Q4 2023 PowerFleet Inc Earnings Call

Operator: Good morning. Welcome to PowerFleet's fourth quarter and full year 2023 conference. Joining us for today's presentation are the company's CEO, Steve Towe, and CFO, David Prestopino. Following their remarks, we will open up the call to questions. Before we begin the call, I would like to provide PowerFleet with a Harbor Statement which includes questions regarding forward-looking statements made during the call. During the call, there will be forward-looking statements made regarding future events, including PowerFleet, all statements other than present and historical facts.

Good morning, welcome to power fleets fourth quarter and full year 2023 conference call.

Joining us for today's presentation are the company's CEO, Steve Cho and CFO David Wilson.

Following their remarks, we will open up the call to questions.

Before we begin the call I would like to provide power fleets Safe Harbor statement, which includes cautions regarding forward looking statements made during this call.

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.

Operator: Please include any statements regarding the company's plans for future operations. Participated future financial, business strategy, competitive position, expectations regarding opportunities for growth, demand for the company's product offering, and other industry trends are considered forward-looking; statements include, but are not limited to, the company's financial expertise. All such forward-looking statements imply the presence of risks, uncertainties, and contingencies, many of which are beyond the company's control.

Demand for the company's product offering and other industry trends are considered forward looking statements.

Such statements include but are not limited to the company's financial expectations for 2024 and beyond.

All such forward looking statements imply the presence of risks uncertainties and contingencies, many of which are beyond the company's control.

Operator: The company's actual results, performance, or achievements may differ materially from those projected or assumed in any forward-looking statements. Factors that could cause actual results to differ materially include, amongst others, PC Filings, Overall Economic and Business Conditions, and Demand for the company's products and services. Competitive factors, the emergence of new technologies, and the company's Sydney does not intend to undertake any duty to update any forward-looking statements to reflect future events or circuits. Finally, I would like to remind everyone that this call will be made available for replay in the Investor Relations section of the website at www.powerfleet.com. Now, I would like to turn the call over to PowerFleet CEO, Mr. Steve Towe. Sir, please.

The company's actual results performance or achievements may differ materially from those projected or assumed in any forward looking statement.

Factors that could cause actual results to differ materially 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.

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 and 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 CEO, Mr. Steve toe Sir Please proceed.

Steve Towe: Good morning, everyone, and thank you for joining the call today. We'll provide you with a business update that focuses on a review of the key milestones that mark 2023 as a year of stellar transformation for the business. An overview of our strong financial performance in the final quarter and second half of 2023, highlighting increased financial strength and growth trajectory, and demonstrating highly effective results from the Strategic Operating Plan for the year, and a deep dive into the progress and momentum we're making in bringing together the PowerFleet and mixed businesses, highlighting the value the combination brings to our shareholders. In 2023, we embarked upon a bold and aggressive transformation, designed to in This plan required us to reshape the revenue profile of the business, and fix balance sheet issues that were a major overhang on the company.

Good morning, everyone and thank you for joining the call today, we will provide you with a business update the folks at all.

Review of the key milestones that not 2023 is a year of astellas transformation for the business.

I'll now review, our strong financial performance in the final quarter of second half of 2023 highlights increased financial strength, congrats trajectory and demonstrating highly effective results from the strategic operating plan for the year.

And then deep dive into the progress and momentum, we're making in bringing together the power fleet and mixed businesses highlighting the value the combination brings to our shareholders.

In 2023, we embarked upon a bold and aggressive transformation plan design.

Designed to inherit may change and accelerate the company's ability to elevated sales to a market leadership position at the very top table of the industry says.

This plan requires us to reshape the revenue profile of the business.

<unk> balance sheet issues that were a major overhang on the company access.

Steve Towe: An accelerated technology pivot to AI and data science-led solutions creates Gale to truly give the company the ability to compete with the global leaders in the industry, reignite EBITDA expansion and positive cash flow generation, and drive a unique product and platform strategy to bring differentiated value propositions to the industry. The outcomes achieved in the last six months, in particular, notably fact-checked by our strong Q4 performance, categorically underlined by world-class execution, the team has delivered with the undeniable achievement of the major business objectives we have communicated to our shareholders over the last 12 to 18-month period. Starting with revenue, where we embarked on a brave transformation early in the year based on improving the quality of our revenue streams. A strategy typically seen in the private equity space but, in our case, executed in the full view of the public market. We are grateful to our shareholders for the trust shown in the leadership team's abilities to execute this bold plan. His pivot included making tough decisions to exit poor-quality revenue segments, unprofitable contracts, low-performing territories, and non-strategic lines of business.

The accelerating technology pivot to AI and data science led solutions.

It's scale securely give the company the ability to compete with the global leaders in the industry.

Reignite to EBITDA expansion and positive cash flow generation.

And drive a unique product to platform strategy to bring differentiated value propositions to the industry.

The outcomes achieved in the last six months in particular, notably checked by our strong Q4 performance categorically underlying through World class execution. The team has delivered with the undeniable achievement of the major business objectives, we have communicated to our shareholders over the last 12 to 18 months period.

Starting with revenue, where we embarked on a branch transformation early in the based on improving the quality of our revenue streams and strategy typically seen in the private equity space, but in that case executing the full view of the public markets.

We are grateful to our shareholders for the trust shown in the leadership team's capabilities to execute just ballpark.

Pivot, including making tough decisions to exit poor quality revenue segments unprofitable contracts low performing territories and non strategic lines of business.

Steve Towe: This deliberate pruning of approximately $8 million of annual revenue concentrated in hardware sales has not only simplified our operations but also redirected resources towards more SAS-based revenue and business profitability. As we predicted publicly, we've reached a fast inflection point and a return to top-line growth in mid-2023, with second-half performance painting a clear picture of success, where total revenue increased by 6% compared to half-one, and gross profit followed suit with a 6% improvement. Topline success is built on our SaaS Unity platform strategy, as evidenced by Q423's high-quality SaaS revenue growing by 16% year-over-year on a constant currency basis. The total revenue performance in Q4 was our best performance in six quarters, growing 9% on a constant currency basis year over year, and was particularly pleasing as we absorbed the predicted revenue shortfall of 2 million in the quarter for our Israeli business due to the current macroeconomic issues for the territory.

It's deliberate pruning of approximately $8 million of annual revenue concentrated in hardware sales has not only simplified our operations, but also re directed vessel losses towards more SaaS based revenue and business profitability.

As we predicted publicly we've reached a fast inflection point and a return to topline growth in mid 2023 with second half performance painting, a clear picture of success, where total revenue increased by 6% compared to half one and gross profit followed suit with a 6% improvement.

Topline success is built on a SaaS unity platform strategy as evidenced by Q4, 'twenty three as high quality revenue growing by 16% year over year on a constant currency basis.

The total revenue performance in Q4 was our best performance in six quarters growing 9% on a constant currency basis year over year and was particularly pleasing as we absorbed the predicted 2 million revenue shortfall in the quarter to Irish variety business due to the current macroeconomic issues for the territory.

Steve Towe: The reshaping of top-line performance in the fall year to focus on high-quality SAAS revenue resulted in a 14% increase in service revenue year-over-year on a constant currency basis and a 3 million improvement in annual gross profit from a lower total revenue. Notably, North America, the leader in adoption of our unity data ecosystem solution, delivered an excellent performance with annual growth of 16%. Adjusted EBITDA in the second half of 2023 saw a terrific 141% increase, a gain of $2.9 million versus the first half.

The reshaping of topline performance in the full year to focus on high quality SaaS revenue resulted in a 14% increase in service revenue year over year on a constant currency basis.

The 3 million improvement in annual gross profit from our lower total revenue base.

Notably in North America, as a leader in adoption of our unity data ecosystem solution.

Delivered an excellent performance with annual growth of 16%.

Adjusted EBITDA in the second half of 'twenty, three so a terrific hundred 41% increase.

Gain of $2 9 million versus the first half.

Steve Towe: It's important to highlight that this EBITDA expansion was achieved despite a full period of moving DOS operating expenses, macroeconomic challenges in Israel, and a $1 million one-off charge for inventory-related items in the fourth quarter of 2023. The 48% sequential adjusted EBITDA increase from Q3 to Q4 2023 and 110% year-over-year increase in Q4 is a satisfying reflection on the output of the aggressive transformation efforts we've Moving on to technology, in 2023, we successfully tackled the dual challenge of aggressively ramping up investment in our next generation unity platform within the challenging landscape of managing near-term liquidity needs and addressing the financial overhang of the Abbree Preferred Note. The challenge was successfully addressed in very short order with the close of our rapid and strategic acquisition of moving dots at the end of March.

