PowerFleet(US:PWFL)2025-06-26 17:29PART I Item 1. Business Powerfleet provides AIoT solutions for high-value asset management, leveraging its Unity SaaS platform and recent strategic acquisitions - Powerfleet is a global provider of Artificial Intelligence-of-Things (AIoT) solutions, offering business intelligence for managing high-value enterprise and mid-market assets to improve operational efficiencies19 - The company's strategy centers on its Unity data highway and AIoT ecosystem, which ingests and harmonizes data from multiple sources to deliver insights via a unified Software-as-a-Service (SaaS) platform20 - In 2024, Powerfleet completed the acquisition of MiX Telematics and, in October 2024, acquired Fleet Complete, significantly expanding its business and accelerating strategic objectives303158 - Powerfleet's solutions, sold under brands like Powerfleet, Pointer, Cellocator, MiX by Powerfleet, and Fleet Complete, are designed to enhance safety, increase efficiency, reduce costs, and drive profitability across various industries2527 Overview - Powerfleet provides AIoT solutions for managing high-value enterprise and mid-market assets, headquartered in Woodcliff Lake, New Jersey, with global offices1920 - The Unity data highway and AIoT ecosystem is central to the company's strategy, capable of ingesting data from multiple sources, harmonizing it, and delivering insights through a unified SaaS platform20 - Solutions include Powerfleet for Warehouse and Factory AIoT (on-premise asset management) and Powerfleet for On-Road AIoT (mobile asset tracking for transportation), covering diverse assets like forklifts, heavy trucks, and shipping containers2324 - The company holds 40 patents and patent applications and has over 25 years of experience in IoT device development, AI, and data science26 Recent Strategic Transactions - On April 2, 2024, Powerfleet Sub acquired MiX Telematics Limited, making it an indirect, wholly-owned subsidiary, and has made significant progress in integration and operational synergy realization30 - On October 1, 2024, Powerfleet acquired Fleet Complete, which also became an indirect, wholly-owned subsidiary, further expanding its market presence31 Our Solutions - The Unity Solution Portfolio, recognized by ABI Research as a top global platform in 2025, offers SaaS-based modules for vehicle, video, and in-warehouse IoT, providing AI-powered insights for people, assets, and business processes3233 - Key applications of AIoT solutions include end-to-end visibility, regulatory compliance, improved safety (e.g., AI-based video safety, predictive analytics), and enhanced operational efficiency and productivity (e.g., asset utilization, workflow automation)35363738 - Solutions also focus on increasing security by reducing theft and improving inventory management through alerts and emergency tracking, and reducing costs by optimizing asset utilization, maintenance, and fuel consumption4344 - AIoT significantly enhances Unity's capabilities by integrating AI with IoT to organize large data pools, automate data harmonization, and generate actionable insights, creating a single source of truth across mobile asset types4546 Services - Powerfleet offers hosting services, SaaS, maintenance services (hardware warranty, extended contracts), and customer support and consulting services50525354 - Training services are increasingly provided through scalable online interactive tools, and consulting services are offered both standalone and as part of system implementation5556 Growth Strategy - The company's objective is to be a leading global AIoT SaaS solutions provider for high-value enterprise and mid-market assets, leveraging its Unity platform for rapid integration and AI-driven insights57 - Growth is driven by focusing on vertical markets, positioning as an innovative thought leader, expanding customer base, shortening sales cycles, differentiating product offerings with analytics and unique sensors, and expanding partnerships and distribution channels5866 - Powerfleet also plans to expand into new applications and markets by integrating with other hardware/software vendors (OEMs, TMS, WMS, ERP, YMS) and pursuing strategic acquisitions5966 Sales and Marketing - Sales and marketing aim for broad market awareness and penetration, focusing on expanding business with existing customers and securing new ones59 - Systems are marketed directly to commercial and government organizations and through indirect channels like OEMs, distributors, and equipment dealers60 - The company works closely with customers to demonstrate a return on investment (typically under 12 months) and maximize system utilization63 Customers - Powerfleet serves over 50,000 enterprise and mid-market customers across diverse industries, including manufacturing, transportation, logistics, and cold chain64 - Notable global customers include Avis, Walmart, Toyota, and XPO Logistics, with no single customer generating more than 10% of consolidated total revenue67 Competition - The market for Powerfleet's solutions is rapidly evolving, highly competitive, and fragmented, with diverse competitors ranging from small startups to large, well-capitalized organizations6869 - Competition is driven by rapid technological change, new product introductions, evolving industry standards, and the ability to