Q1 2022 PowerFleet Inc Earnings Call
Good morning. Welcome to Power Fleet's first quarter 2022 conference call.
Good morning, welcome to Paris fleets first quarter 2022 conference call.
Joining us for today's presentation is the company's CEO , Steve To, and CFO , Ned Mavrimatis. In their remarks, we will...
Joining us for today's presentation is the company's CEO , Steve <unk>.
And CFO Ned Mavrommatis.
Following their remarks, we will open up the call for questions.
Before we begin the call, I would like to provide Power Fleet's Safe Harbor statement that includes questions regarding forward-looking statements made during this call.
Before we begin the call I would like to provide power fleets Safe Harbor statement that includes questions regarding forward looking statements made during this call.
During the call there will be forward-looking statements made regarding future events including the Power Fleet's future financial plan.
During the call there will be forward looking statements made regarding future events, including power fleets future financial performance.
All statements other than present and historical facts, which include any statements regarding the company's plans for future operations, anticipated future financial position, anticipated results of operation, business strategy, competitive position, company's expectations regarding opportunities for growth, demand for the company's product offering, and other industry trends are considered forward-looking.
Statements other than present and historical facts, which include any statements regarding the company's plans for future operations anticipated future financial position anticipated results of operation business strategy competitive position company's expectations regarding opportunities for growth demand for the companys prop.
<unk> offering and other industry trends are considered forward looking statements.
statements include but are not limited to the company's financial expectations for 2022.
Such statements include but are not limited to the company's financial expectations for 2022 and beyond.
All such forward-looking statements imply the presence of risks and uncertainties and contingencies, many of which are beyond the company's control.
All such forward looking statements imply the presence of risks and uncertainties and contingencies, many of which are beyond the company's control.
The company's actual results performance or achievements may differ materially from those projected or assumed in any forward looking statements.
performance or achievements may differ materially from those protected or assumed in any forward position.
Factors that could cause actual results to differ materially could include, amongst others, SEC filings, overall economic and business conditions, demand for the company's products and services, competitive factors, emergence of new technologies, and the company's cash
Factors that could cause actual results to differ materially could include amongst others SEC filings overall economic and business conditions demand for the company's products and services competitive factors.
The emergence of new technologies, and the company's cash position.
The company does not intend to undertake any duty to update any forward-looking statements to reflect future events or circumstances.
The company does not intend to undertake any duty to update any forward looking statements to reflect future events or circumstances.
Finally, I would like to remind everyone that this call will be made available for replay in the Investor Relations section of the company's website at www.powerfleet.com.
Finally, I would like to remind everyone that this call will be made available for replay in the Investor Relations section of the company's website at Www Dot power fleet Dot com.
Now, I would like to turn the call over to Power Fleet's CEO , Mr. Steve Tso. Sir, please.
Now I would like to turn the call over to power fleets CEO Mr. Steve So Sir please proceed.
Welcome everyone and thanks for joining our call. During the first quarter, we built on the solid uplift in revenue from the prior quarter and delivered an encouraging 14% year over year revenue growth.
Welcome everyone and thanks for joining our call during the first quarter, we built on the solid uplift in revenue from the prior quarter and delivered an encouraging 14% year over year revenue growth.
The double-digit growth momentum we generated in the first quarter was driven by further commitment from some of our major customers, including Walmart, Albertsons, and American Intermodal Management, and more broadly, we saw growth across our core international verticals and markets, particularly in Mexico and our
The double digit growth momentum we generated in the first quarter was driven by further commitment from some of our major customers, including Walmart and Albertsons and American intermodal management and more broadly we saw growth across all international both for the market.
Particularly in Mexico at that point through operations both of them.
both of which are realizing solid growth with new and existing parts.
Which are realizing solid growth with new and existing partners.
It's been a little over four months now since I joined PowerFleet and my experience and interactions continue to exceed my expectations.
It's been a little over four months since I joined pathway and my experience in interactions continues to exceed our expectations.
The company has solid technology, a strong reputation, a world-class customer base and a committed global team.
Company has solid technology, a strong reputation of world class customer base and a committed global team.
Our updated strategy has been very well received by customers, partners and employees alike.