It's important to highlight that this EBITDA expansion was achieved despite a full period of moving das operating expenses macroeconomic challenges in Israel, and a $1 million one off charge for inventory related items in the fourth quarter of 2023.

The 48% sequential adjusted EBITDA increase from Q3 to Q4 2023.

110% year over year increase in Q4 is a satisfying reflection on the output of the aggressive transformation efforts, we've completed throughout the year.

Moving on to technology in 2023, we successfully kept cold the dual challenge of aggressively ramping up investment in our next generation units platform within the challenging landscape of managing near term liquidity needs and addressing the financial overhang of the Abbvie preferred notes.

The challenge was successfully addressed in very short order with the close of our Rapids and strategic acquisition and moving those at the end of March.

Steve Towe: As a reminder, this deal secured a cohesive and high-performing team of over 30 engineers and data scientists with deep domain knowledge, cutting-edge IP in the automotive and safety insurance space, along with robust ESG reporting capabilities to enrich unity, and was the source of an $8 million influx of liquidity versus a drain on cash. A key commitment we made to our shareholders at the close of the Moving Dots acquisition was to ensure it became EBITDA neutral within two quarters of close. As David will share, we clearly met this commitment posting a flat year-on-year spend on adjusted OPEX in Q4'23, which included $1.3 million of absorbed Moving Dots spend.

As a reminder, this deal secured a cohesive and high performing team of over 30 engineers and data scientists with deep domain knowledge.

Yeah, Joe IP in the automotive safety insurance space, along with robust ESG reporting capabilities to enrich unity and what's the source of an $8 million influx of liquidity plus he is a drain on cash.

A key commitment we made to our shareholders at the close of the moving dose acquisition was to ensure it became EBITDA neutral within two quarters of clubs as David will share. We clearly met his commitment posting a flat year on year spend in adjusted Opex in Q4, 2003, which included a $1 $3 million.

Absorbed moving don't spend.

Steve Towe: Our greatest accomplishment in 2023 is unquestionably the successful signing of our business combination with Mixed Telnet. This milestone empowers us to fully realize our vision and strategy but also significantly transforms our balance sheet, including clearing the ABRI preferred instrument from our capital structure. The combined value creation opportunity this presents makes us incredibly excited about the future of our business. The mixed deal is also a game changer in terms of scale, with 12 months' trading revenue increasing from $134 million to over $280 million. Combined EBITDA increased from $7 million to $40 million. The combination also provides a clear pathway to realize more than $25 million in cost synergies within two years of quotations.

Our greatest accomplishment in 2023 is unquestionably the successful signing of our business combination with mix telematics.

This milestone not only empowers us to fully realize our vision and strategy, but also significantly transformed our balance sheet, including cleaving, the abbvie preferred instrument from a capital structure.

The combined value creation opportunity. This presents makes us incredibly excited about the future of our business.

The mixed deal is also a game changer in terms of scale with 12 months trailing revenue increasing from $134 million to over $280 million combined EBITDA, increasing from 7 million to 14.

The combination also provides a clear pathway to realize more than $25 million in cost synergies within two years of close.

Steve Towe: With resounding shareholder approval for the transaction secured for both PowerFleet and Minx, our integration teams, led by Chief Corporate Development Officer Melissa Ingram, will now begin to move from the planning phase to active execution, deploying a tried and tested business integration methodology with a track record for delivering tangible results. The program aims to expedite the integration phase, enabling us to swiftly shift our attention towards driving increased shareholder value and enhancing our customers' experience, underpinned by a highly robust EBITDA expansion program. With 100-day plans in place and the non-negotiable deliverables defined, our teams are ready to embark on implementing key elements of the integration plan.

With resounding shareholder approval for the transaction secured for both halfway to mix our integration team led by Chief Corporate Development Officer, Melissa Ingram will now begin to move from the planning phase to active execution.

In deploying a tried and tested business integration methodology with a track record for delivering tangible results. The program aims to expedite integration phase, enabling us to swiftly shift our attention towards driving increased shareholder value and enhancing our customers' experience underpinned by a high.

The robust EBITDA expansion program.

With a 100 day plans in place and the non negotiable deliverables defined our teams are ready to embark on implementing key elements of the integration plan.

David Prestopino: The entire organization is firmly behind this effort, and we can already feel the collective strength of the combined team driving our integration. We are committed to swiftly and effectively putting the integration stage behind us, emerging as a unified, stronger, and more effective company. Before I dive deeper into our future business opportunities and outlook, I'll turn the call over to David to walk you through our numbers in more detail.

The entire organization is firmly behind this effort and we can already feel the collective strengths of the combined team driving our integration success.

We are committed to swiftly and effectively putting the integration stage behind us emerging as a unified stronger and more effective company.

Before I dive deeper into our future business opportunities and outlook I'll turn the call over to David to walk you through our numbers in more detail David.

David Prestopino: Thanks Steve and good morning everyone. We are delighted that we have progressed in transforming the makeup of our revenue base, with growth in our differentiated sticky recurring service revenue pulling through product sales, where we have increased levels of pricing power. As Steve noted, we have actively shared approximately $2 million in quarterly revenue from the first quarter of 2023. And it is great to see that market success from our next generation offerings is now outpacing these surgical cuts. With fourth quarter revenue of $34.5 million, up 4.2% on an absolute basis and 9% on a constant currency basis versus the prior year period.

Thanks, Steve and good morning, everyone.

We are delighted that our progress in transforming the makeup of our revenue base with growth in our differentiated sticky recurring service revenue. According through product sales, where we have increased levels of pricing power.

As Steve noted we are actively said approximately $2 million in quarterly revenue for the first quarter of 2023, and it was great to see that market success from our next generation offerings now outpacing these surgical cuts with fourth quarter revenue of $34 $5 million up four 2% on an absolute basis.

At 9% on a constant currency basis versus the prior year period.

David Prestopino: As noted earlier, service revenue was the driver here, up 8.2% on an absolute basis and 16% on a constant currency basis. While our gross profit margin for the quarter reached 50%, reflecting a modest improvement of one percentage point over the prior year, these figures only partially reflect the underlying progress we have achieved in expanding margin. It's important to note that within the quarter, we absorbed $1.1 million in non-recurring inventory adjustments.

As noted earlier service revenue was the driver here up eight 2% on an absolute basis, 16% on a constant currency basis.

While our gross profit margin for the quarter reached 50%, reflecting a modest improvement of one percentage points over the prior year. These figures only partially reflect the underlying progress we have achieved and expanding margins.

It's important to note that within the quarter, we absorbed $1 1 million in nonrecurring inventory adjustments with.

David Prestopino: Without these one-time costs, our gross margin would have been 53%, or 4 percentage points higher than the prior year. Improved margins were driven by the continued evolution of revenue, with high-margin service revenue now comprising 63% of total revenue, up from 60% in the prior year, and absolute service margins expanding to an historic high of 67% versus 64% in the prior year period. Product margins were 22% on an absolute basis and 30% when adjusted for non-recurring inventory charges, up from 27% in the prior year period.

These onetime costs, our gross margin would have been 53% or four percentage points higher than the prior year.

Improved margins were driven by the continued evolution of revenue with high margin service revenues now comprising 63% of total revenue up from 60% in the prior year.

Absolute service margins expanding to a historic high of 67% versus 64% in the prior year period.

Product margins were 22% on an absolute basis and 30% when adjusted for nonrecurring inventory charges up from 27% in the prior year period.

David Prestopino: Now on to OPEX, which was $21.3 million on an absolute basis and $17.6 million after adjusting for $3.7 million in transaction expenses. It was in line with the $17.6 million incurred in the prior year. Flat year-over-year OPEX provides a compelling proof point of meeting our commitment that Moving Dots would be EBITDA neutral within two quarters of closing the transaction, with cut-to-cover activities absorbing $1.3 million of OPEX incurred by Moving Dots in the quarter. Moving on to Adjusted EBITDA, which more than doubled from $1.4 million to $2.9 million, with a $1 million increase at the gross margin level and lower cash off-expend year-over-year key driver. The net loss attributed to common stockholders totaled $4.6 million, or $0.13 per basic and diluted share, inclusive of an additional $1.5 million gain on the bargain purchase arising from the Moving Dots transaction. Adjusting for transaction costs and the gain on the bargain purchase, the net loss attributable to stockholders was $2.4 million, or $0.07 per basic undiluted share.

Now on to Opex, which was $21 $3 million on an absolute basis and $17 6 million after adjusting for $3 7 million and transaction expenses and in line with the $17 6 million incurred in the prior year.

Flat year over year Opex provides a compelling proof points of meeting our commitments that moving dots would be EBITDA neutral within two quarters of closing the transaction. We've kept to cover activities absorbing $1 3 billion of Opex incurred by moving docs in the quarter.