attract skilled professionals68128 Research and Development - The R&D team specializes in hardware, software, firmware, data analytics, wireless communications, and AI, supplemented by external contractors71 - R&D efforts focus on expanding product capabilities, differentiating offerings through the Unity platform, simplifying solutions, reducing costs, increasing reliability, and enhancing functionality72 Intellectual Property - Powerfleet protects its technology through patents, copyrights, trademarks, and trade secrets in the U.S. and internationally73143 - As of May 23, 2025, the patent portfolio includes 34 U.S. patents, 2 pending U.S. applications, 1 pending foreign application, and 3 foreign patents, with expiration dates between 2026 and 204074 - The company holds numerous trademarks, including I.D. SYSTEMS®, POWERFLEET®, UNITY®, MiX Telematics, and FLEET COMPLETE®, expanded through recent acquisitions16757778 Manufacturing - Hardware manufacturing is outsourced to contract manufacturers, allowing the company to focus on core competencies and scale production without increasing fixed expenses82 - Manufacturers rely on a limited number of suppliers for components, posing risks of supply chain disruptions and increased costs83 Government Regulations - The use of radio emissions is subject to regulation by federal agencies (e.g., FCC) in the U.S. and other countries, requiring product modifications for compliance8788 - Operations in Israel, South Africa, Canada, Europe, and Latin America are subject to additional regulatory requirements, including radio frequency equipment, environmental compliance, and industry-specific licensing92939496 Employees - As of June 4, 2025, Powerfleet had 2,518 full-time employees globally, maintaining good relationships with its workforce97 Macroeconomic Developments - Global economic uncertainty due to higher interest rates, inflation, currency fluctuations, supply chain disruptions, and geopolitical conflicts (e.g., Middle East) adversely impacts customers, suppliers, and operations9899 - Evolving trade policies, including tariffs, further disrupt global commerce, increasing costs and supply chain planning difficulties99 Other Information - Powerfleet, Inc. was incorporated in Delaware in 2019, becoming the parent entity of I.D. Systems and Pointer after the Pointer Merger100 - The company's website (www.powerfleet.com) provides SEC filings and its Code of Ethics for Senior Financial Officers100 Item 1A. Risk Factors Powerfleet faces risks from acquisition integration, recurring losses, international instability, supply chain disruptions, technological changes, cybersecurity, and ERP/CRM challenges - The company may not realize anticipated benefits from the MiX Combination and FC Acquisition, facing integration challenges, unexpected costs, and potential delays104106 - Powerfleet has incurred significant losses and a substantial accumulated deficit, with net losses of $(16.9) million, $(17.3) million, $(19.6) million, and $(51.0) million for the years ended December 31, 2022, 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, respectively111 - The company is exposed to political, economic, trade, and geographic risks due to its international operations, including currency fluctuations, tariffs, and geopolitical conflicts (e.g., Middle East)112114115 - Disruptions in the global supply chain, reliance on limited suppliers for critical components, and failures by subcontractors could materially affect business and financial results119120170 - Risks also include the inability to keep pace with rapid technological change, potential brand damage from inaccurate AI output, cybersecurity breaches, and intense competition in a fragmented market124126127128 Risk Factor Summary - Key risks include integration challenges from recent acquisitions, significant losses and accumulated deficit, international political/economic risks, global supply chain disruptions, rapid technological change, inaccurate AI output, cybersecurity breaches, intense competition, ERP/CRM implementation failures, foreign exchange rate risks, need for additional capital, reliance on third-party channel partners, intellectual property protection issues, and increased indebtedness from acquisitions103 Risks Related to Our Business - Integration of MiX Telematics and Fleet Complete presents operational, cultural, and logistical challenges, potentially leading to unexpected costs, delays, and failure to realize anticipated synergies104106 Net Loss Attributable to Common Stockholders | Period | Net Loss (in millions) | | :--------------------------------- | :--------------------- | | Year Ended December 31, 2022 | $(16.9) | | Year Ended December 31, 2023 | $(17.3) | | Three Months Ended March 31, 2024 | $(19.6) | | Year Ended March 31, 2025 | $(51.0) | - International operations expose the company to risks such as regulatory changes, currency fluctuations, tariffs, sanctions, geopolitical conditions (e.g., Middle East conflict), and the burden of complying with diverse laws112114115179 - The company's ability to manufacture and deliver products relies on a complex global supply chain and subcontractors, facing risks from component constraints (semiconductors), input cost inflation, and geopolitical tensions119120121 - Failure to keep up with rapid technological