Q3 2023 PowerFleet Inc Earnings Call
Speaker 1: Good morning. Welcome to PowerFleets 3rd quarter, 2023 conference call.
Good morning, welcome to power fleets third quarter 2023 conference call.
Joining us for today's presentation is the company's CEO, Steve toe.
Speaker 1: Follow Chrome wavelength.
And CFO David Wilson.
Following their remarks, we will open up the call for questions.
Before we begin the call I would like to provide power fleets Safe Harbor statement that includes cautions regarding forward looking statements made during this call.
Speaker 1: During the call, there will be forward-looking statements made regarding future events, including power fleets future financial performance.
During the call there will be forward looking statements made regarding future events, including power fleets future financial performance.
Speaker 1: all statements other than present and historical facts.
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.
Speaker 1: include any statements regarding the company's plan for future operations anticipated.
Speaker 1: participated in results of operation, business strategy.
Speaker 1: of companies' expectations regarding opportunities for growth, demand for the company's product off.
Regarding opportunities for growth demand for the company's product offering and other industry trends are considered forward looking statements.
Speaker 1: Other industry trends are considered forward looking statements. Such states.
Such statements include but are not limited to the company's financial expectations for 2023 and beyond.
Speaker 1: companies financial expectations for 2023 and beyond. All.
All such forward looking statements imply the presence of risks uncertainties and contingencies, many of which are beyond the company's control.
Speaker 1: another way, Nic mol Started.
Speaker 1: companies' actual results, performance, or achievements may differ materially from those projected or assumed in any forward look.
The company's actual results performance or achievements may differ materially from those projected or assumed in any forward looking statements.
Speaker 1: Actors that could cause actual results to differ materially could include, amongst others, SEC filings, overall economic and business conditions. The man.
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 position.
Speaker 1: emergence of new technologies and the company's cash
Speaker 1: The company does not intend to undertake any duty to update any forward looking statements to reflect future...
The company does not intend to undertake any duty to update any forward looking statements to reflect future events or circumstances.
Speaker 1: 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.powerfully.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 powerfully dot com.
Speaker 1: And now I would like to turn the call over to Power Sleep CEO , Mr. Steve Tau. Sir, please proceed.
Now I would like to turn the call over to power fleet CEO, Mr. Steve toe Sir Please proceed.
Speaker 2: Good morning everyone and thank you for being here today. In today's call I will share an update on our Q3 performance as well as spending some time reviewing progress on the strategic colours of the business.
Good morning, everyone and thank you for being here today in today's call I will share an update on our Q3 performance as well as spending some time living progress on the strategic pillars of the business.
Speaker 2: Turning first to our Q3 performance, we're delighted to report a strong set of Q3 financial results. Our commitment to evolve into a high quality SaaS business requires us to take brave decisions to manage existing revenues in ways where our success would become clear in quarters rather than months.
Turning first to our Q3 performance. We are delighted to report a strong set of Q3 financial results our commitment to evolve into a high quality SaaS business required us to take break decisions to manage existing revenues in white, whereas success will become clearer and quarters rather than months in essence, we've been executing a private equity.
Speaker 2: In essence, we've been executing a private equity style transformative playbook in the public mark.
Style transformative playbook in the public market.
Speaker 2: Central to this strategy is building a pipeline of high margin product sales that pulls through sticky high margin trash revenue while shedding non-core and non-profitable product business.
Central to this strategy is building a pipeline of high margin product sales the pollsters sticky high margin revenue.
While shedding non core and non profitable product business.
Speaker 2: We have been clear that executing this transition would result in revenues coming down through early to mid-2023 before reaching an inflection point where higher product revenue would begin to flow through the P&L in the second half of 2020.
We've been clear that executing these times they shouldn't would result in revenues coming down through early to mid 2023, before reaching an inflection point, where higher project revenues will begin to flow through the P&L in the second half of 2023.
Speaker 2: I'm pleased to report this inflection point is now evident in our numbers. Our Q3 total revenue performance was our best result in board court.
I'm pleased to report this inflection point is now evident unanimous.
Total revenue performance was our best result in four quarters.
Speaker 2: Total revenue increased by 7% sequentially. Q3 product revenue increased quarter over quarter by an impressive 19% at the much improved growth margin.
Total revenue increased by 7% sequentially.
Q3 product revenue increase quarter over quarter by an impressive 19% that's a much improved gross margin.
Speaker 2: At the same time, our service revenue increased by 11% on the constant currency basis year over year.
At the same time, our service revenue increased by 11% on the coasts and currency basis year over year.
Speaker 2: Looking at adjusted EVID DAW, we made a commitment that we would take the necessary steps to absorb the cost and cash burn of our investment in engineering talent following our Q1 moving dots acquisition.
Looking at adjusted EBITDA, we made the commitment that we would tighten and necessary steps to absorb the cost and cash burn of our investments in engineering talent following that Q1 moving belts acquisition.
Speaker 2: Clear success here is evident in our Q3 numbers with sequential adjusted EBITDA increasing threefold to $2 million.
Our success here is evident in our Q3 numbers with sequential adjusted EBITDA, increasing threefold to $2 million.
Speaker 2: David will dive into more details on our financial performance short.
David will dive into more details on our financial performance shortly.
Speaker 2: I view the quarterly earning cycle as an opportunity to provide an overview of strategic and operational changes in the business, and as a regular opportunity for our stakeholders to evaluate whether we are achieving the objectives we set out for the revised business strategy following my appointment in January 2020.
I view, the coffee, earning cycle as an opportunity to provide an overview of strategic and operational changes in the business and there's a regular opportunity for our stakeholders to evaluate whether we are achieving the objectives. We set at the revised business strategy. Following my appointment in January 2022.
Speaker 2: The overriding reason I took the helmet power fleet was a conviction that it provided a starting foundation to build a world-class business and ultimately create a highly valued and appreciated staff asset in the industry.
The overriding reason I took the helm of power fleet was a conviction that it provided just stocking foundation to build a world class business and ultimately create a highly valued and appreciated as I say in the industry.
Speaker 2: To realise this vision, it was essential to execute a substantial transformation planet.
To realize this vision it was essential to execute a substantial transformation pilot pace.
Speaker 2: succeed, we took aggressive and decisive actions designed to enable PowerFleet to have a credible shot at being at the forefront of the data-led fast revolution of the industry in the years to come. This remains a bold and ambitious mission for PowerFleet, our investors, and now our partners from Mixed Telematics.
To succeed we took aggressive and decisive actions designed to enable power fleet to have a credible shot at being at the forefront of the Daiichi alleged past revolution of the industry in the years to come.
