MiX Telematics Ltd ADR

Good morning, everyone, and thank you for participating in today's conference call to discuss Mixed Telematics financial results for the third quarter of fiscal 2024 and December 31, 2023. Joining us today are Mixed Telematics President and CEO, Stefan Jezalowicz, and the company's CFO, Paul Dell. Following their remarks, we'll open the call for any questions you may have. I'd now like to turn the conference over to Mixed Telematics Chief Financial Officer, Paul Dell, as he reads the company's safe harbor statement regarding forward-looking statements. Paul, please go ahead.

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, Stephan Josolovic. Jos?

Thank you, Paul. And good morning, everyone. Before turning to our third quarter performance, I would like to update you on the progress we have made towards completing our transformative business combination with PowerFleet. I am pleased to report that we have made significant headway in navigating the complex regulatory processes that govern the transaction in both the United States and South Africa. We have crossed a number of important administrative hurdles, including receiving most of the prerequisite approvals needed to proceed. One of the final hurdles is for both companies to obtain the approval of their respective shareholders. And to this end, we have set the date of the formal vote for February 28th, 2024. Earlier this week, we mailed copies of the PowerFleet prospectus and our scheme circular to shareholders. Whilst there are no guarantees, I am confident we will receive the green light from our investors and we expect the transaction to formally close in early April. I reaffirm that we have dedicated transaction teams at both Mix and PowerFleet focused on completing the merger deal. As a result, we have managed to keep our regional leaders and business units somewhat protected from the day-to-day complexities around the transaction. That said, since the announcement of the combination, we have been hard at work laying the foundation for integration between the organizations whilst also focusing on operational execution. We have developed a robust integration plan to ensure the transition will go smoothly and the work we've already been able to complete has exceeded my expectations. Internally, together with the PowerFleet executive team, we have communicated our go-forward operating structure and established integration work streams with well-defined objectives and appropriate executive sponsorship. So whilst deal-related distractions have not been completely avoidable, our team has remained focused and delivered a strong operational performance. In the third quarter, we had a record number of net subscriber additions, bringing our total base to well over 1.1 million. Subscription revenue, which represented 86% of total revenues, came in ahead of our expectations at $33.7 million, up 6% year-over-year in constant currency. We also maintained our strict cost-discipline practices, resulting in the continued year-over-year expansion of our adjusted EBITDA margin by 220 basis points to 24.4%. Paul will provide more detail, but increased subscriber acquisition costs combined with a significant increase in our accounts receivable balances resulted in disappointing free cash performance. Corrective measures have been put in place to ensure that we deliver a strong free cash flow result this coming quarter. Our Africa segment continues to be our core growth driver, generating meaningful net subscriber growth. Our AI-enabled camera solution is playing a significant part in winning and acquiring a broad base of new business, and we are also making sustained progress with other initiatives across all geographies. In North America, we acquired new customer logos and subscribers, successfully upsold several existing customers with expansion deals, and continue to add more Mixed Vision AI subscribers. Across Europe, we secured two major contracts with a combined subscriber commitment, close to 5,000 vehicles. In Australia and LATAM, we continue to see progress with both new customer acquisition and existing fleet expansion across a variety of verticals, including public transport, energy, mining, construction, and agriculture. On the technology front, we delivered several new features and enhancements to support our expansion into the construction vertical. This included OEM integration into the construction equipment standard as well as new insights and dashboards for asset utilization and fault code reporting. Our mixed vision AI solution has been further enhanced to support additional privacy features and can now also be sold to our mixed OEM connect customers. This means customers using our service and telematics data feeds from vehicle manufacturers such as Ford can now get the same video experience as customers using proprietary mix-in vehicle technology. Overall, I'm pleased with most elements of our operational execution as we move one step closer to completing our transformative business combination with PowerFleet. This is a very exciting time for both companies and our entire organization is eager to hit the ground running and begin executing our combined strategic growth initiatives. It is opportune to remind our mixed telematics shareholders that the direct NASDAQ listing afforded by the proposed merger should provide significantly increased market exposure and an expanded investor base. As a large shareholder, I strongly believe that the combined leadership group and the Steve Toews future stewardship, combined with PowerFleet's Unity Strategy and our collective scale, will undoubtedly accelerate the achievement of our shared strategic and financial goals. On the expectation that the merger proceeds as planned, this will likely be my last earnings call for Mixed Telematics. I would like to take the opportunity to thank my team who helped build such an awesome business. I'm also particularly pleased that with the exception of Steve Blackheart and myself, the entire Mixed Leadership team will have important roles in the new PowerFleet executive structure. I want to especially thank Charles Tasker, our Chief Operating Officer, Catherine Lewis, our EVP of Technology, Gert Pretorius, who runs our Africa business, Jonathan Bates, our head of marketing, Brendan Horan on special projects, and Steve Blackheart, the most recent addition to our team who currently heads up mergers and acquisitions. Our relationship with almost all of these individuals predates our New York IPO in 2013, and I am extremely grateful for their support and commitment over the years. And lastly, I want to thank Paul Dell, our CFO, who will be moving into the role of Chief Accounting Officer at PowerSuite. And with that, Paul, over to you.