Revenue Performance - Revenues increased by $7.1 million, or 6.6%, to $113.5 million in the three months ended December 31, 2025, compared to $106.4 million in the same period in 2024[159]. - Revenues from services increased by $9.3 million, or 11.4%, to $91.1 million in the three months ended December 31, 2025, driven by increased adoption of AI-powered SaaS solutions[161]. - Total revenues increased by $70.4 million, or 27.2%, to $329.3 million in the nine months ended December 31, 2025, from $258.9 million in the same period in 2024[168]. - Services revenue increased by $71.7 million, or 36.7%, to $266.9 million for the nine months ended December 31, 2025, compared to $195.2 million in the same period in 2024[170]. Profitability and Loss - Net loss attributable to common stockholders was $3.4 million, or $(0.03) per share, for the three months ended December 31, 2025, compared to a net loss of $14.3 million, or $(0.11) per share, for the same period in 2024[167]. - Net loss attributable to common stockholders decreased to $17.9 million, or $(0.13) per share, for the nine months ended December 31, 2025, compared to a net loss of $38.6 million, or $(0.33) per share, for the same period in 2024[176]. - Adjusted EBITDA for the nine months ended December 31, 2025, was $70.6 million, up from $48.7 million in the same period in 2024[184]. Expenses - Cost of revenues increased by $3.2 million, or 6.6%, to $50.8 million in the three months ended December 31, 2025, with gross profit remaining consistent at 55.2%[162]. - Selling, general and administrative expenses decreased by $3.6 million, or 6.6%, to $51.8 million in the three months ended December 31, 2025, as a result of synergies from recent acquisitions[165]. - Research and development expenses remained consistent at $4.6 million in the three months ended December 31, 2025, representing 4.0% of revenues[166]. - SG&A expenses rose by $12.1 million, or 8.2%, to $159.6 million for the nine months ended December 31, 2025, but as a percentage of revenues, SG&A expenses decreased to 48.5% from 57.0%[174]. - R&D expenses increased by $2.5 million, or 22.1%, to $13.6 million for the nine months ended December 31, 2025, representing 4.1% of revenues[175]. Cost of Services - Cost of services increased by $5.0 million, or 16.3%, to $35.5 million in the three months ended December 31, 2025, impacting gross profit margins[164]. - Cost of services increased by $28.4 million, or 37.7%, to $103.7 million for the nine months ended December 31, 2025, with gross profit for services at $163.2 million[173]. - The Fleet Complete acquisition contributed an incremental $53.6 million in service revenues and $14.8 million in cost of services for the nine months ended December 31, 2025[170][173]. Business Integration and Acquisitions - The company has made significant progress in integrating the businesses from the MiX Telematics and Fleet Complete acquisitions, realizing early operational synergies[151]. - The company completed the MiX Combination on April 2, 2024, enhancing its capital structure and liquidity[190][191]. Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended December 31, 2025, was $20.5 million, a significant improvement compared to a net cash used of $16.9 million for the same period in 2024[205]. - The company utilized $31.9 million in investing activities for the nine months ended December 31, 2025, a decrease of approximately 80% from $160.5 million in the same period in 2024[207]. - As of December 31, 2025, the company had cash and cash equivalents of $35.9 million, down from $48.8 million as of March 31, 2025, indicating a decrease of approximately 26%[200]. - The company has a liquidity position with working capital of $15.1 million as of December 31, 2025, down from $18.1 million as of March 31, 2025[200]. - The company expects cash flows from operations and existing cash balances to be sufficient to meet operating and capital expenditure requirements for at least the next 12 months[203]. Accounts Receivable and Inventory - As of December 31, 2025, trade receivables totaled $92.2 million, net of an allowance for credit losses of $9.7 million, with no single customer representing more than 10% of total trade receivables[222]. - The company reported an increase in accounts receivables of $15.7 million and an increase in inventory, net of reserve, of $5.2 million as of December 31, 2025[210]. Debt and Interest Rates - The company has drawn $125 million from the New RMB Term Facility to fund a portion of the purchase price for the FC Acquisition, with an interest rate of 5% per annum plus the applicable term SOFR reference rate[198]. - Interest rates for RMB Facility A are fixed at 8.699% until March 31, 2027, and for RMB Facility B at 8.979%, with principal repayments due in 2028 and 2029 respectively[196]. Liquidity Management - The company is proactively managing liquidity through reductions in discretionary operating expenses and capital expenditures due to inflation and geopolitical instability[201].

