Q1 2025 PowerFleet Inc Earnings Call

August 22, 2024

Presentation.

Operator: are in a listen-only mode.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press door zero on your telephone keypad.

Speaker Change: Please note this conference is being recorded.

Today's remarks will contain forward looking statements.

Operator: Please note this conference is being recorded.

Speaker Change: Actual results may differ from those contemplated by these forward looking statements.

Unknown Executive: Today's remarks will contain forward-looking statements. Actual results may differ from those contemplated by these forward-looking statements. Factors that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements are described in today's earnings press release.

Speaker Change: Factors that may cause actual results performance or achievements to be materially different from those expressed or implied by such forward. Looking statements are described in today's earnings press release.

Speaker Change: Any forward looking statements made on this call are made only as of today and powerfully assumes no obligation nor does the company intend to publicly update or revise any forward looking statements to reflect subsequent events or circumstances.

Unknown Executive: Any forward-looking statements made on this call are made only as of today, and PowerFleet assumes no obligation, nor does the company intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

Speaker Change: During this call both GAAP and non-GAAP financial measures will be presented.

Unknown Executive: During this call, both gap and non-GAAP financial measures will be presented. A reconciliation of gap to non-gap measures is included in today's press release. The press release is available on the Investor section of the company's website at ir.powerfully.com.

Speaker Change: A reconciliation of GAAP to non-GAAP measures is included in today's press release.

Speaker Change: The press release is available on the investors section of the company's website at IR Dot powerfully dot com.

Speaker Change: I will now turn the call over to Steve told you may begin.

Steve Towe: I will now turn the call over to Steve Towe. You may begin.

Steve: Good morning, everyone and thank you for joining the call.

Steve: With the SEC comments successfully resolved I'm delighted to be able to provide additional detail and context on our first quarter operating and financial performance.

Steve Towe: Good morning, everyone, and thank you for joining the call. With the SEC comments successfully resolved, I'm delighted to be able to provide additional detail and context on our first quarter operating and financial performance. Our results clearly demonstrate executional excellence in implementing our operating plan since the business combination.

Operator: are in a listen only mode.

Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press door zero on your telephone keypad.

Steve: <unk> clearly demonstrates execution excellence and implementing our operating plan since the business combination.

Operator: Please note this conference is being recorded. Today's remarks will contain forward-looking statements. Actual results may differ from those contemplated by these forward-looking statements. Factors that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements are described in today's earnings press release.

Speaker Change: We have much to share on today's call. So let's start with the recap of the strategic rationale behind the transaction.

Steve Towe: We have much to share on today's call, so let's start with the recap of the tissue rationale behind the mixed transaction. Securing scale is critical to distinguishing our combined business from competitors and to go head to head with the current market leaders. As the core telematics industry rapidly transforms, the winners in the industry are poised to capture the majority of shareholder value through shifting towards AI-led software solutions and data monetization. The most innovative and agile organizations will thrive through rapidly evolving market consolidation by leveraging advanced AI platforms and next-generated data capabilities to become a mission-critical partners to the customers they serve.

Operator: Any forward-looking statements made on this call are made only as of today and PowerFleet assumes no obligation nor does the company intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances. During this call, both gap and non-gap financial measures will be presented. A reconciliation of gap to non-gap measures is included in today's press release. The press release is available on the investor section of the call.

Operator: Please note this conference is being recorded.

Speaker Change: Securing scale is critical to distinguishing combined business from competitors and to go head to head with the current market leaders.

Speaker Change: As the core telematics industry rapidly transforms the winners in the industry are poised to capture the majority of shareholder value through shifting towards AI led software solutions and data monetization.

Speaker Change: The most innovative and agile organizations will thrive through rapidly evolving market consolidation by leveraging advanced AI platforms and next generation data capabilities to become mission critical partners to the customers they serve.

Speaker Change: Moving forward success in this evolved industry in this firmly on platforms that go well beyond traditional telematics delivering high quality actionable insights for business improvement in our flexible unprofitable manner.

Steve Towe: Moving forward, success in this evolved industry hinges firmly on platforms that go well beyond traditional telematics, delivering high-quality, actionable insights for business improvement in a flexible and profitable manner. Our ability to capture significant market share centers on SaaS monetization of powerfully to Unity ecosystem. The market and customer response to our unity product strategies overwhelmingly positive, signaling its high value and differentiating. Unity's unique data highway creates compelling pathways for revenue synergies, underpinned with best-in-class solution sets from both sides of the business and an opportunity to reach a much-extended enterprise customer base through our improved scale and higher velocity direct and indirect rich to market.

Speaker Change: Our ability to capture significant market share centers on SaaS monetization of power fleets unity ecosystem.

Speaker Change: The market and customer response to our unity product strategies overwhelmingly positive $6 million is high value and differentiation.

UNICEF unique data highway creates compelling pathways for revenue synergies underpinned with best in class solution sets from both sides of the business and an opportunity to reach a much extended enterprise customer base through our improved scale and higher velocity direct and indirect routes to market.

Speaker Change: We now have a rich subscriber base of close to $2 million, many of whom offer us as increased wallet share opportunity through our combined solution portfolio.

Steve Towe: We now have a rich subscriber base of close to 2 million, many of whom offer us an increased wallet share opportunity through our combined solution portfolio. This underpins our expectation of accelerated double-digit growth in future years. Simultaneously, we are well positioned to achieve significant EBITDA expansion by extracting a target to $27 million in cost energies through a proven and battle tested integration playbook. The playbook's first chapter focused on building and executing a rapid transformation plan close close. Our top priority is to drive radical change without losing traction and disrupting operations. The successful execution is evident in our strong financial performance this quarter, with combined revenue increasing by a highly encouraging 10%, and EBITDA by an exceptional 50%, compared to the prior year on a pro-former combined basis.

Speaker Change: This underpins our expectation of accelerated double digit growth in future years.

Speaker Change: Simultaneously, we are well positioned to achieve significant EBITDA expansion by extracting a targeted $27 million in cost synergies through a proven and battle tested integration playbook.

Speaker Change: The playbook first chapter focused on building and executing a rapid transformation plan post close our top priority is to drive radical change without losing traction and disrupting operations.

The successful execution is evident in our strong financial performance this quarter with combined revenue increasing by a highly encouraging 10% and EBITDA by an exceptional 50% compared to the prior year on a pro forma combined basis.

Steve Towe: Good morning, everyone, and thank you for joining the call. With the SEC comments successfully resolved, I'm delighted to be able to provide additional detail and context on our first quarter operating and financial performance. Our results clearly demonstrate execution excellence in implementing our operating plan since the business combination.

Speaker Change: These transformation efforts are also critical in establishing a performance based organizational culture.

Steve Towe: These transformation efforts are also critical in establishing a performance-based organizational culture, focused on delivering exceptional outcomes for our customers and shareholders. We've effectively aligned our operations, integrating teams across regions, and ensuring the fast strategies are cohesive and targeted. Key areas such as go-to-market, technology, hardware, operations, and customer experience have seen smooth transitions, with important frameworks and processes established to drive efficiency and innovation. An essential part of this progress is our work in ingesting mixed device data and core software capabilities into the Unity ecosystem. This capability is crucial, and it unlocks the full potential of Unity for the legacy customer base of MIX.

Steve Towe: We have much to share on today's call, so let's start with the recap of the CQ rationale behind the mixed transaction. Securing scale is critical to distinguishing our combined business from competitors and to go ahead to head with the current market leaders. As the core telematics industry rapidly transforms, the winners in the industry are poised to capture the majority of shareholder value through shifting towards AI-led software solutions and data monetization. The most innovative and agile organisations will thrive through rapidly evolving market consolidation by leveraging advanced AI platforms and next-generated data capabilities to become mission-critical partners to the customers they serve.

Speaker Change: <unk> focused on delivering exceptional outcomes for our customers and shareholders.

Speaker Change: We are effectively aligned our operations integrating teams across regions and ensuring the SaaS strategies are cohesive and targeted.

Speaker Change: Key areas such as go to market technology hardware operations and customer experience have seen smooth transitions with important frameworks and processes established to drive efficiency and innovation.

Speaker Change: And the central part of this progress is our work in ingesting mixed device data and core software capabilities into the unity ecosystem.

Steve Towe: Moving forward, success in this evolved industry hinges firmly on platforms that go well beyond traditional telematics, delivering high-quality, actionable insights for business improvement in a flexible and profitable manner. Our ability to capture significant market share centres on sass monetization of power-fleet unity ecosystem. The market and customer response to our unity product strategies are overwhelmingly positive, signaling its high value and differentiating. Unity's unique data highway creates compelling pathways for revenue synergies, underpinned with best-in-class solution sets from both sides of the business, and an opportunity to reach a much-extended enterprise customer base through our improved scale and higher velocity direct and indirect rich to market.

Speaker Change: This capability is crucial.

Speaker Change: Unlocks the full potential of unity for the legacy customer base mix.

Speaker Change: We are making significant strides in this area and remain on track to complete full integration within the first six months post close.

Steve Towe: We are making significant strides in this area and remain on track to complete full integration within the first six months post-close. Achieving this milestone opens up opportunities for unity-centric revenue synergies in the second half of fiscal 2025.

Speaker Change: Achieving this milestone opens up opportunities for unity centric revenue synergies in the second half of fiscal 2025.

Moving onto our commercial wins, we've had an impressive and confidence building quarter, particularly with the continued momentum of our safety and compliance centric solution set.

Steve Towe: Moving on to our commercial wins, we've had an impressive and competent building quarter, particularly with the continued momentum of our safety and compliance-centric solutions set. Unity continues to be a game-changer, delivering the impressive results across various industries.

Speaker Change: Unit C continues to be a game changer delivering impressive results across various industries.

Speaker Change: I'd like to highlight a recent press release regarding our partnership with IMC.

Steve Towe: I'd like to highlight our recent press release regarding our partnership with IMC, a leading intermodal company in the US. Initially, IMC operated with your sources of technology, with Power-fleet holding a smaller footprint compared to another market leader. However, Unity's advanced data ingestion engine and unified operations integration capability gradually distinguished our offering, prompting IMC to consolidate their data sets from the other provider and their OEMs into Unity. As a result, Power-fleet has now become their full mission-critical partner for the future. Increasingly, companies are recognising Unity as their core data-consolidator and a key provider of insights that drive transformative business change.

A leading intermodal company in the U S.

Speaker Change: Initially IMC operates with dual sources of technology with powerful each holding a smaller footprint compared to another market leader.

However, unisys advanced data ingestion engine and unified operations integration capability gradually distinguished our offering.

Speaker Change: <unk> consolidate their data sets from the other provider and their Oems into unity.

Speaker Change: As a result have fleets has now become the full mission critical partner for the future.

Speaker Change: Increasingly companies are recognizing unity as their core data consolidator and a key provider of insights that drive transformative business chain.

Speaker Change: Another notable win came from a major U S. Caterpillar dealer now leveraging unity to provide more automated and value added solutions.

Steve Towe: Another notable win came from a major US cash pillar dealer, now leveraging Unity to provide more automated and value-added solutions. This strengthens our partnership and reinforces Unity's versatility in addressing diverse industry needs. We're also gaining momentum in new markets for our in-warehouse solutions, most notably in Mexico, highlighting our ability to scale and adapt our solutions globally.

Speaker Change: This strengthens our partnership and reinforces unisys versatility in addressing diverse industry needs.

Speaker Change: We're also gaining momentum in new markets for our in warehouse solutions, most notably Mexico, highlighting our ability to scale and adapt our solutions globally.

Speaker Change: <unk> pedestrian proximity detection solutions continue to gain traction with established customers in industries like pulp and paper and pet nutrition expanding their use of this technology in Q1.

Steve Towe: A.I. led pedestrian proximity detection solutions continue to gain traction with established customers in the industries like pulp and paper and pet nutrition, expanding their use of this technology in Q1. Overall, our unity safety solution demonstrated an impressive 25% year-on-year growth in the US this quarter.

Speaker Change: Overall, our unity safety solutions demonstrated an impressive 25% year on year growth in the U S. This quarter.

Our hedges sharing my forward looking thoughts and perspectives I'll hand, the call over to David to provide additional detail and insight into our financial results David.

David Wilson: Ahead of sharing my forward-looking thoughts and perspectives, I'll hand the call over to David to provide additional detail and insights into our financial results.

Speaker: Today's remarks will contain forward-looking statements. Actual results may differ from those contemplated by these forward-looking statements. Factors that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements are described in today's earnings press release.

David: Thank you, Steve and good morning, everyone.

David: Before diving into our first quarter financial performance I want to share my insights on the businesses operation in the first four months following the close of the next transaction.

David Wilson: David? Thank you, Steve, and good morning, everyone.

Speaker: Any forward-looking statements made on this call are made only as of today and PowerFleet assumes no obligation nor does the company intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.

Speaker: During this call, both gap and non-gap financial measures will be presented. A reconciliation of gap to non-gap measures is included in today's press release. The press release is available on the investor section of the call.

David Wilson: Before I dive into our first quarter-financial performance, I want to share my insights on the business's operation in the first four months following the close of the mixed transactions. The strength of our financial results is no accident. They're founded on a disciplined, rigorous approach with a clear mission. Executing highly equity of M&A is a core competency at PowerFleet, not an afterthought. In the past 20 months, this has been proven twice. Firstly, with the moving dot-sac position, where we seamlessly integrated a team of 35 engineers and swiftly neutralized $4 million in annualized EBITDA phone within six months.

Steve Towe: Good morning, everyone, and thank you for joining the call.

David: The strength of our financial results is no accident that founded on a disciplined rigorous approach with a clear mission.

David: Executing highly accretive M&A is a core competency at pathway not enough vessels.

David: For the past 20 months this has been proven twice.

David: Firstly with the movement towards acquisition, where we seamlessly integrated a team of 35 engineers and swiftly neutralized $4 million in annualized EBITDA burn than six months.