Our updated strategy has been very well received by customers partners and employees alike.
Additionally, our team and key partners are excited about the direction of the business and the increasing role PowerFleet is playing across our customer supply chain to solve the unparalleled need for high visibility and insight through unifying their operation.
Additionally, our team and key partners are excited about the direction of the business.
And the increasing role pathway playing across that customer supply chain to solve the unparalleled high visibility and insight through unifying their operations.
Before I discuss our growth strategy, operational initiatives and business outlook, I would like to thank Ned for his valuable contributions he has made to Power Fleet over the years.
Before I discuss our growth strategy operational initiatives and business outlook I would like to thank Mike for his valuable contributions he has made powerfully over the year.
Ned has been a great business partner since I joined the company and I greatly appreciate his support as we search for our next financial leader to help us build on the operation of financial momentum and capitalise on the growth opportunities on the horizon.
That has been a great business partner since I joined the company and I greatly appreciate your support as we search for our next financial leader to help us build on the operational financial momentum and capitalize on the growth opportunities on the horizon.
On behalf of the board and leadership team, I wish Ned great success in his next endeavour.
On behalf of the board and leadership team I wish net great success in his next endeavor.
In the interim, our global controller, Joaquin Fong, will manage the day-to-day global finance operations until the CFO search is complete.
In the interim our global controller and walking phones will manage the day to day Global finance operations until the CFO search is complete.
And with that, I'll turn to Ned to cover our financial results for the first quarter of 2022.
And with that I'll turn to net to cover our financial results for the first quarter of 2022.
Yes.
Thank you for the kind words Steve. I look forward to supporting the company, not only in a consulting capacity over the coming months, but also as a shareholder and a friend of the power fleet family for the years ahead.
Thank you for the kind words.
I look forward to supporting the company not only in a consulting capacity over the coming months.
But also of the shareholder and our front of the powerful primarily for the years ahead.
Turning to our financial results for the first quarter ended March 31, 2022, total revenue increased 14% to $33.2 million from $29 million in the same year ago period.
Turning to our financial results for the first quarter ended March 31, 2022, total revenue increased 14% to $33 2 million from $29 million from the same year ago period.
High margin, recurring, and services revenue was $18.8 million, or 57% of total revenue. This was an improvement on a dollar basis compared to $17.6 million, or 61% of total revenue in Q1 of last year.
High margin recurring and services revenue was $18 8 million or 57% of total revenue.
This was an improvement on a dollar basis compared to $17 6 million or.
Our 61% of total revenue in Q1 of last year.
Product revenue, which drives future services revenue, was $14.4 million, or 43% of total revenue. This compares to $11.4 million, or 39% of total revenue, in Q1 of 2021.
Product revenue, which drives future services revenue was $14 4 million or 43% of total revenue. This compares to 11 $4 million or 39% of total revenue in Q1 of 2021.
Gross profit was $14.4 million, or 43% of total revenue, compared to $14.5 million, or 50% of total revenue, in the same year-ago period.
Gross profit was $14 4 million or 43% of total revenue compared to $14 5 million or 50% of total revenue in the same year ago period.
Services gross profit was $12 million, or 64% of total service revenue, an improvement compared to $11.2 million, or 64% of total service revenue in Q1 of last year.
Services gross profit was $12 million or 64% of total service revenue an improvement compared to $11 2 million or 64% of total service revenue in Q1 of last year.
Product gross profit was $2.4 million, or 17% of total product revenue, compared to $3.3 million, or 29% of total product revenue in the same year-ago period.
Product gross profit was $2 4 million.
Or 17% of total product revenue compared to $3 3 million or 29% of total product revenue in the same year ago period.
Product gross profit was negatively impacted in Q1 2022 by product mix, higher costs associated with supply chain issues and electronic component shortages, and inflation. During Q1 of 2022, we incurred approximately $1.3 million in purchase price variance, or PPV, related to supply chain issues and electronic component shortages, which impacted our product gross profit by 9%.
<unk> gross profit was negatively impacted in Q1 2022 by product mix higher.
Cost associated with supply chain issues, and electronic component shortages and inflation during Q1 of 2022, we incurred approximately $1 3 million.
