- Impressive Revenue Growth of 17%, Marking Fourth Consecutive Quarter of Year-Over-Year Growth
- High Margin, Recurring and Services Revenue up 10% Year-Over-Year to $20.3 Million, Reflecting Company’s Success Driving SaaS and Software Revenue
- Gross Profit Improves by 20% Year-Over-Year, Demonstrating Company’s Laser Focus on Improving Quality Across the Business
- Cost Rationalization Initiatives Drive 23% Sequential Improvement in Loss from Operations, an Improvement of 68% from Q1 2022
- Strong Nine Month 2022 Financial Results and Improved Gross Profit Reflect Company’s Focus on Generating Profitable Growth
WOODCLIFF LAKE, N. J. , Nov. 08, 2022 (GLOBE NEWSWIRE) -- Powerfleet, Inc. (Nasdaq: PWFL), a global leader of Internet of Things (IoT) Software-as-a-Service (SaaS) solutions that optimize the performance of mobile assets and resources to unify business operations, reported results for the third quarter ended September 30, 2022.
Third Quarter 2022 Financial Highlights
- Total revenue was $34.3 million, an increase of 17% year-over-year.
- High margin, recurring and services revenue increased 10% to $20.3 million, or 59% of total revenue.
- Product gross margin increased to 30% compared to Q2 2022, reflecting the success of the company’s initiatives to effectively manage supply chain headwinds, purchase price variance challenges and reengineering of certain products to enhance margins. Q3 2022 product gross margin increased 78% compared to Q1 2022.
- Loss from operations improved to $(1.2) million, compared to $(1.6) million in Q2 2022 and $(2.4) million in the same year-ago period.
- Strong liquidity position with $17.0 million in cash and cash equivalents and working capital of $36.7 million at quarter-end.
- 653,000 total subscribers on the platform at quarter-end, up from 642,000 subscribers at the end of the prior quarter.
Management Commentary
“Our transformation remains ahead of schedule,” said Steve Towe, Powerfleet CEO. “Despite the difficult market conditions, excellent execution in the third quarter enabled us to deliver 17% revenue growth, 20% gross profit growth and solid adjusted EBITDA profitability. In fact, Q3 marked the fourth consecutive quarter of year-over-year revenue growth for our company. Our rationalization initiatives are enhancing our organization’s efficiency and profitability, producing a 23% sequential improvement in loss from operations and a 68% improvement in loss from operations compared to Q1 2022. Our success in this area and the pace at which we are driving operational improvements have positioned us well to cross over to profitability on an operating basis in the first half of next year.
“We are encouraged by the speed and tangible delivery of our transformation strategy throughout 2022 and expect to deliver greater business success in 2023 and beyond. The enhanced leadership team has brought in a strong execution focus, making accelerated and consistent headway enhancing organizational efficiencies and driving our SaaS transformation. Our transformation is enabling us to refocus the company’s core go-to-market strategy, realize the benefits from fully integrating acquired companies and combining our extensive technology capabilities, all of which we believe will translate to sustainable, high-quality topline growth with expanding profitability and positive cash flow.”
Third Quarter 2022 Financial Results
Total revenue increased 17% to $34.3 million from $29.2 million in the same year-ago period.
Services revenue was $20.3 million, or 59% of total revenue, compared to $18.5 million, or 63% of total revenue, in the same year-ago period. Product revenue, which drives future services revenue, was $14.0 million, or 41% of total revenue, compared to $10.8 million, or 37% of total revenue, in the same year-ago period.
Gross profit was $17.2 million, or 50% of total revenue, compared to $14.3 million, or 49% of total revenue, in the same year-ago period. Service gross profit was $13.0 million, or 64% of total service revenue, compared to $11.7 million, or 63% of total service revenue, in the same year-ago period. Product gross profit was $4.2 million, or 30% of total product revenue, compared to $2.6 million, or 24% of total product revenue, in the same year-ago period.
Operating expenses were $18.4 million, compared to $17.8 million in the prior quarter and $16.7 million in the same year-ago period. Operating expenses included foreign currency translation loss of $922,000 for the third quarter of 2022 compared to $345,000 in the same year-ago period.