Moving on to adjusted EBITDA, which more than doubled from $1 $4 million to $2 $9 million with a $1 million increase of the gross margin level and lower cash opex year over year key drivers.

Net loss attributed to common stockholders totaled $4 6 million.

<unk> 13 per basic and diluted share inclusive of an additional $1 5 million gain.

Jane on bargain purchased arising from moving those transactions.

Adjusting for transaction costs and the gain on bargain purchase.

Net loss attributable to stockholders was $2 $4 million or <unk> 70 per basic and diluted share.

David Prestopino: Closing with cash, we re-exited the quarter with cash of $19.3 million on the back of strong generation with cash from operations totaling $4.5 million in the quarter, inclusive of $1.2 million in cash settled transaction costs. I'll now provide an update on closing the mixed transaction with a focus on funding and the underlying capital structure. We have finalized a $100 million credit agreement with Rand Merchant Bank in South Africa and renewed a $50 million credit agreement with Bank Hapolin in Israel.

Closing with cash we exited the quarter with cash of $19 3 million on the back of strong generation with cash from operations totaling $4 $5 million in the quarter inclusive of $1 2 million in cash settled transaction costs.

I'll now provide an update on closing the mixed transaction with a focus on funding and the underlying capital structure.

We have finalized the $100 million credit agreement with Rand merchant Bank in South Africa, and renewing a $50 million credit agreement with bank heavily in Israel.

David Prestopino: In terms of timing, and as a condition for the merger to be declared effective in South Africa on April 2nd, we will draw down $85 million of debt from RMB on March 13th in order to demonstrate we have unfettered access to the necessary capital to pay down the $90 million owed to ABRI at close. We also plan to draw down the full $30 million of turnover from Hapolene and pay down $23 million of existing Hapolene debt on March 18, both in terms of the amount and the cost of debt. $30 million in term loans from Hafelein will be denominated in the new Israeli shekel, providing a natural hedge for USD-denominated investors for cash flows generated in Israel.

In terms of timing and as a condition to the merger to be declared effective in South Africa on April 2nd we will draw down $85 million of debt from RMB amongst the team.

Order to demonstrate we have unfettered access to the necessary capital to pay down the $19 million owed to abrogate close.

We also plan to draw down the full $30 million of term loan from ethylene and pay down $23 million of existing ethylene that on March <unk>.

In terms of the makeup and the cost of debt.

$30 million in term loans from ethylene will be dominated the new Israeli shekel, providing a natural hedge for USD denominated investors for cash flows generated in Israel.

David Prestopino: $90 million will be denoted in USD, which differs from our earlier intention to have $50 million denoted in ZAR. While we were ultimately unable to obtain exchange-controlled relief in South Africa to borrow in ZAR and remit to PowerFleet Inc. in USD, we are exploring entering into an FX swap to essentially obtain the same hedging benefit for USD-denominated investors by alternate means. The blended annual cost of debt is expected to be $11 million, an effective cash coupon of 8.8%, with interest rates fixed on $85 million of USD-denominated debt.

$19 million will be denominated in USD, which differs from our earlier intention to have $50 million to noted was up.

While we were ultimately unable to obtain exchange control relief in South Africa to borrowings Saar and remit to powerfully Inc. In USD, we are exploring entering into an FX swap to essentially obtain the same hedging benefits for USD two hours at investors by alternative meats.

The blended annual cost of debt is expected to be $11 million and effective cash coupon of eight 8% with interest rates fixed on $85 million of USD denominated debt.

David Prestopino: While this cash coupon is approximately 1.7 percentage points lower than the effective rate included in the January 2024 S4 filing, we expect this saving to be effectively consumed by the contemplated FX swap. Total and net debt to close is forecast to be $125 million and approximately $110 million, respectively. Total liquidity at close is forecast to be approximately $40 million, inclusive of $25 million in undrawn revolver cash.

While this cash coupon is approximately one seven percentage points lower than the effective rate included in the January 2024, as full funding. We expect these savings to be effected to be consumed by the contemplated FX swap.

Total net debt to close is forecast to be $125 million and approximately $10 million respectively.

Liquidity at close is forecast to be approximately $40 million inclusive of $25 million in undrawn revolver capacity.

David Prestopino: In terms of the underlying business, it is performing in line with the numbers shared at our November invest..., with expected trailing 12 months revenue and EBITDA of the combined business at close to be approximately $285 million and north of $40 million, respectively. Some additional context here, when the overriding focus in the first quarter has been on aligning both organizations so we have a running start on aggressively realizing revenue and cost synergies at close. While this is undoubtedly the right call from a shareholder value creation standpoint, it necessarily requires taking some focus away from maximizing top-line performance in the first couple of quarters, as well as investing back into OPEX to ensure we have the right team and skill set in place to meet and beat our prior guidance on the timing of synergies.

In.

The underlying business is performing in line with the numbers said at our November Investor day with expected trailing 12 months revenue and EBITDA of the combined business at close to be approximately $285 million or north of $40 million respectively.

Some additional context here when overriding focus in the first quarter has been on aligning both organizations. So we have a running start on aggressively realizing revenue and cost synergies are closed.

This is definitely the right call from a shareholder value creation standpoint net.

Necessarily required taking some focus away from maximizing top line performance in the first couple of quarters as well as investing back into Opex to ensure we have the right team and skill set in place to meet and beat our prior guidance on the timing of synergies.

David Prestopino: Building on this, in order to provide investors with a comprehensive understanding of our joint operations, our first quarter 2024 earnings call and release will concentrate on the financial outcomes of the merged entity, rather than just standalone figures for legacy PowerFleet, which will appear in the 10-Q filing. A final note, in the first quarter of 2024, Israel continues to be impacted by the challenging macroeconomic backdrop, which is more pronounced in the first quarter, which has historically been the strongest quarter for new business car sales and associated revenue. That concludes my remarks, Steve. Thanks, David.

Building on this in order to provide investors with a comprehensive understanding about joint operations, our first quarter 2024 earnings call.

And release will concentrate on the financial outcomes of the merged entity rather than just standalone figures for legacy power fleet, which will appear in the 10-Q filings.

A final note in the first quarter of 2020 for Israel is continues to be impacted by the challenging macroeconomic backdrop, which is more pronounced in the first quarter, which has historically been the strongest quarter for new business car sales and associated revenue.

That concludes my remarks, Steve.

Thanks, David.

Steve Towe: 2023 has been a landmark year for the company, wholeheartedly meeting the objectives I pledged to achieve to the board and our shareholders within the first two years of my tenure as CEO. I'm profoundly proud of the substantial progress we've achieved across vital areas on our operating vectors of the business, all completed during aggressive and extensive M&A activity and execution. The transformation of our business from where it stood just a year ago is remarkable. We created an exciting foundation in 2023 that is poised to generate substantial value and rewards for our stockholders, starting in 2024 and beyond. The signal from the market and our customers is crystal clear that our Unity platform effectively addresses acute pain points and needs across a broad swath of the mobile asset market, highlighted by our improved revenue performance from our North American market, which has been the number one priority for the go-to-market activities of Unity.

23 has been a landmark year for the company wholeheartedly meeting the objectives of our plants to achieve to the board and the shareholders within the first two years of my tenure as CEO.

I am profoundly proud of the substantial progress we have achieved across cycle areas on our operating vectors of the business or completed during aggressive and extensive M&A activity and execution.

The transformation of our business from where it stood just a year ago is remarkable we created an exciting foundation in 2023 that is poised to generate substantial value and rewards for our stockholders starting in 2024 and beyond.

The signal from the market and our customers is crystal clear that our unity platform and effectively address these acute pain points and needs across a broad swathe of the mobile asset market.

Highlighted by improved revenue performance from our North American market, which has been the number one priority for the go to market activities of unity.

Steve Towe: The acquisition of Moving Dots in Q1 and the pending completion of the game-changing Mixed Transaction massively expand our capacity to accelerate the further development and hardening of this comprehensive software platform and data ecosystem. The unity play is not only increasing our share of wallets with current customers but also attracting new top-tier enterprise accounts, which is highly encouraging. Unity will evolve over time into a platform and ecosystem that extends well beyond telematics. In the immediate term, we are scaling up our device-agnostic data ingestion and processing and leveraging AI to empower customers to flexibly consume insights, be it via our own advanced applications or through integrations with other third-party business operating systems they utilize. The need for these capabilities is opening substantial market opportunities by positioning Unity as a central hub for a broad range of IoT applications and an all-encompassing data highway for our customers' enterprises.

The acquisition of moving Ducks in Q1, and the pending completion of the game changing mix transaction massively expand that capacity to accelerate the further development and hardening of this comprehensive SaaS software platform and data ecosystem the.