In purchase price variance or PPV related to supply chain issues, and electronic component shortages, which impacted our product gross profit by 9%.
Looking at our expenses, total operating expenses were $18.1 million, down from $18.9 million in the prior quarter, but up from $16.4 million in Q1 of last year. A key initiative of our transformation strategy is to rationalize costs in non-core areas, the benefit of which we expect to see starting in Q2.
Looking at our expenses total operating expenses were $18 1 million pound.
Down from $18 9 million in the prior quarter, but up from $16 4 million in Q1 of last year.
A key initiative of our transformation strategy is to rationalize costs in non core areas the benefit of which we expect to see starting in Q2.
Looking at our profitability metrics, gap net loss attributable to common stockholder totaled 4.1 million dollars or 12 cents per basic and diluted share. This compares to gap net loss attributable to common stockholders of three million dollars or nine cents per basic and diluted share in Q1 of last year.
Looking at our profitability metrics GAAP net loss attributable to common stockholders totaled $4 1 million.
Or <unk> 12 per basic and diluted share. This compares to GAAP net loss attributable to common stockholders of $3 million or.
Or <unk> <unk> per basic and diluted share in Q1 of last year.
non-GAAP net loss and non-GAAP metric totaled $2.2 million, or $0.06 per basic and diluted share, compared to non-GAAP net income of $61,000, or $0.00 per basic and diluted share in the same year-ago period.
non-GAAP net loss, a non-GAAP metric totaled $2 2 million.
Or six per basic and diluted share compared to non-GAAP net income was 61000 or zero cents per basic and diluted share in the same year ago period.
Adjusted EBITDA loss and non-gap metric totaled $993,000 compared to adjusted EBITDA of $1.4 million in the same year-ago period. At quarter end, the company had $20.9 million in cash and cash equivalents and $40.5 million of working capital. That concludes my prepared remarks.
Adjusted EBITDA loss, a non-GAAP metric totaled 993000 compared to adjusted EBITDA of $1 4 million in.
In the same year ago period at quarter end, the company had $29 million in cash and cash equivalents and $45 million of working capital that concludes my prepared remarks.
Thank you, Ned. Our company's laser focused in 2022 on establishing a world-class SaaS and IA platform to maximise the impact we make for our customers and increase the wallet share that we can derive in the future.
Thank you Nick accompanies laser focused in 2022 on establishing a world class SaaS.
This platform to maximize the impact we may crack customers and increase the wallet share that we can derive in the future.
PowerSuite is well positioned to capitalize on this opportunity due to the depth and breadth of our solutions, specifically the rich history of innovative platform devices and sensors, our suite of software applications and data, coupled with the growing need for real-time AI-based solutions across our software.
Our fleet is well positioned to capitalize on this opportunity due to the depth and breadth of our solutions specifically the rich history of innovative platform devices incentives as.
Our suite of software applications and data coupled with the growing need for real time, AI based solutions across asset upgrades.
Our strategic roadmap has been finessed with several go-forward data-centric initiatives.
Our strategic roadmap is being finished with several go forward data centric initiatives.
As we started to catalyze on the rapid transformations taking place in our industry, we're driving forward a modular enterprise application methodology to help our customers prioritize and implement their digital transformations at a pace to suit their organization.
As we started to capitalize on the rapid transformation is taking place in our industry. We're driving forward a modular enterprise application methodologies to help our customers prioritize and implement their digital transformations at pace to suit their organization.
It will allow them to prioritise and focus on the business problems they are looking to solve across the C-suite. In turn, this will create significant upsell opportunities as we collaborate with our customers to create strategic business change roadmaps.
It will allow them to prioritize and focus on the business problems. They are looking to solve across the C suite.
In turn this will create significant upsell opportunities as we collaborate with our customers to create strategic fitness chain roadmap.
Another initiative is unifying our platforms to a single set of interfaces, which we remain on track to deliver this year.
Another initiative is unifying our platforms to a single set of interfaces, which we remain on track to deliver this year.
The unification will enable PowerFleet customers to access information across their entire asset estate through a highly intuitive single pane of glass, transforming the way
The unification will enable <unk> customers to access information across their entire estate.
Through a highly intuitive single pane of glass.