change, inaccurate AI output, and cybersecurity breaches (including ransomware and insider threats) could damage reputation, customer relationships, and financial results124126127 - The implementation of integrated ERP and CRM systems poses challenges related to project governance, data migration, system instability, and control changes, which could materially affect operations133134 - Significant indebtedness incurred for acquisitions (MiX Combination, FC Acquisition) increases borrowing costs and reduces operational flexibility, with Israeli subsidiaries also having substantial debt108148149150151 - Material weaknesses in internal control over financial reporting were identified, specifically in journal entry controls at I.D. Systems and Pointer Mexico, and in financial close and reporting processes at Fleet Complete169551553554 Risks Related to Our Securities - Future sales of common stock by existing stockholders or upon option exercise could cause the market price to decline189190 - Concentration of common stock ownership among executive officers and directors (approximately 5.9% as of June 25, 2025) could limit other stockholders' ability to influence corporate transactions191 - Provisions in Delaware law or the company's Charter, such as exclusive forum for legal actions and anti-takeover measures, could delay or prevent an acquisition or make it harder for stockholders to change management192193 Item 1B. Unresolved Staff Comments There are no unresolved staff comments to report - No unresolved staff comments were reported194 Item 1C. Cybersecurity Powerfleet's cybersecurity governance involves board oversight, CISO leadership, and robust risk management processes, with no material incidents reported to date - The board of directors has ultimate oversight for cybersecurity risk management, with the CISO and ISS Committee reporting on material risks and initiatives195196 - The CISO, with over 20 years of experience and various certifications, leads the cybersecurity team in continuous threat monitoring and security control implementation197198 - Cybersecurity risk management includes regular risk assessments, targeted assessments after system changes, engagement with external assessors for audits and penetration testing, and due diligence for third-party service providers201202203204 - As of the report date, no cybersecurity threats or incidents have materially affected Powerfleet's business, strategy, results of operations, or financial condition205 Item 2. Properties Powerfleet maintains corporate headquarters in New Jersey, with additional domestic and international leased offices, warehouses, and call centers, all deemed adequate for current needs - Corporate headquarters are in Woodcliff Lake, New Jersey (1,000 sq ft leased)206 - Domestic offices include Florida (30,416 sq ft leased administrative/warehouse) and Texas (5,514 sq ft leased administrative space)206 - International leased spaces are located in Canada, Mexico, South America, Europe, Africa, Australia, Asia, and Israel (call center, warehouse, antenna sites)207208 Item 3. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 18 to the consolidated financial statements - Legal proceedings information is detailed in Note 18 to the consolidated financial statements210 Item 4. Mine Safety Disclosure This item is not applicable to Powerfleet, Inc - Mine Safety Disclosure is not applicable211 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Powerfleet's common stock trades on Nasdaq and JSE, with 18 record holders, no cash dividends paid, and no unregistered security sales or issuer repurchases - Common stock is traded on The Nasdaq Global Market (AIOT) and the Johannesburg Stock Exchange (PWR)212 - As of June 25, 2025, there were 18 holders of record for common stock212 - The company has never paid a cash dividend and plans to retain future earnings for operations and expansion213 - No sales of unregistered securities or issuer purchases of equity securities were reported214215 Item 6. Reserved This item is reserved and contains no information - Item 6 is reserved216 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Powerfleet's financial condition, highlighting revenue growth, increased net losses from acquisitions, critical accounting estimates, non-GAAP measures, and liquidity impacts from debt - Powerfleet is a global provider of AIoT solutions, with its Unity data highway and AIoT ecosystem central to its strategy for improving operational efficiencies218219 - The company incurred recurring losses and negative cash flows from operations since inception, with an accumulated deficit of $205.8 million as of March 31, 2025224 Key Financial Highlights (Year Ended March 31, 2025 vs. December 31, 2023) | Metric | Year Ended March 31, 2025 (in millions) | Year Ended December 31, 2023 (in millions) | Change (%) | | :--------------------------------- | :-------------------------------------- | :--------------------------------------- | :--------- | | Total Revenues | $362.5 | $133.7 | 171.1% | | Product Revenues | $85.6 | $49.7 | 72.1% | | Service Revenues | $276.9 | $84.0 | 229.7% | | Cost of Revenues | $168.0 | $66.7 | 152.0% | | Gross Profit | $194.5 | $67.1 | 190.9% | | Gross Profit Margin | 53.7% | 50.2% | +3.5 pp | | SG&A Expenses | $204.4 | $71.3 | 186.8% | | R&D Expenses | $16.1 | $8.4 | 