David: Now on a larger scale with the mix for our first quarter financial results reflect our ability to execute quickly and effectively.

David Wilson: And now, on a larger scale with a mix, there are first quarter financial results, reflecting our ability to execute quickly and effectively. This speed of execution and the traction we've gained are sources of deep pride. We're implementing a well-established Facebook, leveraging the talents of key leaders across the organization to achieve high-impact outcomes in specifically targeted areas. Our success is measured by key financial achievements: a remarkable 10% year-of-a-year increase in revenue, an expansion of product gross margins from 25% to 32%. In the rapid execution of our cost energy program, resulting in $8.7 million in annualized savings exiting Q1, approximately $5 million through the elimination of duplicate costs, and $3 million through changes in the way that we work.

The speed of execution and the traction we've gained our sources of deep product we.

We are implementing a well established playbook leveraging the talents of key leaders across the organization to achieve high impact outcomes and specifically targeted areas.

David: Our success is measured by key financial achievements.

David: Remark by 10% year over year increase in revenue and.

Steve Towe: Our top priority is to drive radical change without losing traction and disrupting operations. The successful execution is evident in our strong financial performance this quarter, with combined revenue increasing by a highly encouraging 10% and EBITDA by an exceptional 50% compared to the prior year on a pro forma combined basis. These transformation efforts are also critical in establishing a performance based organizational culture focused on delivering exceptional outcomes for our customers and shareholders.

Speaker Change: The expansion of product gross margins from 25% to 32% and the rapid execution of our cost synergy program, resulting in $8 $7 million in.

Speaker Change: And annualized savings exiting Q1.

Speaker Change: Approximately $5 million through elimination of duplicate costs.

Speaker Change: $3 million through changes in the way that we work in.

Speaker Change: We achieved all of this without missing a beat operationally.

Speaker Change: Before I review, our detailed financial results there are a few important points to highlight.

David Wilson: Importantly, we achieved all of this without missing a beat operationally.

Steve Towe: We've effectively aligned our operations integrating teams across regions and ensuring the fast strategies are cohesive and targeted. Key areas such as go-to-market technology hardware operations and customer experience have seen smooth transitions with important frameworks and processes established to drive efficiency and innovation. An essential part of this progress is our work in ingesting mixed device data and core software capabilities into the Unity ecosystem. This capability is crucial and it unlocks the full potential of Unity for the legacy customer base of mix.

David Wilson: Before I review our detailed financial results, there are a few important points to highlight. Both former comparisons. All comparisons versus prior period results discussed on this call and in our press release are based on the pro-forma financial results of the combined business. This can pass with our 10-Q filing, which will only include the legacy power click numbers.

Steve Towe: We are making significant strides in this area and remain on track to complete full integration within the first six months post-close. Achieving this milestone opens up opportunities for Unity centric revenue synergies in the second half of fiscal 2025.

Steve Towe: With the SEC comments successfully resolved, I'm delighted to be able to provide additional detail and context on our first quarter operating and financial performance. Our results clearly demonstrate execution excellence in implementing our operating plan since the business combination.

Speaker Change: Forma comparisons okay.

Speaker Change: Comparisons versus prior period results discussed on this call and in our press release are based on the pro forma financial results of the combined business.

This contrasts with our 10-Q filing which will only include the legacy power fleet numbers.

Steve Towe: Moving forward, success in this evolved industry hinges firmly on platforms that go well beyond traditional telematics, delivering high-quality, actionable insights for business improvement in a flexible and profitable manner. Our ability to capture significant market share centres on sass monetization of power-fleet unity ecosystem. The market and customer response to our unity product strategies are overwhelmingly positive, signaling its high value and differentiating. Unity's unique data highway creates compelling pathways for revenue synergies, underpinned with best-in-class solution sets from both sides of the business, and an opportunity to reach a much-extended enterprise customer base through our improved scale and higher velocity direct and indirect rich to market.

Speaker Change: One time expenses the expenses incurred this quarter include one time transaction restructuring and accelerated stock based compensation costs totaling $24 million.

David Wilson: One-time expenses. The expenses incurred this quarter include one-time transaction, restructuring, and accelerating stock-based compensation costs totaling $20.4 million. These are backed out of adjusted EBITDA and ETS to reflect on going to run rates.

Speaker Change: These are backed out of adjusted EBITDA and EPS to reflect ongoing run rates.

Speaker Change: <unk> impact.

Speaker Change: This quarter's results also reflect the onset of amortization of intangible assets related to the <unk> acquisition.

David Wilson: The privatization impact. This quarter's results also reflect the onset of environmentalization in tangible assets related to the mix acquisition, resulting in an incremental $3 million in non-cash expenses and reducing service gross margins by over 5%. Now let's dive into the detailed numbers for the quarter, starting with revenue, which increased by 10.2% year-over-year to $75.4 million from $68.4 million. This growth was primarily driven by the success of our differentiated safety-centric product solutions, with product revenue rising over 29% to $18.7 million. There are two important points to note regarding our product revenue. First, as we have transitioned out of our hardware-only business, strong product revenue serves as the lead indicator of growth in service revenue.

Speaker Change: Resulting in an incremental $3 million in non cash expenses from reducing service gross margins by over 5%.

Speaker Change: Now, let's dive into the detailed numbers for the quarter, starting with revenue, which increased by 10, 2% year over year to $75 4 million from $68 $4 million.

Speaker Change: This growth was primarily driven by the success of our differentiated safety centric product solutions with product revenue rising over 29% to $18 7 million.

Steve Towe: Moving on to our commercial wins, we've had an impressive and confidence building quarter, particularly with the continued momentum of our safety and compliance centric solutions set. Unity continues to be a game changer delivering impressive results across various industries. I'd like to highlight our recent press release regarding our partnership with IMC, a leading intermodal company in the US. Initially, IMC operated with your sources of technology with Powerfleet holding a smaller footprint compared to another market leader.

Speaker Change: There are two important points to note regarding our product revenue.

Speaker Change: First as we have transitioned out of a hardware only business strong product revenue serves as the lead indicator of growth in service revenue.

Speaker Change: Second the robust performance of our safety centric solutions more than offset pressure in north Americas more commoditize logistics segments contributing to a 7% expansion in product gross margin, which rose to 32% from 24, 7%.

David Wilson: Second, robust performance of our safety-centric solutions more than offset pressure in North America's more commoditized logistics segments, contributing to a 7% expansion in product growth margins, which rose to 32% from 24.7%. Service revenue also showed strength, increasing over 5% year-over-year, to 56.7 million dollars. This growth, driven by an expansion of our installed base to nearly 2 million devices, underscores the strength of our unity product strategy and the risk diversification benefits of operating at scale globally. This has allowed us to effectively mitigate the impact of previously announced turn in the legacy mixed customer base, challenges in the US logistics market, and macroeconomic headwinds in Israel.

Speaker Change: Service revenue also showed strength, increasing over 5% year over year to $56 $7 million.

Speaker Change: This growth driven by an expansion of our installed base to nearly 2 million devices.

Steve Towe: However, Unity's advanced data ingestion engine and unified operations integration capability gradually distinguished our offering, prompting IMC to consolidate their data sets from the other provider and their OEMs into Unity. As a result, Powerfleet has now become their full mission critical partner for the future. Increasingly, companies are recognising Unity as their core data consolidates and a key provider of insights that drive transformative business change. Another notable win came from a major US cash pillar dealer, now leveraging Unity to provide more automated and value added solutions.

Speaker Change: Underscores the strength of our unity product strategy and the risk diversification benefits of operating at scale globally.

Speaker Change: This has allowed us to effectively mitigate the impact of previously announced churn in the legacy mix customer base.

Steve Towe: This strengthens our partnership and reinforces Unity's versatility in addressing diverse industry needs. We're also gaining momentum in new markets for our in warehouse solutions, most notably in Mexico, highlighting our ability to scale and adapt our solutions globally. A.I, led pedestrian proximity detection solutions continue to gain traction with established customers in industries like pulp and paper and pet nutrition, expanding their use of this technology in Q1. Overall, our Unity Safety Solutions demonstrated an impressive 25% year-on-year growth in the U.S, this quarter.

Speaker Change: Challenges in the U S logistics market.

Speaker Change: Macroeconomic headwinds in Israel.

Speaker Change: Service gross margin was lower at 59, 4% compared to 65, 9% in the prior period.

David Wilson: Service growth margin was lower at 59.4% compared to 65.9% in the prior period, mainly due to the non-cash charges of 3 million dollars from the amortization of tangible assets related to the mixed transaction. On an adjusted basis, service growth margin was 64.7%. The buying growth margin was lower at 52.6%, compared to 57.2% in the prior year, also primarily due to the 3 million dollar non-cash expense just mentioned. Excluding this expense, total growth margin was 56.5%, relatively comparable to the prior year period. Moving on to operating expenses, which totaled 57.9 million dollars per quarter, this includes 20.4 million in one-time transaction, restructuring, and external base compensation costs.

Speaker Change: Mainly due to the noncash charges of $3 million from the amortization of intangible assets related to the mixed transaction.

Speaker Change: On an adjusted basis service gross margin was 64, 7%.

Speaker Change: Combined gross margin was 52, 6% compared to 57, 2% in the prior year also primarily due to $3 million non.

Speaker Change: Noncash expense just mentioned.

Speaker Change: Excluding this expense total gross margin was 56, 5% relatively comparable to the prior year period.

Speaker Change: Moving onto operating expenses, which totaled $57 $9 million per quarter. This.

Speaker Change: This includes $20 4 million in one time transaction restructuring and accelerated stock based compensation costs.

Speaker Change: After adjusting for these costs total opex was $37 5 million in line with the prior year.

David Wilson: After adjusting for these costs, total RPEX was 37.5 million dollars in line with the prior year. And an adjusted basis, selling general administrative expenses, was 34.4 million dollars, representing 45.6% of revenue compared to 49.5% in the prior year. Within SDNA, general administrative expenses were 33.6% of revenue, providing a rich environment for additional cost optimization. Investment in research and development, including $2.9 million in capitalized software costs, totaled $6 million, or 7.9% of revenue, compared to 8.6% in the prior year, when we were still in the process of rationalizing spend following the moving dot set position. This level of spend is highly efficient, reflects the affordability of high quality engineering talent in South Africa.

And then adjusted basis, selling general administrative expenses were $34 $4 million.

Speaker Change: Representing 45, 6% of revenue compared to 49, 5% in the prior year.

Speaker Change: Within SG&A General <unk> expenses were 33, 6% of revenue, providing a rich environment for additional cost optimization.

Speaker Change: Investment in research and development, including $2 $9 million and capitalized software costs totaled $6 million or seven 9% of revenue compared to eight 6% in the prior year when.

Speaker Change: When we were still in the process of rationalizing spend following the <unk> acquisition.

Speaker Change: This level of spend is highly efficient reflects the affordability of high quality engineering talents and South Africa.

Speaker Change: Moving on to adjusted EBITDA, which increased by an impressive 52, 2% to $13 $7 million from $9 million.

David Wilson: Moving on to adjusted EBITDA, which increased spend impressive 52.2% to 13.7 million dollars from 9 million dollars. This growth was primarily driven by strong top-line performance, generating an additional $3.5 million in gross margin after accounting for $3 million in amortized income. Net loss of to build accomplished stockholders was $22.3 million, or loss of 21 cents for basic and diluted share compared to 4 cents in the prior year. After adjusting for one-time expenses and the amortization of acquisition-related intangibles, adjusted EPS was breakeven, or zero cents, for the current quarter. Both in with cash and the balance sheet, we ended the quarter with net debt of $108.2 million, which includes cash of $31.4 million and total debt of $139.6 million.

Speaker Change: This growth was primarily driven by strong top line performance generating an additional $3 5 million and gross margin after accounting for $3 million in amortized.

Speaker Change: Net loss attributable common stockholders was $22 3 million or loss of <unk> 21 per basic and diluted share compared to <unk> in the prior year.

Speaker Change: After adjusting for onetime expenses and the amortization of acquisition related intangibles, adjusted EPS was breakeven or zero cents for the current quarter.

Speaker Change: Boating with cash in the balance sheet, we ended the quarter with net debt of $108 $2 million, which includes cash of $31 4 million and total debt of $139 6 million.

Speaker Change: After adjusting for $6 million in unsettled transaction costs.

David Wilson: After adjusting for $6 million in unsettled transaction costs, reform and net debt stands at $114 million, compared to $110 million at the close of the mixed transaction. The formal and increase in pro-form and net debt is primarily due to a net working capital burn of $7 million in the quarter, driven by an increase in receivables, distributed to strong top line performers.

Speaker Change: Net debt stands at $114 million compared to $110 million at the close of the next transaction.

Speaker Change: The $4 million increase in pro forma net debt is primarily due to a net working capital burn of $7 million in the quarter driven by an increase in receivables attributed to strong top line performance.

Speaker Change: As discussed in our April Fireside chats.

Speaker Change: Dissipate a net cash burn in the first half of fiscal 2025 with a recovery expected in the second half.

David Wilson: As discussed in our April 5th side chats, we anticipated net cash burn in the first half of fiscal 2025, as their recovery is expected in the second half. Finally, given our strong start to the fiscal year, we are reiterating the increased guidance that we shared on our August 6th fireside chat, with full year 2025 revenue to exceed $300 million, up from the initial guidance of approximately $300 million. And our adjusted EBITDA guidance took seed $60 million, which includes an incremental $5 million in secured exit run rate cost energies, compared to our initial guidance of approximately $60 million.

Speaker Change: Finally, given our strong start to the fiscal year, we are reiterating the increased guidance that we shared on our August six fireside chats with full year 2025 revenue to exceed $300 million upfront.

Speaker Change: From the initial guidance of approximately $300 million.

Speaker Change: Our adjusted EBITDA guidance to exceed $60 million, which includes an incremental $5 million unsecured exit run rate cost synergies compared to our initial guidance of approximately $60 million.

Speaker Change: That concludes my remarks, Steve.