Net loss attributable to common stockholders totaled $3.5 million, or $(0.10) per basic and diluted share (based on 35.4 million weighted average shares outstanding), compared to net loss attributable to common stockholders of $4.5 million, or $(0.13) per basic and diluted share, in the same year-ago period (based on 35.0 million weighted average shares outstanding).
Non-GAAP net income, a non-GAAP metric, totaled $1.5 million, or $0.04 per basic and $0.04 per diluted share (based on 35.4 million weighted average basic shares outstanding and 43.2 million weighted average diluted shares outstanding), compared to non-GAAP net loss of $364,000 or $(0.01) per basic and $(0.01) per diluted share (based on 35.0 million weighted average basic shares outstanding and 35.0 million weighted average diluted shares outstanding), in the same year-ago period (See the section below titled “Non-GAAP Financial Measures” for more information about non-GAAP net income and its reconciliation to GAAP net income/loss).
Adjusted EBITDA, a non-GAAP metric, totaled $2.8 million, compared to adjusted EBITDA of $1.0 million in the same year-ago period (See the section below titled “Non-GAAP Financial Measures” for more information about adjusted EBITDA and its reconciliation to GAAP net income/loss).
At quarter-end, the company had $17.0 million in cash and cash equivalents. The company’s working capital position at quarter-end was $36.7 million.
Investor Conference Call
Powerfleet management will discuss these results and business outlook on a conference call today (Tuesday, November 8, 2022) at 8:30 a.m. Eastern time (5:30 a.m. Pacific time).
Powerfleet management will host the presentation, followed by a question-and-answer session.
Toll Free: (877) 524-8416
International: +1 (412) 902-1028
The conference call will be broadcast simultaneously and available for replay here and in via the investor section of the company’s website at ir.powerfleet.com.
If you have any difficulty connecting with the conference call, please contact Powerfleet’s investor relations team at (949) 574-3860.
Non-GAAP Financial Measures
To supplement its financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP), Powerfleet provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP net income (loss), non-GAAP net income (loss) per basic and diluted share and adjusted EBITDA. Reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors’ overall understanding of Powerfleet’s current financial performance. Specifically, Powerfleet believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results and business outlook. These non-GAAP measures are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as an alternate to net income or cash flow from operating activities as an indicator of operating performance or liquidity. Because Powerfleet’s method for calculating the non-GAAP measures may differ from other companies’ methods, the non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliation of all non-GAAP measures included in this press release to the nearest GAAP measures can be found in the financial tables included in this press release.
Powerfleet, Inc. and Subsidiaries
Reconciliation of GAAP to Adjusted EBITDA Financial Measures
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2021 | 2022 | 2021 | 2022 | ||||||||||||
| Net loss attributable to common stockholders | $ | (4,541,000 | ) | $ | (3,535,000 | ) | $ | (10,157,000 | ) | $ | (8,994,000 | ) | |||
| Non-controlling interest | (4,000 | ) | 1,000 | (5,000 | ) | 3,000 | |||||||||
| Preferred stock dividend and accretion | 1,196,000 | 1,235,000 | 3,588,000 | 3,647,000 | |||||||||||
| Interest (income) expense, net | 506,000 | 502,000 | 1,562,000 | 1,493,000 | |||||||||||
| Other (income) expense, net | (7,000 | ) | 0 | (5,000 | ) | (1,000 | ) | ||||||||
| Income tax (benefit) expense | 161,000 | 770,000 | 701,000 | 107,000 | |||||||||||
| Depreciation and amortization | 2,146,000 | 2,019,000 | 6,376,000 | 6,152,000 | |||||||||||
| Stock-based compensation | 927,000 | 1,070,000 | 3,120,000 | 3,156,000 | |||||||||||
| Foreign currency translation | 620,000 | 731,000 | (11,000 | ) | (959,000 | ) | |||||||||
| Impact of the fair value mark-up of acquired inventory | 0 | - | 0 | - | |||||||||||
| Adjusted EBITDA | $ | 1,004,000 | $ | 2,793,000 | $ | 5,169,000 | $ | 4,604,000 | |||||||