Core Insights - PowerFleet reported revenue of $113.49 million for the quarter ended December 2025, reflecting a 6.6% increase year-over-year and surpassing the Zacks Consensus Estimate of $111.73 million by 1.58% [1] - The company achieved an EPS of $0.02, a significant improvement from -$0.11 in the same quarter last year, resulting in an EPS surprise of 600% against a consensus estimate of $0 [1] Revenue Breakdown - Service revenue was reported at $91.09 million, exceeding the average analyst estimate of $90.11 million, marking an 11.4% increase compared to the previous year [4] - Product revenue reached $22.4 million, slightly above the two-analyst average estimate of $21.76 million, but showed a year-over-year decline of 9.3% [4] Profit Metrics - Gross profit from product sales was $7.09 million, surpassing the average estimate of $6.96 million [4] - Gross profit from service sales was reported at $55.6 million, which fell short of the average estimate of $57.03 million [4] Stock Performance - Over the past month, PowerFleet's shares have declined by 12.2%, contrasting with a minor decrease of 0.2% in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Performance - Adjusted EBITDA rose 26% year over year to $25.7 million, with an adjusted EBITDA margin expanding 4 percentage points to 23% [1] - Services revenue grew 11% year over year, representing 80% of total revenue, while total revenue increased 7% year over year, with normalized growth at 9% [2][6] - Adjusted gross margin remained stable at 67%, with product margins steady in the low 30% range [15] Strategic Initiatives - The company secured a "landmark" public-sector contract in South Africa to provide AI video and visibility services across government fleets totaling over 100,000 assets, expected to generate significant multi-year recurring revenue [5][7] - Management emphasized the importance of the partnership with MTN for the successful deployment of the South African contract, which was highly competitive [8] Growth Outlook - Management reiterated fiscal 2026 exit targets of approximately 10% total revenue growth and over 10% growth in recurring revenue, supported by strong performance exiting Q3 [3][6] - The AI video pipeline grew 71% sequentially, and the annual recurring revenue (ARR) pipeline increased 13% sequentially, indicating strong commercial momentum [4][16] Operational Efficiency - The company noted $2.3 million in one-time charges related to restructuring and integration, with a focus on maintaining operational efficiency while investing in growth [14][18] - Management reiterated a target of $18 million in synergies, indicating effective integration efforts while balancing growth opportunities [18] Market Positioning - The business environment has improved, with better positioning in markets and expanding enterprise momentum, as indicated by multiple enterprise wins with contract values ranging from $500,000 to over $5 million [10][19] - The company's "Data Highway" strategy aims to connect fragmented enterprise data and enhance operational efficiency through integration with various enterprise systems [12]

Financial Data and Key Metrics Changes - Total revenue increased by 7% year-over-year, with an adjusted growth of 9% when accounting for a $2 million accelerated product revenue from the previous year [6][23] - Service revenue grew by 11% year-over-year, now representing 80% of total revenue, up from 77% in the prior year [6][22] - Adjusted EBITDA increased by 26% year-over-year to $25.7 million, with margins expanding by 4% to 23% [7][24] - Net debt to Adjusted EBITDA improved to 2.7 times, with expectations to decline to around 2.4 times by year-end [7][25] Business Line Data and Key Metrics Changes - The company is focusing on high-margin recurring revenue, with services revenue growth indicating a strong shift towards this model [22] - The integration of the Fleet Complete acquisition is reflected in the financials, impacting service gross margins by over 6% due to amortization [22] Market Data and Key Metrics Changes - The company secured a significant contract with the South African government, expected to generate substantial recurring SaaS and services revenue over a multi-year term [8][9] - The AI video pipeline grew by 71% sequentially, indicating strong demand for advanced safety and compliance solutions [11] Company Strategy and Development Direction - The company aims for a Q4 exit run rate for FY26 of 10% total revenue growth and over 10% growth in recurring revenue, positioning itself for accelerated growth in FY27 [4][5] - The Unity platform is central to the company's strategy, providing integrated solutions that enhance operational efficiency and safety across various industries [15][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the improving business environment, citing successful navigation through previous challenges such as tariffs [41] - The company is optimistic about achieving a 15% ARR growth for