And forming the way operators can manage their business.
We've already enjoyed several fruitful strategic conversations with major customers and key partners about our broader technology roadmap.
We've already enjoyed several fruitful strategic conversations with major customers and key partners of batch broader technology roadmap.
In parallel, we are ramping up pipeline for the unification of our platforms, which will significantly enhance our ability to cross-sell solutions across the organization.
In parallel we are ramping up pipeline for the unification of our platforms, which will significantly enhance our ability to cross sell solutions across the organization.
The completion of the unification will position PowerFleet as a leading global end-to-end IOT provider, catering to all asset types in a cohesive fashion.
The completion of the unification will position <unk> as a leading global end to end Iot provider takes into all asset types in a cohesive fashion.
Our mission is to become a cornerstone of our customer strategy to unify their operations.
Our mission is to become a cornerstone of our customer strategy to unify their operations.
As part of this effort, we have rapidly galvanized our global data and third party integration capabilities and now have more than 80 data integrations with other best of breed partners, which also offer pivotal services to manage our customer supply chains and their business operations.
As part of this effort, we have rapidly galvanize that global data integration capabilities and now have more than 80 data integrations with other best of breed partners.
Which also offer pivotal services to manage our customer supply chains and their business operations.
We will continue to add significantly to the growing number of key integration points over the coming quarter.
We will continue to add significantly to the growing number of integration points over the coming quarters.
We continue to navigate through the global supply chain and electronic component issues and deliver on our customer commitment.
We continue to navigate through the global supply chain and electronic component issues and deliver on our customer commitments.
supplying products and solutions that they rely on for their business operations.
<unk> products and solutions that they rely on for that business operation.
As we progress through 2022, we expect product growth profit to gradually improve as we begin to realize the benefits from our operational and product re-engineering initiatives.
As we progressed through 2022.
We expect product gross profit to gradually improve as we begin to realize the benefits from our operational and product reengineering initiatives.
In the longer term, we are confident these measures will give us a better control and cost management levers for our supply chain.
In the longer term, we are confident these measures will give us a better control of cost management leaders for our supply chain.
In step with this, we're working hard to expand recurring revenues while reducing operating expenses to even closer integration of our business.
In step with this we are working hard to expand recurring revenues, while reducing operating expenses through even closer integration of our business units.
From a sales perspective, the leadership team and I are fully focused on optimising PowerFleet's global go-to-market growth strategy and better promoting our company's vision to improve safety, productivity, efficiency and sustainability across business operations with intuitive and innovative IoT SaaS solutions.
From a SaaS perspective, the leadership team and I are fully focused on optimizing pathway global go to market growth strategy and better promoting our company's vision to improve safety productivity efficiency and sustainability across business operations with intuitive and innovative Iot SaaS solutions.
Along that line, we recently attended MODEX 2022, the premier industrial supply chain event.
Along that line. We recently attended <unk> X 2022 premiere industrial supply chain of events.
The customers and prospects we met with at the trade show were very responsive to PowerFleet's positioning as having one of the most comprehensive set of capabilities in the industrial market segment.
The customers and prospects, we met with the trades, we're very responsive to power fleet positioning as having one of the most comprehensive set of capabilities.
In the industrial market segment.
There is excitement and demand for our newly launched pedestrian and vehicle warning system.
There is excitement and demand for our newly launched pedestrian and vapor warning system, which uses advanced AI capabilities to manage safety presents to accidents and reduce damage and our customer warehouse facilities.
which uses advanced AI capabilities to manage safety, prevent accidents, and reduce damage in our customer warehouse facilities.
The team is fully focused on executing well on driving transformation and accelerating out this.
The team is fully focused on executing well on driving transformation and accelerating.
The successful execution of our strategic roadmap will create a highly scalable, repeatable and profitable global organization.
The successful execution of our strategic roadmap will create a highly scalable repeatable and profitable global organization.
That concludes our prepared remarks. Now I'll turn it back to the operator for Q&A.
That concludes our prepared remarks, now I'll turn it back to the operator for Q&A.
Ladies and gentlemen, the floor is now open for questions.
If you have any questions or comments, please press star 1 on your phone at this time.
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Please hold while we poll for questions.
