MiX Telematics Ltd ADR

Thank you for standing by. This is the conference operator. Welcome to the mixed telematics first quarter 2023 earnings results conference call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Paul Dell, Chief Financial Officer. Please go ahead.

Thank you and good morning, everyone. We appreciate you joining us to review Mixed Telematics' earnings results for the first quarter of fiscal year 2023, which ended on June 30, 2022. Today, we will be discussing the results announced in our press release issued a few hours ago. I'm Paul Dell, MEX's Chief Financial Officer, and I'm joined by Stefan Josolovic, or as many of you know him, Jos. He is President and Chief Executive Officer of MEX Data Maddox. During today's call, we will make forward-looking statements related to our business, which are subject to material risks and uncertainties that could cause our actual results to differ materially. For discussion of the material risks and other important factors that could affect our results, please refer to those contained in our Form 10-K and other SEC filings, all of which are available on the Investor Relations section of our website. We will also be referring to certain non-GAAP financial measures. There is a reconciliation schedule detailing these results currently available in our press release, which is located on our website and filed with the SEC. With that, I will turn the call over to Jos.

Thanks, Paul. And thanks to all of you for joining the call today. MIX began fiscal 2023 with solid financial and operational results as we navigate the business through an increasingly uncertain economic environment. We had another strong quarter of net subscriber growth, adding 23,200 subscribers to end with a base of over 838,000. This is an increase of 11% year-over-year and an all-time high for the company. It is also our third consecutive quarter, adding more than 20,000 net subscribers, and we are now above pre-pandemic levels, an important driver in our continued revenue growth. All three of our solution categories contributed to the expansion, with a notably strong performance in our live feed business. I would now like to quickly summarize our financial results for the quarter. Subscription revenue of $31 million was up 6% in constant currency. Annual recurring revenue ended at $123.2 million, up 1% sequentially and 7% year over year on a constant currency basis. As we have discussed in previous quarters, the ongoing supply chain challenges continue to impact vehicle deliveries to some of our customers. Our committed contract backlog is still at elevated levels. and represents future growth as vehicles get delivered and implemented. In addition, the dollar strengthened notably during the quarter, which was a meaningful headwind to our reported results. Q1 adjusted EBITDA was $6 million at a 17% margin. Paul will discuss this in more detail later, but the cost increases in parts of our business put some pressure on our profitability during the quarter. We are taking proactive steps to manage our cost structure to ensure we remain on track to deliver our full-year adjusted EBITDA margin guidance. Overall, our business continues to perform reasonably well given current circumstances. The sizable expansion of our subscriber base in recent quarters, in addition to the continued strong growth in our sales pipeline across regions and product categories, reflects meaningful customer interest in deploying advanced telematic solutions. Our solutions can help customers manage some of the most pressing challenges in their operations. This includes worker productivity to mitigate tight labor markets, as well as promoting greater fuel efficiency, enhancing vehicle utilization, and promoting safer and more sustainable fleet operations. We have proven repeatedly that our solutions represent high ROI investments for our customers. I would like to highlight a few key wins from the first quarter. We signed agreements with various customers in Latin America to expand existing contracts for almost 3,000 additional subscribers with implementation ongoing. In the UK, the leading bus operator, Go Ahead Group, renewed their 4,000 plus subscriber contract with us and are actively expanding their investment by adding our mixed vision AI solution in their metro fleets to further improve their safety standards. Go Ahead has been a mixed customer since 2008 This is their fourth renewal with us and further testimony to our ability to deliver ongoing value and build long-term relationships with large enterprise fleets. In South Africa, Isuzu, a Japanese commercial vehicle manufacturer serving customers in more than 150 countries worldwide, awarded us the Connected Truck Contract. The agreement will see Mixus fleet and asset tracking technologies installed on their production line, on all vehicles in three commercial ranges produced in South Africa. Branded locally as Isuzu Insights, the solution will be used by Isuzu to provide value-added services to their clients and also presents a significant upsell opportunity for MEX. A leading utilities operator in Australia selected MEX Telematics for its nearly 200 assets due to our comprehensive product portfolio. Several of our solutions have been adopted simultaneously including our core premium fleet telemetry service, AI video, driver app, journey management, and in-cab coaching. A global electric vehicle fleet and battery specialist has confirmed their partnership with MEX. Originating in Europe, this deal will soon be expanding into the Middle East, Australasia, as well as South America to provide an integrated solution for their electric vehicle bus and coach customers. Nearly 200 subscribers came on board in Q1, with further expansion scheduled imminently. We continue to believe that we are in a position to generate mid to high single digit constant currency subscription revenue growth and high single to low double digit ARR growth for the fiscal year, in addition to adjusted EBITDA margins in the low to mid 20s. As always, we will focus on those things that we can control, particularly on exceptional customer service cost discipline, and targeted investments in our strategic growth initiatives. Despite the near-term uncertainty in the market, nothing has changed about our long-term expectations for our business. The telematics market is in the early stages of broad-based adoption of cloud-based solutions across fleets of all sizes. We feel very good about our ability to deliver on our long-term financial targets of 15% to 20% constant currency subscription revenue growth and 30% plus adjusted EBITDA margins. This is an exciting time for the company, and I want to thank all of our employees for their hard work and commitment to our customers' success. I would now like to turn the call over to Paul to review our financial results in more detail.