This remains a bold and ambitious mission capacity, our investors and now I caught Mr. Mixt telematics.
Speaker 2: Trust is a key currency in successfully navigating this kind of transition and is built by following through on your commitment.
Trustees of key currency in successfully navigating this kind of transition and he's built by following through on your commitments.
Speaker 2: A common mantra for those of you who have joined me on this journey so far is the commitment of the PowerFleet team to say what we do and do what we say. To demonstrate that these words have substance, I'll now share proof points from the Revolutionary Change Programme, focusing on the three major areas we knew we would need to significantly transform in the first two years of my tenure. First, scale, second, technology, and third, the shape and health of our P&L and balance.
Manta for those of you who have joined me on this journey. So far is the commitment to the pathway team.
To say, what we do and do what we say.
To demonstrate that these words have substance unless you have proof points from the revolutionary change program focusing on the three major areas. We knew we would need to significantly transform in the first two years of my tenure first scale second technology and third the shape and health of our P&L and balance sheet.
Speaker 2: Looking at scale, we're not here to be an also Iran in the industry. We're here to secure a place at the very top table. I'm convinced there will be four to five consolidated global players that will dominate the space over time. And we very much intend to be one of them.
Looking at scale, we're not here to be an also ran in the industry. We're here to secure a place at the very top table I'm convinced that it will be four to five consolidated global players that will dominate the space over time, and we very much intend to be one of them.
Speaker 2: To get there, we need the depth of resources to invest at the level the market demands and have the breadth of data-led solution capability to feed, refine, and evolve best-in-class AI engines, earning the right to be a mission-critical provider in an integrated fashion for an energized customer.
To get that we need the depth of resources to invest at the level the market demands and have the breadth of data led solution capability to feed refine and evolve best in class III engines, earning the right to be a mission critical provider in an integrated fashion for an energized customer base.
Speaker 2: With the announcement of the mixed combination, both organizations have taken a massive step towards securing the necessary scale.
With the announcement of the mix combination both organizations have taken a massive step towards security and the necessary scale.
Speaker 2: Anticipated achievements of the transaction to support the combined strategy include annual revenues increasing from $135 million to $280 million, adjusted EBITDA increasing from $7 million to $39 million, the number of subscribers on our platforms increasing from 700,000 to 1.8 million, the engineering team growing from 90 to over 230 colleagues,
Anticipated achievements of the transaction to support the combined strategy include.
Annual revenues, increasing from $135 million to $290 million adjusted EBITDA, increasing from $7 million to $39 million the number of subscribers on our platforms, increasing from 700000 to $1.8 million.
The engineering team growing from 90 to over 230 colleagues.
Speaker 2: and enterprise customers growing from three and a half thousand to more than seven and a half.
And enterprise customers growing from three and a half thousand to more than seven and a half days.
Speaker 2: Now on to technology, where the Unity AI and data platform strategy has been validated by customers and industry analysts alike. It was also pivotal to Mix's decision to combine forces with power.
Now once technology, whether unity AI and data platform strategy has been validated by customers and industry analysts alike. It was also a pivotal to make this decision to combine forces with passive.
Speaker 2: Josh and his team have produced a successful, incredibly well-run business that's been steeped in the industry for over 25 years. The fact that they believe wholeheartedly that the Unity vision is the right one to take a leading position in our fast evolving industry is a compelling validation for the unique Unity data highway and integrated ecosystem.
Jos and his team have produced a successful incredibly well run business that's been steeped in the industry for over 25 years. The fact that I believe wholeheartedly that the unity vision is the right one to take a leading position in a fast evolving industry is a compelling validation for the unique unity data highway and integrated ecosystem.
Speaker 2: Another proud achievement this year remains the Q1 acquisition of MovingDots, which secured some unique IP in the insurance space alongside a sizable team of data scientists and AI experts with deep domain knowledge.
Another proud achievement. This year remains the Q1 acquisition of moving dose, which secured some unique IP in the insurance space alongside a sizable team of data scientists and experts with deep domain knowledge.
Speaker 2: We believe that the combined engineering teams and data sets of PowerFleet and MIX will provide the strategic pillars for us to be a technological and market leader in the rapidly evolving Artificial Intelligence of Things or AIoT space driven through the Unity platform.
We believe that the combined engineering teams and data sets are powerful you can mix will provide the strategic pillars for us to be a technological and market leader in the rapidly evolving artificial intelligence of things or Iot space driven through the unity platform.
Speaker 2: Now on to the evolution of our P&L and balance sheet. I shared at the start of this call our progress against a strategy to evolve the P&L to successfully build a pipeline of strategic product sales that pull through sticky high margin SAS revenue while shedding non-core and non-profitable product business.
Now onto the evolution of our P&L and balance sheet I shared at the start of this call our progress against the strategy to evolve the P&L to successfully build a pipeline of strategic product sales.
Pull through sticky high margin SaaS revenue, while shedding noncore normal profitable product business.
Speaker 2: and that we've reached the inflection point in our strong Q3 performance.
And that we've reached the inflection point in our strong Q3 performance.
Speaker 2: I'd like to add some more color on the strategic evolution of our P&L and balance sheet.
I'd like to add some more color on the strategic evolution of our P&L and balance sheet looks.
Speaker 2: Looking at the geographical distribution of revenue, we've been very clear that we would directly address the mindshare and hidden cost drag of our subscale businesses in Brazil, Argentina and South Africa.
Looking at the geographical distribution of revenue.
You've been very clear that we would directly address the mindshare and hidden cost drag about subscale businesses in Brazil, Argentina, and South Africa.
Speaker 2: At a single stroke, our announced combination with Mix enables us to retain and scale these books of business, particularly in South Africa, which will combine with Mix's powerful local operation, and Brazil, where reaching critical mass on a combined basis now comes true.
At the single stroke, our announced combination with mix enables us to retain and scale. These books of business, particularly in South Africa, which will combine with makes these powerful local operation in Brazil, we're reaching critical mass on a combined basis now comes true.
Speaker 2: With regards to the balance sheet, the mixed combination provides an elegant and shareholder friendly pathway to meet our commitments to adjust the challenging ABRI preferred instrument.
With regards to the balance sheet. The mix combination provides an elegant and shareholder friendly pathway to meet our commitments suggests the challenging app REIT preferred instruments.
Speaker 2: Based on any measure, these are major accomplishments across all three areas, and this is a testament to the ability of the team to deliver compelling results against ambitious targets.
Based on any measure.