Steve: Thanks, David.

David Wilson: That concludes my remarks, Steve.

Speaker Change: Long term shareholders intending analysts on today's call can appreciate just how far we've come in a short time.

Steve Towe: Thanks, David. Long-term shareholders and tenant analysts on today's call can appreciate just how far we've come in a short time. The transformation of the business since we implemented a new vision and strategy for the company in early 2022 has been outstanding.

David Wilson: Ahead of sharing my forward-looking thoughts and perspectives, I'll hand the call over to David to provide additional detail and insights into our financial results. David. Thank you, Steve, and good morning everyone.

Steve: The transformation of the business since we implemented a new vision and strategy for the company in early 2022 has been outstanding.

David Wilson: Before I dive into our first quarter-financial performance, I want to share my insights on the business's operation in the first four months following the close of the mixed transaction. The strength of our financial results is no accident. They're founded on a disciplined, rigorous approach with a clear mission. Executing highly equity of M&A is a core competency at PowerFleet, not an afterthought. In the past 20 months, this has been proven twice. Firstly, with the moving dot-sac position, where we seamlessly integrated a team of 35 engineers and swiftly neutralized $4 million in annualized EBITDAB own within six months.

Steve Towe: Simultaneously, we are well positioned to achieve significant EBITDA expansion by extracting a target to $27 million in cost energies through a proven and battle tested integration playbook. The playbook's first chapter focused on building and executing a rapid transformation plan close close. Our top priority is to drive radical change without losing traction and disrupting operations. The successful execution is evident in our strong financial performance this quarter, with combined revenue increasing by a highly encouraging 10% and EBITDA by an exceptional 50% compared to the prior year on a pro forma combined basis.

Steve: While I am proud of what our team has accomplished this is just the beginning.

Speaker Change: Our goal is to achieve and surpass the rule of 40 SaaS performance over the next two years, which will significantly enhance shareholder value by potentially increasing our valuation multiple from today's two times level to the five to eight times revenue typically seen in public SaaS companies meeting this benchmark.

Steve Towe: While I'm proud of what our team has accomplished, this is just the beginning. Our goal is to achieve and surpass the rule of 40 SaaS performance over the next two years, which would significantly enhance shareholder value by potentially increasing our valuation multiple from today's two times level to the five to eight times revenue typically seen in public SaaS companies meeting with benchmark. The unity ecosystem is a central pillar in driving this transformation in value, and our confidence in realizing its full potential has never been higher. Starting first with the market, where the customer response to our device-agnostic capabilities, rapidly growing library of third-party integrations, and breadth of solution from in warehouse to over the road is compelling.

Speaker Change: The unity ecosystem as a central pillar in driving this transformation and value and our confidence in realizing its full potential has never been higher.

Steve Towe: These transformation efforts are also critical in establishing a performance based organizational culture focused on delivering exceptional outcomes for our customers and shareholders. We've effectively aligned our operations integrating teams across regions and ensuring the fast strategies are cohesive and targeted. Key areas such as go-to-market technology hardware operations and customer experience have seen smooth transitions with important frameworks and processes established to drive efficiency and innovation. An essential part of this progress is our work in ingesting mixed device data and core software capabilities into the Unity ecosystem.

Speaker Change: Starting first with the market, while the customer response to our device agnostic capabilities rapidly growing library of third party integrations and breadth of solutions remain warehouse to over the road is compelling.

Steve Towe: This capability is crucial and it unlocks the full potential of Unity for the legacy customer base of mix. We are making significant strides in this area and remain on track to complete full integration within the first six months post-close.

We are gaining more and more traction with large enterprises, who are looking for data consolidation harmonization and simplification and integration.

Steve Towe: We are gaining more and more traction with large enterprises who are looking for data consolidation, harmonization, simplification, and integration. The value and visibility these capabilities provide to complex organizations running low on skilled resources is immense. The requirement for automation and digital optimization is becoming mandatory as organizations face the need for increased efficiency. The excitement and engagement with the mixed customer base reaffirms our understanding and conviction that unity provides solutions to address acute pain points across market verticals and geographies.

Speaker Change: The value of visibility these capabilities provide to complex organizations running low on skilled resources is a mix.

Speaker Change: The requirement for automation and digital optimization is becoming mandatory as organizations face the need for increased efficiency.

Speaker Change: The excitement and engagement with the mix customer base reaffirms, our understanding and conviction that unity provide solutions to address acute pain points across market verticals and geographies.

Steve Towe: Achieving this milestone opens up opportunities for Unity centric revenue synergies in the second half of fiscal 2025.

Speaker Change: We're off to a strong start in achieving our cost synergy commitments securing $8 $7 million in annual savings within the first 90 days, we have a clear plan to reach our target of $27 million in annualized savings within two years of the transaction, which will continue to support EBITDA expansion.

Steve Towe: We're off to a strong start in achieving our cost energy commitments, securing $8.7 million in annual savings within the first 90 days. We have a clear plan to reach our target of $27 million in annual savings within two years of the mixed transaction, which will continue to support EBITDAX fans. We're going deeper into our saving plan to pivot more and more resources into our go-to-market and customer success teams. Additional savings we are realizing over and above the $27 million EBITDA expansion programs is giving us the ability to hire a 30% uplift on our quote to carrying sales rules.

David Wilson: Now, on a larger scale with a mix, there are first quarter-financial results, reflect our ability to execute quickly and effectively. This feed of execution and the traction we've gained are sources of deep pride. We are implementing a well-established Facebook, leveraging the talents of key leaders across the organization to achieve high-impact outcomes in specifically targeted areas. Our success is measured by key financial achievements, a remarkable 10% year-over-year increase in revenue, an expansion of product gross margins from 25%, to 32%, and the rapid execution of our cost energy program resulting in $8.7 million in annualized savings, exiting Q1, approximately $5 million for the elimination of duplicate costs, and $3 million through changes in the way that we work. Importantly, we achieved all of this without missing a beat operationally.

David Wilson: Before I review our detailed financial results, there are a few important points to highlight. Both former comparisons, all comparisons versus prior period results discussed on this call and in our press release, are based on the pro-former financial results of the combined business. This contrasts with our 10Q filing, which will only include the legacy-powered league numbers. One-time expenses. The expenses incurred this quarter include one-time transaction, restructuring, and accelerating stock-based compensation costs, totaling $20.4 million. These are backed out of adjusted EBITDA and ETS to reflect on going to run rates.

Speaker Change: We're going deeper into our savings plan to pivot more and more resources into our go to market and customer success teams additional savings we are realizing over and above the $27 million EBITDA expansion programs are giving us the ability to hire a 30% uplift on our quota carrying sales force.

Speaker Change: We plan to continue scaling our customer facing operations significantly as we leverage our increased efficiency and extended capabilities over the next two years.

Steve Towe: We plan to continue scaling our custom-of-fating operations significantly as we leverage our increased efficiency and extended capabilities over the next two years.

David Wilson: Now let's dive into the detailed numbers for quarter, starting with revenue, which increased by 10.2% year-over-year to $75.4 million from $68.4 million. This growth was primarily driven by the success of our differentiated safety-centric product solutions with product revenue rising of a 29% to $18.7 million. There are two important points to note regarding our product revenue. First, as we have transitioned out of our hardware-only business, strong product revenue serves as the lead indicator of growth in service revenue.

Speaker Change: In summary, we have all the key components in place to accelerate revenue growth and expand EBITDA through scale enhanced gross margins and strategically targeted cost rationalization.

Steve Towe: In summary, we have all the key components in place to accelerate revenue growth and expand EBITDA through scale, enhance growth margins, and strategically targeted cost rationalisation. We look forward to maintaining this momentum and sharing the results of our efforts as we continue the march toward Rule of 40 performance in our regularly quarterly updates.

David Wilson: Second, robust performance of our safety-centric solutions, more than offset pressure in North America's more commoditized logistics segments, contributing to a 7% expansion in product growth margins, which rose to 32% from 24.7%. Service revenue also showed strength, increasing over 5% year-over-year, the $56.7 million. This growth, driven by an expansion of our installed base to nearly 2 million devices, underscores the strength of our unity product strategy and the risk diversification benefits of operating at scale globally.

Speaker Change: We look forward to maintaining this momentum and sharing the results of our efforts as we continue the March toward rule of 40 performance in our regular quarterly updates.

David Wilson: This has allowed us to effectively mitigate the impact of previously announced turn in the legacy-mixed customer base challenges in the US logistics market and macroeconomic headwinds in Israel. Service growth margin was lower at 59.4% compared to 65.9% in the prior period, mainly due to the non-cash charges of $3 million from the amortization of intangible assets related to the mixed transaction. On an adjusted basis, service growth margin was 64.7%. The buying growth margin was lower at 52.6% compared to 57.2% in the prior year, also primarily due to the $3 million non-cash expense just mentioned. Excluding this expense, total growth margin was 56.5%, relatively comparable to the prior year period.

Before concluding I'm pleased to share that we will be holding a further investor day in New York City on November 21, this year going deeper into the progress we've made within the combined business and focusing on a path to accelerated growth in the coming needs.

Steve Towe: Before concluding, I'm pleased to share that we'll be holding a further investor day in New York City on November the 21st this year, going deeper into the progress we've made within the combined business and focusing on our path to accelerated growth in the coming years. We'll be communicating more about this to you in the coming weeks. I'll now turn it back to the operator for Q&A.

David Wilson: Moving on to operating expenses, which totaled $57.9 million per quarter, this includes $20.4 million in one-time transaction, restructuring, and external base compensation costs. After adjusting to these costs, total RPEX was $37.5 million in line with the prior year. And an adjusted basis, selling general administrative expenses, was $34.4 million, representing $45.6% of revenue compared to $49.5% in the prior year. Within SDNA, general administrative expenses were 33.6% of revenue, providing a rich environment for additional cost optimization.

Speaker Change: We will be communicating more about this to you in the coming weeks I'll now turn it back to the operator for Q&A operator.

Speaker Change: Thank you 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.

Operator: Operator? Thank you.

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 may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Your first question for today is from Scott certainly with Roth capital.

Scott Searle: One moment please for today is from Scott Surley with Roast Capital. Hey, good morning, guys. Thanks for taking the questions. Congratulations on the quarter. It's nice to see service growth returning, and congrats on getting the filing done.

Speaker Change: Hey, good morning, guys. Thanks for taking the questions. Congratulations on the quarter, it's nice to see service growth returning and congrats on getting the filings done.

Speaker Change: Thanks Scott.

Speaker Change: In terms of the filings they are still to come will be coming this week.

Steve Towe: Thanks, Scott. In terms of the filing, there's still to come to becoming this week, but we'll very well position that.

Speaker Change: We're very well positioned there.

Speaker Change: Okay.

Speaker Change: Steve maybe to start here.

Speaker Change: Hearing you talk more and more about AI.

David Wilson: Investment in research and development, including $2.9 million in capitalized software costs, totaled $6 million, or $7.9% of revenue, compared to 8.6% in the prior year, when we were still in the process of rationalizing spend following the moving dot set position. This level of spend is highly efficient, reflects the affordability of high quality engineering talent in South Africa.

Scott Searle: Steve, maybe to start hearing you talk more and more about AI device-agnostic data and the customer requirements. I wonder if you could give us a little bit more color in terms of the magnitude of the pipeline that's building around those capabilities because they're unique, I think, in terms of the competitive landscape out there. What that's translating to in terms of ongoing customer dialogues, how that's impacting the pipeline. I don't know if you'd want to take a stab at giving us an idea of the magnitude of that pipeline and what the near term TCV looks like.

Speaker Change: Rice agnostic data.

Speaker Change: From the customer requirements I'm wondering if you could give us a little bit more color in terms of.

Speaker Change: The magnitude of the pipeline that's building around those kind of capabilities because they are unique I think in terms of the competitive landscape out there what that's translating to in terms of ongoing customer dialogue, how thats impacting the pipeline.

Speaker Change: And I don't know if you'd want to take a stab at giving US an idea of the magnitude of that pipeline and kind of what the near term <unk> looks like.

Speaker Change: Yes, Scott, we're going to size some of that until we get to our investor day in terms of magnitude and quantification where it is.

Steve Towe: Yeah, Scott, we're going to say some of that until we get to our Investor Day in terms of magnitude and quantification, but it's highly significant. So we are seeing a number of large enterprises across the globe, whether that's insurance companies, large logistics companies, complex organizations who have a lot of a subcontractor base, who are seen and acute pain point with not being able to get true visibility across their fleet. And then secondly, they're also not able to make sense of all the different data streams that are being presented to them, and they don't have the resources to actually collate, understand, refine, and do something with the data.

Speaker Change: What I would say is it's highly significant so we are seeing a number of large enterprises across the globe, whether that's insurance companies large logistics companies complex organizations, who have a lot of a subcontract base, who are seeing an acute pain point with not being able to get true visibility.

Steve Towe: As a result, Powerfleet has now become their full mission critical partner for the future. Increasingly, companies are recognising Unity as their core data consolidates and a key provider of insights that drive transformative business change.

Speaker Change: Across their fleets and then secondly, they are also not able to make sense of all the different data streams.

Speaker Change: Being presented to them and they don't have the resources to actually collate understand we're fine and do something with the data.

Speaker Change: So the play that we know in terms of.

Speaker Change: Really kind of being that one stop shop for that capability positioning ourselves in the center of their organizations to ultimately harmonize the in yesterday to harmonize the data and then presented to them in a fashion, which is easy for them to consume which also means other monetization opportunities for us.

Steve Towe: So the play that we now make in terms of really kind of being that one-stop shop for that capability, positioning ourselves in the center of their organizations to ultimately harmonize the, ingest the data, harmonize the data, and then present it to them in a fashion which is easy for them to consume, which also means other monetization opportunities for us is making a real, real difference. So, I would say it is a significant increase in our pipeline. As we get to realize some of the benefits of that, and we expect to have some customers who come and talk to you all about that in the future, you'll see kind of that magnitude come through.