Your first question for today is coming from Mike Walkley from Canaccord Genuity. Mike.
Your first question for today is coming from Mike Walkley.
From Canaccord Genuity, Mike Your line is live.
Great. Thanks for taking my questions and congrats on a solid start to the year and Ned best wishes in your future endeavors.
Great. Thanks for taking my questions and congrats on a solid start to the year end.
In your future endeavors.
First question for me, Steve, is just on the on the supply chain, you know, we know it's very challenging. Can you just elaborate further on what power fleet is doing to manage this and how we should think about the slope of recovery for Harvard gross margins over the next several quarters?
First question for me Steve.
On the on the supply chain.
It is very challenging can you just elaborate.
Elaborate further on what powerfully is doing to manage this and.
How we should think about the slope of recovery for hardware gross margins over the next several quarters.
And thank you for the question, and a good question to start. So.
Hello, and thank you for the question and a good question to start so.
In terms of the medium term we have looked to re-engineer a number of potential component challenges out of the estate and that obviously takes time for us to work through. So in the meantime there is a shortage of components, there are components that are nearing end of life or got to end of life and prices in the market are being sent up off the back of that.
In terms of the medium term, we have looked to reengineer a number of <unk>.
Potential ponant challenges out of the estate.
That obviously takes time for us to work through so in the meantime, there.
There is a shortage of components. There are components that are nearing end of life or got to end of life and prices in the market are being sent up off the back of that.
We've taken a philosophy where we can practically just continue to implement those solutions with our customers, provide the product.
We've taken a philosophy, where we can practically.
Continue to.
Implement those solutions with our customers to provide the products and.
And that's where you've seen the hitching gross margin. So that will start to ease because we are seeing a slight improvement, I would say, in the situation over the coming quarters, plus the reengineering work. So as we kind of go out to the end of the year, we should see our sales rebound quite steadily.
And that's why you've seen the hitting gross margin so that.
That will start to ease because we are seeing a slight.
<unk> I would say in this situation over the coming quarters, plus the reengineering work as we can go out to the end of the year.
Should see a sales rebound quite steadily.
Great, thanks. And I know Focus is growing AI and SaaS revenue. Maybe you can talk about, or elaborate more on, how's your sales team adopting to this? What might be changing in terms of your go-to-market strategy and discussions with your customers?
Great. Thanks.
I know the focus is growing.
And tax revenue, maybe you can talk about.
Or elaborate more on how how is your sales team adopting to this.
What might be changing in terms of your go to market strategy and discussions.
With your customers.
Yes, I think we've talked before this is an and and and strategy. So it's, you know, first of all, let's get as many devices and subscribers as we can into the market.
Yes, So I think we've talked before the season ended and the strategy so far.
First of all let's get as many devices and subscribers as we can into the market.
and then focus on the expand strategy to really kind of cement ourselves with the data solutions that we provide. So from a sales team perspective, this has been very well received.
And then focus on and they expand strategy to really kind of cement ourselves with the data solutions that we provide so from a SaaS perspective. This has been very well received because they have more solutions that go and sell to customers. Both in terms of data sets that we were able to provide but also the breadth across the.
because they have more solutions now to go and sell to customers both in terms of data sets that we're able to provide but also the breadth across the different asset types.
Different assets asset types.
What we are obviously looking at longer term to do is make sure we can be a very good one stop shop across all of those asset types. So we have a number of conversations now going on with different members of the C-suite within the organisations to make sure that we're looking at appropriate solutions across the business as a whole rather than maybe in a particular
What we are obviously looking at longer term to do is make sure. We can be a very good one stop shop across all of those asset types. So we have a number of conversations now going on with different members of the C suite.
Within the organization to make sure that we're looking at appropriate solutions across the business as a whole rather than maybe in a particular segment.
Great last question for me and I'll pass back the line just as you think about the model, you know, obviously you want greater mix assess revenue longer term, but there's also, you know, some cost cutting, I guess, initiatives or efficiency initiatives going on. So should we think about overall operating expense dollars?
Great last question for me and I'll pass back the line just.
As you think about the model, obviously, you want greater mix of SaaS revenue longer term, but there is also yes.