These are major accomplishments across all three areas and this is a testament to the ability of the team to deliver compelling results against ambitious targets.
Speaker 2: As I approach my two-year anniversary, I'm proud to say that the prospects and the strategic potential of the business are transformed. The right chess pieces are now in place for the next phase of our journey, a phase that is centered on realizing significant enterprise value for our shareholders.
As I approach my two year anniversary I'm proud to say that the prospects and the strategic potential of the business are transformed the right chess pieces are now in place for the next phase of our journey. If I use that is centered on realizing significant enterprise value for our shareholders.
Speaker 2: Ahead of sharing insights and thoughts on this, I'll ask David to walk through our third quarter results in detail. David.
The head of sharing insights and thoughts on this I'll ask David to walk through our third quarter results in detail David.
Speaker 3: Thanks, Steve and good morning everyone. Continuing the spirit of transparency and accountability, I'll firstly provide an update on the key strategic priorities that I called out on our prior call before providing additional insight on the numbers.
Thanks, Steve and good morning, everyone, continuing the spirit of transparency and accountability are firstly provide an update on the key strategic priorities that I called out on our prior call before providing additional insight on the numbers.
Speaker 3: Strategic priority number one is to accelerate our business transformation while living within the limits of our current balance sheet.
Strategic priority number one is to accelerate our business transformation, while living within the limits of our current balance sheet.
Speaker 3: Our October 10th Mixed Business Combination announcement is a game-changer, while the realized results from our cut-to-cover activities for Moving Dots with adjusted EBITDA traveling sequentially demonstrate a team that can execute decisively and at pace.
Our October 10th mixed business combination announcements is a game changer, while the realized results from our cut to cover activity. So moving dots with adjusted EBITDA sharply sequentially demonstrate a team that can execute decisively and pace.
Speaker 3: While these initiatives are major wins, they naturally created some headwind in our short-term financial results with $1.4 million in one-time transaction rationalization expenses incurred in the...
While these initiatives are major wins, they naturally created some headwind in our short term financial results with $1 $4 million in one time transaction and restaurant operation expenses incurred in Appaloosa.
Speaker 3: Priority number two is to improve the underlying operating leverage of our business by implementing a common and scalable software platform across all geographies.
Number two is to improve the underlying operating leverage of our business by implementing a common and scalable software platform across all geographies.
Speaker 3: The central tenet of this initiative is the rollout of a global ERP system and, as I'm sure you can appreciate, our business combination with Mix significantly increases the scale of this endeavor and presented us with alternate pathways.
The central tenets of this initiative is the rollout of our global ERP system and as I'm sure. You can appreciate our business combination with mix significantly increases the scale of this endeavor and presented us with alternative pathways.
Speaker 3: Based on an initial review, we concluded that the most expeditious option to get the entire global business on a single ERP instance is to standardize our mixed dynamics 365 solution that is actively being rolled out.
Based on our initial review we concluded that the most expeditious option to get the entire global business on a single ERP instance is to standardize our mixed dynamics 365 solution that is actively being rolled out.
Speaker 3: A global ERP is of a critical importance, both for realizing millions of dollars in spend efficiencies and building out a rich set of SAS metrics that provide proof points on the durability of revenue and operating leverage inherent in our business model.
A global ERP is of critical importance to realizing millions of dollars in spend efficiencies and building out a rich set of SaaS metrics that provide proof points on the durability of revenue and operating leverage inherent in our business model.
Speaker 3: ERP is a major workstream for integration planning and execution, and we will continue to provide regular insights and updates on future calls.
ERP is a major work streams of integration planning and execution and we will continue to provide regular insights and updates on future calls.
Now onto our financial performance for the quarter.
Speaker 3: Starting with Revenue, with the underlying quality is radically improved versus the prior year.
Starting with revenue, where the underlying quantity is radically improved versus the prior year.
Speaker 3: While total revenue for the quarter ended September 30, 23 of $34.2 million was in line with last year, approximately $2 million of low value product revenue has been actively shed from the business and replaced with high margin service revenue up 4% on an absolute basis and over 11% on a constant currency basis.
Total revenue for the quarter ended September 30, 23 of $34 $2 million was in line with last year.
Me $2 million of low value product revenue has been actively shed from the business.
Replace with high margin service revenue up 4% on an absolute basis.
The 11% on a constant currency basis.
Speaker 3: Additionally, our product sales are increasingly high-margin, differentiated, and centered on pulling through sticky SAS revenue.
Additionally, our product sales are increasingly high margin differentiated and centered on pulling through sticky SaaS revenue.
Speaker 3: Success here is evident in sequential performance where product margins increase from 22% to over 30.
Success here as evidenced in sequential performance, where product margins increased from 22%.
Yes.
Speaker 3: Total gross profit margin for the quarter of 50% was in line with the prior year.
Total gross profit margin for the quarter of 50% was in line with the prior year.
Speaker 3: Product gross margin of 33% benefited from $400,000 in out of period import, due to recovery. On an adjusted basis, product margin was 30%.
Product gross margin of 33% benefited from $400000 in out of period.
Coverage.
On an adjusted basis product margin was 30%.
Speaker 3: Meanwhile, service gross margin 61% was handed by $400,000 in out of period infrastructure expense and $300,000 in unity depreciation expense.
Meanwhile, service gross margin of 61% was hindered by $400000 in out of period infrastructure expense and $300000 in unity depreciation expense.
Speaker 3: suggesting for these items, service gross margin was in line with the 64% hosted in the price.
Adjusting for these items service gross margin was in line with the 64% posted in the prior year.
Speaker 3: onto operating expenses which increased by $2 million to $20.4 million compared to the same ago period with the current year impacted by one time deal in restoration costs of $1.4 million.
Onto operating expenses, which increased by $2 million to $20 4 million compared to the same period with the current year impacted by onetime deal and rationalization costs of $1 4 million.
Speaker 3: That's also to build a common shareholder's total $5 million or 14 cents per basic and diluted share. And adjusted EBITDA was $2 million, three times higher than the prior quarter, following cuts of cover activities for moving.
Net loss attributed to common shareholders totaled $5 million or <unk> 14 per basic and diluted share and adjusted EBITDA was $2 million.
Three times higher than the prior quarter following cut to cover activities for me because.
Speaker 3: Our battery sheet remains strong quarter end with 19.6 million dollars in cash and cash equivalents and a worth in capital position of 34.5 million dollars.
Our balance sheet remains strong quarter, and with $19 $6 million in cash and cash equivalents on our working capital position of $34 5 million.