The unity play is not only increasing our share of wallet with current customers, but also attracting new top tier enterprise accounts, which is highly encouraging.

<unk> will evolve over time into a platform and ecosystem that extends well beyond telematics in the immediate term we are scaling up our device agnostic data ingestion and processing and leveraging AI to empower customers to flexibly consume insights.

Our own advanced applications or through integrations with other third party business operating systems that utilize the.

The need for these capabilities is opening substantial market opportunities by positioning unity as a central hub for a broad range of Iot applications and an all encompassing data highway frac customers enterprise.

Steve Towe: Feedback on our one-stop-shop strategy for providing rich data solutions that cover operations in both the warehouse and on the road has been very positive, as larger enterprises look for true mission-critical partners who can help drive their digital transformation and business improvement. In addition to accelerating our technology and go-to-market build, we have achieved, in a single step, the necessary scale and punching power to give us a much stronger ability to execute our long-term vision and strategy for the company. The deal more than doubles the size and the scale of our operations, increasing trailing 12 month revenue to north of $280 million and EBITDA to over $40 million, with active subscribers going from 700,000 to 1.8 million, resulting in an exceptional medium-term cross-sell and upsell opportunity.

Feedback on a one stop shop strategy for providing which stages solutions that cover operations in both the warehouse and over the road is very positive as larger enterprises look for true mission critical partners, who could help drive their digital transformation and business improvements.

In addition to accelerating our technology and go to market build we have achieved in a single step the necessary scale and purchasing power to give us a much stronger ability to execute our long term vision and strategy for the company.

The deal more than doubles, the size and the scale of our operations, increasing trailing 12 months revenue to north of $290 million in.

And EBITDA, so over $40 million with active subscribers going from 700000 to $1 8 million.

Resulting in an exceptional medium term cross sell and upsell opportunity.

Steve Towe: Early dialogue with customers focused on the broader value proposition the combination presents has been extremely encouraging and provides us with strong confidence that we will accelerate the growth trajectory of the company in the medium term. As the deal is set to conclude at the start of April, we will spotlight key indicators in our future earnings calls to demonstrate the trajectory towards significantly enhancing EBITDA and propelling revenue growth. In the forthcoming updates, we will focus on the cumulative annual run rate cost energy achieved by the end of each quarter.

The dialogue with customers focused on the broader value proposition. The combination presents has been extremely encouraging and provides us with strong confidence that we will accelerate the growth trajectory of the company in the medium term.

As the daily set to conclude at the start of April we will spotlight key indicators in our future earnings calls to demonstrate the trajectory towards significantly enhancing EBITDA and propelling revenue growth.

In the forthcoming updates we will focus on the.

The cumulative annual run rate cost synergies achieved by the end of each quarter advancements in transitioning mixes customer base to the unity platform.

Steve Towe: Progress in transitioning Mixi's customer base to the Unity platform, specific instances of how we're expanding our share of wallet with existing customers through cross-selling the comprehensive product line-up resulting from the combination, and also progress in utilizing Mixi's extensive global network of 130 resellers to broaden the sales reach of our in-warehouse solutions and advanced safety solutions. To conclude, we have a team that has undoubtedly proven that it is highly effective at executing brave and highly complex business improvements at pace, and one which will now be bolstered even further by the addition of the talented individuals joining us through the Mixed Transaction. We have the clarity of vision and mission for the combined team, a disruptive and compelling data-driven software strategy, and a much improved global market opportunity to build a business centered on highly differentiated, sticky, recurring SaaS revenue that gives us the ability to expect to meet and then beat the rule of 40 performance two years into the closing of the transaction, as we begin to put a sharp focus on executing the next phase of our strategic plan to the highest We anticipate rewarding our shareholders over time through a significant re-rate in our trading value from today's pro forma valuation of approximately 1.5 times revenue towards the five to eight times revenue valuation more typically enjoyed by a rule of 40 public class company. The commencement of the new combined business is set to formally go live on April 2nd.

Specific instances of how we're expanding our share of wallet with existing customers through cross selling the comprehensive product lineup, resulting from the combination and also progress in utilizing mixes extensive global network of 130 resellers to broaden our sales reach of Arian warehouse solutions and advanced safety.

Solutions.

To conclude we have a team that does that typically proven that it is highly effective at executing brave and highly complex business improvements at pace and one which will now be bolstered even further by the addition of the talented individuals joining us through the mix transaction.

We have the clarity of vision and mission for the combined team are disruptive and compelling data led software strategy and look to improve global market opportunity to be able to business centered on highly differentiated sticky recurring SaaS revenue that gives us the ability to expect to meet and then beat rule of 40 performance two years into.

The closing of the transaction.

As we begin to push our focus on executing the next phase of our strategic plan to the highest level in the next two year period.

We anticipate rewarding our shareholders over time through a significant rewriting our trading value from today's pro forma valuation of approximately one five times revenue towards the five to eight times revenue valuation more typically enjoyed by our rule of 40 public SaaS company.

The commencement of the new combined business is set to formally go live on April one.

Operator: We naturally need some time to fully take control and apply the plan for ourselves in the coming months, with the mission to successfully land the combined organization with a highly effective operating rhythm within six months. It is crystal clear we now have all the ingredients we need to drive a very compelling value proposition for the near and long term for our shareholders, our customers, and our colleagues. I'll now turn it back over to the operator for Q&A. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your. A confirmation tone will indicate your line is open. Press Star 2 if you would like to remove your question.

We naturally need some time to fully take control apply the planning for our sales in the coming months with the mission to successfully launch the combined organization with a highly effective operating with them within six months.

It is crystal clear, we now have all the ingredients, we need to drive a very compelling value proposition for the near and long term for our shareholders our customers and our colleagues.

I'll now turn it back over to the operator for Q&A.

Operator.

At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue you.

You May press Star two if you would like to remove your question from the queue.

Operator: The participants... The participants... and maybe nothing. Pick up your handset before pressing the, One moment, please, while we poll. Your first question for today. Scott Searle with Ross M. Hey, good morning.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Your first question for today is from Scott Searle with Roth MKS.

Hey, good morning, Thanks for taking the questions.

Scott Wallace Searle: Thanks for taking the questions. Nice job on the fourth quarter. It's nice to see the continued integration efforts seem to be tracking and everything as we go to, I guess, April. Maybe, Dave, I wanted to get a little bit of color in terms of what you're seeing sequentially into the March quarter. It sounds like Israel continues to be some headwinds, but just kind of directionally how you're thinking about it. And then, from a broader picture, Steve, what are you seeing in terms of the total contract value, the opportunity pipeline, and kind of ARR growth? What should we be thinking about going forward over the next couple of quarters here? And how are sales cycles looking? It sounds like things are filling up in the industry, and broadly speaking, it looks to be very healthy right now. But how are you seeing that reflect itself in the current?

Nice job on the fourth quarter, it's nice to see the continued integration efforts seem to be tracking and everything as we go to I guess April 2nd launch.

Maybe for starters.

Dave wanted to get a little bit of color in terms of what you're seeing sequentially into the March quarter. It sounds like Israel continues to be some headwinds, but just kind of directionally, how you're thinking about things and then from a broader picture Steve what are you seeing in terms of the.

The total contract value of the opportunity pipeline kind of in our growth what should we be thinking about going forward over the next couple of quarters here and how are sales cycles looking it sounds like things are filling up in the industry broadly speaking looks to be very healthy right now, but how are you seeing that reflect itself in the current pipeline.

David Prestopino: Great. Thanks, Scott. I'm happy to start in terms of just some insight into Q1. Clearly, there's a huge opportunity set that we have. We're focused in terms of building up a great head of steam in the first half of the calendar year next year. A lot of our energy is really going in just to make sure things click into place so we have a running start for April. So I would definitely view Q1 as a bit of a stub period in terms of where we're focused. But there were also some benefits in the fourth quarter in terms of just lower expenses as we reacted to the events in Israel.

Great. Thanks, Scott happy to start in terms of just some insight in terms of Q1.

Clearly, there's a huge opportunity set that we have we're focused in terms of making sure. We're building up a great head of steam in the first half of calendar year next year.

A lot of our LNG is really going in just to make sure things click into place. So we have a running start for April so I would definitely view Q1 as a bit of a stub period in terms of where we're focused.

There were also some benefits in the fourth quarter in terms of just lower expenses as we reacted to the events in Israel. So we're very much focused in terms of making sure. We're in control. There. So there will be some sort of reinvestment back into the business from an opex standpoint.

David Prestopino: So we're very much focused on terms of making sure we're in control there. So there will be some sort of reinvestment back into the business from an OPEC standpoint. Some of it, just things that we just delayed doing. Others, there were certain savings in terms of people being called, for example, to the front line.

