

Revenue

 

Hardware and

Other Revenue

 

Total Revenue

 

Segment Adjusted

EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

37,198

 

$

2,485

 

$

39,683

 

$

17,147

 

Europe

 

6,170

 

 

1,009

 

 

7,179

 

 

2,526

 

Americas

 

9,441

 

 

725

 

 

10,166

 

 

1,082

 

Middle East and Australasia

 

8,396

 

 

4,123

 

 

12,519

 

 

5,536

 

Brazil

 

3,432

 

 

1,119

 

 

4,551

 

 

1,847

 

Total Regional Sales Offices

 

64,637

 

 

9,461

 

 

74,098

 

 

28,138

 

Central Services Organization

 

11

 

 

4

 

 

15

 

 

(4,817

)

Total Segment Results

$

64,648

 

$

9,465

 

$

74,113

 

$

23,321

 

The following table (unaudited and shown in thousands) reconciles total Segment Adjusted EBITDA to income before income tax expense for the periods shown:

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

Segment Adjusted EBITDA

$

9,437

 

 

$

12,038

 

 

$

18,289

 

 

$

23,321

 

Corporate and consolidation entries

 

(2,778

)

 

 

(2,933

)

 

 

(4,952

)

 

 

(4,912

)

Operating lease costs (1)

 

(301

)

 

 

(291

)

 

 

(635

)

 

 

(603

)

Product development costs (2)

 

(349

)

 

 

(351

)

 

 

(692

)

 

 

(683

)

Onerous contract costs

 

—

 

 

 

39

 

 

 

—

 

 

 

39

 

Depreciation and amortization

 

(3,450

)

 

 

(4,758

)

 

 

(7,196

)

 

 

(8,770

)

Stock-based compensation costs

 

(243

)

 

 

(325

)

 

 

(51

)

 

 

(565

)

Restructuring costs

 

—

 

 

 

(7

)

 

 

—

 

 

 

(30

)

Net profit on sale of property, plant and equipment

 

—

 

 

 

—

 

 

 

33

 

 

 

4

 

Net foreign exchange gains/(losses)

 

653

 

 

 

(123

)

 

 

1,498

 

 

 

(853

)

Interest income

 

138

 

 

 

198

 

 

 

888

 

 

 

467

 

Interest expense

 

(361

)

 

 

(539

)

 

 

(624

)

 

 

(1,041

)

Acquisition-related costs

 

(784

)

 

 

—

 

 

 

(784

)

 

 

—

 

Strategic costs (3)

 

—

 

 

 

(796

)

 

 

—

 

 

 

(796

)

Non-recurring transitional service agreement costs (4)

 

—

 

 

 

(121

)

 

 

—

 

 

 

(121

)

Contingent consideration remeasurement

 

—

 

 

 

514

 

 

 

—

 

 

 

538

 

Income before income tax expense

$

1,962

 

 

$

2,545

 

 

$

5,774

 

 

$

5,995

 

Description of reconciling items: 1.

For the purposes of calculating Segment Adjusted EBITDA, operating lease expenses are excluded from the Segment Adjusted EBITDA. Therefore, in order to reconcile Segment Adjusted EBITDA to income before income tax expense, the total lease expense in respect of operating leases needs to be deducted.

2.

For segment reporting purposes, product development costs, which do not meet the capitalization requirements under ASC 730 Research and Development or under ASC 985 Software, are capitalized and amortized. The amortization is excluded from Segment Adjusted EBITDA. In order to reconcile Segment Adjusted EBITDA to income before income tax expense, product development costs capitalized for segment reporting purposes need to be deducted.

3.

Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above.

4.

Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 will be incurred on a temporary basis from September 2023 to December 2023 and have been excluded from Adjusted EBITDA.

 

Annexure A: Non-GAAP Financial Measures and Key Business Metrics

We use certain measures to assess the financial performance of the business. Certain of these measures are termed “non-GAAP measures” because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with GAAP, or are calculated using financial measures that are not calculated in accordance with GAAP. These non-GAAP measures include adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per share, adjusted effective tax rate, free cash flow and constant currency information.

An explanation of the relevance of each of the non-GAAP measures, a reconciliation of the non-GAAP measures to the most directly comparable measures calculated and presented in accordance with GAAP and a discussion of their limitations is set out below. We do not regard these non-GAAP measures as a substitute for, or superior to, the equivalent measures calculated and presented in accordance with GAAP or those calculated using financial measures that are calculated in accordance with GAAP.

In addition to providing the non-GAAP financial measures mentioned above, we disclose ARR to give investors supplementary indicators of the value of our current recurring revenue contracts. ARR represents the estimated annualized value of recurring revenue for subscription contracts that have commenced revenue recognition as of the measurement date.