Speaker 3: Looking to the future, we recognize that the macro-environment poses certain challenges in specific markets and regions.
Looking to the future, we recognize that the macro environment poses certain challenges in specific markets and regions.
Speaker 3: Specifically, the ongoing conflict in Israel has understandably what about temporary fluctuations in product demand and foreign currency challenge.
Specifically the ongoing conflict in Israel has understandably worried about temporary fluctuations in product demand from foreign currency challenges.
Speaker 3: It is worthy to note that over 80% of our book of business in Israel is recurring subscription revenue that is centered on transportation safety and security, an essential versus discretionary needs.
It is worthy to note that over 80% of our book of business in Israel is recurring subscription revenue that is centered on transportation safety and security.
An essential versus discretionary needs.
Speaker 3: Most importantly, I'm relieved to report that despite the horrific ongoing events and related strains to all those impacted, our Israeli team members are currently safe, and our facilities remain unaffected.
Most importantly, I'm relieved to report that despite the horrific ongoing events and related strain to all those impacted.
The team members are currently safe and our facilities remain unaffected.
Speaker 3: While we continue to closely monitor the situation, this assurance of safety is paramount.
While we continue to closely monitor the situation. This assurance of safety is Paramount we.
Speaker 3: We have also enacted our business continuity plan to ensure we have redundant capabilities for other services our Israeli team provides to our global business, particularly around supply chain and distribution. That concludes my remarks. Steve.
We are also we enacted our business continuity plan to ensure we have redundant capabilities or the services. Our Israeli team provides to our global business, particularly around supply chain and distribution.
It concludes my remarks, Steve.
Thanks, David.
Speaker 2: Accused to be financial results or a testament to the exceptional execution by our global team. These on-plan results are particularly impressive when you take into consideration they were achieved in the midst of an immense effort to sign our transformative business combination with them.
Our Q3 financial results are a testament to the exceptional execution by our global team. These unplanned results are particularly impressive when you take into consideration. They were achieved in the midst of an immense effort to sign our transformative business combination with mix.
Speaker 2: Moving back to the overall view of the business, we continue to gain strong practice.
Moving back to the overall view of the business, we continue to gain strong traction.
Speaker 2: This is especially true as we witnessed the resounding subheathebunity are safely driven industrial solutions and are connected car of.
Especially true as we witnessed the resounding success of unity are safety, driven industrial solutions and our connected car offerings.
Speaker 2: In Q3, we are delighted to announce New logo wins in North America with the likes of Balvali, Summit Construction and Development, OIGlass and CMC, and major account expansion projects with the likes of NACPAC, Brinks, General Motors, Georgia Pacific and FEMP.
In Q3, we are likely to announce new logo wins in North America with the likes of Valvoline select construction and development.
My glass and CMC and major account expansion projects with the likes of snack pack Brink's General Motors, Georgia Pacific and FEMSA.
Speaker 2: From a market development perspective, safety remains at the very heart of what we do. Here are some examples of what...
From a market development perspective safety remains at a very hard to what we do.
Here are some examples of what we achieved in Q3.
Speaker 2: Powerfully expanded into the existing relationship with Mr. Bitchie Lodge next America, MLA, the fourth largest fourth-first manufacturer in the world. We signed a white label agreement creating a competitive advantage to MLA, an additional revenue stream for power.
<unk> expanded it to the existing relationship with Mitsubishi largely next America MLA, the fourth largest forklift manufacturer in the World, We signed a white label agreement, creating a competitive advantage for MLD and an additional revenue stream for power fleet.
Speaker 2: The US Department of Transportation launched an initiative and subsequent campaign to reduce the rising number of serious injuries and deaths on America's highway roads and streets. After an extensive review process, how fleets in our Unity platform were selected as apartments of joining the US Department of Transportation Deficit to improve road safety.
The U S Department of Transportation launched an initiative in subsequent campaign to reduce the rising number of serious injuries and deaths on American Highway roads and streets. After an extensive review process. How fleets now unity platform was selected as a partner to join the U S Department of Transportation's efforts to improve road safety.
Speaker 2: ABI research, a leading analyst in the IoT industry, released a competitive report that compared vendors to videostasis solutions to provide a third party assessment and rank.
Abi research, a leading analyst in the Iot industry relates to competitive report the compared vendors a video safety solutions to provide a third party assessment and ranking.
Speaker 2: After a full assessment process, which includes innovation criteria like solution options, user experience and use cases, power fleet was named as a top innovator and ranked within the top five providers in the world.
After a full assessment process, which include innovation criteria like solution options user experience and use cases power fleet was named as a top innovator and ranked within the top five providers in the world.
Speaker 2: To close off our prepared remarks, I'll now set expectations on what the Combined Power Fleece and Mixed Team is committed to deliver over the coming quarters. In a similar fashion to my initial commitments, I made for the business at the beginning of 2022.
To close off our prepared remarks, I'll now set expectations on what the combined power fleet and mixed team is committed to deliver over the coming quarters in a similar fashion to my initial commitments I made for the business at the beginning of 2022.
Speaker 2: Delivery will be across the following three vectors, technology, financial performance and realising shareholder value.
Delivery will be across the following three vectors technology financial performance and realizing shareholder value.
Speaker 2: Starting with technology, we will continue to strengthen and broaden the capabilities of Unity and demonstrate this is a true software platform capable of expanding wallet share with our existing customers, as well as acting as a powerful magnet for new ones.
Starting with technology, we will continue to strengthen and broaden our capabilities of unity and demonstrate this is a true software platform capable of expanding wallet share with our existing customers as well as acting as a powerful magnet for new ones unity is on the path to become a platform and ecosystem that in the future will go well.
Speaker 2: Unity is on the path to become a platform and ecosystem that in the future will go well beyond traditional telamer.
On traditional telematics sky.
Speaker 2: Scaling our device's diagnostic and data-ingestion capabilities, harnessing our IILED insights for customers and providing flexibility on how they consume those insights, whether through our advanced applications or other integration.
Scaling our device agnostic and data ingestion capabilities harnessing the.
Insights to customers and providing flexibility on how they consume those insights whether through our advanced applications or other integration points.
Speaker 2: Positions Unity is a true data highway and ecosystem hub for broader IOT use.
Physicians unity is a true data highway and ecosystem hub for broader Iot use cases.
Speaker 2: Looking at financial performance, we expect to deliver accelerated revenue.
Looking at financial performance, we expect to deliver accelerated revenue growth.
Speaker 2: We expect to realise readily available revenue synergies from the mixed combination, source from compelling cross-cell and up-tail opportunities through the combined complimentary product portfolio.