Some of it just things that we just delayed doing others. There were certain savings in terms of people being coal for example to the frontline. So there were certain costs in Israel that we avoided and that certainly contributed to a pretty healthy EBITDA in the fourth quarter, but again the goal is to really sort of get things in place in Q1, and obviously, we're focused on managing multiple.

David Prestopino: So there were certain costs in Israel that we avoided, and that certainly contributed to a pretty healthy EBITDA in the fourth quarter. But again, the goal is to really sort of get things in place in Q1. Obviously, we're focused on managing multiple things, including financial performance, but the overriding focus is really on getting off to a running start. Yeah, and to answer your question, Scott, about pipeline and market, so both the quantity and quality of pipeline are increasing. I think, you know, if you look at the trajectory where we took out product revenue and, you know, pivoted very quickly back to growth with, you know, a much improved output in recurring SAS revenue, then, you know, that's a testament to, you know, the quality of the pipeline coming through. And also, as well, the improved growth margins, you know, in terms of better deal discipline and just overall, higher quality deals that So that trajectory will continue.

Things, including financial performance, but the overriding focus is really on getting off to a running start for Michael.

And to answer your question, Scott about pipeline and market. So both the quantity and quality of pipeline.

Is increasing.

I think if you look at the trajectory, where we took out the project revenue and pivoted very quickly back to growth.

<unk>.

Much improved.

In recurring SaaS revenue then.

It is a testament to.

The quality of the pipeline coming through and also as well to improve gross margins in terms of better deal discipline and just overall higher quality deals that we are we are working through so that trajectory will continue.

Steve Towe: Obviously, on top of that now, we are starting to have very early conversations with mixed clients and PowerFleet clients about the combined portfolio, which is opening further doors. So, in general terms, I think, you know, the market is strong. I think we have an ability to take advantage of that one-stop shop capability I discussed earlier in terms of in the warehouse and on the road. And I think, you know, underpinning that kind of unity strategy where we're able to take multiple data sources and provide, you know, holistic inputs and outputs for customers is only driving that further attractive pipeline for us in the future. What we have to do, you know, is invest as much as we can to develop sales and marketing, which is a part of our key strategies to unlock the ability to put more investment and more feet on the street.

Obviously on top of that now we are starting to have very early conversations we mixed clients and pathway clients back to the combined portfolio, which is opening further doors. So in general terms I think the market is strong.

I think we have an ability to take advantage of that one stop shop capability are discussed earlier in terms of in warehouse and over the road and I think <unk>.

Underpinning that the kind of unity strategy, where we're able to take multiple data sources and provide holistic inputs and outputs for customers.

Driving that further.

Attractive pipeline for us in the future what we have to do it.

As investors much as we can to develop sales and marketing, which is a part of that.

Key strategies to unlock the ability to put more investment and more feet on the street, but the vector is good and we feel really positive about that.

Steve Towe: But the vectors are good, and we feel really positive about, you know, the future trajectory of the company. What we have stated in terms of revenue growth, short and medium term, the first couple of quarters, is very much around synergy and lock on the cost side, integrating the business and giving us that oxygen into the P&L. And then as we start to kind of come through that, we get into the operating rhythm, then we'll see the revenue growth tick up over time. Good, very helpful. And two questions if I could follow up, and I'll get back in the queue.

The future trajectory of the company what we have stated in terms of revenue growth short and medium term.

The first couple of quarters is very much around the synergy unlock on the cost side integrating the business and given us the oxygen into the P&L.

And then as we start to kind of come through that we get into the operating with them then we will see.

The revenue growth tick up over time.

Good very helpful and two questions if I could a follow up and I'll get back in the queue, but Steve David is there any change in terms of how youre thinking about the long term targets at this point in time I know, it's not that far beyond the November analyst day, but you guys are hitting the ground with a running start here as we get close to I guess the launching.

Scott Wallace Searle: Steve, David, is there any change in terms of how you're thinking about the long-term targets at this point in time? I know it's not that far beyond November Analyst Day, but you guys are hitting the ground with a running start here as we get close to, I guess, the launch in early April. Is there any change of thought on that front?

Early April is there any change of thought on that front and then Steve just a follow up on the unity platform.

Scott Wallace Searle: And then, Steve, just to follow up on the Unity platform, I just wanted to get my hands around a little bit on the integration timelines of when you can really start getting out there and hitting the installed base customer base. And you also referenced more IoT applications being incorporated into the Unity platform. I'm wondering if you could expand a little bit on that.

Just wanted to get my hands around a little bit.

Integration timelines of when you can really start getting out there and hitting them installed mix customer base and you also referenced more Iot applications being incorporated into the unity platform I'm wondering if you could expand a little bit on that thanks.

Steve Towe: So in terms of your first question, I think we remain confident. And, you know, we've had another two or three months to get under the skin of the combined business. We feel confident in the numbers and projections we put forward at Investor Day. We don't see any change to that. Obviously, when we fly the plane for ourselves, then we'll fully see the landscape that's in front of us.

So in terms of your first question I think we remain confident and we have had another two or three months to.

Get under the skin of the combined business, we feel confident in the numbers and projections, we put forward at Investor Day, We don't see any change to that obviously when we fly the plane for ourselves then we will fully see the landscape in front of us but.

Steve Towe: But, you know, overall, the indications remain strong, and we think we have put together a credible plan and an overview for our shareholders of the journey that we're going to go on. In terms of MIX customers being able to enjoy Unity, within three to six months, maximum, the customers will have the ability to utilize the Unity services.

Overall, the indication remained strong.

And we think we've put together a credible plan and.

Overview for our shareholders at the journey that we're going to go on.

In terms of mix.

Customers being able to enjoy unity within three to six months maximum that the customers will have the ability to utilize the unity services. We are obviously working hard as well to ensure that hardware and devices already installed can communicate by directionally. So we can also from a pathway perspective.

Steve Towe: We are obviously working hard as well to ensure that, you know, hardware and devices already installed can communicate bidirectionally. So we can also, from a PowerFleet perspective, utilize the MIX capabilities that don't exist, which we're obviously building into the overall Unity proposition. Then, in terms of kind of broader IoT, we're looking at all asset types. So, you know, that could be temperature and humidity.

Utilize the mix of capabilities that don't exist, which we are obviously building into the overall unity proposition and then in terms of kind of broader Iot. We're looking at all asset types. So that can be temperature and humidity. It can be things from as we've talked about previously defibrillator solutions and just different.

Steve Towe: It can be things like, as we've talked about previously, defibrillator solutions and just different monitoring systems that exist in order to provide a customer with a holistic view of data that is relevant to their organization. So, you know, we'll expand those as we go. We have our core offerings right now, but I think what we are seeing is customers saying to us, "Look, can you take data from this type of asset, from this type of sensor?" And can you make them to be porous?

Referring systems that exist to in order to provide the customer with a holistic view of data that is relevant to their organization. So we will expand those as we go we have our core offerings right now, but I think what we are seeing is is customers, saying to us look can you take data from this type of asset from this type of sensor and can you make sense of it.

David Prestopino: And that's all part of the strategy that we are following. Scott, just a quick add, sorry, on the Amistay numbers, just to confirm, I know we said it on the day, you need to think about those numbers as being the first four quarters after. So it's not a calendar year projection. It's really for the 12 months after close.

For us and that's all part of the strategy that we undertake.

Scott just a quick.

Sorry on the analyst day numbers just to confirm I know, we said it on the day you need to think about those numbers as being the first full quarter after close.

Not a calendar year projection is really for the for the 12 months after close.

David Prestopino: So those numbers should be thought of in terms of a year ending March 31, not December. Great. Thanks so much.

Those numbers should be thought of in terms of the year ending March 31 December 31.

Great. Thanks, so much great job on the quarter and looking forward to the combined entity for.

Scott Wallace Searle: Great job on the quarter, and I'm looking forward to the combined entity. Thanks, Scott. Your next question is from Mike Walkley with Canaccord. Great, thanks for taking my question and congratulations on all you achieved in 2023. First question, just for David on the gross margin services, you know, quite strong this quarter. Is this a good way to think about where it should go going forward? Or was there a mix shift during the quarter?

Thanks Scott.

Okay.

Your next question is from Mike Walkley with Canaccord Genuity.

Great. Thanks for taking my question and congratulations on all your achieved in 2023 I guess first question just for David on that.

On the gross margin in services quite strong this quarter is this a good way to think about.

And should go going forward or is there a mix shift in the quarter and then also on hardware and should we expect sustained.

David Prestopino: And then also on hardware, you know, it should be expected to sustain around that 30% level given the new mix of hardware. Yeah, so you're right, obviously, services gross margin was strong at 67%. It was unusually low in Q3, it ran about 60%, and normalized, it was sort of closer to 64%.