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA and adjusted EBITDA margin are two of the profit measures reviewed by the CODM. We define adjusted EBITDA as net income before income taxes, interest expense, interest income, net foreign exchange gains/losses, depreciation of property, plant and equipment including capitalized customer in-vehicle devices, amortization of intangible assets including capitalized internal-use software development costs and intangible assets identified as part of a business combination, stock-based compensation costs, net profit on sale of property, plant and equipment, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and the contingent consideration remeasurement. We define adjusted EBITDA margin as adjusted EBITDA divided by total revenue.

We have included adjusted EBITDA and adjusted EBITDA margin in this press release because they are key measures that the Company’s management and Board of Directors use to understand and evaluate its core operating performance and trends; to prepare and approve its annual budget; and to develop short and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA and adjusted EBITDA margin can provide a useful measure for period-to-period comparisons of the Company’s core business. Accordingly, the Company believes that adjusted EBITDA and adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating its operating results.

A reconciliation of net income (the most directly comparable financial measure presented in accordance with GAAP) to adjusted EBITDA for the periods shown is presented below (in thousands and unaudited):

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

Net (loss)/income

$

(1,206

)

 

$

249

 

 

$

(528

)

 

$

1,857

 

Plus: Income tax expense

 

3,168

 

 

 

2,296

 

 

 

6,302

 

 

 

4,138

 

Plus: Interest expense

 

361

 

 

 

539

 

 

 

624

 

 

 

1,041

 

Less: Interest income

 

(138

)

 

 

(198

)

 

 

(888

)

 

 

(467

)

(Less)/plus: Net foreign exchange (gains)/losses

 

(653

)

 

 

123

 

 

 

(1,498

)

 

 

853

 

Plus: Depreciation (1)

 

2,171

 

 

 

3,201

 

 

 

4,797

 

 

 

5,768

 

Plus: Amortization (2)

 

1,279

 

 

 

1,557

 

 

 

2,399

 

 

 

3,002

 

Plus: Stock-based compensation costs

 

243

 

 

 

325

 

 

 

51

 

 

 

565

 

Less: Net profit on sale of property, plant and equipment

 

—

 

 

 

—

 

 

 

(33

)

 

 

(4

)

Plus: Restructuring costs

 

—

 

 

 

7

 

 

 

—

 

 

 

30

 

Plus: Acquisition-related costs

 

784

 

 

 

—

 

 

 

784

 

 

 

—

 

Plus: Strategic costs (3)

 

—

 

 

 

796

 

 

 

—

 

 

 

796

 

Plus: Non-recurring transitional service agreement costs (4)

 

—

 

 

 

121

 

 

 

—

 

 

 

121

 

Less: Contingent consideration remeasurement

 

—

 

 

 

(514

)

 

 

—

 

 

 

(538

)

Adjusted EBITDA

$

6,009

 

 

$

8,502

 

 

$

12,010

 

 

$

17,162

 

Adjusted EBITDA margin

 

17.0

%

 

 

22.5

%

 

 

17.1

%

 

 

23.2

%

1.

Includes depreciation of owned assets (including in-vehicle devices).

2.

Includes amortization of intangible assets (including capitalized internal-use software development costs and intangible assets identified as part of a business combination).

3.

Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above.

4.

Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 will be incurred on a temporary basis from September 2023 to December 2023 and have been excluded from Adjusted EBITDA.

Our use of adjusted EBITDA and adjusted EBITDA margin have limitations as analytical tools, and should not be considered as performance measures in isolation from, or as a substitute for, analysis of our results as reported under GAAP.

Some of these limitations are:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
• Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
• Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to the Company;
• other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure; and
• certain of the adjustments (such as restructuring costs, impairment of long-lived assets and others) made in calculating adjusted EBITDA are those that management believes are not representative of our underlying operations and, therefore, are subjective in nature.

Because of these limitations, adjusted EBITDA and adjusted EBITDA margin should be considered alongside other financial performance measures, including income from operations, net income and our other results.

Adjusted Net Income

Adjusted net income is defined as net loss/income excluding net foreign exchange gains/losses, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement, net of tax.

We have included adjusted net income in this press release because it provides a useful measure for period-to-period comparisons of our core business by excluding net foreign exchange gains/losses, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement, net of tax and associated tax consequences, from earnings. Accordingly, we believe that adjusted net income provides useful information to investors and others in understanding and evaluating our operating results.