We expect to realize readily available revenue synergies from the combination saw some compelling cross sell and upsell opportunities through the combined complementary product portfolios.
Speaker 2: Powerflake solutions will also benefit from the global reach of Mixed is 120 in direct channel pass.
The fleet solutions will also benefit from the global reach it makes it a 120 indirect channel partners.
Speaker 2: Expect Unity to be an engine driving a steady quarterly climb of net dollar retention to best in class levels through the following areas. The device-ignostic capabilities of Unity expands the process of revenue generating subscribers well beyond those we directly supply. Our value added modules and integration points provides significant headroom on the amount of revenue we can generate per subscriber.
Expect units to be an engine driving a steady quarterly climb of net dollar retention to best in class levels through the following areas the device agnostic capabilities of unity expand the set of revenue generating subscribers well beyond those we directly support <unk>.
All you added modules integration points provide significant headroom on the amount of revenue, we can generate per subscriber and.
Speaker 2: And finally, our solutions become increasingly sticky as the value of the data that we provide, which is well beyond the underlying acetone inorganization.
And finally, our solutions become increasingly sticky as the value of the data that we provide reaches well beyond the underlying asset owner in organizations.
Speaker 2: expect rapidly expanding adjusted EBITDA. The opportunities coming out of the combination are both substantial and readily accessible and we expect adjusted EBITDA to more than double from a trading 12-month start.
Expect rapidly expanding adjusted EBITDA, the opportunities coming out with a combination of both substantial and readily accessible and we expect adjusted EBITDA to more than double from a trailing 12 months starting point.
Speaker 2: And finally, expect best in class rule of 40 financial performance within two years of course.
And finally expect best in class rule of 40 financial performance within two years of clubs.
Speaker 2: Now on to shareholder value creation, where we expect to take major strides in recalibrating the way powerfully viewed and valued by the market. Air is a
Now on to shareholder value creation, where we expect to take major strides in recalibrating. The white power fleets is viewed and valued by the market.
Areas of focus include the following.
Speaker 2: The mix combination provides sizing scale that will enable us to attract a much broader set of investments.
The mix combination provides size and scale that will enable us to attract a much broader set of investors.
Speaker 2: The steady release of Unity AIOT, Powered offerings, will enable us to break away from the market's traditional view of telematics.
The steady release of unity I Iot powered offerings will enable us to break away from the markets traditional view of telematics devices.
Speaker 2: The rollout of our globally RP for the combined company will allow us to report an increasingly rich set of fast metrics which will provide clarity and transparency on the quality and durability of our recurring revenue book of business with a specific focus on net dollar retention. And finally, securing an enterprise value that is underpinned by a rule of 40 revenue model.
The rollout globally, our pace of the combined company will allow us to report an increasingly rich set of SaaS metrics, which will provide clarity and transparency on the quality and durability of our recurring revenue book of business with a specific focus on net dollar retention and finally, securing an enterprise value that is underpinned.
Our rule of 40 revenue multiple.
Speaker 2: We clearly now have a compelling short to midterm value proposition to present to the markets. And as a result, we will be intensifying our investor outreach.
We clearly now have a compelling short to mid term value proposition to present to the markets and as a result, we will be intensifying our investor outreach.
Speaker 2: This starts next week where the joint power fleet and MIX team will attend the Roth Investor Conference in mid-term Manhattan on November 15th. We will host our joint investor day with MIX at the Intercontinental New York Barclay Hotel in mid-term Manhattan at 2pm Eastern time on November 16th. David will be joining the MIX team at the Raymond James TMT Conference in New York on December 5th. And finally, we plan to execute an investor road show early in the new year. We look forward to seeing as many views possible.
This starts next week, where the joint powerfully to mixed team will attend the Roth Investor Conference in Midtown Manhattan on November the 15th.
We will house that joined to Investor day with mix at the Intercontinental New York Barclay Hotel in Midtown Manhattan at two P. M. Eastern time on November the 16th.
David will be joining the mix team at the Raymond James TMT Conference in New York on December the fifth.
And finally, we plan to execute an Investor Road show early in the new year we.
We look forward to seeing as many of you as possible at these events.
Speaker 2: I'll now turn it back over to the operator for Q&N. Operator.
I'll now turn it back over to the operator for Q&A.
Operator.
Speaker 1: Thank you. The floor is now open for questions. If you would like to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask if listening on speaker phone this morning that you pick up your handset while asking your question to provide optimal found quality. Once again, that'll be star one at this time if you wish to join the queue to ask a question. Please hold a moment while we pull for questions.
Thank you.
Floor is now open for questions if you'd like to join the queue to ask a question at this time. Please press star one on your telephone keypad, we do ask if listening on speaker phone. This morning that you pick up your handset while asking your question to provide optimal sound quality once again that'll be star one at this time, if you wish to join the queue to ask.
I ask a question please hold a moment, while we poll for questions.
Speaker 1: And our first question this morning is coming from Scott Cirl from Roth MKN. Scott, your line is live. Please go ahead.
And our first question. This morning is coming from Scott Searle from Roth MKS.
Your line is live please go ahead.
Speaker 4: Hey good morning, thanks for taking my questions. Nice job on the quarter guys, I know it's a difficult macro back.
Hey, good morning, Thanks for taking my questions nice job on the quarter guys I know, it's a difficult macro backdrop.
Speaker 4: Hey, David, maybe just quickly for clarification. My audio was a little choppy. I wanted to clarify if there was 1.4M. I thought transformation costs in the quarter. Wanting to confirm that it sounds like the ERP systems that you're going to use going forward are going to be mixed.
David maybe just quickly for clarification my audio was a little choppy I wanted to clarify if there was $1 4 million I thought transformation costs in the quarter wanted to confirm that it sounds like the ERP systems that youre going to use going forward, we're going to be mix wanted to just clarify that as well and then immediately in the December quarter, how are you expecting.
Speaker 4: want to just clarify that as well. And then immediately in the December quarter, how are you expecting things to trends sequentially? I know there are some macro headwinds out there, particularly markets like Israel, but just wondering if you could quickly comment on how you see things progressing in the intermediate term or near term before we start to see the combination impacts.
Things to trend sequentially I know there are some macro headwinds out there, particularly in markets like Israel, but just wondering if you could quickly comment on how you see things progressing in the intermediate term or near term before we start to see the combination impact from mix.
Alright, Thanks, Scott So in terms of the choppy audio the $1 4 million that referred to one time costs incurred in the quarter.
