PowerFleet, Inc.

Good day, everyone. Welcome to PowerFleet's fourth quarter and full year 2026 earnings call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, David Wilson, Chief Financial Officer. The floor is yours.

Thanks, Alfreda. Good morning, everyone. This presentation contains forward-looking statements within the meaning of federal securities law. 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 facts are statements that could be forward-looking statements. For example, forward-looking statements include statements regarding prospects of 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 operation costs, increasing production volumes, and expanding business with core customers. The risks and uncertainties referred to above are not limited to risks detailed from time to time in PowerFleet's filings with the SEC, including PowerFleet's annual report on Form 10-K for the year ended March 31, 2025. These risks could cause 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 presentation and expressly disclaims any obligation to do so, whether a result of new information, future events, or otherwise. Now, I'll turn the call over to PowerFleet's CEO, Steve Tone. Steve?

Good morning, everyone, and thank you for joining us today. I'm here with key members of the leadership team, and we're excited to walk you through what has been a defining year for PowerFleet. Before we get into the quarter, I want to take a few minutes to step back and talk about the journey, because the context really matters. And it's helpful to orient investors to fully understand what this team has delivered and why we feel confident about where we go from here. Two years ago, we set a very clear strategy for PowerFleet. We said we would use consolidation to build scale. We said we would invest that scale into technology differentiation. And we said we would run this business with the kind of financial discipline that compounds value for shareholders over time. That was the thesis. And I'm pleased to stand and tell you we're delivering against that plan in full. Within 18 months, we restructured the global operating model, unified the product roadmap under Unity, centralized core functions, and delivered more than $34 million in annualized cost synergies on time and in full. And importantly, we didn't do that at the expense of growth. We did it while simultaneously accelerating organic revenue performance, expanding margins, and winning at a level in the enterprise market that the heritage power fleet could simply never have achieved, and that was deliberate. On technology differentiation, and this is where really the future value of the company sits, Unity has become the system of work for some of the world's largest and most demanding enterprises. Independently, we've received validation that the differentiation we've built in AI video, on-site safety, data highway ingestion, And the unified operations layer is what makes us truly mission critical for our customers. And you can see that differentiation showing up directly in the commercial performance of the business. We've secured landmark enterprise wins, Fortune 500 accounts across energy, mining, food and beverage, logistics, manufacturing. And we're now winning tier one public sector contracts at a scale that simply wasn't possible two years ago. Our AI video pipeline compounded through the year. Our on-site solutions saw rapid adoption. Cross-sell revenue accelerated. Customers are leaning in because Unity solves everyday operational challenges, improving safety, enhancing visibility, boosting efficiency, all through one integrated platform. Next slide. So let me frame the year through these three priorities we set ourselves and executed again. The first, durable revenue growth. We've proven that the combined business is delivering consistent, high-quality organic growth anchored in recurring SaaS revenue. The second, compounding EBITDA growth. We've demonstrated that as the top line scales, the operating model we've built is converting that growth into expanding margins and compounding profitability. And the third, driving towards sustainable free cash flows. We've proved the pivot, showing that this business is moving from an investment and integration phase into a cash generative model that strengthens the balance sheet and compound shareholder value. Let me take you through each one. Next slide, please. Starting with revenue, services revenue, which is really the engine of the business, grew to $360 million and now represents 81% of our total revenue. up from 76% in FY25. That shift in mix is deliberate and is significant because every percentage point of that shift brings higher margins, greater predictability, and strong customer lifetime value. Total revenue increased to $444 million, and what is most encouraging is the growth acceleration we saw as the year progressed. In Q4, total revenue grew 11% year-over-year, and service revenue grew 14%. That's the exit rate we've been signaling to investors, and we've delivered it. The trajectory is clear. The quality of the growth is high, and the durability of the recurring revenue base gives us real visibility and confidence heading into FY27. Next slide, please. On the customer side, we signed multi-million contracts with two of the world's largest brands. a top three global food and beverage company, and a major global manufacturer, both choosing our differentiated on-site solutions. These are exactly the kind of large-scale enterprise wins that the heritage power fleet of two years ago could not have competed for, let alone won. And then, of course, there's the South African Treasury contract, the single largest win in our company's history. With anticipated five-year total contract values, of between $100 to $120 million once fully implemented. This has been powered by Unity Safety Solution and AI video capabilities in partnership with MTN. That is a transformational piece of business for PowerFleet, and I'll talk more about how that's progressing when we get to our FY27 growth multipliers. On the solution side, our AI video bookings grew more than 50% in FY26, meaningfully outpacing market growth. Our onsite revenue grew 39%, powered by North America sales acceleration. These are the two highest ARPU, highest differentiation parts of our portfolio, and the fact that they're driving such strong growth tells you the strategy is working where it matters most. And on retention, Q4 was our strongest retention quarter in the last two years, driven by Unity's differentiated solutions and the deeper, stickier customer relationships we're building. That's an important proof point, as it speaks to the quality of what we're delivering to our customers. Next slide. Turning to EBITDA, adjusted EBITDA for FY26 grew 44% to $97 million. with margins expanding 330 basis points to 21.9%. And in Q4, adjusted EBITDA grew 42% year-over-year to $26.4 million, with margins hitting 23.1%, a 5 percentage point increase