Powerfleet, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Net Income (Loss) Financial Measures
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2021 | 2022 | 2021 | 2022 | ||||||||||||
| Net loss attributable to common stockholders | $ | (4,541,000 | ) | $ | (3,535,000 | ) | $ | (10,157,000 | ) | $ | (8,994,000 | ) | |||
| Preferred stock dividend and accretion | 1,196,000 | 1,235,000 | 3,588,000 | 3,647,000 | |||||||||||
| Other (income) expense, net | (7,000 | ) | 0 | (5,000 | ) | (1,000 | ) | ||||||||
| Intangible assets amortization expense | 1,282,000 | 1,268,000 | 3,879,000 | 3,816,000 | |||||||||||
| Stock-based compensation | 927,000 | 1,070,000 | 3,120,000 | 3,156,000 | |||||||||||
| Foreign currency translation | 620,000 | 731,000 | (11,000 | ) | (959,000 | ) | |||||||||
| Non-cash portion of income tax expense | 159,000 | 766,000 | 651,000 | 55,000 | |||||||||||
| Impact of the fair value mark-up of acquired inventory | 0 | - | 0 | - | |||||||||||
| Non-GAAP net income (loss) | $ | (364,000 | ) | $ | 1,535,000 | $ | 1,065,000 | $ | 720,000 | ||||||
| Non-GAAP net income (loss) - basic | $ | (0.01 | ) | $ | 0.04 | $ | 0.03 | $ | 0.02 | ||||||
| Non-GAAP net income (loss) - diluted | $ | (0.01 | ) | $ | 0.04 | $ | 0.02 | $ | 0.02 | ||||||
| Weighted average common shares outstanding - basic | 35,019,000 | 35,406,000 | 34,398,000 | 35,375,000 | |||||||||||
| Weighted average common shares outstanding - diluted | 35,019,000 | 43,211,000 | 42,612,000 | 43,022,000 | |||||||||||
About Powerfleet
Powerfleet (NASDAQ: PWFL; TASE: PWFL) is a global leader of internet of things (IoT) software-as-a-service (SaaS) solutions that optimize the performance of mobile assets and resources to unify business operations. Our data science insights and advanced modular software solutions help drive digital transformation through our customers’ and partners’ ecosystems to help save lives, time, and money. We help connect companies, enabling customers and their customers to realize more effective strategies and results. Powerfleet’s tenured and talented team is at the heart of our approach to partnership and tangible success. The company is headquartered in Woodcliff Lake, New Jersey, with our Pointer Innovation Center (PIC) in Israel and field offices around the globe. For more information, please visit www.Powerfleet.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements include statements with respect to Powerfleet’s beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond Powerfleet’s control, and which may cause its actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. For example, forward-looking statements include statements regarding prospects for additional customers; potential contract values; market forecasts; projections of earnings, revenues, synergies, accretion, or other financial information; emerging new products; and plans, strategies, and objectives of management for future operations, including growing revenue, controlling operating costs, increasing production volumes, and expanding business with core customers. The risks and uncertainties referred to above include, but are not limited to, future economic and business conditions, the ability to recognize the anticipated benefits of the acquisition of Pointer, which may be affected by, among other things, the loss of key customers or reduction in the purchase of products by any such customers, the failure of the market for Powerfleet’s products to continue to develop, the possibility that Powerfleet may not be able to integrate successfully the business, operations and employees of I.D. Systems and Pointer, the inability to protect Powerfleet’s intellectual property, the inability to manage growth, the effects of competition from a variety of local, regional, national and other providers of wireless solutions, and other risks detailed from time to time in Powerfleet’s filings with the Securities and Exchange Commission, including Powerfleet’s annual report on Form 10-K for the year ended December 31, 2021. These risks could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, Powerfleet. Unless otherwise required by applicable law, Powerfleet assumes no obligation to update the information contained in this press release, and expressly disclaims any obligation to do so, whether a result of new information, future events, or otherwise.
Powerfleet Investor Contact
Matt Glover
Gateway Group, Inc.