Speaker 3: Thanks, Scott. So, in terms of the choppy audio, the 1.4 million that referred to one-time costs incurred in the quarter, both in terms of the transaction costs for the mixed deal, in addition to certain rationalization costs attached to the ongoing cost reduction to cover moving docks. So, that was the 1.4 million that was referred to in the prepared remarks.
Both in terms of the transaction costs for the mix deal in addition to certain rationalization costs.
The ongoing cost reduction to cover moving docs. So that was the $1 4 million that was referred to in the prepared remarks.
Speaker 5: Yes. And in terms of the ERP, we've obviously evaluated both the NetSuite path that we were on, as well as the Dynamics 365 path that the MIX team were on. And as we've looked at it, the most expeditious and the quickest way for us to get on a common platform is actually to move to the Dynamics platform. So again, that will be a very important piece of work that we'll be planning for between now and close and aggressively executing post-close. So we're there in terms of that piece.
Yes, and in terms of the ERP.
Obviously evaluated both the net suite path that we run as well as the dynamics 365, but the mixed team around and as we've looked at it the most expeditious and the quickest way for us to get on a common platform is actually to move with the dynamics platform. So again that will be a very important piece of work, but we'll be planning for between now and close an.
Certainly executing post close.
In terms of that piece.
Speaker 5: And then in terms of looking forward to future financial performance.
And then in terms of looking forward to future financial performance.
Speaker 5: The key issue is obviously Israel. It is obviously a very important piece of our business.
The key issue is obviously Israel.
There is obviously, a very important piece of our business as I referred to in the prepared remarks. The vast majority of that revenue is recurring in nature.
Speaker 5: As I referred to in the prepared remarks, the vast majority of that revenue is recurring in nature. It is also an essential need as opposed to a discretionary need.
It is also an essential need as opposed to a discretionary need.
Speaker 5: And so last quarter Israeli business was just north of sort of 10 million dollars So ran about two main in product statement recurring services
So last quarter Israeli business was just north of sort of $10 million, so right about $2 million in prototyping recurring services, we expect the recurring services piece to hold up very well.
Speaker 5: We expect the recurring services piece to hold up very well, so other than FX issues and obviously the FX rate has actually improved over the last week or so, but it was clearly weaker earlier in the quarter, there'll be some exposure there. And then from a product standpoint, a fair amount of that product revenue is actually sold to the consumer through dealerships.
So other than FX issues, and obviously the FX rate has actually improved over the last week or so but it was clearly weaker earlier in the quarter there'll be some exposure there and then from a product standpoint, a fair amount of that product revenue was actually sold to the consumer through dealerships and you can appreciate that's a piece of the mark.
Speaker 5: and you can appreciate that's a piece of the market that will be definitely sort of softened in terms of the man just given what's going on in the country. So that's the sort of key headwind.
That will be definitely sort of softened in terms of demand just given what's going on in the country. So that's the sort of key headwind, but in terms of the fundamentals of the business were performing well, obviously very clear in our Q3 numbers. We're building up a very nice head of steam. So the fundamentals are very very strong and we think we can absorb.
He is already headwinds.
Speaker 4: Very good and and Steve if I could from a high level it seems like you continue to add more logos You get add-ons with existing customers
Very good and Steve if I could from a high level. It seems like you continue to add more logos.
Add ons with existing customers.
Speaker 4: And you had 11%, I think, growth in the services side year over year in constant currency.
And you had 11% I think growth in the services side year over year in constant currency could you comment a little bit in terms of what the total <unk> opportunity pipeline. It looks like you think over the last couple of quarters, you had some relatively big growth on a sequential basis, how is that trending.
Speaker 4: Could you comment a little bit in terms of what that total TCV opportunity pipeline looks like? I think over the last couple of quarters you had some relatively big growth on a sequential basis. How is that trending? Also, kind of the initial cut when you start to look at the combination with mix and upsell opportunities. What does that look like?
So kind of the initial cut when you start to look at the combination with mix and upsell opportunities what does that look like and also just competitively now you're a different company. When you add the mixed scale in terms of reach and product breadth.
Speaker 4: and also just competitively. Now you're a different company when you add the mix scale in terms of reach and product breadth.
Speaker 4: How are you doing in terms of getting to the table now with some sort of geotab? Is that changing the dialogue out in the marketplace in terms of how you guys are perceived? Thanks.
How are you doing in terms of getting to the table now with some sort of geo tablets or changing the dialogue out in the marketplace in terms of how you guys are perceived thanks.
Speaker 2: Right. So firstly, Scott, I don't think we've ever given a full TCV pipeline number. We've talked about the growth sequentially. It's continued. So roundabout net around thirty five to forty million dollars of new pipelines being added, which is great.
Okay.
So.
Firstly, Scott I don't think we've ever given a full tacb pipeline number we've talked about the growth sequentially.
Continued so roundabout net around 35% to $40 million of <unk>.
New pipeline has been added which is great.
Speaker 2: I think in terms of customer sentiment towards the business, it's extremely strong.
I think in terms of customer sentiment towards the business it's extremely strong.
Speaker 2: So, you know, both as powerfully as a loan you've seen, you know, every quarter we come out with the new logos and the account expansions, you see the broader market appreciation that we're starting to receive now. And that kind of links in as well to the positioning with mix as in terms of being a business at scale.
So both of this pathway.
You've seen every quarter, we come out with the new logos in the account expansions you see the broader market appreciation that we are starting to receive now and that kind of links and as well to the positioning with makes in terms of being a business at scale.
Speaker 2: So we've already seen more inbound interest. I think, you know, this takes us to almost the very top table. And I think, you know, we are now seeing ourselves in a position where we will fight more business against the biggest boys in the industry. And we're confident of our chances in those interactions.
So we've already seen more inbound interest I think Ken.
Makes us to them.
Almost a very top table.
I think we are now seeing ourselves in a position, where we will find more business against the biggest boys in the industry.
And we're confident about challenges in those interactions as well.
Speaker 4: Great, thanks so much. I'll get back in the queue and look forward to seeing you guys next week at her conference in the analyst day. All the best.
Great. Thanks, so much ill get back in the queue and look forward to seeing you guys next week at our conference in the Analyst day, all the best.
Thank you Scott.
Speaker 1: Thank you. Your next question is coming from Mike Walkley from Canaccord Genuity. Mike, your line is live. Please go ahead.
Thank you. Your next question is coming from Mike Walkley from Canaccord Genuity.
Mike Your line is live please go ahead.
