MiX Telematics Ltd ADR

Everyone, and thank you for participating in today's conference call to discuss mixed telematics financial results for the fiscal third quarter 2023 ended December 31, 2022. Joining us today are mixed telematics president and CEO Stefan Joselowitz and the company CFO Paul Dell. Following their remarks, we'll open the call up for any questions you may have. I'd now like to turn the conference over to Chief Financial Officer Paul Dell as he reads the company's safe harbor statement regarding forward-looking statements. Please go ahead, Paul.

Thank you, and good morning, everyone. Before we continue, I'd like to remind all participants that 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 would like to turn the call over to Mixed Telematics' President and CEO, Stefan Joselobits. Jos?

Thank you, Paul. Good morning, everyone. Thank you all for joining us. For our third quarter of fiscal 2023, we delivered another strong quarter of financial and operational results. Our results were highlighted by record organic subscriber growth a 520 basis point sequential improvement in our adjusted EBITDA margin, and a strong return to positive free cash flow generation. We achieved another record quarter of organic subscriber growth with an increase of over 44,000 net new subscribers, primarily driven by growth in Africa. At the end of the quarter, we had more than 959,000 subscribers, which was up 21% year over year. Financially, we generated $37.8 million of total revenue and delivered 17% year-over-year growth in ARR on a constant currency basis, ending the quarter with $131.8 million of annual recurring revenue. We are making steady progress on integrating the field services management business, which we refer to as FSM, which we acquired from Trimble in the second quarter and are now implementing our customer retention strategy. While it is still early in the transition process, we continue to believe that we can achieve our previously set goal of a 75% conversion rate within the next three to five quarters. We also closed a deal for 500 mixed vision AI cameras with an FSM customer with additional potential future upside. This is an early sign of success of the cross-sell potential inherent in this acquisition. In terms of our adjusted EBITDA performance, we generated $8.4 million at a margin of 22.2%, a significant increase from last quarter. We saw sequential expansion in our normalized adjusted EBITDA margins in each month of the quarter and believe that we will exit fiscal 2023 with margins moving towards the mid-20s in the fourth quarter, with further margin expansion expected in fiscal 2024. As we continue to grow and evolve as a company, strategic M&A remains an important component of our business strategy. We are committed to finding attractive means of adding value to our subscriber base and technology portfolio. To that end, We have a dedicated team in place that is focused on identifying and evaluating potential acquisition opportunities. Our team is continuously monitoring the market for companies and assets that align with our strategic goals and that can help us to scale our presence in the US and abroad. Shifting our focus to product development, we recently unveiled a significant upgrade to our Mixed Vision AI solution in early December. This update to our existing integrated video and fleet telematics package includes support for smaller dashcams that are quicker and easier to install, as well as new software features to enhance the user experience and provide even more flexibility to customers. Our portfolio of AI-powered products now includes the option of an advanced multi-camera mobile digital video recorder that integrates seamlessly with Mixus Telematics' premium fleet solutions. We believe this will enhance the value proposition of our broader portfolio by addressing the growing trend of business leveraging video technology to improve driver safety and reduce risk. With regards to our mixed OEM connect strategy, last quarter we completed our integration with the telematics services of Ford Europe, as well as another major vehicle corporation that represents multiple automotive brands. The commercialization of our OEM connect solutions is ongoing in North America and Europe. While this currently represents a small portion of our overall business, we continue to view our OEM strategy as a gateway to high margin recurring revenue in the future. The nature of our industry demands ongoing innovation, so it is essential that we maintain a forward thinking approach by constantly enhancing our offerings. This enables us to preserve and strengthen our competitive edge across our varied solutions. Investing in these endeavors is vital for our ability to organically grow our market share and retain our dedicated customers in the long term. Now turning to our regional performance and key customer wins during the quarter. Our global sales team has been working diligently to identify new opportunities and strengthen existing relationships. This has led to a steady flow of new subscribers as well as upsell opportunities with current customers. In North America, subsequent to quarter end, we signed a contract with a large fast food corporation with thousands of locations across the United States, which will further enhance the expansion of our footprint and continue to diversify our presence outside of oil and gas. This contract signing is just the start of our relationship with this customer, and we will have work to do to build it out. But we are hopeful that this customer can become an important vertical reference for us. We implemented over 2,900 new additions in Latin America, including supplying our premium fleet solution to a mining company in Brazil with a potential upsell of 9,000 connections. This customer has a fleet of over 20,000 vehicles, and seeks to improve safety and maintenance costs by implementing our telematic solutions. We also provided over 1,200 new premium fleet connections to a Brazilian bus and coach company, adding to our existing 2,000 subscribers with this customer. In Europe, we are expanding our connections with Linde Gas with orders for over 750 new connections across six countries as a result of the compelling safety value proposition of Mixed Vision AI. The solution is gaining further traction rapidly in Europe, including with our customer Swans Travel in the UK, who specializes in transporting fans to and from Premier League soccer games. In the Middle East, we received a first-phase order from a major FMCG player and extended our base with a large existing customer in seven additional countries. And lastly, We added over 100 new subscribers in Australia for Mixed Vision AI to combat fatigue for an agricultural customer and renewed two key customer contracts for multi-year agreements. Overall, I am pleased with the progress our sales and marketing teams continue to make and believe that we are on the right path towards sustained improvement coming out of the pandemic. Looking at the expectation we set for organic annual recurring revenue percentage growth for fiscal 2023, we are likely to end the year closer to the low end of our previous guidance range, which would put us in the high single digits. Looking towards fiscal year 2024, while our pipeline remains robust, we, like everyone, expect to face uncertainties in the broader macroeconomic environment across the globe. which somewhat complicates our line of sight into our growth objectives. However, our broad product portfolio and truly diverse global customer base positions us well to take advantage of the positive trends in the telematics industry and to drive growth. Given the uncertainties within the macro environment, our goal for fiscal 2024 is to prioritize initiatives within our control and ultimately reaching rule of 40 performance. We remain highly confident in our ability to continue restoring our operating margins, improving our bottom line, and driving free cash flow. I would like to announce that we plan to hold an investor and analyst day in April to discuss our ongoing strategic initiatives in more depth. Further details regarding the upcoming event will be provided in the coming months. I'll now turn the call over to Paul to review our financial results in more detail.