PWFL@gatewayir.com
(949) 574-3860
Powerfleet Media Contact
Julia Grove
jgrove@powerfleet.com
(703) 629-5449
Powerfleet, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Data
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2021 | 2022 | 2021 | 2022 | ||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
| Revenue: | |||||||||||||||
| Products | $ | 10,785,000 | $ | 14,021,000 | $ | 37,671,000 | $ | 43,231,000 | |||||||
| Services | 18,461,000 | 20,267,000 | 54,114,000 | 58,812,000 | |||||||||||
| 29,246,000 | 34,288,000 | 91,785,000 | 102,043,000 | ||||||||||||
| Cost of revenue: | |||||||||||||||
| Cost of products | 8,172,000 | 9,839,000 | 27,186,000 | 33,152,000 | |||||||||||
| Cost of services | 6,809,000 | 7,268,000 | 19,819,000 | 21,081,000 | |||||||||||
| 14,981,000 | 17,107,000 | 47,005,000 | 54,233,000 | ||||||||||||
| Gross Profit | 14,265,000 | 17,181,000 | 44,780,000 | 47,810,000 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative expenses | 13,959,000 | 16,664,000 | 40,988,000 | 47,393,000 | |||||||||||
| Research and development expenses | 2,735,000 | 1,735,000 | 8,259,000 | 6,965,000 | |||||||||||
| 16,694,000 | 18,399,000 | 49,247,000 | 54,358,000 | ||||||||||||
| Loss from operations | (2,429,000 | ) | (1,218,000 | ) | (4,467,000 | ) | (6,548,000 | ) | |||||||
| Interest income | 11,000 | 20,000 | 35,000 | 48,000 | |||||||||||
| Interest expense | (516,000 | ) | (522,000 | ) | (1,597,000 | ) | (1,541,000 | ) | |||||||
| Foreign currency translation of debt | (261,000 | ) | 191,000 | 151,000 | 2,803,000 | ||||||||||
| Other (expense) income, net | 7,000 | - | 5,000 | 1,000 | |||||||||||
| Net loss before income taxes | (3,188,000 | ) | (1,529,000 | ) | (5,873,000 | ) | (5,237,000 | ) | |||||||
| Income tax benefit (expense) | (161,000 | ) | (770,000 | ) | (701,000 | ) | (107,000 | ) | |||||||
| Net loss before non-controlling interest | (3,349,000 | ) | (2,299,000 | ) | (6,574,000 | ) | (5,344,000 | ) | |||||||
| Non-controlling interest | 4,000 | (1,000 | ) | 5,000 | (3,000 | ) | |||||||||
| Net loss | (3,345,000 | ) | (2,300,000 | ) | (6,569,000 | ) | (5,347,000 | ) | |||||||
| Accretion of preferred stock | (168,000 | ) | (168,000 | ) | (504,000 | ) | (504,000 | ) | |||||||
| Preferred stock dividend | (1,028,000 | ) | (1,067,000 | ) | (3,084,000 | ) | (3,143,000 | ) | |||||||
| Net loss attributable to common stockholders | $ | (4,541,000 | ) | $ | (3,535,000 | ) | $ | (10,157,000 | ) | $ | (8,994,000 | ) | |||
| Net loss per share - basic and diluted | $ | (0.13 | ) | $ | (0.10 | ) | $ | (0.30 | ) | $ | (0.25 | ) | |||
| Weighted average common shares outstanding - basic | |||||||||||||||
| and diluted | 35,019,000 | 35,406,000 | 34,398,000 | 35,375,000 | |||||||||||
Powerfleet, Inc. and Subsidiaries
Condensed Consolidated Balance Sheet Data
| As of | |||||
| December 31, 2021 | September 30, 2022 | ||||
| (Unaudited) | |||||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 26,452,000 | $ | 16,703,000 | |
| Restricted cash | 308,000 | 309,000 | |||
| Accounts receivable, net | 32,094,000 | 33,352,000 | |||
| Inventory, net | 18,243,000 | 23,572,000 | |||
| Deferred costs - current | 1,762,000 | 1,025,000 | |||
| Prepaid expenses and other current assets | 9,051,000 | 8,868,000 | |||
| Total current assets | 87,910,000 | 83,829,000 | |||
| Deferred costs - less current portion | 249,000 | - | |||
| Fixed assets, net | 8,988,000 | 8,994,000 | |||
| Goodwill | 83,487,000 | 83,487,000 | |||
| Intangible assets, net | 26,122,000 | 23,312,000 | |||
| Right of use asset | 9,787,000 | 7,999,000 | |||
| Severance payable fund | 4,359,000 | 3,614,000 | |||