Some cost cutting I guess initiatives or efficiency initiatives going on so should we think about overall operating expense dollars.
declining over the course of the year, or do you need to hire a new sales team with the change and go-to-market strategy?
Declining over the course of the year or do you need to hire.
Our new sales team with the change in go to market strategy.
Yeah, it's a bit of balancing of both. So obviously, you know, we feel there's a really good market opportunity and we need to put
Okay.
One thing about so obviously, we feel that's a really big market opportunity and we need to put.
some further feet on the street for the market segments. We've talked before about bringing the point to solutions as an example to the US market in quite a.
Some further fee on the street.
For the market segments, we have talked before about bringing the point solutions as an example to the U S market and quite tell you.
a large way so I think you know we'll be adding people at the same time the cost reductions and integration efforts will take time to come in so you know there may be some costs go up before we see the full fruit of the reductions but at the same time there are some quick wins as well from a cost reduction.
Yeah.
A large way so I think we will be adding people at the same time, the cost reductions and integration efforts will take time to come in so.
There may be some cost go up before we see the full fruit of the reductions but at the same time there are some quick wins as well from a cost reduction perspective.
Okay, great. Thanks for taking my questions and best wishes for success this year.
Great. I take my questions and best wishes for success this year.
Thanks, a lot.
Your next question for today is coming from Jason Schmidt with Lake Street.
Your next question for today is coming from Jason Smith with Lake Street, Jason Your line is live.
Hey, guys, thanks for taking my questions. Really nice momentum on the revenue line in March. Just curious what you're seeing from an order pattern standpoint here in April and early May.
Hey, guys. Thanks for taking my questions really nice momentum on the revenue line in March just curious what youre seeing from an order pattern standpoint here in April and early May.
Yes, so we're seeing good momentum remain in our pipelines. I think that, you know, the Q4 was a strong revenue quarter. Q1 was a strong revenue quarter and we're seeing demand continue.
Yes, so we're seeing good momentum remain in our pipelines.
I think that.
Q4 was a strong revenue quarter Q1 was a strong revenue quarter and we're seeing demand continue.
I think customers are, again, thinking of us now in a different light. So, you know, not only near term pipeline, but also longer term pipeline as to how PowerFleet can be a partner on a broader basis. But as I said in the note, you know, we we're feeling that those conversations are fruitful and that helps both the short term and the long term.
I think customers are.
Again thinking of US now in a different light so no.
In this near term pipeline, but also longer term pipeline is to have powerfully can be a partner.
On a broader basis as I said in the note.
We're feeling that those conversations are fruitful and that helps both the short term and the long term.
Okay, no, that's that's really helpful. And then just looking at the equipment gross margin line, I know you expect improvement this year as some of the initiatives kind of float through, but just curious if some of this improvement is also assuming the supply chain backdrop overall improves.
Okay No that's.
That's really helpful. And then just looking at the equipment gross margin line I know you expect improvement this year as some of the initiatives kind of flow through but just curious if some of this improvement is also assuming the supply chain backdrop overall improves.
A lot of it, as I've said, is our re-engineering, and we obviously, we've been putting that into execution, you know, from mid-year last year through the rest of this year. We are seeing slight improvement, but I wouldn't say anything that makes us feel totally confident that, you know, that pattern is going to continue at this point into the future.
I love to say as I've said it is a reengineering and we obviously.
Been putting that into execution.
From mid year last year through through the rest of this year.
We are seeing slight improvement, but I wouldn't say anything that makes us feel totally confident.
That patent is going to continue at this point in time.
Okay, and then just the last one for me, and I'll jump back into Q. I know you spelled out Mexico in the release, but from a geographical perspective, any other areas that jump out either positive or negative?
Okay, and then just the last one for me and I'll jump back into queue. I know you spelled out with Mexico in the release, but from a geographical perspective, any other areas that jump out either positive or negative.
So, I mean, what's great is the improvement is being spread around the globe. So our Israeli team saw good growth, our Mexican team, as we said, and also our U.S. team as well. So, you know, those three territories, I would say, are leading the way for us. I wouldn't say anything from a negative perspective, but they're really standing out as getting market share and market gain. OK, great. Appreciate the call. Thanks, guys.