91.7% | | Net Loss Attributable to Common Stockholders | $(51.0) | $(17.3) | 194.8% | Adjusted EBITDA Reconciliation | Metric | Year Ended Dec 31, 2022 (in thousands) | Year Ended Dec 31, 2023 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | Year Ended Mar 31, 2025 (in thousands) | | :--------------------------------- | :------------------------------------- | :------------------------------------- | :--------------------------------------------- | :------------------------------------- | | Net loss attributable to common stockholders | $(16,891) | $(17,307) | $(19,640) | $(51,012) | | Adjustments (selected) | | | | | | Preferred stock dividend and accretion | 10,137 | 11,632 | 11,125 | 25 | | Interest expense, net | 1,624 | 1,903 | 601 | 19,404 | | Depreciation and amortization | 8,262 | 9,445 | 1,943 | 47,494 | | Stock-based compensation | 4,343 | 3,908 | 1,028 | 9,362 | | Acquisition-related expenses | — | 5,140 | 6,078 | 21,300 | | Integration-related expenses | — | — | — | 4,851 | | Adjusted EBITDA | $8,148 | $6,631 | $1,921 | $71,131 | - Net cash used in operating activities was $3.3 million for the year ended March 31, 2025, compared to net cash provided of $4.4 million in 2023301 - Net cash used in investing activities was $170.6 million for the year ended March 31, 2025, primarily due to $137.1 million in acquisitions (net of cash assumed), $20.0 million for fixed assets, and $13.8 million for capitalized software development305 - Net cash provided by financing activities was $115.7 million for the year ended March 31, 2025, driven by $125.0 million in long-term debt proceeds and $66.5 million from a private placement, partially offset by $90.3 million for preferred stock redemption308 Overview - Powerfleet is a global provider of AIoT solutions for managing high-value enterprise and mid-market assets, aiming to improve operational efficiencies218 - The Unity data highway and AIoT ecosystem is the core strategy, ingesting data from multiple sources to deliver insights through a unified SaaS platform219 - The company has incurred recurring losses and negative cash flows from operations since inception, with an accumulated deficit of $205.8 million as of March 31, 2025224 Critical Accounting Estimates - Critical accounting estimates include assumptions for business combinations, allowance for credit losses, income taxes, impairment of intangible assets (goodwill), capitalized software development costs, standalone selling prices (SSP), derivative asset valuation, and market-based stock-based compensation225 - Goodwill and intangible assets are tested for impairment annually (October 1) or when triggering events occur; no impairment charges were incurred for the periods presented227228229 - Business combinations recognize acquired assets and assumed liabilities at fair value, requiring significant estimates for intangible assets like customer relationships, tradenames, and developed technology using discounted cash flow analyses230231232 Results of Operations Consolidated Statement of Operations as a Percentage of Revenues | Metric | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Three Months Ended Mar 31, 2024 | Year Ended Mar 31, 2025 | | :--------------------------------- | :---------------------- | :---------------------- | :------------------------------ | :---------------------- | | Revenues: | | | | | | Products | 41.9 % | 37.2 % | 35.8 % | 23.6 % | | Services | 58.1 % | 62.8 % | 64.2 % | 76.4 % | | Total revenues | 100.0 % | 100.0 % | 100.0 % | 100.0 % | | Cost of revenues: | | | | | | Cost of products | 31.3 % | 27.2 % | 28.2 % | 17.1 % | | Cost of services | 20.9 % | 22.6 % | 23.8 % | 29.2 % | | Total cost of revenues | 52.2 % | 49.8 % | 52.0 % | 46.3 % | | Gross profit | 47.8 % | 50.2 % | 48.0 % | 53.7 % | | Operating expenses: | | | | | | Selling, general and administrative expenses | 46.7 % | 53.3 % | 64.7 % | 56.4 % | | Research and development expenses | 6.2 % | 6.3 % | 6.0 % | 4.4 % | | Total operating expenses | 52.9 % | 59.5 % | 70.7 % | 60.8 % | | Loss from operations | (5.1)% | (9.4)% | (22.7)% | (7.1)% | | Net loss attributable to common stockholders | (12.4)% | (12.9)% | (58.2)% | (14.1)% | - For the year ended March 31, 2025, total revenues increased by 171.1% to $362.5 million, primarily due to contributions from the MiX Telematics ($171.2 million) and Fleet Complete ($59.0 million) acquisitions236237238431446 - Gross profit margin increased to 53.7% for the year ended March 31, 2025, from 50.2% in 2023, driven by higher margin product lines, despite a decrease in service gross profit margin due to acquisition-related intangible amortization239240241 - SG&A expenses increased by 186.8% to $204.4 million for the year ended March 31, 2025, largely due to acquired businesses ($73.9M MiX, $28.0M Fleet Complete) and $41.1 million in acquisition-related, integration, restructuring, and accelerated stock-based compensation costs242 - Net loss attributable to common stockholders for the year ended March 31, 2025, was $51.0 million, or $(0.43) per share, significantly impacted by acquisition-related expenses, integration costs, restructuring charges, and amortization of acquisition-related intangibles244245 Non-GAAP Financial Information - Powerfleet uses non-GAAP measures like Adjusted EBITDA, headline loss, and headline loss per common