Sustained around that 30% level, given the new mix of hardware.

Yes, so youre right, obviously services gross margin was strong at 67%. It was unusually low in Q3, it read about 60% of normalized it was sort of closer to 64%. So what I think is most important is that we're seeing in gross margin as a service that will expand over time.

David Prestopino: So what I think is most important is that we're seeing gross margins of service levels expand over time. But just a comment on the Q4 performance, as I mentioned earlier, in the earlier questions, there was a benefit in Israel in terms of being able to pull costs out, and there were fewer shifts, for example, working at a call center level.

But just a comment on the Q4 performance as I mentioned earlier in the earlier questions. There was a benefit in Israel.

Terms of being able to pull costs out there.

Fewer shifts for example, working at our call center level, So theres, probably sort of over a percentage point of benefit there. So I would say on a go forward basis, 65% is probably the right way to think about it from a services standpoint, again with headroom to expand over time.

David Prestopino: So there's probably sort of over a percentage point of benefit there. So I would say on a go forward basis, 65% is probably the right way to think about it from a services standpoint, again, with headroom to expand over time. And then, in terms of your question on hardware margins, yes, 30 percent is a good sort of baseline to look at. The thought and the goal is to expand that over time. But as of now, I think 30 percent is the right sort of base to build from. Thanks.

And then in terms of your question hardware margins, yes, 30% is a good sort of baseline to look at.

The order and the goal is to expand that over time, but as of now I think 30% is the right sort of base to build from.

Alright. Thanks.

David Prestopino: And just with the $8 million in annual revenue pulled out, how should we think about just in terms of comparables when you're lapping that? Is it setting up for easier growth trends on the standalone PowerFleet business as the year plays out? Or was it mostly pulled out at the beginning of the year or end of 2022?

With the $8 million in annual revenue pulled out yes.

How should we think about just in terms of comparable is when you're lapping that is is it setting up for easier growth trends on a standalone power fleet business as the year plays out or was it mostly pulled out.

At the beginning of the year end of 2022.

David Prestopino: Yeah, so basically, the lapping becomes easier from Q1-24 onwards. It were really initiatives that took hold and impacted the P&L from Q1-22. Great, thanks. And just one last question for me before I pass it on: you know, I'm excited about the combined entities and those targets. But as you look at, you know, your standalone PowerFleet business and, you know, how much the margins have expanded, you know, what do you think this business's standalone area could reach in terms of adjusted EBITDA margins, you know, as the trends play out over the course of the year? Yeah, so in terms of the standalone business, the expectation has always been that, on a standalone basis, we can be a rule of Again, that would be EBITDA margins in the sort of the 30% range over time.

Yes, so basically the lapping becomes easier from Q1 'twenty four onwards, it was rarely initiatives that took hold and impacted the P&L from Q1 'twenty.

Alright, Thanks, and just last question for me before I pass it on and excited about the combined entities and those targets, but as you look at your Standalone power fleet business.

How much the margins have expanded.

What do you think this business is standalone area could could reach in terms of adjusted EBITA margins trends play out over the course of the year.

Yes, so in terms of the stand alone business.

Expectation has always been on a standalone basis, we can be a rule of 40 company again that would be EBITDA margins in the sort of the 30% range over time, there's a lot of efficiencies. We think we can continue to drive from an opex standpoint and to the earlier comments, we do see gross margins expanding over time.

David Prestopino: There are a lot of efficiencies we think we can continue to drive from an OPEX standpoint. And to the other comments, we do see gross margins expanding over time. Two key drivers there: firstly, from a services standpoint, the scale benefits as that grows, and also from a revenue mix standpoint, the expectation is that services as a percentage of revenue will continue to grow as it has been growing. So that's always been the expectation on a standalone basis.

Two key drivers there firstly from a services standpoint, this scale benefits as that grows and also from a revenue mix standpoint, and the expectation is that services as a percentage of revenue will continue to grow as it has been growing so that's what we've been expansion on a standalone basis. The joy of the mixed transaction as we get there a lot more quickly.

Steve Towe: The joy of the mixed transaction is that we get there a lot more quickly, and we also have certain elements of the P&L totally within our control. And obviously, the cost base being the key one and expectations, there's efficiencies we can harvest. And I think, like, just to add, so, you know, obviously, we've managed to make a huge technological transformation within the envelope that we had in terms of the balance sheet and the restrictions. So, you know, we, but what we committed to was getting through that, getting those investments in place, but ripping out a bunch of costs and improving margins to move PowerFleet standalone to a path of profitability. And I think we can now, you know, we can all see those numbers start to flow, and that will continue to grow as we go.

And also we have certain elements of the P&L totally within our control and obviously the cost base being the key one is the expectation that efficiencies we can harvest.

And I think Mike just to add so obviously, we've managed to make a huge technological transformation.

Within the envelope that we had in terms of balance sheet and the restrictions so.

But what we committed to was getting through that getting those investments in place, but ripping out a bunch of cost and improving margins to move power fleet Standalone to a path of profitability and I think we can now we can all see those numbers start to flow and that will continue to grow as we go.

Great. That's very helpful. I guess, one last question and I'll pass.

Steve Towe: I guess one last question I'll pass on, just in terms of the deal closing, you have the debt in place, you have shareholder approval, are there any other milestones that need to happen between now and then? Smooth sailing from here until the closing date. So, I mean, all conditions have been met in terms of all the regulatory approvals required. Obviously, the funding is fully in place, and the shareholder vote was resounding.

In terms of the deal closing the debt in place you have shareholder approval is there any other milestones that need to happen.

Now and then or you think it's smooth.

Smooth sailing from here until the closing date.

So all conditions have been met in terms of all the regulatory approvals required obviously the funding is fully in place and the shareholder vote was resounding. So now it's just a matter of time.

Steve Towe: So now it is just a matter of time, and that is just time that has to pass under legislative terms from South Africa. So we are, at this point, highly confident that that April 2 date will be the launch of the new combined. Great, thank you very much. Bye. Your next question for today, Schmidt, athletes. Hey guys, thanks for taking my questions. I know you called out Israel, but just curious, from a geographical perspective, if there are any other areas that jump out, either positive or negative?

And that is just time that has to passing on the legislative tons add to South Africa. So.

At this point are highly confident that the April to date will be the launch for the new combined company.

Great. Thank you very much.

Thanks, Brian.

Your next question for today is from Jason Smith with Lake Street.

Hey, guys. Thanks for taking my questions I know you called out Israel, but just curious from a geographical perspective, if there are any other areas that jump out either positive or negative.

Steve Towe: I think, you know, if you look at the positive growth of North America in the last 12 months, you know, that's where we focused our enterprise sales efforts. It's where we launched Unity. And, you know, the response that we're seeing is super positive, with proof points in terms of new logos, and customer commitments. We are shortly embarking on Heartbeat in May, which is our second annual customer conference where there'll be a bunch of customers talking about Unity and its effect on their business. So I think overall, you know, we're seeing strong vectors.

I think if you look at the positive growth of North America in the last 12 months.

That's why we focused our enterprise sales efforts, it's where we've launched unity.

And.

The response that we're seeing is super positive proof points in terms of new logos customer commitments we shortly.

Embarking on Hot base in May which is our second annual customer conference, where there'll be a bunch of customers talking about.

Unity and its effect on their business. So I think overall, we're seeing strong vectors and that's also considering in the U S. We've seen some headwinds in terms of the.

Steve Towe: And that's also considering, you know, in the US, we've seen some headwinds in terms of the supply chain industry, you know, with some of the traditional PowerFleet revenues. So, you know, the overriding, I think, growth in our safety solutions, the combined solution of in the warehouse and over the road is really kind of coming to bear. But that's where we see some kind of real strength. We're starting to plant some seeds, as we've talked about previously, in the European region. That's a midterm burn.

The supply chain industry with some of the traditional pathway revenue so.

The overriding I think growth in our safety solutions, the combined solutions in warehouse and over the road is really kind of coming to bear, but thats, where we see kind of real strength, we're starting to plant some seeds as we've talked previously in.

The European region.

Steve Towe: But, you know, we're seeing some good pipelines starting to build out of Europe, and I think, you know, we have a new lease of life coming for our Brazil, Argentina, and South African businesses, which, obviously, we put into almost maintenance mode. And, you know, we kind of killed any growth pipeline with the decisions that we made when we looked for strategic alternatives for it.

Mid term burn, but we're seeing some good pipeline starting to build.

Out of Europe, and I think we have a new lease of life coming for Brazil, Argentina, and South African businesses, which obviously, we put into almost maintenance mode and Tina.

Yes.

We kind of killed any growth pipeline with the decisions that we made when we look for strategic alternatives for it so.