Speaker 6: Right. Thank you. Yeah. Congratulations on the strong results and our prayers and best wishes to your Israel employee base, I guess, to start off very strong quarter and gross margin, which has been part of your strategy. I guess, David, on the hardware side, it's 30% kind of a good number to think about going forward, or is there anything you should think about unmixed for your standalone business in terms of gross margin trends?
Great. Thank you.
Congratulations on the strong results and our parents and best wishes to your Israel employee base.
I guess to start off very strong quarter in gross margin.
Which has been part of your strategy I guess, David on the on the hardware side.
It's 30% kind of a good number to think about going forward or are there is there anything we should think about them and mix for your standalone business in terms of gross margin trends.
Speaker 5: Yeah. So in terms of the 30% that is definitely a target that was spoken about in the past. In terms of the quarter itself.
Yes, so in terms of the 30%.
That is definitely a target that we've spoken about in the past.
In terms of the quarter itself.
Speaker 5: clearly very strong, centered in North America, which is sort of at the forefront in terms of again, interaction in terms of the unity story. So that's an important piece of it.
Have a very strong centered in North America, which is sort of at the forefront in terms of gaining traction central utility stories. So that's an important piece of it. So I would say, 30% is reflective of expectations on a go forward basis, there's always some and then when you.
Speaker 5: So I would say 30% is reflective of expectations on a go-forward basis. There's always some, and that when you use WEDMIX, obviously mixes the challenging word to use. But within our business, there's often sort of mix issues in terms of things that are highly different, for example, like our industrial solution.
With mix, obviously mixes of challenging word to use but within our business and sort of mix issues in terms of things that are highly differentiate for example, like our industrial solution.
Speaker 5: We have more pricing power. We're there than maybe the logistics side of things. So there's always some sort of fluctuations, but I think on a blended basis.
Have more pricing power than maybe at the logistics side of things. So there's always some sort of fluctuations, but I think on a blended basis at 30% and then growing from there is a good expectation that.
Speaker 5: 30% and then growing from there is a good expectation.
Speaker 2: And just coming over the top of that, as we signaled in terms of taking out the lower product margin business and unprofitable product lines, that was the reason that we were down where we were. So this is a great proof point in terms of the newer pipeline that we've built, the execution of that new pipeline, and our commitment to do higher margin profitable business.
And just just coming over the top of that.
As we signaled in terms of taking out the lower product margin business in unprofitable product lines.
That was the reason that we were down where we were so this is a great proof point in terms of the new pipeline that we've built the execution of that new pipeline and a commitment to do higher margin profitable business.
Speaker 6: No, great, that's great explanation because that's on that execution as you're coming out the other side. I guess just a follow up question, building on some of Scott's questions.
Great. That's great explanation, because that's on that execution as you come out the other side I guess just a follow up question from Scott's question just.
Speaker 6: On the pipeline of business sounds like, you know, Israel is expected, the products could be a little soft. North America's been a strong business year to date. How are you seeing kind of the pipeline and trends for your different regions?
And the pipeline of business sounds like Israel as expected products could be a little soft.
North America has been a strong business year to date, how are you seeing kind of the pipeline and trends for your <unk>.
Uh huh regions.
Speaker 2: Yeah, so I mean, if you look at the North American year to date and quarterly results, that was our number one focus. It's our number one strategic arena that we think we can get to a very high level in terms of market leadership. And I think that is playing out well. And the pipeline strength there is growing as is our reputation. You know, it took a while for us to be known in the market. And I think now to kind of Scott's earlier question as well, we're starting to see far more inbound interest into the business as we go.
Yeah. So I mean, if you look at the North American year to date and quarterly results.
Our number one focus it's our number one strategic.
Arena that we think we can get to a very high level in terms of market leadership and I think that is playing out well and the pipeline strength. There is growing as is our reputation. It took a while for us to be known in the market and I think now to kind of Scott's earlier question as well, we're starting to see formal inbound interest into the business as we go.
Speaker 2: So that's that's very strong. Europe will be a big growth area for us in 2024. So as you're aware, we've invested in Europe . We've got a nice pipeline building there. Very competent in terms of abilities to execute, considering particularly, you know, the background and experience that I and others that I bought into the business have of that market.
So that's very strong Europe will be a big growth area for us in 2024 so.
As you're aware we've invested in Europe, we've got nice pipeline building there.
Very competent in terms of our ability to execute considering particularly the background and experience that I and others that I bought into the business half of that market.
Speaker 2: I think our kind of Latin American business was naturally in a place of uncertainty. And since we've now been able to settle the future of that business and we're going to have businesses of scale, you know, with the mixed combination, then we're starting to see pipeline grow again. And from an Israel perspective, despite the fact that we naturally in the short term have some headwinds, the development of pipeline, particularly in the B2B space, is still remains strong for the medium term.
I think kind of Latin American business was naturally in a place of uncertainty and since we've now being able to settle the future of that business and began a half business is a scale.
With the mix combination then we're starting to see pipeline grow again and from Israel perspective, Despite the fact that.
We naturally in the short term have some headwinds the development pipeline, particularly in the database space is still remain strong for the medium term.
Speaker 2: So, you know, I think if you look over all, we're getting traction now, you know, we're getting the proof point in terms of the new strategy, you necessarily can go with the top in terms of being able to get incremental.
So I think if you look at overall well.
Getting traction there.
We are getting the proof points in terms of the new strategy units is really coming out with the top in terms of being able to get incremental.
Speaker 2: opportunities for revenue. And then if you take the mix combination, then, you know, in terms of the solutions that mix have, that we don't have, particularly the strong in-cab logistic stuff that we're not so know-cut on. And then vice versa, in terms of the industrial solutions that will be available to all mixed territories, you know, we can definitely see the past incremental growth rates that we're alluding.
Opportunities for revenue and then if you take the mix combination then.
Terms of the solutions that mix have that we don't have particularly strong in cab.
<unk> stuff that we're not so no cotton and then vice versa in terms of the industrial solutions that will be available to all mixed territories.
We can definitely see the path to the incremental growth rates that we're alluding to.
Great well congrats on already accomplished to date and I'll pass the line.
Thanks, Mike.
Thank you. The next question is coming from Jason Smith from Lake Street, Jason. Your line is live. Please go ahead.
Hey, guys. Thanks for taking my questions just given the macro backdrop curious what youre seeing from a pricing standpoint, if you've seen it get a lot more competitive I know the telematics space is always fairly competitive but have you seen any significant changes just given the current macro.
I think we're seeing some competitors desperation, you have I would describe it so.