Steve Towe: Another notable win came from a major US cash pillar dealer, now leveraging Unity to provide more automated and value added solutions. This strengthens our partnership and reinforces Unity's versatility in addressing diverse industry needs.

<unk> is making a real real difference so.

Speaker Change: I would say it is a significant increase in our pipeline.

Steve Towe: We're also gaining momentum in new markets for our in warehouse solutions, most notably in Mexico, highlighting our ability to scale and adapt our solutions globally. A.I, led pedestrian proximity detection solutions continue to gain traction with established customers in industries like pulp and paper and pet nutrition, expanding their use of this technology in Q1. Overall, our Unity Safety Solutions demonstrated an impressive 25% year-on-year growth in the U.S, this quarter.

Speaker Change: As we get to.

Speaker Change: Realize some of the the.

Speaker Change: The benefits of that and we expect to have some customers, who who come and talk to you all about that in the future youll see kind of that magnitude come through but what I would say at this point is it is significant it is global and it's across multi vertical and multi industry.

Scott Searle: But what I would say at this point is it is significant, it is global, and it's across multivirt goals, issues. Very helpful.

Speaker Change: Great very helpful and if I could Steve just to follow up I think at the.

The August six update you talked about new logos versus in house Im wondering now given the expanding product set and offering the global availability of unity.

Scott Searle: And if I could see just to follow up, I think at the August 6th update, you talked about new logos versus in-house. I'm wondering now, you know, given the expanding product set and offering the global availability of Unity, you know, what that number looks like now in terms of the opportunity set of upsell with the existing customer base versus new logos, and real quickly on gross margins, service gross margins, pro forma adjusted around 65%. I think the target level is higher than that.

Speaker Change: What that number looks like now in terms of the opportunity set of up sell with the existing customer base versus new logos and real quickly on gross margins on service gross margins pro forma adjusted around 65% I think the target level is higher than that I wonder if you could just give us some idea about how that progresses over the next couple of quarters. Thanks, So much.

David Wilson: Moving on to adjusted EBITDA, which increased spend impressive $52.2% to $13.7 million from $9 million. This growth was primarily driven by strong top-line performance, generating an additional $3.5 million in gross margin after accounting for $3 million in amortized income. Net loss of to build accomplished stockholders was $22.3 million, or loss of $21 cents for basic and diluted share compared to 4 cents in the prior year. After adjusting for one-time expenses and the amortization of acquisition related intangibles, adjusted EPS was breakeven or zero cents for the current quarter.

David Wilson: Both in with cash and the balance sheet, we ended the quarter with net debt of $108.2 million, which includes cash of $31.4 million and total debt of $139.6 million. After adjusting for $6 million in unsettled transaction costs, both former net debt stands at $114 million, compared to $110 million at the close of the mixed transaction. The former and increase in pro-forma net debt is primarily due to a net working capital of $7 million in the quarter, driven by an increase in receivables, which is due to strong top line performance.

Scott Searle: I wonder if you could just give us some idea about how that progresses over the next couple of quarters. Thanks so much.

David Wilson: As discussed in our April 5th side chats, we anticipated net cash burn in the first half of fiscal 2025, as their recovery expected in the second half.

Speaker Change: So I'll, let David answer the second question.

Speaker Change: In terms of.

David Wilson: Finally, given our strong start to the fiscal year, we are reiterating the increased guidance that we shared on our August 6th fireside chat with four-year 2025 revenue to exceed $300 million up from the initial guidance of approximately $300 million. And our adjusted EBITDA guidance took seed $60 million, which includes an incremental $5 million in secured exit run rate cost energies, compared to our initial guidance of approximately $60 million.

Steve Towe: That concludes my remarks, Steve. Thanks, David. Long-term shareholders and tenant analysts on today's call can appreciate just how far we've come in a short time.

David Wilson: Ahead of sharing my forward-looking thoughts and perspectives, I'll hand the call over to David to provide additional detail and insights into our financial results.

Steve Towe: So I'll let David answer the second question, but in terms of the first question, I think that, you know, what we're seeing is customers really having the need to have this differentiated solution, which ultimately is driving both new business, because the new business is coming from they're insisting on their third party contractors taking our solution, but then obviously evolving within themselves. So, you know, we're at a 70-30 split from existing customers to new in 2.1, but we see where this is kind of having a compounding effect: we're getting more growth with that install base because of just the general services. But this insistence on them taking our solution as a subcontractor or an alliance partner of the end customer is also then bringing the new logos to us as well.

Speaker Change: The first question I think that.

David Wilson: David. Thank you, Steve, and good morning everyone.

Speaker Change: What we're seeing.

Is customers really.

Speaker Change: Having the need to have this differentiated solution, which ultimately is driving both new business because the new business is coming from.

Speaker Change: They are insisting on that third party contracts is taking our solution, but then obviously evolving within themselves so where it's a 70 30 split from existing customers to new in Q1, but we see where this is kind of having a compounding effect is we're getting more growth with our installed base because of just the <unk>.

Speaker Change: Services, but this insistence on them, taking our solution as a subcontractor or an alliance partner.

Speaker Change: The end customer is also then bringing the new logos to us as well.

Speaker Change: David do you want that service gross margin yes.

David: Yeah. So Scott if you look at services gross margin this year versus last year Youre, absolutely right. If you adjust for the amortization of intangibles.

David Wilson: David, do you want to take the service charge margin? Yeah, so Scott, if you look at services, both margin this year versus last year, you're absolutely right. If you adjust for the amortization of intangibles, we were sort of rounding up to 65% this year versus rounding the 60% last year. In terms of what's driving that, it's primarily higher levels of depreciation of in-vehicle devices. It keeps South Africa and also from known churn in the legacy subscriber base that we discussed previously, so that's the primary drivers. In terms of looking forward, target actions have been undertaken in terms of improving that, and we do expect services growth margins to expand steadily in future quarters between now and the end of the year.

Speaker Change: Rounding up to 65% this year versus rounding to 60% last year.

Speaker Change: In terms of what's driving that it's primarily higher levels of depreciation of in vehicle devices that came South Africa and also from known churn and the legacy subscriber base that we discussed previously so thats. The primary drivers in terms of looking forward target actions have been undertaken in terms of improving that.

Speaker Change: We do expect services gross margins to expand steadily in future quarters between now and the end of the year. So.

Speaker Change: Thank you to sort of increase over time.

Speaker Change: Beyond the levels, we were at last year.

David Wilson: So, you know, we expected to sort of increase over time above and beyond the levels we're at last year.

Speaker Change: I apologize I'm going to toss one out and then I'll get back in the queue, but Steve it seems like the confidence level and double digit growth.

Scott Searle: I apologize; I'm going to toss one out, and I'll get back in the queue. But Steve, it seems like the confidence level in double-digit growth continues to grow. It sounds like you're more enthusiastic. Could you give us an idea about when you think we might start to be punching through that sustained double-digit growth, particularly on the services front?

Speaker Change: Continues to grow it sounds like Youre more enthusiastic could you give us an idea about when do you think we might start to be punching through that sustained double digit growth, particularly on the services front. Thanks, so much.

Speaker Change: Yes.

Speaker Change: I think we've never not been enthusiastic I think we're being.

Steve Towe: Thanks so much. Yeah, so I don't think we've ever not been enthusiastic. I think we're being very measured in terms of the transformation that is taking place. You know, if you think about the seismic shifts that we're making in the organization, then, you know, year one has always been about getting on the very front front of that EBITDA expansion, which I think we've demonstrated wholeheartedly in this quarter and more continue to do so. So I think we're not changing our guidance in when we expect to get to the sustained double-digit growth, but what we are seeing is validation of that thesis and momentum growing from a pipeline perspective, from a customer reaction perspective.

Speaker Change: My head in terms of the transformation that is taking place.

Speaker Change: If you think about the seismic shifts that we're making in the organization then.

Steve Towe: The transformation of the business since we implemented a new vision and strategy for the company in early 2022 has been outstanding. While I'm proud of what our team has accomplished, this is just the beginning. Our goal is to achieve and surpass the rule of 40 SaaS performance over the next two years, which would significantly enhance shareholder value by potentially increasing our valuation multiple from today's two-time level to the five-to-eight-times revenue typically seen in public SaaS companies meeting with benchmark.

David Wilson: Before I dive into our first quarter-financial performance, I want to share my insights on the business's operation in the first four months following the close of the mixed transaction. The strength of our financial results is no accident. They're founded on a disciplined, rigorous approach with a clear mission. Executing highly equity of M&A is a core competency at PowerFleet, not an afterthought. In the past 20 months, this has been proven twice.

Speaker Change: <unk> has always been about getting on the very front of that EBITDA expansion, which I think we've demonstrated wholeheartedly in this quarter and we will continue to do so so I think we're not changing our guidance and when we expect to get to the sustained.

Speaker Change: Double digit growth, but what we are seeing is validation of that thesis and.

David Wilson: Firstly, with the moving dot-sac position, where we seamlessly integrated a team of 35 engineers and swiftly neutralized $4 million in annualized EBITDAB own within six months. Now, on a larger scale with a mix, there are first quarter-financial results, reflect our ability to execute quickly and effectively. This feed of execution and the traction we've gained are sources of deep pride. We are implementing a well-established Facebook, leveraging the talents of key leaders across the organization to achieve high-impact outcomes in specifically targeted areas.

Speaker Change: <unk> momentum growing from a pipeline perspective from a customer reaction perspective and.

David Wilson: Our success is measured by key financial achievements, a remarkable 10% year-over-year increase in revenue, an expansion of product gross margins from 25%, to 32%, and the rapid execution of our cost energy program resulting in $8.7 million in annualized savings, exiting Q1, approximately $5 million for the elimination of duplicate costs, and $3 million through changes in the way that we work.

Speaker Change: I think we.

Speaker Change: In the prepared remarks, we quoted the fact that we've never had higher confidence that we have a winning play here and we very much stick to that and that will flow through.

Scott Searle: And, you know, I think we, in the prepared remarks, we quoted the fact that we've never had higher confidence that we have a winning play here, and we very much stick to that, and that will flow through. Also, as well, I think you heard that we are currently hiring, you know, a large increase in our Salesforce, which will take time to become productive. I think those two things, a little bit of time, more build out of the pipeline and realizing that pipeline, and then, you know, just the scale and momentum in the business, we feel very confident around the rule of 40 performance that we've projected.

Steve Towe: The unity ecosystem is a central pillar in driving this transformation in value, and our confidence in realizing its full potential has never been higher. Starting first with the market, where the customer response to our device-agnostic capabilities rapidly growing library of third-party integrations and breadth of solution from in warehouse to over the road is compelling. We are gaining more and more traction with large enterprises who are looking for data consolidation, harmonization, simplification and integration.

David Wilson: Importantly, we achieved all of this without missing a beat operationally. Before I review our detailed financial results, there are a few important points to highlight. Both former comparisons, all comparisons versus prior period results discussed on this call and in our press release, are based on the pro-former financial results of the combined business. This contrasts with our 10Q filing, which will only include the legacy-powered league numbers.

Speaker Change: Also as well I think you heard that we are currently hiring.

Steve Towe: The value and visibility these capabilities provide to complex organizations running low unskilled resources is immense. The requirement for automation and digital optimization is becoming mandatory as organizations face the need for increased efficiency. The excitement and engagement with the mixed customer base reaffirms our understanding and conviction that unity provides solutions to address acute pain points across market verticals and geographies. We are after a strong start in achieving our cost energy commitments, securing $8.7 million in annual savings within the first 90 days.

David Wilson: One-time expenses. The expenses incurred this quarter include one-time transaction, restructuring, and accelerating stock-based compensation costs, totaling $20.4 million. These are backed out of adjusted EBITDA and ETS to reflect on going to run rates.

Speaker Change: A large increase in our sales force, which will take time to become productive I think those two things a little bit of time mobile active the pipeline and realizing that pipeline and then.

Steve Towe: We have a clear plan to reach our target of $27 million in annualized savings within two years of the mixed transaction which will continue to support EBIT direct funds. We're going deeper into our saving plan to pivot more and more resources into our go-to-market and customer success teams. Additional savings we are realizing over and above the $27 million EBITDA expansion programs are giving us the ability to hire a 30% uplift on our quote to carrying sales rules.

Steve Towe: We plan to continue scaling our custom-afating operations significantly as we leverage our increased efficiency and extended capabilities over the next two years. In summary, we have all the key components in place to accelerate revenue growth in its bandy-bit DAH through scale, enhanced growth margins, and strategically targeted cost rationalisation.

Speaker Change: Just the scale and momentum in the business, we feel very confident.

Speaker Change: The rule of 40 performance that we've projected and obviously double digit growth is a key part of that and as this really kind of scales.

Scott Searle: And obviously, double-digit growth is a key part of that. And as this really kind of scales, and we're able to take, you know, the extended engineering force that we now have to scale Unity at a faster rate, then, you know, the accelerated double-digit growth in our two years is something that we feel very, very good.

Steve Towe: We look forward to maintaining this momentum and sharing the results of our efforts as we continue the march toward rule of 40 performance in our regular quarterly updates.

Speaker Change: And we're able to take the.

Speaker Change: Extended engineering force that we now have the scale unity at a faster rate than the accelerated double digit growth in outer years is something that we feel very very good about.

Speaker Change: Thanks, so much.

Scott Searle: David. Thanks so much.

Operator: Operator? Thank you.

Speaker Change: Your next question is from Gary pressed the piano with Barrington Research.

Gary Prestopino: Your next question is from Gary Prestopino with Barrington Research.

Operator: 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 telephone keypad. A confirmation tone will indicate your line is in the question Q. You may press star 2 if you would like to remove your question from the Q. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, we'll be pulled for questions.

Gary: Good morning, Steve and David a couple of questions.