share to assess financial performance and comply with JSE reporting requirements267 - Adjusted EBITDA is defined as net loss attributable to common stockholders, adjusted for non-controlling interest, preferred stock dividend/accretion, interest, taxes, depreciation/amortization, stock-based compensation, foreign currency, restructuring, bargain purchase, severance, derivative mark-to-market, contract asset recognition, Movingdots-related, acquisition-related, and integration-related expenses269 Adjusted EBITDA | Metric | Year Ended Dec 31, 2022 (in thousands) | Year Ended Dec 31, 2023 (in thousands) | Three Months Ended Mar 31, 2024 (in thousands) | Year Ended Mar 31, 2025 (in thousands) | | :--------------------------------- | :------------------------------------- | :------------------------------------- | :--------------------------------------------- | :------------------------------------- | | Net loss attributable to common stockholders | $(16,891) | $(17,307) | $(19,640) | $(51,012) | | Adjusted EBITDA | $8,148 | $6,631 | $1,921 | $71,131 | Headline Loss per Share | Metric | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Three Months Ended Mar 31, 2024 | Year Ended Mar 31, 2025 | | :--------------------------------- | :---------------------- | :---------------------- | :------------------------------ | :---------------------- | | Net loss attributable to common stockholders | $(16,891) | $(17,307) | $(19,639) | $(51,012) | | Headline loss | $(16,891) | $(26,341) | $(19,639) | $(51,021) | | Weighted average common shares outstanding | 35,393 | 35,628 | 35,813 | 119,877 | | Net loss per share | $(0.48) | $(0.49) | $(0.55) | $(0.43) | | Headline loss per share | $(0.48) | $(0.74) | $(0.55) | $(0.43) | Liquidity and Capital Resources - On April 2, 2024, Powerfleet redeemed $90.3 million of Series A convertible preferred stock using proceeds from RMB Facilities and refinanced Hapoalim Credit Facilities282 - On September 27, 2024, the company secured a $125 million New RMB Term Facility to fund a portion of the Fleet Complete acquisition296 Cash and Working Capital | Metric | March 31, 2024 (in millions) | March 31, 2025 (in millions) | | :--------------------------------- | :--------------------------- | :--------------------------- | | Cash and cash equivalents (incl. restricted cash) | $109.7 | $48.8 | | Working capital | $126.2 | $18.1 | - Net cash used in operating activities was $3.3 million for the year ended March 31, 2025, compared to $4.4 million provided in 2023, reflecting changes in accounts receivable, payables, and deferred costs301303304 - Net cash used in investing activities was $170.6 million for the year ended March 31, 2025, primarily due to $137.1 million for acquisitions (MiX and FC), $20.0 million for fixed assets, and $13.8 million for capitalized software development305 - Net cash provided by financing activities was $115.7 million for the year ended March 31, 2025, driven by $125.0 million in long-term debt, $66.5 million from a private placement, and $19.6 million from short-term bank borrowings, offset by $90.3 million for preferred stock redemption308 Off-Balance Sheet Arrangements - The company has no off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources312 Impact of Recently Issued Accounting Pronouncements - The company adopted ASU 2023-07 (Segment Reporting) on April 1, 2024, retrospectively313415 - The company is evaluating the effects of ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Disaggregation of Income Statement Expenses), effective for fiscal years beginning after December 15, 2024, and December 15, 2026, respectively416417 Item 7A. Quantitative and Qualitative Disclosures About Market Risk This item is not applicable to Powerfleet, Inc - Quantitative and Qualitative Disclosures About Market Risk is not applicable314 Item 8. Financial Statement and Supplementary Data This section presents Powerfleet's audited consolidated financial statements and detailed notes, covering key financial positions, operations, cash flows, and significant accounting policies - The consolidated financial statements for the year ended March 31, 2025, were audited by Deloitte & Touche, expressing an unqualified opinion319 - Comparative financial statements for prior periods were audited by Ernst & Young LLP, also with an unqualified opinion, before retrospective adjustments for segment reporting changes320338 - Deloitte & Touche expressed an adverse opinion on the company's internal control over financial reporting as of March 31, 2025, due to identified material weaknesses321563 Consolidated Balance Sheets (in thousands) | Metric | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | Total Current Assets | $169,788 | $169,080 | | Total Assets | $308,680 | $910,071 | | Total Current Liabilities | $43,590 | $151,009 | | Total Liabilities | $179,771 | $463,329 | | Convertible redeemable preferred stock | $90,273 | — | | Total Equity | $38,636 | $446,742 | Consolidated Statements of Operations (in thousands) | Metric | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Three Months Ended Mar 31, 2024 | Year Ended Mar 31, 2025 | | :--------------------------------- | :---------------------- | :---------------------- | :------------------------------ | :---------------------- | | Total Revenues | $135,912 | $133,736 | $33,740 | $362,515 | | Gross Profit | $64,993 | $67,076 | $16,203 | $194,537 | | Loss from operations | $(6,971) | $(12,557) | $(7,647) | $(25,885) | | Net loss attributable to common stockholders | $(16,891) | $(17,307) | $(19,639) | $(51,012) | | Net loss per share | $(0.48) | $(0.49) | $(0.55) | $(0.43) | Consolidated Statements of Cash Flows (in thousands) | Metric | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Three Months Ended Mar 31, 2024 | Year Ended Mar 31, 2025 | | :--------------------------------- | :---------------------- | :---------------------- | :------------------------------ | :---------------------- | | Net cash provided by (used in) operating activities | $1,249 | $4,397 | $(208) | $(3,345) | | Net cash (used in) provided by investing activities | $(6,330) | $1,529 | $(1,900) | $(170,596) | | Net cash (used in) provided by financing activities | $(282) | $(3,706) | $92,821 | $115,722 | | Cash and cash equivalents, and restricted cash at end of period | $17,989 | $19,332 | $109,664 | $48,788 | NOTE 1 - DESCRIPTION OF THE COMPANY - Powerfleet, Inc. is a global provider of AIoT solutions, with primary listing on Nasdaq and secondary on JSE361 - On April 2, 2024, MiX Telematics became an indirect, wholly-owned subsidiary (MiX Combination)362 - On October 1, 2024, Fleet Complete became an indirect, wholly-owned subsidiary (FC Acquisition)363 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Consolidated financial statements are prepared in accordance with U.S. GAAP; fiscal year end changed from December 31 to March 31 in 2024364 - Key estimates include business combinations, credit losses, income taxes, intangible asset impairment, capitalized software, SSP, derivative valuation, and stock-based compensation365 - Restricted cash at March 31, 2025, included $3.3 million for FC Acquisition tax liabilities, $0.3 million for vendor purchases, $0.7 million for MiX Telematics Enterprise BEE Trust, and $0.05 million for property lease guarantees366 - Revenue is recognized when performance obligations are satisfied, with product sales recognized at point-in-time and SaaS/hosting fees recognized ratably over contract life (1-5 years)371372375 - Goodwill and indefinite-lived intangible assets are tested for impairment annually (October 1); no impairment charges were incurred for the periods presented386388 - The company adopted ASU 2023-07 (Segment Reporting) on April 1, 2024, retrospectively, and is evaluating ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Expense Disaggregation)415416417 NOTE 3 - ACQUISITION - The MiX Combination (April 2, 2024) was accounted for as a business combination, with Powerfleet identified as the accounting acquirer based on board composition, senior management, and institutional investor concentration421425 MiX Combination Consideration Transferred | Metric | April 2, 2024 (in thousands) | | :--------------------------------- | :--------------------------- | | Fair value of Powerfleet common stock transferred | $362,005 | | Replacement of acquiree's equity awards | $7,818 | | Total fair value of consideration | $369,823 | MiX Combination Purchase Price Allocation (in thousands) | Category | April 2, 2024 | | :--------------------------------- | :------------ | | Total identifiable net assets acquired | $153,029 | | Goodwill | $216,799 | | Purchase price consideration | $369,823 | MiX Combination Acquired Intangible Assets (in thousands) | Asset | Fair Value | Weighted Average Useful Lives | | :--------------------------------- | :--------- | :---------------------------- | | Trade name | $10,000 | 14 years | | Developed technology | $30,000 | 5 years | | Customer relationships | $113,000 | 13 years | - The FC Acquisition (October 1, 2024) was also accounted for as a business combination, with Powerfleet as the accounting acquirer433 FC Acquisition Consideration Transferred | Metric | October 1, 2024 (in thousands) | | :--------------------------------- | :--------------------------- | | Fair value of Powerfleet common stock transferred | $21,343 | | Cash consideration paid | $16,225 | | Repayment of Fleet Complete's existing debt | $152,382 | | Total fair value of consideration | $189,950 | FC Acquisition Preliminary Purchase Price Allocation (in thousands) | Category | October 1, 2024 | | :--------------------------------- | :------------ | | Total identifiable net assets acquired | $107,705 | | Goodwill | $82,245 | | Purchase price consideration | $189,950 | FC Acquisition Acquired Intangible Assets (in thousands) | Asset | Fair Value | Weighted Average Useful Lives | | :--------------------------------- | :--------- | :---------------------------- | | Trade name | $4,000 | 4.5 years | | Developed technology | $25,000 | 5.5 years | | Customer relationships | $70,000 | 9.5 years | NOTE 4 - REVENUE RECOGNITION Revenues by Source (in thousands) | Revenue Source | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Three Months Ended Mar 31, 2024 | Year Ended Mar 31, 2025 | | :--------------------------------- | :---------------------- | :---------------------- | :------------------------------ | :---------------------- | | Products | $56,945 | $49,741 | $12,080 | $85,584 | | Services | $78,967 | $83,995 | $21,660 | $276,931 | | Total revenues | $135,912 | $133,736 | $33,740 | $362,515 | Contract Assets and Liabilities (in thousands) | Category | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | Deferred contract cost | $2,632 | $11,894 | | Deferred revenue – services | $10,674 | $21,466 | | Deferred revenue – products | $60 | $1,106 | | Deferred revenue – long term | $4,892 | $5,197 | | Total | $18,268 | $39,663 | - The company recognized $4.7 million in revenue from deferred revenue balances at the beginning of the year ended March 31, 2025, and expects to recognize remaining deferred revenue through 2030449 NOTE 5 - PREPAID EXPENSES AND OTHER ASSETS Prepaid Expenses and Other Current Assets (in thousands) | Category | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | Sales-type lease receivables, current | $1,100 | $1,062 | | Prepaid expenses | $2,817 | $9,038 | | Contract assets | $1,162 | $5,088 | | VAT receivable | — | $1,901 | | Sundry debtors | — | $5,424 | | Total | $8,133 | $23,319 | NOTE 6 - INVENTORY - Inventory is stated at the lower of cost or net realizable value, using the 'moving average' or FIFO method, and consists of finished goods and components451 Inventory Composition (in thousands) | Category | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | Components | $9,403 | $11,859 | | Work in process | $49 | — | | Finished goods, net | $12,206 | $6,491 | | Total | $21,658 | $18,350 | NOTE 7 - FIXED ASSETS - Fixed assets are recorded at cost, net of accumulated depreciation, using the straight-line method over estimated useful lives (e.g., installed products 3-5 years, computer software 3-5 years)384453 Fixed Assets, Net (in thousands) | Category | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | Installed and uninstalled products | $11,030 | $61,564 | | Computer software | $11,496 | $11,523 | | Computer and electronic equipment | $6,179 | $6,294 | | Furniture and fixtures | $2,361 | $3,054 | | Leasehold improvements | $1,498 | $1,459 | | Plant and equipment | — | $276 | | Assets in progress | — | $7 | | Accumulated depreciation and amortization | $(19,845) | $(26,166) | | Total | $12,719 | $58,011 | - Depreciation and amortization expense for fixed assets was $19.9 million for the year ended March 31, 2025, including $5.7 million for computer software453 NOTE 8 - INTANGIBLE ASSETS AND GOODWILL - The company capitalizes internal-use software development costs that meet capitalization criteria and amortizes them over 3 to 7 years391393 Identifiable Intangible Assets, Net (in thousands) | Category | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | Definite-lived: | | | | Customer relationships | $11,252 | $178,874 | | Trademark and tradename | $3,676 | $15,752 | | Patents | $164 | $75 | | Technology | — | $52,345 | | Software to be sold or leased | $4,395 | $11,371 | | Indefinite-lived: | | | | Customer list | $104 | $104 | | Trademark and tradename | $61 | $61 | | Total | $19,652 | $258,582 | - Amortization expense for intangible assets was $27.6 million for the year ended March 31, 2025456 Goodwill Reconciliation (in thousands) | Metric | Amount | | :--------------------------------- | :----- | | Balance at March 31, 2024 | $83,487 | | MiX Combination | $216,799 | | FC Acquisition | $82,245 | | Foreign currency translation difference | $615 | | Balance at March 31, 2025 | $383,146 | NOTE 9 - STOCK-BASED COMPENSATION - The 2018 Incentive Plan allows for grants of stock options, restricted stock, and other equity-based awards, with 7,040 shares available for future issuance as of March 31, 2025460 - Stock-based compensation expense was $9.4 million for the year ended March 31, 2025, including $3.1 million for stock options and $3.3 million for restricted stock grants403465470 - The increase in expense was partly due to the accelerated vesting of unvested restricted stock and stock option awards in connection with the MiX Combination465470 - As of March 31, 2025, unrecognized compensation costs for unvested options (excluding market-based) were $0.7 million (0.97 years weighted-average period) and for market-based options were $2.2 million (1.91 years weighted-average period)467468 - The company assumed MiX Telematics' share plans, including Stock Appreciation Rights (SARs), with $5.6 million of unrecognized compensation cost for unvested SARs as of March 31, 2025 (2.62 years weighted-average period)475476479 NOTE 10 - NET LOSS PER SHARE Net Loss Per Share Attributable to Common Stockholders | Metric | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Three Months Ended Mar 31, 2024 | Year Ended Mar 31, 2025 | | :--------------------------------- | :---------------------- | :---------------------- | :------------------------------ | :---------------------- | | Net loss attributable to common stockholders | $(16,891) | $(17,307) | $(19,639) | $(51,012) | | Net loss per share (basic and diluted) | $(0.48) | $(0.49) | $(0.55) | $(0.43) | | Weighted-average common shares outstanding (basic and diluted) | 35,393 | 35,628 | 35,813 | 119,877 | - Basic loss per share is calculated by dividing net loss attributable to common shareholders by the weighted-average common shares outstanding. Diluted loss per share reflects potential dilution from outstanding options, warrants, and restricted stock480 NOTE 11 - SHORT-TERM BANK DEBT AND LONG-TERM DEBT Debt Summary (in thousands) | Category | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | Short-term