He is trying to be one at very low rates, we're not going there I mean, you've seen chromalloy straw.
Strategy out of the last year for US we would draw the type b small selective over revenue in terms of maintaining and growing profitability and I think we're selling far more value so, particularly in the north American market. We have hired a very good set of enterprise software sales folks.
A concentrate very much on the value proposition across the C suite, and that's allowing us to hold pricing. So now that the pressures out there and but again, we are very have very strong conviction in terms of the growth of EBITDA and the growth of revenue alongside it based on the quality of pipeline that we're delivering and we think there's more than enough.
There for us to be comfortable.
Okay. That's really helpful. And then just as a follow up are you seeing any meaningful headwinds from the supply chain.
In terms of component supply for ourselves.
Correct.
No. We are we are we've done an awful lot of work in terms of dual and triple sourcing capabilities.
Again, a big shout out to our Israeli supply chain distribution team.
In terms of how they go about sourcing and making sure that we've got enough in <unk>.
<unk> to fulfill so very confident again that as long as our sales team can deliver them, we'll be able to supply effectively in the coming quarters.
Alright, perfect. Thanks, a lot guys.
Thank you.
Thank you. Your next question is coming from Gary <unk> from Barrington Research Gary Your line is live. Please go ahead.
Thanks, Good morning.
No David.
Couple of questions first of all David you called out a couple of one time.
Expenses related to the gross profit on <unk>.
Services and I Couldnt write them down could you just go through that again please.
Yeah, absolutely. So there's two that offset each other one is a $400000 of pickup in terms of just input Judy from prior period sort of a rebate.
That benefited the product margin side of things.
We've also been very active in terms of just working the infrastructure side of things as we transform things.
There was a catch up drilling that came through to the tune of $400000, but sort of offset the benefit from the Judy standpoint, So again from a total gross margin standpoint, and this thing is neutral.
But that was the pickup the sort of hinted service margins in the quarter.
Well, you're saying one thing is for product one thinks for service I'm trying to I'm trying to understand what you said that there was there was something that impacted the services margin because it was down year over year. So that's what I'm trying to get at was that yet.
One time issue or is that something that's going to be ongoing.
There's two issues. So one is a onetime issue, which is this $400000 out of period infrastructure cost that impacted margins. The other thing that has happened and is more prominent this quarter is an increase a significant step up in terms of the amount of depreciation we're taking on the unity platform.
So that was about a $300000 that will be something that we'll obviously continue on a go forward basis. The only thing I'd add there is the amount of operating leverage on unity is massive just because that's essentially a fixed cost.
Versus the revenue growth that will be enjoying on the back of that investment. So there is a pickup in terms of noncash costs that have impacted gross margin this quarter and that will be an impact next quarter or two.
Okay, and then is it safe to assume that most of the impact on the currency dealt with Israel shekel.
Yes.
Okay.
And then David could you.
I'm sorry, Steve could you maybe talk about.
The unity platform.
How much is that helping to drive new logos and as well as.
Where are you with trying to get the your base business your base customer base to accept or adopt the <unk> platform I assume its very early stages at this point.
Okay. So its significantly helping us in the race to win new business.
Unity as a consolidation platform. So a lot of our customers have multiple floor. Just because this is a fragmented market. So it will be able to be able to say that data and harmonize. It in one single place is to protective to them.
Also have too much data to many operating systems and they are looking for someone to help them simplify that to integrate those data sources into the different ways that people want to consume it which is fairly unique in this market. So that simplification that ease of use the ability for us to.
Really kind of tight people on their digital transformation journey also is helping us to win new business.
Then the value added modules with better more predictive AI insights on top and making the business benefit case, a lot smarter for customers. So that's all in terms of.
The reasons why we are winning more new logos and why people are now seeing this as a differentiated solution that's number one.
And then number two in terms of people adopting unity. So the way that we put units together is everyone sees our existing functionality.
They previously saw in our heritage platforms on unity today, So in fact.
The customers on unity <unk>.
They didn't have the ability to do is take on top of that the value added services are more device.
And data ingestion more integration and the value added modules that are kind of premium modules on top of the feature functions that they have today. So it's a very easy path.
We are fairly early still in kind of the upsell process of that so we have put together an inside sales team that is now just going out and kind of.
And really kind of having those good conversations and this is all kind of <unk> uplift that we will see continue in the future. So that's all part of the strategy and as I said, the confidence and proof points are very strong to date.
Okay. Thank you and then just briefly comment on.
Your markets industrial logistics I believe the third one was transferred transportation what.
How did they each performing quarter and.
What would be the outlook going into Q Q4.
When those market segments.
So Alice our safety solutions across the board, whether that safety in the warehouse or safety on the road.
So when you look at it not just by vertical, but and Colorado, where are we in the warehouse or are we a truck or a way of light commercial or are we a call. We look at it as kind of the solutions, we're delivering so safety solutions across the piece, we're seeing extremely strong traction pool and locked into in the warehouse in terms of the pedestrian.
Proximity alert solutions that we have.
A strong kind of I think sway towards video solutions as we talked about the Abi research piece.
And the logistics kind of I would say more commoditized still face is still the clunky area for us.
And I think people are still weighing up their overall needs following the post pandemic and rationalizing their assets. The states. So we don't see huge growth at that end, but that is more kind of as I say the lower <unk> revenue that we enjoy today.
And but it's not kind of the key growth area for us moving forward. So moving into Q4 moving into Q1, we're seeing pipelines, Iran safety insurance sustainability and compliance.
It's really strong and that's where we focused our efforts in terms of solution design in terms of marketing and in terms of bringing the best of the best because we truly believe that if we win the right in that space than wet where customers want to consolidate have fewer suppliers. Then we will we will win the traditional telematics business alongside.
Got it.
And so far the early signs of that strategy are coming through nicely.
Thank you.
Thank you and.
And there are no further questions in queue at this time in the Q&A session has now concluded I would now like to turn the floor back to Steve for closing remarks.
Sorry, Steve just turning the floor back to Steve for closing remarks at this time.
Thank you sorry, I had it.
<unk> audio problem. There so everyone. Thank you for the insightful questions and thanks again to everyone. Joining us. This morning as I mentioned, we'll be hosting an investor day alongside the mixed team next Thursday November 16th at two P. M. Eastern time in New York City.
If you're interested in attending this event please get in touch with our Investor Relations Representative Ms. Glover from Gateway group, who can provide you with all the necessary information.
We look forward to seeing many of you next week until then take care and talk to you soon.
Yeah.
Thank you for joining us today for our presentation you may now disconnect.