Steve Towe: Good morning, Steven David. A couple of questions. You're realizing you said you had some churn, but you also mentioned that your subscriber base was up year over year. Did I get that right? Can you give us some idea of what the percentage change up was? And maybe an absolute number of subscribers, are you willing to give that number? Yeah, I can give that, Gary. So subscribers at the end of the quarter was 1.95 million. It's up to about 9 percentage points versus the prior year. Okay. Yeah, I'm sorry. Correct. Gary, yeah.

Speaker Change: Youre. Realizing you said you have had some churn.

Scott Searle: Your first question for today is from Scott Surley with Roast Capital. Hey, good morning guys. Thanks for taking the questions. Congratulations on the quarter. It's nice to see service growth returning and congrats on getting the filings done. Thanks Scott. It's in terms of the filings that there's still to come to becoming this week, but we'll very well position that. Steve, maybe to start hearing you talk more and more about AI, device, agnostic data and the customer requirements.

Scott Searle: I wonder if you could give us a little bit more color in terms of the magnitude of the pipeline that's building around those capabilities because they're unique, I think, in terms of the competitive landscape out there. What that's translating to in terms of ongoing customer dialogues, how that's impacting the pipeline, and I don't know if you'd want to take a stab at giving us an idea of the magnitude of that pipeline, and what the near-term TCV looks like.

Gary: But you also mentioned that your subscriber base was up year over year did I get that right and can you can you give us some idea of.

Scott Searle: Scott, we're going to say some of that until we get to our investor day in terms of magnitude and quantification, but it's highly significant. So we are seeing a number of large enterprises across the globe, whether that's insurance companies, large logistics companies, complex organizations who have a lot of a subcontractor base, who are seeing an acute pain point with not being able to get true visibility across their fleets, and then secondly, they're also not able to make sense of all the different data streams that are being presented to them, and they don't have the resources to actually collate, understand, refine, and do something with the data.

Speaker Change: What the percentage change up was.

Scott Searle: So the play that we now make in terms of really kind of being that one stop shop for that capability, positioning ourselves in the center of their organizations, to ultimately harmonize the, ingest the data, harmonize the data, and then present it to them in a fashion which is easy for them to consume, which also means other monetization opportunities for us is making a real, real difference. So I would say it is a significant increase in our pipeline as we get to realize some of the benefits of that, and we expect to have some customers who who come and talk to you all about that in the future, you'll see kind of that magnitude come through, but what I would say at this point is it is significant, it is global, and it's across multi-verticals,[inaudible] issues.

Steve Towe: Very helpful. And if I could see just to follow up, I think at the August 6th update, you talked about new logos versus in-house. I'm wondering now, you know, given the expanding product set and offering the global availability of unity, you know, what that number looks like now in terms of the opportunity set of upsell with the existing customer base versus new logos. And real quickly on gross margins, service gross margins, pro forma adjusted around 65%.

Speaker Change: Maybe an absolute number of subscribers are you willing to give that number.

Speaker Change: Yes, I can give that Gary so subscribers at the end of the quarter was one point.

Steve Towe: I think the target level is higher than that. I wonder if you could just give us some idea about how that progresses over the next couple quarters. Thanks so much. So I'll let David answer the second question. But in terms of the first question, I think that what we're seeing is customers really having the need to have this differentiated solution, which ultimately is driving both new business because the new business is coming from their insisting on their third party contract as taking our solution.

Steve Towe: But then obviously evolving within themselves. So, you know, we're at a 70, 30 split from existing customers to new in two, one. But we see where this is kind of having a compounding effect is we're getting more growth with that install base because of just the general services. But this insistence on them taking our solution as a subcontractor or an alliance partner of the end customer is also then bringing the new logos to us as well.

Speaker Change: <unk> 5 million.

Steve Towe: David, do you want to take the service gross margin? Yeah, so Scott, if you look at services, both margin this year versus last year, you're absolutely right. If you adjust for the amortization of intangibles, we were sort of rounding up to 65% this year versus rounding the 60% last year. In terms of what's driving that, it's primarily higher levels of depreciation of in vehicle devices that came South Africa and also from known churned in the legacy subscriber base that we discussed previously.

It's up about nine percentage points versus the prior year.

Speaker Change: Okay.

Steve Towe: So that's the primary drivers. In terms of looking forward, target actions have been undertaken in terms of improving that and we do expect services gross margins to expand steadily in future quarters between now and the end of the year. So, you know, we expected to sort of increase over time above and beyond the levels we're at last year.

Gary: Yes, I'm sorry, yes.

Correct correct, Gary So David was referencing and mix public came out and said that they had some.

Steve Towe: I apologize, I'm going to toss one out and then I'll get back in the queue, but Steve, it seems like the confidence level in double digit growth continues to grow. It sounds like you're more enthusiastic. Could you give us an idea about when you think we might start to be punching through that sustained double digit growth particularly on the services front? Thanks so much. Yeah, so I don't think we've ever not been enthusiastic.

Steve Towe: So David was referencing mixed, public came out and said that they had some churn in their base in the final quarter before the combination. So that subscriber base is including that churn. And this is where we're particularly proud of all the headwinds that have been in front of us in terms of, you know, mitigating that churn in terms of the macroeconomic challenges that our regions have faced. And also some of the industry challenges where, uh, Powerfeet in the US has been, you know, successful in the past in the more commoditized logistics space. So not just the subscriber growth and the retention, but also the overall top line growth has been mitigated all those those elements.

Steve Towe: I think we're being very measured in terms of, you know, the transformation that is taking place. You know, if you think about the seismic shifts that we're making in the organization, then, you know, year one has always been about getting on the very front front of that EBITDA expansion, which I think we've demonstrated wholeheartedly in this quarter and more continue to do so. So I think we're not changing our guidance in when we expect to get to the sustained double digit growth.

David Wilson: The monetization impact. This quarter's results also reflect the onset of our monetization intangible assets related to the MIX acquisition, resulting in an incremental $3 million in non-cash expenses and reducing service gross margins by over 5%. Now let's dive into the detailed numbers for quarter, starting with revenue, which increased by 10.2% year-over-year to $75.4 million from $68.4 million. This growth was primarily driven by the success of our differentiated safety-centric product solutions with product revenue rising of a 29% to $18.7 million.

Gary: Churn in their base.

Steve Towe: So what we are seeing is validation of that thesis and momentum growing from a pipeline perspective, from a customer reaction perspective. And, you know, I think we, we, in the prepared remarks, we quoted the fact that we've never had higher confidence that we have a winning play here. And we very much stick to that and that will flow through also as well. I think you, you heard that we are currently hiring, you know, a large increase in ourselves force, which will take time to become productive.

Speaker Change: Final quarter before the combination so that subscriber base is including that churn and this is why we're particularly proud of all the headwinds that have been in front of us in terms of.

Steve Towe: I think those two things, a little bit of time, more build out of the pipeline and realizing that pipeline and then, you know, just the scale and momentum in the business, we feel very confident around the rule of 40 performance that we've projected. And obviously double digit growth is a key part of that. And as this really kind of scales, and we're able to take, you know, the extended engineering force that we now have to scale unity as a faster rate, then, you know, the accelerated double digit growth in outer years is something that we feel very, very good. Thank you so much.

David Wilson: There are two important points to note regarding our product revenue. First, as we have transitioned out of our hardware-only business, strong product revenue serves as the lead indicator of growth in service revenue. Second, robust performance of our safety-centric solutions, more than offset pressure in North America's more commoditized logistics segments, contributing to a 7% expansion in product growth margins, which rose to 32% from 24.7%. Service revenue also showed strength, increasing over 5% year-over-year, the $56.7 million.

Speaker Change: Mitigating that churn in terms of the macroeconomic challenges that some of our regions are faced and also some of the industry challenges where power fleet in the U S has been successful in the past in the more Commoditized logistics space.

Speaker Change: Not just the subscriber growth and the retention, but also the overall top line growth has been has mitigated all those.

Gary Prestopino: Your next question is from Gary Prestopino with Barrington Research.

David Wilson: This growth, driven by an expansion of our installed base to nearly 2 million devices, underscores the strength of our unity product strategy and the risk diversification benefits of operating at scale globally. This has allowed us to effectively mitigate the impact of previously announced turn in the legacy-mixed customer base challenges in the US logistics market and macroeconomic headwinds in Israel. Service growth margin was lower at 59.4% compared to 65.9% in the prior period, mainly due to the non-cash charges of $3 million from the amortization of intangible assets related to the mixed transaction.

Speaker Change: Those elements. So that's why we're particularly proud of this quarter and when we are just putting a business. Together. This is a merger of equals. So you could get extremely distracted to your customer base could get disjointed. Your sales teams could be confused we manage all of that through premium well and Thats why we were very very proud of the result.

Steve Towe: So that's why we're particularly proud of this quarter.

Steve Towe: Good morning, Stephen David. A couple of questions. You know, realizing you said you had some change in turn, but you also mentioned that your subscriber base was up year over year. Did I get that right? And can you give us some idea of what the percentage change up was in maybe an absolute number of subscribers? Are you willing to give that number? Yeah, I can give that Gary. So subscribers at the end of the quarter was 1.95 million.

David Wilson: On an adjusted basis, service growth margin was 64.7%. The buying growth margin was lower at 52.6% compared to 57.2% in the prior year, also primarily due to the $3 million non-cash expense just mentioned. Excluding this expense, total growth margin was 56.5%, relatively comparable to the prior year period.

Steve Towe: And when we are just putting a business together, you know, this is a merger of equals. So you could get extremely distracted. Your customer base could get disjointed. Your sales teams could be confused. You know, we've managed all of that supremely well. And that's why we're very, very proud of the results that we've been able to post across the board.

Steve Towe: It's up to about 9 percentage points versus the prior year. Okay, yeah, correct, correct, Gary yet. So David was referencing mix. Public came out and said that they had some churn in their base in the final quarter before the combination. So that subscriber base is including that churn and this is where we're particularly proud of all the headwinds that have been in front of us in terms of, you know, mitigating that churn in terms of the macroeconomic challenges that of our regions have faced and also some of the industry challenges where they're perfect in the US has been, you know, successful in the past in the more commoditized logistics space.

Speaker Change: So we've been able to post across the board.

Speaker Change: No that's great.

Speaker Change: Brendan.

Speaker Change: Hear you right that you said all of the mix.

Gary Prestopino: Yeah, that's great.

Steve Towe: So not just the subscriber growth and the retention, but also the overall top line growth has been has mitigated all those those elements. So that's why we're particularly proud of this quarter and when we are just putting a business together, you know, this is a merger of equals. So you could get extremely distracted, your customer base could get disjointed, your sales teams could be confused. You know, we've managed all of that supremely well and that's why we're we're very, very proud of the results that we've been able to post across the board.

David Wilson: This growth was primarily driven by strong top-line performance, generating an additional $3.5 million in gross margin after accounting for $3 million in amortized income. Net loss of to build accomplished stockholders was $22.3 million, or loss of $21 cents for basic and diluted share compared to 4 cents in the prior year. After adjusting for one-time expenses and the amortization of acquisition related intangibles, adjusted EPS was breakeven or zero cents for the current quarter.

Gary Prestopino: Um, and did I hear you right that you said all of the Mix customer base will be transitioned to the Unity platform by the back half of this fiscal year? What we said is by the end of quarter two. So the end of September, the mix customers will be able to consume the Unity capabilities. So they won't have the ability to consume those. Unity is an ecosystem.

Steve Towe: Yeah, that's great. And did I hear you right that you said all of the mixed customer base will be transitioned to the unity platform by the back half of this fiscal year. What we said is by the end of quarter two, so the end of September, the mixed customers will be able to consume the unity capabilities. So they will have the ability to consume those. Unity is an ecosystem, so one of the parts of the strategy here is not to force migration across to another platform because that comes with a lot of risk both technologically and also from opening up the customers to go back to market.

Speaker Change: Customer base will be transitioned to the unity platform by the back half of this fiscal year.

Speaker Change: What we said it by the end of quarter. Two so the end of September the means customers will be able to consume the unity.

David Wilson: As discussed in our April 5th side chats, we anticipated net cash burn in the first half of fiscal 2025, as their recovery expected in the second half. Finally, given our strong start to the fiscal year, we are reiterating the increased guidance that we shared on our August 6th fireside chat with four-year 2025 revenue to exceed $300 million up from the initial guidance of approximately $300 million. And our adjusted EBITDA guidance took seed $60 million, which includes an incremental $5 million in secured exit run rate cost energies, compared to our initial guidance of approximately $60 million.

Speaker Change: Capabilities. So they won't have the the ability to consume knows unity as an ecosystem. So one of the parts of the strategy here is not to force migration across to another platform because that comes with a lot of risk both technologically and also from opening up the customers to go back to market. So what we look.

Steve Towe: That concludes my remarks, Steve. Thanks, David.

Steve Towe: Long-term shareholders and tenant analysts on today's call can appreciate just how far we've come in a short time. The transformation of the business since we implemented a new vision and strategy for the company in early 2022 has been outstanding. While I'm proud of what our team has accomplished, this is just the beginning.

Steve Towe: So one of the parts of the strategy here is not to force migration across to another platform because that comes with a lot of risk, both technologically and also from opening up the customers to go back to market. So what we look to do here is that they can still consume everything that they've enjoyed and signed up for, but then they have the ability to take on those improved services, that variation in terms of the solution sets that they can get. And that's, you know, having the ability not only with unity in kind of the data highway perspective, but also the in warehouse solutions as well.

Speaker Change: I do hear is that they can feel consume everything that they have enjoyed and signed up for but then they have the ability to take on those improved services that variation in terms of the.

Steve Towe: So what we look to do here is that they can still consume everything that they've enjoyed and signed up for, but then they have the ability to take on those improved services that variation in terms of the solution sets that they can get. And that's, you know, having the ability not only with unity in kind of the data highway perspective, but also the in warehouse solutions as well. So customers will be able to consume those fully from the end of September from the mix.

