PowerFleet(PWFL) - 2025 Q2 - Quarterly Report

Revenue Performance - Revenues increased by $28.7 million, or 38.0%, to $104.1 million for the three months ended June 30, 2025, compared to $75.4 million in the same period in 2024[157]. - Service revenues rose by $29.8 million, or 52.5%, to $86.5 million, driven by growth initiatives and the acquisition of Fleet Complete, which contributed $26.2 million[159]. - Product revenues decreased by $1.1 million, or 5.8%, to $17.7 million, primarily due to lower sales in North America and Europe, partially offset by $3.2 million from Fleet Complete[158]. Profitability and Expenses - Gross profit increased to $56.5 million, representing 54.2% of total revenues for the three months ended June 30, 2025, up from 52.6% in the same period in 2024[160]. - Net loss attributable to common stockholders was $10.2 million, or $(0.08) per share, for the three months ended June 30, 2025, compared to a net loss of $22.3 million, or $(0.21) per share, in the same period in 2024[165]. - Selling, general and administrative expenses decreased to $53.7 million, or 51.5% of revenues, down from 72.6% in the same period in 2024[163]. - Research and development expenses increased by $1.8 million, or 56.6%, to $4.9 million, representing 4.7% of revenues for the three months ended June 30, 2025[164]. Cash Flow and Financial Position - As of June 30, 2025, cash and cash equivalents totaled $35.6 million, down from $48.8 million as of March 31, 2025, indicating a decrease of approximately 27%[192]. - Net cash provided by operating activities for the three months ended June 30, 2025, was $4.7 million, compared to a net cash used of $7.6 million in the same period of 2024[194]. - Net cash used in investing activities for the three months ended June 30, 2025, was $11.8 million, a shift from net cash provided of $19.6 million in the same period of 2024[195]. - During the three months ended June 30, 2025, net cash used in financing activities was $6.8 million, significantly lower than $89.5 million used in the same period of 2024[196]. Acquisitions and Integration - The company has made significant progress in integrating the acquired businesses of MiX Telematics and Fleet Complete, realizing early operational synergies[148]. - The MiX Combination was completed on April 2, 2024, with a total redemption of $90.3 million for Series A Preferred Stock[177]. - The company drew down $125 million under the New RMB Term Facility on October 1, 2024, to pay a portion of the Purchase Price for the FC Acquisition[190]. Market Risks and Economic Conditions - The company faces risks from global economic conditions, supply chain disruptions, and competitive pressures that could impact future performance[145]. - The company is exposed to market risks related to fluctuations in foreign exchange rates, interest rates, inflation risk, and credit risk[200]. - A significant portion of revenues and costs are denominated in foreign currencies, particularly affecting the South African rand, Mexican peso, Brazilian real, and Canadian dollar[202]. - The company has not entered into any hedging arrangements for foreign currency risk, which may adversely affect future results[203]. Interest Rates and Borrowing - Interest rates in South Africa remained unchanged for most of 2024, with a 25-basis point reduction announced in September, November 2024, and January 2025[205]. - The U.S. dollar-denominated loans had a 90-day average rate of 4.34% as of June 30, 2025, down from 5.35% a year earlier, representing a decline of 1.01%[205]. - Estimated annual interest expense could increase by $454,000 for a 1% increase in variable rate borrowings[209]. Trade Receivables and Credit Losses - As of June 30, 2025, trade receivables totaled $81.5 million, net of an allowance for credit losses of $8.4 million[211]. - No single customer represented more than 10% of total trade receivables, indicating diversified customer exposure[211]. - The current allowance for credit losses is deemed adequate to cover expected losses, with ongoing monitoring of customer liquidity trends[211].