year-over-year. The compounding effect was the result of disciplined synergy execution, a deliberate shift towards high-margin recurring services, and an operating model that is built to generate expanding leverage at the top line scales. And what's particularly pleasing is that we've achieved this while simultaneously investing in growth, in our go-to-market capabilities, in our channel partnerships, and currently in the South African deployment. We've made a deliberate choice to be good stewards of investment opportunity, and even with those investments, we still delivered meaningful adjusted EBITDA expansion. This is a solid indication of the inherent leverage in this model. Next slide, please. And the third priority, free cash flow. This is where FY26 represents a genuine inflection point for the business. We generated $4.1 million of free cash flow in the second half, a meaningful swing from the $13.7 million use of cash in the first half. Operating income reached $11 million. an $18 million improvement from FY25 when we were in an operating loss position. And net leverage improved to 2.47 times, down from 3.39 times. That's almost a full turn of deleveraging within the fiscal year. We've been very clear with investors throughout this year that as we move through the final stages of integration and set up investments to support large-scale growth opportunities, there will be periods of elevated cash use. This was a temporary and necessary cost of building the business we have today. What the second half trajectory demonstrates is that the true underlying cash generation of this model is now coming through and will continue to strengthen as we scale into FY27. Next slide, please. So with that context, let me now turn to what lies ahead. We've delivered the FY26 plan. We've proven the thesis, and we now have the scale, the differentiation, the operating model, and the financial foundation to step forward confidently from here. FY27 is about building further momentum. Next slide, please. This slide captures the strategic levers we've assembled to drive future shareholder value creation, and they frame why we are seeing such a compelling multi-year opportunity ahead. First, Our warehouse and onsite solutions are the category-defining wedge. This is where we have true differentiation, where win rates are highest, and where we're opening doors into the largest enterprises in the world. We deliver a unique data set for the industry through AI-powered safety and compliance across the full operational environment, onsite and over the road, in a single platform. Second, we now have the high-impact channels to market, such as AT&T, TELUS and MTN, with additional partnerships in development. These are force multipliers that can create meaningful growth expansion without proportional increases in our cost base. The channel flywheel is beginning to turn. Third, Unity capitalizes on a powerful industry tailwind. Enterprises are consolidating fragmented point solutions and data into unified operating platforms. That is exactly what the data highway was built to deliver. We're not fighting the market. We're navigating a successful path. Fourth, our proprietary operational data creates a defensible moat. As customers integrate more deeply into Unity, ingesting data from ERP, HR, safety, maintenance, and IoT systems, the stickiness compounds. Our data highway helps us to become mission critical, embedded in our customers' workflows, and making it increasingly difficult for us to be displaced. And finally, the compounding EBITDA growth opportunity remains substantial. With services at 81% of revenue and growing, the cost optimization program still delivering, and with scaled benefits compounding as the top line accelerates, there is meaningful further margin expansion ahead. Next slide. Our priorities for FY27 are consistent and clear. Amplify revenue growth, continue to compound adjusted EBITDA growth, and enhance the balance sheet. On revenue, we're doubling down on the two differentiators that are driving the most traction on-site and AI video. These solutions now represent 65% of our pipeline, up from 50% entering FY26. We're seeing these differentiators play out in real wins, with some of our largest customers expanding to adopt Unity's full solution stack. And we're going to replicate these top-tier deal successes through extended direct sales capacity, expanded go-to-market channels, and the growing bank of referenceable customer outcomes. On Adjusted EBITDA, you'll hear more on this from Melissa shortly, but the key point is we see a clear path to further meaningful efficiency gains that support continued adjusted EBITDA expansion while freeing capacity for reinvestment in growth. And on the balance sheet, we're doubling down on working capital improvement. We have a finance partner network in place for customer financing aligned with industry best practice. We're making a material shift towards annual and first quarter in advance customer payment terms. And the operating leverage in this model means higher conversion of EBITDA to cash as the revenue growth compares. This creates a virtuous cycle, deleveraging, reduced cash interest costs, and compounding returns for shareholders. Next slide. Over and above core execution, we have significant growth multipliers entering FY27. First, the South African Treasury deal. 60,000 assets are now moving to the deployment planning phase. This meaningful new revenue contribution is expected to contribute in growth in late FY27 and wholeheartedly in FY28 and is a powerful validation of Unity's capabilities at Tier 1 scale. Secondly, a new partnership with Accenture. Accenture has selected PowerFleet as a strategic safety solutions innovation partner and is now recommending our end-to-end Unity portfolios. This opens a significant new enterprise go-to-market channel that dramatically extends our reach into large-scale digital transformation programs globally. And lastly, a story I'm particularly proud of. Femsa is the largest Coca-Cola franchise bottler in the world. They first came to PowerFleet for connected intelligence that would deliver efficiency and control across their on-road operations, subsequently adding AI video to drive elevated safety performance. The next step in that relationship is on-site. Femsa is now adding PowerFleet's on-site solutions to their deployment to manage the safety and compliance of their warehouse operations, which is our land and expand motion working exactly as intended. A customer that trusted us with their on-road operations is now trusting us with their end-to-end estates. That pattern replicated across our enterprise base is one of the most important growth opportunities we have. Each one of these is a high conviction, high impact growth driver. Taken together, they give us real confidence in the acceleration opportunity ahead. With that, I'll hand over to Melissa to walk through our optimization and efficiency progress.