Steve Towe: Our goal is to achieve and surpass the rule of 40 SaaS performance over the next two years, which would significantly enhance shareholder value by potentially increasing our valuation multiple from today's two-time level to the five-to-eight-times revenue typically seen in public SaaS companies meeting with benchmark. The unity ecosystem is a central pillar in driving this transformation in value, and our confidence in realizing its full potential has never been higher. Starting first with the market, where the customer response to our device-agnostic capabilities rapidly growing library of third-party integrations and breadth of solution from in warehouse to over the road is compelling.

Speaker Change: The solution sets that they can get and that's having.

Speaker Change: The ability not only with unity in kind of the data highway perspective, but also being warehouse solutions as well so customers will be able to consume those fully from the end of September from the mix customer mix.

Steve Towe: We are gaining more and more traction with large enterprises who are looking for data consolidation, harmonization, simplification and integration. The value and visibility these capabilities provide to complex organizations running low unskilled resources is immense. The requirement for automation and digital optimization is becoming mandatory as organizations face the need for increased efficiency. The excitement and engagement with the mixed customer base reaffirms our understanding and conviction that unity provides solutions to address acute pain points across market verticals and geographies.

Steve Towe: So customers will be able to consume those fully from the end of September from the mix. Customer bank. So, as, as, as they elect to move on to unity, that is going to be a key lever to get service revenue growth accelerating is that kind of a correct assumption. 100%. So this is our expansion. It's increased wallet share. You know, it becomes more sticky from a retention perspective.

Steve Towe: We are after a strong start in achieving our cost energy commitments, securing $8.7 million in annual savings within the first 90 days. We have a clear plan to reach our target of $27 million in annualized savings within two years of the mixed transaction which will continue to support EBIT direct funds. We're going deeper into our saving plan to pivot more and more resources into our go-to-market and customer success teams. Additional savings we are realizing over and above the $27 million EBITDA expansion programs are giving us the ability to hire a 30% uplift on our quote to carrying sales rules. We plan to continue scaling our custom-afating operations significantly as we leverage our increased efficiency and extended capabilities over the next two years.

Speaker Change: So as as.

Speaker Change: As they elect to move on to unity.

Steve Towe: Customer Bank. So, as they elect to move on to unity, that is going to be a key lever to get service revenue growth accelerating, is that kind of a correct assumption? 100%. So, this is our first expansion, it's increased wallet share. You know, it becomes more sticky from a retention perspective. So, you know, and this is one of the biggest different differentiators of immunity. So, you know, you have the ability to harvest far more in the customer base.

Steve Towe: In summary, we have all the key components in place to accelerate revenue growth in its bandy-bit DAH through scale, enhanced growth margins, and strategically targeted cost rationalisation. We look forward to maintaining this momentum and sharing the results of our efforts as we continue the march toward rule of 40 performance in our regular quarterly updates.

Speaker Change: That is going to be a key lever to get.

Speaker Change: Service revenue growth accelerating.

Speaker Change: That kind of a correct assumption.

Speaker Change: 100%. So this is also expansion and increase wallet share.

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

Speaker Change: It becomes more sticky from a retention perspective.

Operator: Operator? Thank you.

Speaker Change: And this is one of the biggest differentiators of.

Gary Prestopino: So again, and this is one of the biggest differentiators of. Abunity. So, you know, you have the ability to harvest far more in the customer base. And if you think about the device, agnostic piece as well, so you can bring other sensors or the data streams in that creates, you know, a very sticky armlock with the customer. The more integrations you do into their third party operating systems is also the same. And that then allows you to, you know, have really strong conversations across your customer's estate to say what are their applications, what are the modules would be attractive for the customer and build a kind of, you know, long-term strategic roadmap in the true sense of what a staff company would do.

Operator: One moment please, we'll be pulled for questions.

<unk>. So you have the ability to harvest far more in the customer base and if you think about the device agnostic piece as well. So you can bring other centers other data streams in that creates a very sticky.

Steve Towe: And if you think about the device agnostic piece as well, so you can bring other sensors or the data streams in, that creates, you know, a very sticky arm lock with the customer. The more integrations you do into their third party operating systems, is also the same. And that then allows you to, you know, have really strong conversations across your customers estate to say what other applications, what other modules would be attractive for the customer and build a kind of, you know, long-term strategic roadmap in the true sense of what a SaaS company would do. So, that's what excites us into your very salient point. That gives us the ability to accelerate service revenue.

Speaker Change: Sticky armlock with the customer the more integrations you are doing to their third party operating systems is also the same.

Speaker Change: That then allows you to have really strong conversations across your customers are saying to say what are the applications. While other modules will be attractive for the customer and build a kind of in our long term strategic roadmap in the true sense of.

Speaker Change: What a SaaS company with data so that's what excites us until very salient point that gives us the ability to accelerate service revenue.

Gary Prestopino: So that's what excites us until you're very salient point that gives us the ability to accelerate service revenue.

Scott Searle: Very helpful. And if I could see just to follow up, I think at the August 6th update, you talked about new logos versus in-house. I'm wondering now, you know, given the expanding product set and offering the global availability of unity, you know, what that number looks like now in terms of the opportunity set of upsell with the existing customer base versus new logos. And real quickly on gross margins, service gross margins, pro forma adjusted around 65%. I think the target level is higher than that. I wonder if you could just give us some idea about how that progresses over the next couple quarters.

And then just two more questions I'll jump off.

Scott Searle: Thanks so much.

Gary Prestopino: And then just two more questions. I'll jump off with that 1.95 million subscribers. Can you give us an approximate split. What will legacy powerfully legacy mix just so we can get an idea of the magnitude of these subscribers that can't elect to join unity and drive service revenue growth. Yeah, so it's roughly 1.1, 1.2 million from mix, and the remainder was powerfully so substantial opportunity. And there's still substantial opportunity in the powerfully base as well, so that's a subscriber. So, you know, we've built something out quite believe us, you know, we do see an obviously one of the major strategic rationale for the combination was to bring those services to the rich customer base and subscribe a base that makes sense.

Speaker Change: With that 195 million subscribers can you give us an approximate split.

Steve Towe: And in just two more questions, I'll jump off. With that 1.95 million subscribers, can you give us an approximate split? What will legacy power fleet, legacy mix? Just so we can get an idea of the magnitude of these subscribers that can elect to join unity and drive service revenue growth? Yeah, so it's roughly 1.1.2 million from mix and the remainder with power. So, substantial opportunity. And there's still substantial opportunity in the power fleet base as well.

Steve Towe: So I'll let David answer the second question. But in terms of the first question, I think that what we're seeing is customers really having the need to have this differentiated solution, which ultimately is driving both new business because the new business is coming from their insisting on their third party contract as taking our solution. But then obviously evolving within themselves.

Speaker Change: What were legacy power fleet legacy mix, just just so we can get an idea of the magnitude of these subscribers that can elect to join unity and drive service revenue growth.

Yeah. So it's roughly $1, one $1 2 million from mix and the remainder was passed a substantial opportunity.

Speaker Change: And there's still substantial opportunity in the power fleet base as well so that our subscribers. So we've we've built.

Speaker Change: Globally, though.

Steve Towe: So, that's a subscriber. So, you know, we've built seeing that globally, but, you know, we do see, and obviously one of the major strategic rationale for the combination was to bring those services to the rich customer base and subscribe a base that makes sense.

Speaker Change: We do see and obviously one of the major strategic rationale for the combination was to bring those services to the rich customer base and subscriber base that makes sense.

Steve Towe: So, you know, we're at a 70, 30 split from existing customers to new in two, one. But we see where this is kind of having a compounding effect is we're getting more growth with that install base because of just the general services. But this insistence on them taking our solution as a subcontractor or an alliance partner of the end customer is also then bringing the new logos to us as well.

Speaker Change: And then just just very briefly I don't know if there is.

Speaker Change: A brief answer this question you talked about some competitive takeaways here with IMC and then a cat dealer.

Gary Prestopino: And then just very briefly, I don't know if there's a brief answer to this question. You talk about some competitive takeaways here with I am C and then a cat dealer with the Unity platform. One of the key selling points there. It was the having point; was the selling point. Okay, thank you very much, guys.

Gary Prestopino: And then just very briefly, I don't know if there's a brief answer to this question. You talked about some competitive takeaways here with IMC and then a cat dealer with the unity platform, one of the key selling points there. It was the selling point. Okay, thank you very much, guys.

Speaker Change: Was the unity platform.

One of the key selling points there.

Speaker Change: It was the selling point.

Speaker Change: Was the strong okay. Thank you very much guys.

Speaker Change: Okay.

Speaker Change: Your next question for today is from Anthony Stoss with Craig Hallum.

Anthony Stoss: Your next question for today is from Anthony Stoss with Craig Hallum. Stephen David Stephen wanted to follow up on the strong safety certificate revenue, and you highlighted at 25% year of year growth rate. Can you share with us your view on perhaps the percent of the market investment penetrated or the overall market potential, and then I had a fault for David. Yeah, penetration still remains low. I mean, if you quantify it from, you know, basic driver behavior, then, you know, a lot of telematic solutions for many years have offered driver training and performance management around driver scoring.

Anthony Stoss: Your next question for today is from Anthony Stoss with Craig Hallum. We're in Stephen David. Stephen wanted to follow up on the strong safety strategic revenue and you highlighted a 25% year of year growth rate. Can you share with us your view on perhaps the percent of the market investment penetrated or the overall market potential? And then I had a follow-up for David. Yeah, penetration still remains low. I mean, if you quantify it from, you know, basic driver behavior, then, you know, a lot of telematic solutions for many years have offered driver training and performance management around driver scoring.

Anthony Stoss: Good morning, Steve and David Steve I wanted to follow up on the strongest safety centric revenue and you highlighted.

David Wilson: David, do you want to take the service gross margin? Yeah, so Scott, if you look at services, both margin this year versus last year, you're absolutely right. If you adjust for the amortization of intangibles, we were sort of rounding up to 65% this year versus rounding the 60% last year. In terms of what's driving that, it's primarily higher levels of depreciation of in vehicle devices that came South Africa and also from known churned in the legacy subscriber base that we discussed previously.

Anthony Stoss: Highlighted a 25% year over year growth rate can you share with us your view on perhaps the percent of the market investment penetrated or the overall market potential and then I had a follow up for David.

Speaker Change: Penetration still remains low.

Speaker Change: If you if you quantify it from basic driver behavior than a lot of telematics.

Speaker Change: <unk> solutions for many years have offered driver drive.

David Steve: Training in.

David Steve: Performance management around.

David Steve: Driver, scoring but ultimately now there is a.

David Steve: A much improved and increased capabilities with the likes of driver distraction. The camera based solutions that are offered.

Steve Towe: But ultimately now there is a, you know, a much improved and increased capabilities with the likes of driver distraction. The camera-based solutions that are offered. And you know, if you look at what we do in the warehouse stuff, you know, we've got a desk-based system that, you know, will stop the fork with trucks banging into people, etc., etc. and causing, you know, injury and harm. So, you know, we see a big opportunity in front of us. And we see a uniqueness to that opportunity when you talk about, you know, how broad is it because organizations are not just trying to manage.

Anthony Stoss: But ultimately now, there is a much improved and increased capabilities with the likes of driver distraction, the camera-based solutions that are offered. And, you know, if you look at what we do in the warehouse stuff, you know, we've got ADAS-based systems that, you know, will stop the forklift trucks banging into people, et cetera, et cetera, and causing, you know, injury and harm. So, you know, we see a big opportunity in front of us.

Speaker Change: And if you look at what we do in the warehouse stuff. We've got <unk> spy systems that will stop the forklift trucks banging into people etcetera, etcetera and causing injury.

Speaker Change: Injury and harm so we see a big opportunity in front of us and we see a uniqueness to the opportunity when you talk about.

Speaker Change: How broad is it because organizations are not.

Anthony Stoss: And we see a uniqueness to that opportunity when you talk about, you know, how broad is it? Because organizations are not just trying to manage the safety of their individuals and their mobile resources on the road, but also as well, you know, their other employees within the warehouse. So, this is where we have that unique capability to give a safety director, a compliance director, visibility control, and understanding of performance around safety across pretty much their whole estate.

Speaker Change: Just trying to manage.

Speaker Change: The safety of their individuals in their mobile resources on the road, but also as well there are other employees within the warehouse. So this is where we have that unique capability to give a safety director of compliance director visibility control and understanding our performance around safety across pretty much the whole of state. So that is a big.

Steve Towe: You know, safety of their individuals and their mobile resources on the road, but also as well, you know, there are other employees within the warehouse. So this is where we have that unique capability to give a safety director a compliance director, visibility control, and understanding your performance around safety across pretty much their whole estate. So that is a big driver where we're seeing the traction and having that unique proposition across the two. And eight times, I said 10. The person who is responsible for safety on the road is also the person who is responsible for safety in the warehouse.

Speaker Change: Driver, where we're seeing the traction and having that unique proposition across the two and eight times ascertain the person who has responsibility for safety on the road at all so the person who is responsible for safety in the warehouse. So we see it as a very very significant growth area and not just from the safety element itself.

Anthony Stoss: So, that is a big driver where we're seeing the traction and having that unique proposition across the tube. And eight times out of ten, the person who is responsible for safety on the road is also the person who is responsible for safety in the warehouse. So, we see it as a very, very significant growth area not just from the safety element itself, but the regulatory requirements that are coming in on a global fashion in terms of organizations having to be super, super competent in making sure that they keep their employees safe, that they're managing working out and fatigue and distraction and ultimately manage your risk.

Anthony Stoss: So we see it as a very, very significant growth area not just from the safety element itself, but the regulatory requirements that are coming in on a global fashion in terms of organizations having to be super, super competent in making sure that they keep their employees safe. So they're managing working hours and fatigue and distraction, and ultimately manage your risk. And if you then, you know, extrapolate that act to the likes of insurance companies who are more and more looking to create risk, risk-based profile premiums in their estates and then, you know, be able to adjust premiums off the base of, you know, what the risk profile is for that fleet from a safety and security perspective.