bank debt | — | $36,788 | | Current maturities of long-term debt | $1,951 | $4,844 | | Long-term debt - less current maturities | $113,810 | $232,160 | - As of March 31, 2025, short-term debt included $18.0 million utilized from the RMB General Facility (extended to April 2, 2026) and $17.4 million utilized from Hapoalim Revolving Facilities (extended to February 27, 2026)486487494 - The A&R Credit Agreement with Hapoalim provides $30 million in term loans (Hapoalim Term Facilities) and $20 million in revolving credit (Hapoalim Revolving Facilities), secured by Powerfleet Israel and Pointer assets489490497 - The RMB Facilities (total $85 million) were drawn on March 13, 2024, to redeem Series A preferred stock, with interest rates of 8.699% and 8.979% per annum, maturing March 31, 2027, and March 31, 2029, respectively500501 - A $125 million New RMB Term Facility was drawn on October 1, 2024, for the FC Acquisition, bearing interest at 5% plus SOFR, maturing October 31, 2029505508 Scheduled Contractual Maturities of Long-Term Debt (in thousands) | Year ending March 31, | Amount | | :--------------------------------- | :----- | | 2026 | $4,913 | | 2027 | $47,904 | | 2028 | $5,404 | | 2029 | $54,290 | | 2030 | $125,000 | | Thereafter | — | | Total | $237,511 | NOTE 12 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued Expenses and Other Current Liabilities (in thousands) | Category | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | Accrued warranty | $1,138 | $1,479 | | Accrued compensation | $8,956 | $27,825 | | Government authorities | $3,062 | $6,982 | | Other current liabilities | $827 | $9,041 | | Total | $13,983 | $45,327 | Warranty Activity (in thousands) | Metric | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | Accrued warranty reserve, beginning of period | $2,797 | $2,926 | | Accrual for product warranties issued | $441 | $365 | | Product replacements and other warranty expenditures | $(165) | $(510) | | Acquired through MiX Combination and FC Acquisition | — | $954 | | Accrued warranty reserve, end of period | $2,926 | $3,618 | NOTE 13 - STOCKHOLDERS' EQUITY - On April 2, 2024, the company redeemed all outstanding Series A Preferred Stock for $90.3 million513 - Holders of Series A Preferred Stock were entitled to cumulative dividends at a minimum rate of 7.5% per annum, increasing by 100 basis points monthly after 66 months up to 17.5%514 Dividend Paid Activity (in thousands) | Period | Dividends paid in cash | Dividends paid in shares | Total | | :--------------------------------- | :--------------------- | :--------------------- | :---- | | Year Ended December 31, 2022 | — | $4,231 | $4,231 | | Year Ended December 31, 2023 | $3,385 | $1,108 | $4,493 | | Three Months Ended March 31, 2024 | $1,128 | — | $1,128 | | Year Ended March 31, 2025 | $25 | — | $25 | NOTE 14 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Comprehensive loss includes net loss and foreign currency translation gains and losses516 Accumulated Other Comprehensive Income (Loss) (in thousands) | Period | Foreign currency translation adjustment | Accumulated other comprehensive income (loss) | | :--------------------------------- | :------------------------------------ | :-------------------------------------------- | | Balance at January 1, 2022 | $391 | $391 | | Balance at December 31, 2022 | $(1,210) | $(1,210) | | Balance at December 31, 2023 | $(616) | $(616) | | Balance at March 31, 2024 | $(985) | $(985) | | Balance at March 31, 2025 | $(8,850) | $(8,850) | NOTE 15 - SEGMENT INFORMATION - Powerfleet operates in one reportable segment: wireless AIoT asset management518 - The Chief Executive Officer, as CODM, reviews financial information on a consolidated basis and makes decisions based on consolidated net loss519 Revenues by Geographic Region (in thousands) | Region | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Three Months Ended Mar 31, 2024 | Year Ended Mar 31, 2025 | | :--------------------------------- | :---------------------- | :---------------------- | :------------------------------ | :---------------------- | | North America | $70,820 | $74,671 | $18,090 | $121,623 | | Israel | $44,580 | $41,689 | $11,267 | $49,555 | | Africa | $3,241 | $3,283 | $863 | $97,586 | | Europe and Middle East | $3,120 | $1,908 | $1,016 | $43,190 | | Australia | — | — | — | $30,962 | | Other | $14,151 | $12,185 | $2,504 | $19,599 | | Total | $135,912 | $133,736 | $33,740 | $362,515 | Long-Lived Assets by Geographic Region (in thousands) | Region | March 31, 2024 | March 31, 2025 | | :--------------------------------- | :------------- | :------------- | | North America | $4,083 | $13,051 | | Israel | $3,946 | $2,249 | | Africa | $705 | $32,391 | | Europe and Middle East | $2,850 | $4,824 | | Australia | — | $825 | | Other | $1,135 | $4,671 | | Total | $12,719 | $58,011 | NOTE 16 - INCOME TAXES Loss Before Income Taxes (in thousands) | Category | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Three Months Ended Mar 31, 2024 | Year Ended Mar 31, 2025 | | :--------------------------------- | :---------------------- | :---------------------- | :------------------------------ | :---------------------- | | U.S. operations | $(10,303) | $(16,494) | $(7,990) | $(46,935) | | Foreign operations | $4,421 | $11,443 | $(162) | $483 | | Total | $(5,882) | $(5,051) | $(8,152)