Steve Towe: So, you know, that that region's got new life. And, you know, if you look at the fact that we've been able to grow this quarter, considering the challenges faced in Israel from October 7th onwards, it gives us a real strong indication in terms of, you know, the overall growth potential for the business. And, you know, I would say a big thank you as well to our Israeli team, who, you know, have done a tremendous job to protect revenues and find alternative revenue streams to continue that support moving forward during, obviously, what is challenging.

That region's got new life in <unk>.

If you look at if you look at the fact that we've been able to grow this quarter considering the challenges faced in Israel from October 7th onwards.

Gives us a real strong indication in terms of the overall growth potential for the business and I would say a big thank you as well to add Riley team.

They have done a tremendous job to protect revenues.

And find alternative revenue streams to continue that support moving forward viewing obviously what is challenging times.

Got it that's helpful and Steve I know you just mentioned new logos in North America. When you look at that pipeline expansion in.

Steve Towe: That's helpful. And Steve, I know you just mentioned new logos in North America. When you look at that pipeline expansion in aggregate across your business, is that early expansion being driven by these new logos? Or are you still expanding pretty significantly at existing customers? It's a mixture of both.

In aggregate across your business if that expansion it really being driven by these new logos or are you still expanding pretty significantly at existing customers.

It's a mixture of both.

Steve Towe: So I think we are, even in PowerFleet standalone, doing a much better job of cost selling and upselling, you know, where we have customers in the warehouse that we're now starting to get into their assets that are on the road and vice versa. But what I think is, you know, is particularly intriguing and exciting is the view that we have of this kind of, you know, data highway play where, you know, customers, large enterprises in the US have multiple providers and they're struggling to make sense of the data and get it in a meaningful format and are looking for more of a mission critical partner. I think that's the role that we're starting to play. And that's what is bringing new logo growth where maybe there is some frustration in key verticals with some of the more tactical competitors out there. Okay, and then just the last one, and I'll jump back into Q. I don't know if you disclose ARPU, but at least directionally, is it trending the way you expected it to?

So I think we even powerfully standalone doing a much better job of cross selling and up selling where we had customers in the warehouse that we're now starting to get into their assets that are on the road and vice versa.

But what I think is.

Is particularly intriguing and exciting is the view that we have is this kind of data highway play where customers large enterprises in the U S have multiple providers and they are struggling to make sense of the data and get it in a meaningful formats and we're looking for more of a mission critical partner I think thats the role that we're starting to play and that's what he is bringing new logo.

Where maybe there is some frustration in key verticals with some of the more tactical compared to that in the market.

Okay, and then just the last one and I'll jump back into queue. I don't know if you disclosed <unk>, but at least Directionally is trending and how you expected it to.

David Prestopino: Yeah, again, ARPU is not a metric that we're overly focused on. We're increasingly focused on sort of the book of business, the end recurring book of business. But the benefit of unity is that it really is adding an extra layer of value from a customer standpoint, and clearly, we get to earn our share of economic rent for that value delivery. And just to add to that, kind of the stickiness of taking in different data sources adds ARPU to your standard three.

Yes again.

Who is not a metric that we're overly focused on we are increasing focus on sort of the book of business annual recurring book of business, but the benefit of unity is it really is adding an extra layer of value from a customer standpoint, and clearly we get to earn our share of economic rent for that value delivered.

Just to add to that kind of the stickiness of taking in different.

<unk> data sources adds up to your standard three expanding the enterprise applications.

Steve Towe: Expanding the enterprise applications and the AI capabilities and delivering premium applications adds more to your ARPU. And then, finally, integrating with third-party business systems and sending our data into other solutions allows us to do that. So I think, you know, if you look at kind of more of the commoditized revenue that PowerFleet had and some of the, you know, the non-profitable stuff and all the stuff we've kind of taken out of the business that's now being replaced with stronger ARPUs and higher margins and better quality revenue. Okay, perfect. Thanks a lot, guys. Thank you. Your next question is from Gary Prestopino with Barron. Hey, good morning, Steve, David.

Our capabilities in delivering premium applications at multi Yahoo, and then finally integrating to third party business systems and sending our data into other solutions allows us to do the same.

So I think.

If you look at kind of more of the Commoditized.

Revenue that <unk> had in some of the.

The non profitable stuff and all the stuff, we've kind of taken answered the business. That's now been replaced with stronger <unk> and higher margin and better quality revenue.

Okay perfect. Thanks, a lot guys.

Thank you.

Your next question is from Gary Presto piano with Barrington Research.

Hey, good morning, Steve David.

Gary Frank Prestopino: A couple of questions here. And I guess that you just answered the first one I was going to ask is in terms of, are you giving a subscriber count, or is that just not a metric that you're going to be focusing on? So I think I think we talked generically about the subscribers. We will provide subscriber numbers.

Couple of questions here and I guess, you just answered the FERC.

One I was going to ask in terms of are you, giving a subscriber count or that just does not.

A metric that youre going to be focusing on.

So I think I think we talked generically about the subscribers, we will provide subscriber numbers.

Steve Towe: And, you know, for us, it's about quality of revenue and ARPU in terms of just the scale of revenue we're getting per subscriber rather than just attracting subscribers. So I think that's, you know, it is something that is important to us. But I would say it's not the number one vector.

For us it's about quality.

Revenue in our <unk> in terms of.

The scale of revenue will get impressive driver rather than just attracting subscribers.

I think that.

It is something that is important to us, but I would say, it's not the number one vector.

Steve Towe: The number one vector is, you know, the profitability of the revenue and the growth that we can pull forward per customer and improving that wallet share, I think is another key. Okay, so just on the legacy business alone, PowerFleet, can you give us some metrics? where you are with the Unity platform in terms of your legacy customer base or legacy revenue on the services side. I mean, what percentage of revenues are now being derived through being a part of the Unity platform. Yeah, so I mean, Unity is an ecosystem and a platform. So all of the previous heritage functionality from the previous platforms reside in it.

Number one back to is the profitability of the revenue and the growth that we can we can pull forward per customer and improving that wallet share.

<unk> is another key event.

Okay. So just on the legacy business alone power fleet can you give us some metrics.

No.

Where you are with the unity platform in terms of your legacy customer base, our legacy revenues on the services side I mean, what percentage of these.

Revenues are now being derived through being a part of the unity platform.

Yes, so unity is an ecosystem and a platform so all of the previous heritage functionality.

The previous platforms resides in unity. So it's not like we are migrating from platform a platform built and therefore varies as unity.

Steve Towe: So it's not like we're migrating from platform A to platform B, and therefore there is Unity, you know, revenue shift from one platform to the other. It's all part of Unity. So it's difficult to break it out.

Revenue shift from one platform to the other it's all part of unity.

It's difficult to break it out what I would say is if you look at the growth that we are achieving in our strong proportion of that growth is coming from the fact of the capabilities of what unity just today and one that is going to do in the future. So I think thats, where if you take if you will see the fact, we've taken.

Steve Towe: What I would say is if you look at the growth that we are achieving, then a strong proportion of that growth is coming from the fact of the capabilities of what Unity does today and what it's going to do in the future. So I think that's where, you know, if you see the fact we've taken out eight million dollars in annualized revenue and now we're out tracking that in terms of growth, then I would say the majority of that is coming from the Unity game. And in line with that, I would say the safety solutions that we sell within Unity. Okay, and then, as I recall, you said you were going to have five or six modules. Is that correct? Are they all out in the market now?

In dollars of annualized revenue and now we're tracking that in terms of growth then I would say the majority of that is coming from the unity play and in line with that I would say the safety solutions that we sell within unit.

Okay and then what.

As I recall, you said you were going to have five or six modules is that correct, but they all out in the market now.

Gary Frank Prestopino: No, we we've not put out a another module since the sustainability module. We've pivoted right now to ensuring that we can integrate MIPS. So there are capabilities that will enhance the overall modularity that we have that Mix has today. So that has been something that we've pivoted to, obviously, off the back of the transaction. And then secondly, the kind of, I think, excitement and desire for the device agnostic piece, of the platform has meant that we've accelerated our capabilities there to be able to do that at scale. So once those two things are done, then we'll start to release more and more AI capabilities and more modularity into the platform. But we think our, you know, near-term bang for the buck is very much on focusing on the integration with MIX and this kind of device agnostic piece and being able to take multiple data sources into the platform. Thank you. Matt Thau.

No we have not put out any of the module since the sustainability module, we've pivoted right now to ensure.

Ensuring that we can integrate mix.

So there are capabilities that will enhance the overall modularity that we have that mix has today.

So that has been something that we've pivoted to obviously off the back of the transaction and then secondly.

<unk> kind of I think excitement and desire for the device agnostic piece.