The following table (in thousands, except per share data, and unaudited) reconciles net income to adjusted net income for the periods shown:

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

Net (loss)/income

$

(1,206

)

 

$

249

 

 

$

(528

)

 

$

1,857

 

Net foreign exchange (gains)/losses

 

(653

)

 

 

123

 

 

 

(1,498

)

 

 

853

 

Income tax effect of net foreign exchange gains/(losses)

 

2,023

 

 

 

109

 

 

 

4,059

 

 

 

534

 

Restructuring costs

 

—

 

 

 

7

 

 

 

—

 

 

 

30

 

Income tax effect of restructuring costs

 

—

 

 

 

(2

)

 

 

—

 

 

 

(7

)

Acquisition-related costs

 

784

 

 

 

—

 

 

 

784

 

 

 

—

 

Income tax effect of acquisition-related costs

 

(182

)

 

 

—

 

 

 

(182

)

 

 

—

 

Strategic costs (1)

 

—

 

 

 

796

 

 

 

—

 

 

 

796

 

Non-recurring transitional service agreement costs (2)

 

—

 

 

 

121

 

 

 

—

 

 

 

121

 

Contingent consideration remeasurement

 

—

 

 

 

(514

)

 

 

—

 

 

 

(538

)

Income tax effect of contingent consideration remeasurement

 

—

 

 

 

(5

)

 

 

—

 

 

 

—

 

Adjusted net income

$

766

 

 

$

884

 

 

$

2,635

 

 

$

3,646

 

1.

Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above.

2.

Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 will be incurred on a temporary basis from September 2023 to December 2023 and have been excluded from Adjusted net income.

 

Adjusted Net Income Per Share

Adjusted net income per share is defined as adjusted net income divided by the weighted average number of ordinary shares or ADSs in issue during the period.

We have included adjusted net income per share in this press release because it provides a useful measure for period-to-period comparisons of our core business by excluding net foreign exchange gains/losses, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement, net of tax and associated tax consequences, from earnings. Accordingly, we believe that adjusted net income per share provides useful information to investors and others in understanding and evaluating our operating results.

The following tables (unaudited) reconcile diluted net income per ordinary share or ADS to diluted adjusted net income per ordinary share or ADS for the periods shown:

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

 

 

2022

 

 

 

2023

 

 

2022

 

 

 

2023

 

Net (loss)/income per ordinary share – diluted

$

(0.002

)

 

#

 

$

(0.001

)

 

$

0.003

 

Effect of net foreign exchange (gains)/losses to net income

 

(0.001

)

 

#

 

 

(0.003

)

 

 

0.002

 

Income tax effect of net foreign exchange gains/(losses)

 

0.004

 

 

#

 

 

0.008

 

 

 

0.001

 

Restructuring costs

 

—

 

 

#

 

 

—

 

 

#

Income tax effect of restructuring costs

 

—

 

 

#

 

 

—

 

 

#

Acquisition-related costs

 

0.001

 

 

 

—

 

 

0.001

 

 

 

—

 

Income tax effect of acquisition-related costs

#

 

 

—

 

#

 

 

—

 

Strategic costs (1)

 

—

 

 

 

0.002

 

 

—

 

 

 

0.002

 

Non-recurring transitional service agreement costs (2)

 

—

 

 

#

 

 

—

 

 

#

Contingent consideration remeasurement

 

—

 

 

#

 

 

—

 

 

 

(0.001

)

Income tax effect of contingent consideration remeasurement

 

—

 

 

#

 

 

—

 

 

 

—

 

Adjusted net income per ordinary share – diluted

$

0.001

 

 

$

0.002

 

$

0.005

 

 

$

0.007

 

1.

Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above.

2.

Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 will be incurred on a temporary basis from September 2023 to December 2023 and have been excluded from adjusted net income per diluted ordinary share.

#

Amount less than $0.001

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

Net (loss)/income per ADS – diluted

$

(0.05

)

 

$

0.01

 

 

$

(0.02

)

 

$

0.08

 

Effect of net foreign exchange (gains)/losses to net income

 

(0.03

)

 

 

0.01

 

 

 

(0.07

)

 

 

0.04

 

Income tax effect of net foreign exchange gains/(losses)

 

0.08

 

 

*

 

 

0.18

 

 

 

0.02

 

Restructuring costs

 

—

 

 

*

 

 

—

 

 

*

Income tax effect of restructuring costs

 

—

 

 

*

 

 

—

 

 

*

Acquisition-related costs

 

0.04

 

 

 

—

 

 

 

0.04

 

 

 

—

 

Income tax effect of acquisition-related costs

 

(0.01

)

 

 

—

 

 

 

(0.01

)

 

 

—

 

Strategic costs (1)

 

—

 

 

 

0.04

 

 

 

—

 

 

 

0.04

 

Non-recurring transitional service agreement costs (2)

 

—

 

 

*

 

 

—

 

 

*

Contingent consideration remeasurement

 

—

 

 

 

(0.02

)

 

 

—

 

 

 

(0.02

)

Income tax effect of contingent consideration remeasurement

 

—

 

 

*

 

 

—

 

 

 

—

 

Adjusted net income per ADS – diluted

$

0.03

 

 

$

0.04

 

 

$

0.12

 

 

$

0.16

 

1.

Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above.

2.

Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 will be incurred on a temporary basis from September 2023 to December 2023 and have been excluded from adjusted net income per diluted ADS.

*

Amount less than $0.01

 

Adjusted Effective Tax Rate

The adjusted effective tax rate is defined as income tax expense excluding the income tax effect of net foreign exchange gains/losses, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement divided by income before income tax expense excluding net foreign exchange gains/losses, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement.

A reconciliation of the effective tax rate (the most directly comparable financial measure presented in accordance with GAAP) to the adjusted effective tax rate for the periods shown is presented below (in thousands and unaudited):

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

Income before income tax expense

$

1,962

 

 

$

2,545

 

 

$

5,774

 

 

$

5,995

 

Net foreign exchange (gains)/losses

 

(653

)

 

 

123

 

 

 

(1,498

)

 

 

853

 

Restructuring costs

 

—

 

 

 

7

 

 

 

—

 

 

 

30

 

Acquisition-related costs

 

784

 

 

 

—

 

 

 

784

 

 

 

—

 

Strategic costs (1)

 

—

 

 

 

796

 

 

 

—

 

 

 

796

 

Non-recurring transitional service agreement costs (2)

 

—

 

 

 

121

 

 

 

—

 

 

 

121

 

Contingent consideration remeasurement

 

—

 

 

 

(514

)

 

 

—

 

 

 

(538

)

Income before income tax expense excluding net foreign exchange (gains)/losses, restructuring costs, acquisition-related costs, strategic costs, non-recurring transitional service agreement costs and contingent consideration remeasurement

$

2,093

 

 

$

3,078

 

 

$

5,060

 

 

$

7,257

 

 

 

 

 

 

 

 

 

Income tax expense

$

(3,168

)

 

$

(2,296

)

 

$

(6,302

)

 

$

(4,138

)

Income tax effect of net foreign exchange gains/(losses)

 

2,023

 

 

 

109

 

 

 

4,059

 

 

 

534

 

Income tax effect of restructuring costs

 

—

 

 

 

(2

)

 

 

—

 

 

 

(7

)

Income tax effect of acquisition-related costs

 

(182

)

 

 

—

 

 

 

(182

)

 

 

—

 

Income tax effect of contingent consideration remeasurement

 

—

 

 

 

(5

)

 

 

—

 

 

 

—

 

Income tax expense excluding income tax effect of net foreign exchange gains/(losses), restructuring costs, acquisition-related costs and contingent consideration remeasurement

$

(1,327

)

 

$

(2,194

)

 

$

(2,425

)

 

$

(3,611

)

 

 

 

 

 

 

 

 

Effective tax rate

 

161.5

%

 

 

90.2

%

 

 

109.1

%

 

 

69.0

%

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

63.4

%

 

 

71.3

%

 

 

47.9

%

 

 

49.8

%

1.

Strategic costs relate to costs incurred in relation to the Powerfleet Transaction discussed in the “Recent Developments” section above.

2.

Certain non-recurring costs related to the extension of the transitional service agreement in respect of the FSM business acquired from Trimble in September 2022 will be incurred on a temporary basis from September 2023 to December 2023 and have been excluded from Adjusted EBITDA.

 

Free Cash Flow

Free cash flow is determined as net cash used in/provided by operating activities less capital expenditure for investing activities. We believe that free cash flow provides useful information to investors and others in understanding and evaluating the Company’s cash flows as it provides detail of the amount of cash the Company generates or utilizes after accounting for all capital expenditures including investments in in-vehicle devices.

The following table (in thousands and unaudited) reconciles net cash used in/provided by operating activities to free cash flow for the periods shown:

 

Three Months Ended

September 30,

 

Six Months Ended

September 30,

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

Net cash provided by operating activities

$

2,267

 

 

$

8,459

 

 

$

1,582

 

 

$

13,438

 

Less: Capital expenditure payments

 

(7,376

)

 

 

(6,397

)

 

 

(14,060

)

 

 

(11,368

)

Free cash flow

$

(5,109

)

 

$

2,062

 

 

$

(12,478

)

 

$

2,070

 

Constant Currency

Constant currency information has been presented to illustrate the impact of changes in currency rates on the Company’s results. The constant currency information has been determined by adjusting the current financial reporting period results to the prior period average exchange rates, determined as the average of the monthly exchange rates applicable to the period. The measurement has been performed for each of the Company’s currencies, including the South African Rand and British Pound. The constant currency growth percentage has been calculated by utilizing the constant currency results compared to the prior period results.