FY27, bolstered by the recent large contract win [32][33] Other Important Information - The company is maintaining disciplined operational execution while investing in growth initiatives, with a focus on optimizing costs and enhancing service delivery [24][59] - The management highlighted the importance of AI as an enabler for the industry, enhancing data utilization and operational decision-making [35][36] Q&A Session Summary Question: Growth mix and contribution of new logos versus upsell - Management indicated that 65%-70% of business comes from existing customers, with 30% from new logos, including the South African government contract [31] Question: Business environment comparison to six months ago - Management noted that the business environment is improving, with increased enterprise engagement and repeat business due to tangible ROI from solutions [40][42] Question: Update on the South African contract's revenue potential - While specific financial details could not be disclosed, management suggested that the contract aligns with existing ARPU and margin expectations, indicating significant future revenue potential [43] Question: Competitive landscape for the South African contract - Management confirmed that the contract was highly competitive, with a focus on robust capabilities and partnerships, particularly with MTN [75] Question: Cost structure related to the South African contract - Management clarified that initial investments would focus on people, processes, and systems to support the contract, with a strategy to optimize existing resources for future growth [56][59]

Financial Data and Key Metrics Changes - Service revenue grew 11% year-over-year, now representing 80% of total revenue [6][22] - Total revenue increased 7% year-over-year, with an adjusted growth of 9% when accounting for prior year accelerated product revenue [6][23] - Adjusted EBITDA increased 26% year-over-year, with margins expanding by 4% to 23% [7][24] - Net debt to Adjusted EBITDA improved to 2.7 times, with expectations to decline to around 2.4 times by year-end [7][25] Business Line Data and Key Metrics Changes - The company is focused on high-margin recurring SaaS revenue, with services revenue now accounting for 80% of total revenue, up from 77% in the prior year [22][23] - Adjusted EBITDA gross margins remained stable at 67%, with product margins steady in the low 30% range [24] Market Data and Key Metrics Changes - The company secured a significant South African public sector contract, expected to generate substantial recurring SaaS and services revenue over a multi-year term [8][9] - The AI video pipeline increased 71% sequentially, indicating strong demand for advanced safety and compliance solutions [11] Company Strategy and Development Direction - The company aims for a Q4 exit run rate for FY26 of 10% total revenue growth and over 10% growth in recurring revenue [4][5] - The focus is on expanding partnerships with Tier 1 customers and enhancing the Unity platform's capabilities [10][14] - The Data Highway strategy aims to connect fragmented data across enterprises, enabling operational decisions and safety outcomes [15][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth milestones, indicating a positive outlook for FY27 [5][21] - The business environment is improving, with a focus on creating tangible ROI for customers [41][42] - Management highlighted the importance of AI as an enabler for the industry, enhancing data utilization and operational efficiency [35][36] Other Important Information - The company is maintaining operating expense investments to support growth, with an updated Adjusted EBITDA guidance of approximately 45% annual growth [25] - Initial investments for the South African contract will focus on personnel, processes, and systems to support scalability [55][56] Q&A Session Summary Question: Growth mix and contribution of new logos versus upsell - Management indicated that 65%-70% of business comes from existing customers, with 30% from new logos, including the South African government contract [31] Question: Business environment comparison to six months ago - Management noted that the business environment is improving, with increased enterprise business and repeat business from satisfied customers [40][41] Question: Update on AT&T reps training and South Africa contract revenue - Management refrained from providing specific financial details but indicated that the contract aligns with existing ARPU and margin expectations [43] Question: Competitive nature of the South African contract - Management confirmed that the contract was highly competitive, with a focus on robust capabilities and partnerships, particularly with MTN [74]