So I mean, what's great is the improvement is being spread around the globe. So Israeli team.
So good growth at Mexican team as we said and also our U S team as well so.
<unk> III territories I would say are leading the way first I wouldn't say anything from a negative perspective, but they're really standing out as getting market market share market gains.
Okay, Great I appreciate the color thanks, guys.
Your next question for today is coming from Scott <unk> with Roth Capital Scott. Your line is live Hey, good morning, Thanks for taking the questions I.
Hey, good morning. Thanks for taking the questions. Ned, I want to wish you all the best of luck going forward. It's been fun working with you over the years.
I want to wish you all the best of luck going forward, it's been fun working with you over the years.
Hey, maybe just to follow up on a couple of the earlier questions on the gross margin front. Steve, you're going through product redesigns. I'm wondering what that entails then from a certification process, if you could put some time frames around that. And then as we start to think about the recovery on the product side, what should we be expecting kind of exit rate in 22? And what are the ultimate targets here? This used to be a business that ran at 30% plus, we're at 17%. Is that still an achievable number subject to mix?
Maybe just to follow up on a couple of the earlier questions on the gross margin front, Steve you've gone through product Redesigns I'm wondering what that entails and from a certification process. If you could put.
Some timeframe around that and then as we start to think about the recovery on the product side.
What are what should we be expecting kind of exit rate in 'twenty, two and what are the ultimate targets here. This used to be a business around at 30% plus we're at 17% is that still an achievable number subject to mix.
Okay, so let's take those two in in separation. So in terms of the certification, some we do need certification, some we don't.
Okay. So let's take those two in and separation. So in terms of the certification. Some we do need certification some we don't.
in terms of the minor designs and everything that we're changing. So that has all taken place where it needs to and will continue to take place. We see really the fruits of that, of the full engineering work to take place from Q4 this year. So that's the first part. In the second part, I think, you know, getting back to mid-20s is a good short-term target for us.
In terms of the mine the designs and everything that we are changing so that is all taken place where it needs to and will continue to take place. We see really the fruits of that full engineering, which take place in Q4. This year. So that's the first part in the second part I think getting back to mid twenties.
Good short term target for us.
30 percent plus. I mean, there's a lot of macroeconomics that we need to look at to be able to be certain of that moving forward. But, you know, we expect to improve on that mid 20s, you know, later in the year and early next.
30% plus I mean, there's a lot of macroeconomics that we need to look at to be able to be certain of that moving forward, but we expect to improve on that mid twenties later in the year to 90 next year.
Gotcha, very helpful and on the OPEX front up sequentially. I'm wondering if there any one time items in there to call out. I know at the beginning of the year, you got things like FICA and otherwise, but if there's anything to highlight in terms of that base level OPEX that we're starting from.
That's very helpful and on the Opex front up sequentially I'm wondering if there are any onetime items in there to call out I know at the beginning of the year, you got things like FICA and otherwise.
But if there is there anything to highlight in terms of that base level of Opex that we're starting from.
So, Ned, do you want to take that one? It's actually down slightly compared to Q4, but not.
The net do you want to take that one.
Hey, Scott, it's actually down slightly compared to Q4.
But not.
anything specific but during the first quarter there's a few hundred thousand of one-time items uh and that gets uh hit in the first quarter that should not be there in the second quarter. Gotcha okay and last
Anything specific but during the first quarter there is a few hundred thousand.
One time items.
But that's kind.
In the first quarter, but should not be there in the second quarter Gotcha.
And lastly, Steve if I could.
You know, you've talked about the evolution of the platform, more modular, and identifying some partners. It sounds like you've gotten further along on that front, and I think you had in the past talked about...
You've talked about the evolution of the platform more modular and identifying some partners. It sounds like you've gotten further along on that front I think you had in the past talked about starting to see some of the initial beta is rolling into the marketplace with those partners in the second half are those metrics of those timelines still tracking.
starting to see some of the initial betas rolling into the marketplace with those partners in the second half.
Are those metrics or those timelines still tracking? And I'm also wondering from a metric standpoint, going forward, as you think about the business, how are you gonna be reporting the business going forward? And last, if I could, I know you guys had talked before about an analyst day.