Speaker Change: But the regulatory requirements that are coming in on a global fashion in terms of organizations, having to be super Super competent in making sure that they keep their.

Speaker Change: The employee sites that they're managing working hours and fatigue and distraction.

Speaker Change: And ultimately manage risk and if you then.

Speaker Change: Extrapolate that act to the likes of insurance companies, who are more and more looking to create with <unk>.

Anthony Stoss: And if you then, you know, extrapolate that to the likes of insurance companies who are more and more looking to create risk-based profile premiums in their estates and then, you know, be able to adjust premiums off the base of, you know, what the risk profile is for that fleet from a safety and security perspective. So, we're very excited about that. You know, it's seeing very much as, you know, cameras leads that and we see a very strong element for that, but the use of that data to feed other systems, other operators, other value propositions that surround the safety space is significant.

Speaker Change: <unk> profile.

Speaker Change: Premiums in their states and then be able to adjust premiums off the base.

Speaker Change: What the risk profile is for that fleet from a safety and security perspective, So we're very excited.

Speaker Change: Sorry about that.

Speaker Change: It's it's it's seeing very much as cameras leads that and we see a very strong elements of that but the use of that data to feed other systems. Other operators of the value proposition that surround this IFC space is cigna.

David Wilson: So we're very excited about that. You know, it's, it's, it's, it's seen very much as, you know, cameras lead that and we see it a very strong element for that. But the use of that data to feed other systems, other operators, and other value propositions that surround the safety space is significant.

Speaker Change: Okay.

Speaker Change: Very good Steve Thank you for that and then David.

Speaker Change: On overall gross margins I'm curious if you have any change or what you see the trajectory to hitting your overall gross margin targets down the road.

Anthony Stoss: Very good to see you. Thank you for that.

Anthony Stoss: Very good to see you. Thank you for that. And then David, just an overall gross margin. I'm curious if you have any change or what you see the trajectory to hitting your overall gross margin targets down the road. Yeah, so Tony, obviously, if you look at the midpoint of our current guidance, it's 57 and a half percentage points for the year. We feel very comfortable with that out there in the public realm. So well positioned. And as I noted earlier, expect services, most margins to improve satellite between now and the end of the year. Perfect. Very good guys. Thank you.

David Wilson: And then, David, just an overall gross margin. I'm curious if you have any change or what you see the trajectory to hitting your overall gross margin targets down the road. Yeah, so Tony, obviously if you look at the midpoint of our current guidance, it's 57.5 percentage points for the year. We feel very comfortable with that out there in the public realm.

David Wilson: So that's the primary drivers. In terms of looking forward, target actions have been undertaken in terms of improving that and we do expect services gross margins to expand steadily in future quarters between now and the end of the year. So, you know, we expected to sort of increase over time above and beyond the levels we're at last year.

Speaker Change: Yes, so Tony obviously, if you look at the midpoint of our current guidance. It's 57 five percentage points for the year, we feel very comfortable with that out there in the public realm. So.

Speaker Change: We are well positioned and as I noted earlier expect services gross margins to improve steadily between now and the end of the year.

David Wilson: So, well positioned. And as I noted earlier, expect services, both margins to improve satellite between now and the end of the year.

Speaker Change: Perfect very good guys. Thank you.

Speaker Change: Thanks.

Anthony Stoss: Perfect, very good guys. Thank you.

Speaker Change: Your next question is from Killen Becker with William Blair.

Dylan Becker: Thanks. Your next question is from Dylan Becker with William Blair. Hey guys, it's Faith on for Dylan. I'm just kind of wanted to talk about this Unity platform. And as you continue to migrate the mixed capabilities over, houses resonating with maybe additional stakeholders or use cases that you haven't been able to direct. And then maybe adding on those investments you called out in sales capacity, how are you thinking about unlocking this cross-cell opportunity as productivity ramps. Yeah, so in terms of the use cases and opportunities, traditionally the market, you know, we've been selling to the operators who manage the asset itself.

Steve Towe: Thanks. Your next question is from Dylan Becker with William Blair. Hey guys, it's Faith on for Dylan. I'm just kind of wanted to talk about this unity platform. And as you continue to migrate the mixed capabilities over houses resonating with maybe additional stakeholders or use cases that you haven't been able to direct. And then maybe adding on those investments, you called out in sales capacity. How are you thinking about unlocking this cross sell opportunity as productivity ramps.

Speaker Change: Hey, guys. Its faith on for Dylan, just kind of wanted to talk about this unity platform and as you continue to migrate the mix capabilities over houses resonating with maybe additional stakeholders are use cases that you haven't been able to directly sell to in the past and then maybe adding on those investments you called out in.

Speaker Change: Sales capacity, how are you thinking about unlocking this cross sell opportunity as productivity brands.

Scott Searle: Thank you so much.

Gary Prestopino: Your next question is from Gary Prestopino with Barrington Research. Good morning, Stephen David. A couple of questions. You know, realizing you said you had some change in turn, but you also mentioned that your subscriber base was up year over year. Did I get that right? And can you give us some idea of what the percentage change up was in maybe an absolute number of subscribers? Are you willing to give that number?

Yes, so in terms of the use cases and opportunities traditionally the market.

Steve Towe: Yeah, so in terms of the use cases and opportunities, traditionally the market, you know, we've been selling to the operators who manage the asset itself. What this is doing is evolving into very much a broader set of stakeholders across the organizations who want to use this technology. And, you know, that's from a unity perspective. And, you know, we've just used safety as a great example. But we're seeing, you know, the ability for us to have great conversations and do business with CIOs, with CTOs, with CFOs.

Speaker Change: We've been selling to the operators to manage the asset itself.

Speaker Change: What this is doing is evolving.

Evolving into very much a broader set of stakeholders across the organizations, who want to use this technology and that's from a unit perspective, and we've refused safety is a great example, but we're seeing the ability for us to have great conversations and do business with <unk> with <unk> with CFO.

Steve Towe: What this is doing is evolving into very much a broader set of stakeholders across the organizations who want to use this technology. And you know, that's from a unity perspective, and, you know, we've just used safety as a great example. But we're seeing, you know, the ability for us to have great conversations and do business with CIOs, CTOs, and CFOs. And the compliance director, the safety director, as we said, and even, you know, the need for CIOs to have visibility across their organization from a compliance perspective is something which is becoming more and more important.

Speaker Change: And the compliance director the safety directives, we said an uneven.

Steve Towe: And the compliance director, the safety director, as we said, and even, you know, the need for CIOs to have a visibility across their organization from a compliance perspective is something which is becoming more and more important. So this is moving to a true SAS cell across the organization. We're selling the same data points into multiple applications for different use cases. And so it's extrapolating our opportunity, you know, multi-dimensionally moving forward. And then in terms of, can you just remind me of your second question?

Speaker Change: They need for Ceos to have visibility across their organization from a compliance perspective is something which is becoming more and more important. So this is moving to a true SaaS sell across the organization, we're selling the same.

Steve Towe: So this is moving to a true SAS cell across the organization. We're selling the same data points into multiple applications for different use cases. And so it's extrapolating our opportunity, you know, multi-dimensionally moving forward.

Speaker Change: Data points into multiple applications for different use cases, and so its extrapolating our opportunity multi multi dimensional <unk> moving forward.

Speaker Change: And then in terms of can you just remind me of your second question.

Steve Towe: And then, in terms of, can you just remind me of your second question? Just as you guys continue to invest in your sale and go to market and push it in the air. Yeah, so, you know, the efforts that we're putting in there, the growth that we're putting in is twofold. One is more enterprise SAS salespeople who can sell that multi-dimensional solution, whether it's around the device-agnostic piece, further applications or integrations. And then secondly, it's more in quote-a-carrying customer success individuals. Because when we talk about that stickiness and we talk about being able to harvest into the account, you know, new modular applications, new AI and data science-led insights.

Just as you guys continue to invest in your sales and go to market positioning.

Steve Towe: Just as you guys continue to invest in your sale and go to market. Yeah, so, you know, the efforts that we're putting in there, the growth with putting those twofold, one is more enterprise SAS salespeople who can sell that multi-dimensional solution, whether it's around the device, the diagnostic piece, further applications or integrations. And then secondly, it's more in quota carrying customer success individuals, because when we talk about that stickiness and we talk about being able to harvest into the account, you know, new modular applications, new AI and data science led insights, then you can do that more from an install based perspective and a customer success perspective.

Speaker Change: Yes so.

Speaker Change: The efforts that we're putting in that the growth that we're putting in is twofold. One is more enterprise SaaS salespeople, who can sell that multi dimensional solution, whether it's around the device agnostic pace further applications or integration and then secondly, it's more in <unk>.

Speaker Change: Quota carrying customer success.

Speaker Change: Individuals because when we talk about that stickiness and we talk about being able to harvest into the account new module applications, New AI and data science led insights than you can do that more from an installed base perspective, and a customer success perspective. So those two things mixed with the added capabilities primes is fair.

Steve Towe: Then you can do that more from an install-based perspective and a customer success perspective. So those two things mixed with the added capabilities. Prime is very much for that accelerated growth. And Unity is built in a way as we've said where it's very, very easy for a customer to maintain their current service and solutions. And then add on incremental layers with us over time. All right, great. Thanks for the color. Then one more, if I can add on, maybe just from an innovation standpoint. Now that you have this increased capacity with your engineers.

Speaker Change: Much for accelerated growth and unity is built in a way as we've said, where it's very very easy for a customer to maintain their current services solutions and then add on incremental layers with us overtime.

Steve Towe: So those two things, mix with the adi capabilities, prime is very much for that accelerated growth. And unity is built in a way as we've said where it's very, very easy for a customer to maintain their current service and solutions, and then add on incremental layers with us over time.

Speaker Change: Alright, great. Thanks for the color then one more if I can add on maybe just from an innovation standpoint now that you have this increased capacity with your engineers.

David Wilson: All right, great. Thanks for the color. Then one more if I can add on maybe just from an innovation standpoint. Now that you have this increased capacity with your engineers, in the next six months, once you're done kind of mixing the mix, legacy mix and powerfully capabilities together. Is there anything else on the horizon that you guys are going to focus in on, whether it's platform expansion, or is there any adjacencies that you're looking to enter into?

Don: In the next six months one for you Don kind of maxing the mix legacy mix and powerful capabilities. Together is there anything else on the horizon that you guys are kind of focused in on whether its platform expansion or is there any adjacencies that you're looking to enter into.

Steve Towe: In the next six months, once you're done kind of mixing the mix, legacy mix and powerfully capabilities together, is there anything else on the horizon that you guys are going to focus in on, whether it's platform expansion, or is there any adjacencies that you're looking to enter into? No, we've got more than enough capabilities for the time being. That said, we are building new applications, which we will bring to market over time. But the very laser focus that we have now is around scaling the platform to the early questions and dialogue in terms of pipeline build and, you know, the willingness and want to need from our customers, both new logo and existing base to take these added capabilities.

Speaker Change: No we've got more more than enough capabilities.

David Wilson: No, we've got more than enough capabilities for the time being. That said, we are building new applications, which we will bring to market over time. But the very laser focus that we have now is around scaling the platform to the early questions and dialogue in terms of pipeline build. And, you know, the willingness and want to need from our customers, both new logo and existing base to take these added capabilities. Then we're very much committing the resource to be able to cope with that scale.

Speaker Change: For the time being and that said, we are building new applications, which we will bring to market over time, but they are very.

David Wilson: And that's something that we will see will differentiate us and allow us to increase our speed to revenue and and speed to adoption. So that's very much the immediate focus right now. That said, as people that know as well, we are always innovating and we will be bringing some new solutions and value solutions to market, but with the first priority has to be to manage that scale because we're getting more and more anchor accounts now who want to take these added capabilities that exist today. As a reminder, if you would like to ask a question, please press star one on your phone at this time.

Speaker Change: <unk> is a focus that we have now is around scaling the platform to the earlier questions and dialogue in terms of pipeline build and the willingness and want and need from our customers, both new logo and existing base to take these added capabilities. Then we're very much pivoting the resource to be able to cope with that scale.

Steve Towe: Then we're very much committing the resource to be able to cope with that scale. And that's something that we will see will differentiate us and allow us to increase our speed to revenue and speed to adoption. So that's very much the immediate focus right now. That said, as people that know as well, we are always innovating, and we will be bringing some new solutions and value solutions to market, but with the first priority has to be to manage that scale because we're getting more and more anchor accounts now who want to take these added capabilities that exist today.

And that's something that we will see we will differentiate us and allow us to increase our speed to revenue.

Speaker Change: And speed to adoption. So that's very much the immediate focus right now that said as people that know us well we are.

Speaker Change: Always innovating and we will be bringing some new solutions and anti value solutions to market, but with the first priority has to be to manage that scale, because we're getting more and more anchor accounts now who want to tighten these added.

Speaker Change: Capabilities exists today.

Speaker Change: As a reminder, if you would like to ask a question. Please press star one on your phone at this time.

Alex Skylar: As a reminder, if you would like to ask a question, please press star one on your phone at this time. Your next question for today is from Alex Skyler with Raymond James. Hey, thanks for the question.

Speaker Change: Your next question for today is from Alex Skylar with Raymond James.

Jonathan McCarrion: Your next question for today is from Alex Skyler with Raymond James. Hey, thanks for the question. This is Jonathan McCarrion for Alex. So we're going to touch on the subscriber additions in the quarter. And I know you mentioned building out sales heads around the enterprise. Can you give any color on the breakdown of additions between the enterprise versus the smaller customer cohorts? And how do you think about that mixed longer term?

Speaker Change: Hey, Thanks for the question. This is Jonathan to carry on for Alex So wanted to touch on the subscriber additions in the quarter and I know you mentioned building out sales heads around the enterprise can you give any color on the breakdown of additions between the enterprise versus a smaller customer cohorts and how do you think about that mix longer term and then is there any difference in the demand environment between those two cohort.