Financial Data and Key Metrics Changes - In Q3 2026, total revenue increased by 7% year-over-year, with an adjusted growth of 9% when accounting for a prior year comparison that included $2 million in accelerated product revenue [5][21] - Service revenue grew by 11% year-over-year, now representing 80% of total revenue, up from 77% in the prior year [5][21] - Adjusted EBITDA increased by 26% year-over-year to $25.7 million, with adjusted EBITDA margins expanding by 4% to 23% [6][21] - Net debt to Adjusted EBITDA improved to 2.7 times, with expectations to decline to around 2.4 times by year-end [6][23] Business Line Data and Key Metrics Changes - The company reported a strong focus on high-margin recurring revenue, with service revenue growth being a significant contributor to overall revenue [20] - The integration of the Fleet Complete acquisition is reflected in the financials, impacting service gross margins by over 6% due to non-cash amortization [20] Market Data and Key Metrics Changes - The company secured a significant contract with the South African public sector, expected to generate substantial recurring SaaS and services revenue over a multi-year term [6][7] - The AI video pipeline grew by 71% sequentially, indicating strong demand for advanced safety and compliance solutions [10] Company Strategy and Development Direction - The company is focused on accelerating high-margin recurring revenue growth, expanding profitability, and strengthening its balance sheet while maintaining disciplined execution [4] - The Unity platform is positioned as a key differentiator, enabling the company to deliver integrated solutions across various industries [12][16] - The Data Highway strategy aims to connect fragmented data across enterprises, enhancing operational efficiency and safety [13][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a Q4 exit run rate for FY26 of 10% total revenue growth and over 10% growth in recurring revenue [4][5] - The operating environment is perceived to be improving, with the company finding effective solutions to market challenges [36] Other Important Information - The company is maintaining operating expense investments to support business growth, resulting in updated Adjusted EBITDA guidance of approximately 45% annual growth [22][23] - The South African contract is expected to be one of the largest deployments in the company's history, with strong initial enrollments [7][45] Q&A Session Summary Question: Can you provide more color on the growth mix and contribution of new logos versus upsell? - The business is composed of 65%-70% from existing customers and 30% from new customers, with a developing new logo pipeline [28] Question: How is AI impacting fleet management platforms? - AI is seen as an enabler, helping to manage and interpret large amounts of data for better business decisions [32] Question: Is the business environment better, the same, or worse than six months ago? - The environment is improving, with the company finding effective market positions and generating tangible ROI for customers [36] Question: Can you provide an update on the AT&T reps and the South Africa contract revenue? - The South Africa contract is expected to be within the company's average ARPU and margin range, but specific financial details cannot be disclosed [39] Question: How competitive was the contracting process for the South African contract? - The contract was highly competitive, requiring robust capabilities and strong governance, with Powerfleet's partnership with MTN being a key differentiator [71]

Core Viewpoint - PowerFleet reported quarterly earnings of $0.02 per share, exceeding the Zacks Consensus Estimate of breakeven and showing an improvement from a loss of $0.11 per share a year ago [1] Financial Performance - The earnings surprise for the quarter was +600.00%, with the company previously expected to post earnings of $0.05 per share but actually reporting $0.02, resulting in a surprise of -60% [2] - PowerFleet's revenues for the quarter ended December 2025 were $113.49 million, surpassing the Zacks Consensus Estimate by 1.58% and increasing from $106.43 million year-over-year [3] Stock Performance and Outlook - PowerFleet shares have declined approximately 9% since the beginning of the year, while the S&P 500 has gained 1.3% [4] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the upcoming quarter at $0.01 on revenues of $112.14 million, and for the current fiscal year at -$0.11 on revenues of $439.67 million [8] Industry Context - The Internet - Software industry, to which PowerFleet belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable position as the top 50% of Zacks-ranked industries tend to outperform the bottom 50% by more than 2 to 1 [9]

Q3FY26 Investor Presentation February 2026 Important Disclaimers The contents of this presentation are not to be construed as legal, regulatory, business, accounting or tax advice. You should consult your own attorney, business advisor, accountant and tax advisor as to legal, regulatory, business, accounting and tax advice. This presentation has been prepared exclusively for the internal confidential use of the recipient only. This presentation is confidential. Any reproduction of distribution of this prese ...