And I'm also wondering from a metric standpoint going forward as you think about the business. How are you going to be reporting the business going forward and lastly, if I could I know you guys had talked before about in analyst day is that something that we should still be thinking about or is that kind of looking more like in the third quarter fourth quarter kind of timeframe. Thanks.
Is that something that we should still be thinking about, or is that kind of looking more like in the third quarter, fourth quarter kind of time frame? Thanks.
Okay.
<unk>.
From the first one, in terms of the integrations, those eight integrations are live now. So the team have done a fantastic job to move very quickly. So I think that's a fantastic start for us and we'll now be, you know, really publishing that in anger from the second half of the year and getting our go-to-market teams behind it. In terms of, can you just explain your question a lot more in terms of reporting the business?
From the first one in terms of the integrations those 18 integrations alive now so the team has done a fantastic job to move very quickly.
So I think thats, a fantastic start for us and we will now be really publishing that in aggregate from the second half of the year and getting our go to market teams behind it.
In terms of can you just explain your question a bit more in terms of reporting the business.
Yes, Steve, I'm just in terms of metrics of subscribers, enterprises that you're working with or otherwise, how you're thinking about, I guess, measuring the business both internally and what you're going to be reporting to the street going forward. I know it's still early in your tenure, but are there any early thoughts in terms of how we should be thinking about the business, particularly on the SaaS side?
Yeah, Steve I'm, just in terms of metrics of subscribers.
Enterprises that youre, working with or otherwise, how youre thinking about.
I guess measuring the business, both internally and what you're going to be reporting to the street going forward I know, it's still early in your tenure, but is there any early thoughts in terms of how we should be thinking about the business, particularly on the SaaS side.
I don't I think don't think we would be saying anything different to what we've been saying before or looking at the business in a different way. Obviously, we're going to go very strong on recurring revenues and the metrics around that. And I think quality across the organisation is something that, you know, throughout the organisation internally, we're making sure that we're at the top of our game. So maybe a bit more strength around that. But the general running of the business, I think we have good metrics today.
Okay.
I don't I think don't think we would be saying anything different to what we've been saying before looking at the business in a different way obviously, we're going to go very strong non recurring revenues and the metrics around that.
And I think quality across the organization.
Is something that throughout the organization internally, we are making sure that we're at the top of our games there might be a bit more strength around the.
The general running of the business I think we have good metrics today.
In terms of your third question, then yes, we are hosting our Analyst Investor Day on the 14th of June in New York City.
In terms of your third question then yes, we are hosting an analyst Investor day.
On the 14th of June in New York City.
Great. Thanks, so much.
There are no further questions in queue. I would like to turn the floor over to Steve for closing remarks.
There are no further questions in queue I would like to turn the floor over to Steve for closing remarks.
Thank you to everyone for the insightful questions and thanks today for joining the call. As I just mentioned, we are hosting an investor and analyst day in New York City on Tuesday, June 14 from 12 noon to 3 p.m. Eastern time.
Thank you to everyone for the insightful questions and thanks today for joining the call.
As I just mentioned, we are hosting an investor and analyst day in New York City on Tuesday June 14.
From 12 noon to three PM eastern time.
The event will provide an opportunity to meet the expanded leadership team and gain insight into our strategic roadmap, growth drivers and long-term outlook and to really spend some time with the heart of the business.
The event will provide an opportunity to meet the expanded leadership team and gain insights into our strategic roadmap growth drivers and long term outlook and to really spend some time with the half of the business.
To RSVP for the event, please contact Matt Glover via PWFL at GatewayIR.com.
The RSVP for the event, please contact Mark Glover via PWM L.
At Gateway.
Dot com.
In closing, I'd like to thank our employees for their diligent efforts and operational execution. Extend a thank you to our valued customers for putting their trust in PowerFleet. And thanks to our investors for your continued support and confidence in our ability to realise our vision.
In closing I'd like to thank our employees for their diligent efforts and operational execution.
And thank you to our valued customers for putting their trust in powerfully and thanks to our investors for your continued support and confidence in our ability to realize our vision.
Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Thank you ladies and gentlemen, this does conclude todays event you may disconnect at this time and have a wonderful day. Thank you for your participation.
Okay.