The platform has meant that we've accelerated our capabilities that should be able to do that at scale. So once those two things are done then we'll start to release more and more AI capabilities and more modularity into the platform, but we think near term Bang for the Barclays very much on focusing on the integration with mix.

And this kind of device agnostic patient being able to take multiple data sources into the platform.

Okay. Thank you.

Thanks, Greg.

Your next question is from Matt Pfau with William Blair.

Steve Towe: Great, thanks. Very nice results. I wanted to follow up on the comments around the MIX customer base and discussions about moving them over to the Unity platform. Maybe can you just remind us the strategy around that? How long is that going to take and how potentially disruptive is that to the existing MIX customer base? So it's only additive to the mixed customer base. So we are implementing a strategy at the moment, like we did with PowerFleet platforms, to bring all of the current mixed platform capabilities into the Unity ecosystem and infrastructure. What that means within three to six months is that customers will have the ability to utilize the value-added services that Unity brings. So whether that is more data ingestion points, whether that is the advanced applications that we've delivered already, or the more scalable business system integration, so there is zero disruption to the customer base.

Okay, great. Thanks, Nice results wanted to follow up on the comments around the mix of customer base.

Discussions with moving them over to the unity platform, maybe can you just remind us the strategy around that how long is that going to take and how potentially disruptive is that to the existing mix customer base.

So it's only additive to the mix of customer base. So we are implementing a strategy at the moment like we did with pathway platforms to bring all of the current mix platform capabilities into the unity ecosystem in infrastructure.

What it means within three to six months is that the customers will have the ability to utilize the value added services.

Unity brings so whether that is more data ingestion points, whether that is the advanced applications that we've delivered already or the more scalable.

System integration. So there is zero disruption to the customer base.

Steve Towe: And what we have seen already in the dialogue is, you know, a lot of, I would say, excitement. And, you know, customers putting us under pressure to get that stuff delivered, which is great. And then I think secondly, the other thing that, from a mixed perspective, customers have the ability to absorb is the in-warehouse solution. So, you know, where we're focusing on safety and sustainability, the folks that are usually responsible for that in an organization are both responsible for it in the warehouse and on the road. So this gives us the ability to go and sell to new people in the organization and do broader propositions. And I think it's something that the mixed team is excited about; they didn't have that strong capability, and therefore, that was a bit of a challenge. On the flip side, we also have some key mix technologies that the PowerFleet customer base has been wanting and desiring. So there's a bi-directional move.

And what we have seen already in the dialogue.

Is a lot of I would say excitement.

And customers, putting us under pressure to get that stuff delivered which is great.

And then I think secondly, the other thing that from a mix perspective, the customers have the ability to.

It will be seen warehouse solutions so.

Where we're focusing on safety and sustainability to folks that are usually responsible for that in an organization.

Both responsible for it in the warehouse and over the road. So this gives the ability to go sell to new new people into the organization and deepwater propositions and I think it's something that the mixed team are excited about it and they didn't have that strong capability and therefore that was a bit of a cap.

On the flip side, we also have some key mix technologies that the power fleet.

Our customer base have been have been wanting and desiring so theres a bidirectional Lou so obviously the pathway customers to benefit from that mix technology again within the same period of time.

David Prestopino: So obviously, the PowerFleet customers can benefit from that mixed technology again within the same company. Great. And then, David, just wanted to follow up on the comments around the impact to top-line growth from the integration efforts. How long should we expect that to continue? Is that something beyond Q1?

Great and then David just wanted to follow up on the comments around the impact to top line growth from the integration efforts, how long should we expect that to continue or is that something beyond Q1, and then in any way to sort of quantify how youre thinking about that impact.

David Prestopino: And then, in any way, to sort of quantify how you're thinking about that impact? Yeah, so again, the businesses are growing nicely, both on their side and our side. So we're not expecting there to be sort of a pullback in terms of, you know, how we're performing there. Obviously, Israel is a headwind.

Yes, so again.

The businesses are growing nicely both on their side and our side. So we're not expecting there to be sort of a pullback in terms of how we're performing there. Obviously Israelis are headwinds we have to work our way around that so we do have those types of things and as Steve said in his earlier comments the logistics area in the U S with certainly some sort of headwinds in <unk>.

David Prestopino: We have to work our way around that. So we do have those types of things. And as Steve said in his earlier comments, the logistics here in the US, there's certainly some sort of headwinds in terms of that piece of the market.

Of that piece of the market.

David Prestopino: But I think the essence of what we're calling out here is, if we really focused on the top line, we would do better, just because where we put our attention, we generally get to move the dial. And if we look to put our attention on the dial, we're going to create the most amount of value. And I'd say over the next two quarters, it really is about getting this thing up and running. We have a massive focus in terms of expanding EBITDA through benefits in terms of efficiencies from a cost standpoint. So we're going to put our minds and our efforts to work there. But obviously, we can keep more than one plate spinning at a single point in time.

But I think the essence of what we're calling out here is if we really focused on top line, we would do better just because where we put our attention we generally get to move the dial and we look to put our attention to the dialogue, we're going to create the most amount of value and I'd say over the next two quarters. It really is about getting this thing up and running.

Have a massive focus in terms of expanding EBITDA through the benefits in terms of efficiencies from a cost standpoint, so we're going to put our minds in our efforts to work there, but obviously, we can keep more than one place spending at a single point in time.

Steve Towe: And so we'll be looking to be effective across all fronts, but we're going to prioritize those things that matter the most. Yeah, I'll just add to that. You know, this is a big undertaking and a brave undertaking that the two companies are doing. And, you know, the industry and broader industries are littered with, you know, integrations and combinations that fail.

We will be looking to be effective across all fronts, but we're going to prioritize those things that matter the most.

I'll just add to that this is this is a big undertaking that.

And our brave undertaking that the two companies are doing.

The industry and broader industry related with.

Integrations and combinations that fail.

Steve Towe: You know, what we are highly confident about is we have a team with a track record of doing this really, really well. And I think we, you know, even from Investor Day times, people saw the similar cultures of the teams, and the teams are actively working together. What we want to do is make sure we land into a very, very strong operating rhythm fast. You know, we've come out and made some bold statements in terms of projections over a two-year period. And the key part of moving that forward is getting everybody aligned internally so that we can then focus externally as soon as possible, and we don't get that distracted.

What we are highly confident batches, we have a team with a track record of doing this really really well.

I think we.

Even from Investor Day time, if people saw the similar cultures at the teams and the teams are actively working together what we want to do is make sure we land into a very very strong operating within past, we've come out and make some.

Some bold statements in terms of projections over two year period, and the key pops of moving that forward you to a getting everybody aligned internally. So that we can then focus externally as soon as soon as possible and we don't get that distraction.

Steve Towe: You know, the ability for us to realize those EBITDA expansion programs, I think, gives us everything we're going to need to propel top-line growth. But, you know, we're going to make sure we don't dilute efforts on both of those by trying to do too much in one go. So that first six month period is very much key to us winning hearts and minds internally and externally. I think we have a great plan to do that. And then once we're through that initial period, we can start to put our foot on the accelerator.

The the ability for us to realize those EBITDA expansion programs I think gives us everything we're going to need to propel top line growth.

But we've got to make sure we don't dilute efforts on both of those by folks trying to do too much in mortgage so that first six month period is very much something that is key to us winning the hearts and minds internally and externally and.

And we have a great plan to do that and then once we're through that initial period. Then we can start to put effort makes alright.

Steve Towe: OK, perfect. Appreciate you taking the time to answer my questions. Thanks. We have reached the end of the question and answer session, and I will now turn the call over to you, for Closer. Thank you. I'd like to say a sincere thank you once again for the trust and confidence shown by our shareholders and the outstanding contribution from so many of our colleagues in both the PowerFleet and Mixed organizations that have allowed us to complete a highly strategic and complex transaction so effectively and seamlessly. We look forward very much to new beginnings for the evolved and highly energized PowerFleet family, and we look to continue to update our shareholders along the way. Thank you, everyone. Have a great day. We'll speak again. Thank you for joining us today for our presentation. You may now disconnect.

Okay perfect I appreciate you taking my questions.

Thanks, Tom.

We have reached the end of the question and answer session and I will now turn the call over to Steve for closing remarks.

Thank you.

I'd like to say a sincere. Thank you once again for the trust and confidence shown by our shareholders and the outstanding contribution from so many of our colleagues in both the powerfully and mixed organization that have allowed us to be able to complete a highly strategic and complex transactions, so effectively and seamlessly.

We look forward, we look forward very much to new beginnings for the evolved and highly energized powerfully family and we look to continue to update shareholders along the way.

Everyone have a great day, we'll speak again soon.

Thank you for joining us today for our presentation you may now disconnect.