Revenue Performance - Total revenue reached a record $113.5 million, a 7% year-over-year increase from $106.4 million in Q3 FY25[1][3] - Services revenue increased by 11% to $91.1 million from $81.7 million in Q3 FY25, now representing 80% of total revenue[1][3] - Total revenues for the three months ended December 31, 2025, increased to $113,487,000, up from $106,429,000 in the same period of 2024, representing a growth of 1.0%[38] - Total revenues for the three months ended December 31, 2024, and 2025, were $106.4 million and $113.5 million, respectively, with nine-month revenues of $258.9 million and $329.3 million[36] Profitability Metrics - Operating profit improved to $6.3 million, compared to an operating loss of $1.2 million in Q3 FY25[1][4] - Net loss attributable to common stockholders decreased to $3.4 million, or $0.03 per share, from a net loss of $14.3 million, or $0.11 per share, in the prior year[1][4] - Adjusted EBITDA increased by 26% year-over-year to $25.7 million from $20.5 million, with adjusted EBITDA margins expanding to 23% from 19%[1][4] - Adjusted EBITDA for the three months ended December 31, 2024, and 2025, was reported at $20.5 million and $25.7 million, respectively, while for the nine months, it was $48.7 million and $70.6 million[35] - Adjusted net income for the three months ended December 31, 2024, and 2025, was $1.6 million and $2.6 million, respectively, with nine-month adjusted net income of $2.4 million in 2024 and $5.6 million in 2025[36] Guidance and Future Expectations - The company expects full-year revenue guidance to be in the range of $440 million to $445 million, tightening from prior guidance of $435 million to $445 million[1][9] - Adjusted EBITDA growth is anticipated to be approximately 45% year-over-year, reflecting investments in operating expenses to support future demand[1][10] - A major public sector contract in South Africa was awarded, expected to significantly increase future demand for services[1][3] Asset and Liability Overview - Total assets increased from $910,071 million in March 2025 to $959,459 million in December 2025, showing a growth of 5.4%[24] - Total liabilities rose from $463,329 million in March 2025 to $474,280 million in December 2025, an increase of 2%[24] - Total debt as of December 31, 2025, was $277,452,000, up from $273,792,000 in March 2025[39] Cash Flow and Expenses - The company reported cash flows from operating activities showing a net cash used of $(16,886) million for the nine months ended December 31, 2024, compared to a net cash provided of $20,451 million in 2025[26] - Non-GAAP selling, general and administrative expenses for the nine months ended December 31, 2025, were $137,850,000, compared to $108,007,000 in 2024, reflecting a 27.6% increase[38] - Total operating expenses for the nine months ended December 31, 2025, were $173,207,000, an increase from $158,679,000 in 2024, marking a 9.2% rise[39] - Adjusted operating expenses for the three months ended December 31, 2025, were $54,014,000, slightly up from $53,364,000 in 2024[39] Debt and Leverage - Adjusted net debt to adjusted EBITDA improved to 2.7x, down from 3.4x at fiscal year-end 2025[1][8] - Adjusted net debt to adjusted EBITDA ratio improved to 2.7 as of December 31, 2025, down from 3.4 in March 2025[39] - The adjusted EBITDA margin improved to 19.2% for Q4 2024 and 22.6% for Q4 2025, with a nine-month margin of 18.8% in 2024 and 21.4% in 2025[33] Research and Development - Research and development expenses for the three months ended December 31, 2025, were $4,572,000, which is 4.0% of total revenues, consistent with the previous year[38] - Research and development incurred as a percentage of total revenues for the nine months ended December 31, 2025, was 8.1%, compared to 7.6% in 2024[38]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for PowerFleet (AIOT) due to higher revenues, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - PowerFleet is expected to report a quarterly loss of $0.00 per share, reflecting a year-over-year change of +100% [3]. - Revenues are projected to be $111.73 million, representing a 5% increase from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised 33.33% higher in the last 30 days, indicating a positive reassessment by analysts [4]. - The Most Accurate Estimate for PowerFleet is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +350.00% [12]. Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. - PowerFleet currently holds a Zacks Rank of 3, suggesting a likelihood of beating the consensus EPS estimate [12]. Historical Performance - PowerFleet has not been able to beat consensus EPS estimates in the last four quarters, with a previous surprise of -60% [13][14]. Industry Context - Another company in the Zacks Internet - Software industry, Reddit Inc. (RDDT), is expected to post earnings of $0.96 per share, indicating a year-over-year change of +166.7% [18]. - Reddit Inc.'s revenues are expected to be $667.58 million, up 56.1% from the previous year, but it has a negative Earnings ESP of -14.49% and a Zacks Rank of 4 [19][20].