The constant currency information represents non-GAAP information. We believe this provides a useful basis to measure the performance of our business as it removes distortion from the effects of foreign currency movements during the period.

Due to the significant portion of our customers who are invoiced in non-U.S. Dollar denominated currencies, we also calculate our subscription revenue growth rate on a constant currency basis, thereby removing the effect of currency fluctuation on our results of operations.

The following tables (in thousands, except year over year change) provide the unaudited constant currency reconciliation to the most directly comparable GAAP measure for the periods shown:

Subscription Revenue:

 

Three Months Ended

September 30,

 

Year Over Year

Change

 

2022

 

2023

 

 

Subscription revenue as reported

$

30,700

 

$

32,437

 

5.7

%

Conversion impact of U.S. Dollar/other currencies

 

—

 

 

1,454

 

4.7

%

Subscription revenue on a constant currency basis

$

30,700

 

$

33,891

 

10.4

%

Hardware and Other Revenue:

 

Three Months Ended

September 30,

 

Year Over Year

Change

 

2022

 

2023

 

 

Hardware and other revenue as reported

$

4,562

 

$

5,325

 

16.7

%

Conversion impact of U.S. Dollar/other currencies

 

—

 

 

100

 

2.2

%

Hardware and other revenue on a constant currency basis

$

4,562

 

$

5,425

 

18.9

%

Total Revenue:

 

Three Months Ended

September 30,

 

Year Over Year

Change

 

2022

 

2023

 

 

Total revenue as reported

$

35,262

 

$

37,762

 

7.1

%

Conversion impact of U.S. Dollar/other currencies

 

—

 

 

1,554

 

4.4

%

Total revenue on a constant currency basis

$

35,262

 

$

39,316

 

11.5

%

Subscription Revenue:

 

Six Months Ended

September 30,

 

Year Over Year

Change

 

2022

 

2023

 

 

Subscription revenue as reported

$

61,663

 

$

64,648

 

4.8

%

Conversion impact of U.S. Dollar/other currencies

 

—

 

 

5,030

 

8.2

%

Subscription revenue on a constant currency basis

$

61,663

 

$

69,678

 

13.0

%

Hardware and Other Revenue:

 

Six Months Ended

September 30,

 

Year Over Year

Change

 

2022

 

2023

 

 

Hardware and other revenue as reported

$

8,658

 

$

9,465

 

9.3

%

Conversion impact of U.S. Dollar/other currencies

 

—

 

 

390

 

4.5

%

Hardware and other revenue on a constant currency basis

$

8,658

 

$

9,855

 

13.8

%

Total Revenue:

 

Six Months Ended

September 30,

 

Year Over Year

Change

 

2022

 

2023

 

 

Total revenue as reported

$

70,321

 

$

74,113

 

5.4

%

Conversion impact of U.S. Dollar/other currencies

 

—

 

 

5,420

 

7.7

%

Total revenue on a constant currency basis

$

70,321

 

$

79,533

 

13.1

%

Key Business Metrics

Annual Recurring Revenue

We believe that ARR is a key indicator of the trajectory of our business performance and serves as an indicator of future subscription revenue growth. We define ARR as the annualized value of subscription contracts that have commenced revenue recognition as of the measurement date. ARR is calculated by taking the subscription revenue for the last month of the period, multiplied by 12. It provides a 12-month forward view of revenue, assuming unit numbers, pricing and foreign exchange rates (the average monthly exchange rates applicable to the last month of the period) remain unchanged during the year. Constant currency ARR growth has been determined by adjusting the prior financial reporting period results to the last month of the current period average exchange rates, determined as the average monthly exchange rates applicable to the last month of the period.

ARR does not have a standardized meaning and is not necessarily comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and is not intended to be combined with or to replace it. ARR is not a forecast and the active contracts at the date used in calculating ARR may or may not be extended or renewed.

ARR is included in the following table (in thousands and unaudited):

 

September 30,

 

2022

 

2023

Annual Recurring Revenue

$

128,447

 

$

129,416

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231106445767/en/

Investor Relations Contact Matt Glover and Cody Cree Gateway Group, Inc. MIXT@gateway-grp.com +1-949-574-3860