| Deferred tax asset | 4,262,000 | 3,740,000 | |||
| Other assets | 4,703,000 | 5,086,000 | |||
| Total assets | $ | 229,867,000 | $ | 220,061,000 | |
| LIABILITIES | |||||
| Current liabilities: | |||||
| Short-term bank debt and current maturities of long-term debt | $ | 6,114,000 | $ | 9,366,000 | |
| Accounts payable and accrued expenses | 29,015,000 | 28,818,000 | |||
| Deferred revenue - current | 6,519,000 | 6,523,000 | |||
| Lease liability - current | 2,640,000 | 2,464,000 | |||
| Total current liabilities | 44,288,000 | 47,171,000 | |||
| Long-term debt, less current maturities | 18,110,000 | 11,914,000 | |||
| Deferred revenue - less current portion | 4,428,000 | 4,208,000 | |||
| Lease liability - less current portion | 7,368,000 | 5,793,000 | |||
| Accrued severance payable | 4,887,000 | 4,148,000 | |||
| Deferred tax liability | 5,220,000 | 5,182,000 | |||
| Other long-term liabilities | 706,000 | 628,000 | |||
| Total liabilities | 85,007,000 | 79,044,000 | |||
| MEZZANINE EQUITY | |||||
| Convertible redeemable Preferred stock: Series A | 52,663,000 | 56,309,000 | |||
| STOCKHOLDERS' EQUITY | - | - | |||
| Total Powerfleet, Inc. stockholders' equity | 92,111,000 | 84,640,000 | |||
| Non-controlling interest | 86,000 | 68,000 | |||
| Total equity | 92,197,000 | 84,708,000 | |||
| Total liabilities and stockholders' equity | $ | 229,867,000 | $ | 220,061,000 | |
Powerfleet, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flow Data
| Nine Months Ended September 30, | |||||||
| 2021 | 2022 | ||||||
| (Unaudited) | |||||||
| Cash flows from operating activities (net of net assets acquired): | |||||||
| Net loss | $ | (6,569,000 | ) | $ | (5,347,000 | ) | |
| Adjustments to reconcile net loss to cash (used in) provided by operating activities: | |||||||
| Non-controlling interest | (5,000 | ) | 3,000 | ||||
| Inventory reserve | 122,000 | 177,000 | |||||
| Stock based compensation expense | 3,380,000 | 3,156,000 | |||||
| Depreciation and amortization | 6,377,000 | 6,152,000 | |||||
| Right-of-use assets, non-cash lease expense | 1,839,000 | 2,071,000 | |||||
| Bad debt expense | 824,000 | 102,000 | |||||
| Other non-cash items | 229,000 | 660,000 | |||||
| Deferred taxes | 701,000 | 107,000 | |||||
| Changes in: | |||||||
| Operating assets and liabilities | (8,145,000 | ) | (8,795,000 | ) | |||
| Net cash (used in) provided by operating activities | (1,247,000 | ) | (1,714,000 | ) | |||
| Cash flows from investing activities: | |||||||
| Proceeds from sale of property and equipment | - | - | |||||
| Capital expenditures | (2,534,000 | ) | (4,001,000 | ) | |||
| Net cash (used in) investing activities | (2,534,000 | ) | (4,001,000 | ) | |||
| Cash flows from financing activities: | |||||||
| Net proceeds from stock offering | 26,907,000 | - | |||||
| Payment of preferred stock dividend | (3,084,000 | ) | - | ||||
| Repayment of long-term debt | (4,040,000 | ) | (4,279,000 | ) | |||
| Short-term bank debt, net | 94,000 | 3,949,000 | |||||
| Proceeds from exercise of stock options | 170,000 | - | |||||
| Purchase of treasury stock upon vesting of restricted stock | (383,000 | ) | (193,000 | ) | |||
| Net cash (used in) provided by financing activities | 19,664,000 | (523,000 | ) | ||||
| Effect of foreign exchange rate changes on cash and cash equivalents | (189,000 | ) | (3,510,000 | ) | |||
| Net increase in cash, cash equivalents and restricted cash | 15,694,000 | (9,748,000 | ) | ||||
| Cash, cash equivalents and restricted cash - beginning of period | 18,435,000 | 26,760,000 | |||||
| Cash, cash equivalents and restricted cash - end of period | $ | 34,129,000 | $ | 17,012,000 | |||