Jonathan McCarrion: This is Jonathan McCarrion for Alex. So we're going to touch on the subscriber additions in the quarter. And I know you mentioned building out sales heads around the enterprise. Can you give any color on the breakdown of additions between the enterprise versus the smaller customer cohorts? And how do you think about that mixed longer term? And then, is there any difference in demand environment between those two cohorts that you call out? Yeah, so we obviously have a global business. If you think about the business as a whole, the future is really presented on enterprise. It's ended on Unity.

Gary Prestopino: Yeah, I can give that Gary. So subscribers at the end of the quarter was 1.95 million. It's up to about 9 percentage points versus the prior year. Okay, yeah, correct, correct, Gary yet. So David was referencing mix. Public came out and said that they had some churn in their base in the final quarter before the combination. So that subscriber base is including that churn and this is where we're particularly proud of all the headwinds that have been in front of us in terms of, you know, mitigating that churn in terms of the macroeconomic challenges that of our regions have faced and also some of the industry challenges where they're perfect in the US has been, you know, successful in the past in the more commoditized logistics space. So not just the subscriber growth and the retention, but also the overall top line growth has been has mitigated all those those elements.

Steve Towe: So that's why we're particularly proud of this quarter and when we are just putting a business together, you know, this is a merger of equals. So you could get extremely distracted, your customer base could get disjointed, your sales teams could be confused. You know, we've managed all of that supremely well and that's why we're we're very, very proud of the results that we've been able to post across the board. Yeah, that's great.

Speaker Change: That you'd call out.

Jonathan McCarrion: And then is there any difference in demand environment between those two cohorts that you call out? Yeah, so we obviously have a global business. If you think about the business as a whole, the future is really presented on enterprise. It's ended on unity. The key markets there are going to be North America primary and also increasingly Europe, where there's a lot of regulatory demands. So that is the focus. That is the future of the business that said we do also have what we described as franchise.

Speaker Change: Okay.

Speaker Change: Yeah. So.

Speaker Change: We obviously have a global business.

Speaker Change: If you think about the business as a whole the future is really centered on enterprise centered on unity.

Speaker Change: The key markets that are going to be North America, primarily and also increasingly Europe, where theres a lot of regulatory demands.

Steve Towe: And did I hear you right that you said all of the mixed customer base will be transitioned to the unity platform by the back half of this fiscal year. What we said is by the end of quarter two, so the end of September, the mixed customers will be able to consume the unity capabilities. So they will have the ability to consume those. Unity is an ecosystem, so one of the parts of the strategy here is not to force migration across to another platform because that comes with a lot of risk both technologically and also from opening up the customers to go back to market.

Steve Towe: The key markets there are going to be North America, primary, and also increasingly Europe, where there's a lot of regulatory demands. So that is the focus. That is the future of the business that said we do also have what we described as franchise. Businesses both in South Africa and in Israel, which are the dominant or one of two key players in the market. And they are businesses that are performing very, very well. So we are seeing good growth there. Their fast generations of cash. And so it's always a blame when you look at the subscribers.

Speaker Change: That is the focus that is the future of the business.

Speaker Change: That said, we do also have what we describe as franchise businesses, both in South Africa, and in Israel, which are the dominant or one of two key players in the market.

Jonathan McCarrion: Businesses both in South Africa and in Israel, which are the dominant or one of two key players in the market. And they are businesses that are performing very, very well. So we are seeing good growth there. Their fast generations of cash. And so it's always a blame when you look at the subscribers. It's a blend, but we're definitely seeing sort of strong demand in terms of our franchise businesses. And why we just add is unity is super flexible.

Speaker Change: And they are businesses that are performing very very well. So we are seeing good growth there.

Fast generators of cash.

Speaker Change: It's always apply and when you look at the subscribers.

But we're definitely seeing strong demand in terms of our franchise relationships.

Steve Towe: It's a blend, but we're definitely seeing sort of strong demand in terms of our franchise businesses. And why we just add is Unity is super flexible. So for small and medium fleet, there are elements of the Unity ecosystem that are very, very relevant for the smaller mid market as well as, you know, the whole thing in down simple end to end solution in the enterprise space. So we built this very much in a way that our regions, depending on their market conditions, can target medium size smaller fleets or they can go for the big enterprises.

Speaker Change: And while I would just add is unity is super flexible so for small and medium fleets. There are elements solve the unity ecosystem that are very very relevant for the small and mid market as well as the whole singing dancing full end to end solution in the enterprise space. So we've built this very much in a way.

Jonathan McCarrion: So for small and medium fleet, there are elements of the unity ecosystem that are very, very relevant for the smaller mid market as well as, you know, the whole thing in down simple end to end solution in the enterprise space. So we built this very much in a way that our regions, depending on their market conditions, can target medium size smaller fleets or they can go for the big enterprises. And unity gives them the ability to really have that flexibility, because even if it's a piece part of an integration to a third party system or just a couple of device integrations or it is actually, you know, utilizing a more advanced set of capabilities because smaller organizations have less skilled resources to actually manage that it is very flexible.

Speaker Change: Our region, depending on the market conditions can target medium sized smaller fleets or they can go over that began to prices.

Speaker Change: And unity gives them the ability to really have that flexibility because even if it's a paper and integration to a third party system or just a couple of device.

Steve Towe: And unity gives them the ability to really have that flexibility, because even if it's a piece part of an integration to a third party system or just a couple of device integrations, or it is actually, you know, utilizing a more advanced set of capabilities, because smaller organizations have less skilled resources to actually manage that, it is very flexible. So, you know, I think what we've shown from how our regions have managed to mitigate a lot of the storms and headwinds out in the industry is they're very able quickly to pivot to new pipeline to different types, focusing on different types and elements of their customer base.

Speaker Change: Integrations or it is actually utilizing a more advanced set of capabilities because smaller organizations have less.

Speaker Change: Skilled resources to actually manage that it is very flexible so.

Speaker Change: I think what we've what we've shown from Hal.

Jonathan McCarrion: So, you know, I think what we've what we've shown from how our regions have managed to mitigate a lot of the storms and headwinds out in the industry is they're very able quickly to pivot to new pipeline to different types, focusing on different types and elements of their customer base. So it's a full flexible tool, but as David says, for unity is really an enterprise play from an end to end. Thank you. Great, thanks.

Speaker Change: As our regions have managed to mitigate all of the storms and headwinds that the industry is they're very able quickly to pivot to new pipeline two different types focusing on different types of elements of their customer base. So it's a full flexible tool, but as David said it further for unity is really.

Steve Towe: So it's a full flexible tool, but as David says, for Unity it is really an enterprise play from an end to end. Perspective.

David Steve: <unk> enterprise play from an end to end perspective.

David Steve: Okay, great. Thanks, and then.

David Steve: Just one quick one for you David So it's obviously been good progress ahead of schedule on the cost synergy realization.

Anthony Stoss: Your next question for today is from Anthony Stoss with Craig Hallum.

David Wilson: Great, thanks. Just one quick one for you, David. So it's probably been a good progress on how to schedule on the cost and utilization, and then a good color on some of the go-to-market investments you spoke to.

David Wilson: Just one quick one for you, David. So it's probably been a good progress. I had a schedule on the cost and utilization. And then I, you know, good, good color on some of the go-to-market investments you spoke to. So I just, how should we think about the linearity of cost savings, implied in evid outlook just through the rest of the year? Yeah, so we spoke about realizing $8.7 million of run rate savings.

David Steve: And then.

Speaker Change: Good color on some of the go to market investments you spoke to so just how should we think about the linearity of cost savings in quad and EBITDA outlook, just the rest of the year.

David Wilson: So, how should we think about the linearity of cost savings implied in EBITL looks just through the rest of the year? Yes, so we spoke about realizing $8.7 million of run-rate savings. If you think about the guidance that Melissa shared in April, the target was $60 million of exit run rates at the end of March, so that will be obviously an add-on to the 8.7 realize. I would view that as being more sort of second half of the year in terms of incremental pickup in terms of seeing the benefit there, but in terms of the 8.7 million that we realized, we didn't get the full benefit of that this quarter, so do expect to see an improvement in terms of OT and A, E2R from next quarter onwards.

David Steve: Yes, so we spoke about realizing $8 $7 million of run rate savings.

Speaker Change: If you think about the guidance for the rest assured in April the target was $60 million of exit run rate at the end of March.

David Wilson: If you think about the guidance that Melissa shared in April, the target was 60 million of exit run rates at the end of March. So that will be obviously an add-on to the 8.7 realize. I would view that as being more sort of second half of the year in terms of incremental pickup in terms of seeing the benefit there. But in terms of the 8.7 million that we realized we didn't get the full benefit of that this quarter. So do expect to see an improvement in terms of a TNA, E2R from the next quarter onwards. Great.

Speaker Change: So that will be obviously, an add on to the $8 seven realized I would view that as being more sort of second half of the year in terms of that incremental pick up in terms of seeing the benefit there, but in terms of the $8 $7 million will be realized we didnt get the full benefit of that this quarter. So do you expect to see an improvement in terms of.

Speaker Change: G Nia EUR from next quarter onwards.

Speaker Change: Great. Thank you.

Speaker Change: Your next question is from Gregg Gilbert with Northland Securities.

David Wilson: Great, thank you.

Greg Gibas: Your next question is from Greg Gibbis with Northland Securities. Thank you. Good morning, Steven David. Thanks for taking the questions. Congrats on the quarter once again.

Greg Gibas: Thank you. Your next question is from Greg Gibas with Northland securities. Good morning, Steve and David. Thanks for taking the questions. Congrats on the quarter once again. You know, wanted to kind of get some color on, could you remind us what the drivers were of the expected term from the mixed customer base were? And did I guess that level of turn play out as you anticipated? Was it potentially less impactful than originally anticipated?

Speaker Change: Hey, good morning, Steve and David Thanks for taking the questions congrats on the quarter once again.

Anthony Stoss: We're in Stephen David. Stephen wanted to follow up on the strong safety strategic revenue and you highlighted a 25% year of year growth rate. Can you share with us your view on perhaps the percent of the market investment penetrated or the overall market potential? And then I had a follow-up for David.

Speaker Change: Wanted to.

Steve Towe: Yeah, penetration still remains low. I mean, if you quantify it from, you know, basic driver behavior, then, you know, a lot of telematic solutions for many years have offered driver training and performance management around driver scoring. But ultimately now, there is a much improved and increased capabilities with the likes of driver distraction, the camera-based solutions that are offered. And, you know, if you look at what we do in the warehouse stuff, you know, we've got ADAS-based systems that, you know, will stop the forklift trucks banging into people, et cetera, et cetera, and causing, you know, injury and harm.

Steve Towe: So, you know, we see a big opportunity in front of us. And we see a uniqueness to that opportunity when you talk about, you know, how broad is it? Because organizations are not just trying to manage the safety of their individuals and their mobile resources on the road, but also as well, you know, their other employees within the warehouse. So, this is where we have that unique capability to give a safety director, a compliance director, visibility control, and understanding of performance around safety across pretty much their whole estate.

Speaker Change #100: Kind of give some color on could you remind us what the drivers where we expected churn from a mix customer base. We're in did I guess that level of churn play out as we anticipated was it potentially less.

Steve Towe: You know, wanted to kind of get some color on, could you remind us what the drivers were of the expected terms and the mixed customer base were, and did I guess that level of turn play out as you anticipated, was it potentially less impactful than originally anticipated? Yes, I'll take it, David. So no, I mean, we worked very seamlessly with the mixed leadership team and had full transparency. It played out as expected, and that was really, I think, the particular industries that a couple of customers were playing in had evolved, and mixed hadn't really had the investment capability to move at the speed that maybe some of the competitors had in the very niche markets in which these customers play.

Steve Towe: So, that is a big driver where we're seeing the traction and having that unique proposition across the tube. And eight times out of ten, the person who is responsible for safety on the road is also the person who is responsible for safety in the warehouse.

Speaker Change #100: Impactful than originally anticipated.

Speaker Change #100: Yes.

Speaker Change #102: I'll take that so no I mean, we worked very seamlessly with the mixed leadership team and have full transparency.

Greg Gibas: Yes. I'll take it, David. So no, I mean, you know, we worked very seamlessly with the mixed leadership team and had full transparency. It played out as expected. And that was really, I think the, you know, the particular industries that a couple of customers were playing in, had evolved and, you know, mix was. Mix hadn't really had the investment capability to move at the speed that maybe some of the competitors had in the very, in the very niche markets in which these customers play.

Speaker Change #102: Slide out as expected.

Speaker Change #103: And that was really I think the particular industries that a couple of customers. We're playing in had evolved in mix was mix hasn't really had the investment capability to move with the speed that maybe some of the competitors have in the way in a very niche markets in which these days.

Speaker Change #103: These customers play.

Speaker Change #103: So.

Speaker Change #104: We feel very good about moving forward now and as David said, we've been able to mitigate that trend, but it was as expected nothing different.

Steve Towe: So, you know, we feel very good about moving forward now, and as David said, we've been able to mitigate that change, but it was, as expected, nothing different. Got it, that's helpful.

Greg Gibas: So, you know, we, we feel very good about moving forward now. And as David said, we've been able to mitigate that, you know, but it was as expected, nothing different. Got it. That's helpful. And you know, if I could just kind of overall growth expectations this year, or upon the product side versus the service side. Is there anything you can address in terms of your expectations there and maybe when we would get a sense that those segments maybe normalize given the strength you had in Q1 with product revenue?

Got it that's helpful and if I could just kind of <unk>.

Speaker Change #105: Overall growth expectations. This year on the product side versus the service side is there anything you can address in terms of your expectations, there and maybe when we would get a sense that those segments, maybe normalized given the strength you had in Q1 with product revenue.

David Wilson: And, you know, if I could just kind of, overall growth expectations this year or the product side versus the service side, is there anything you can address in terms of your expectations there, and maybe when we would get a sense that those segments maybe normalize given the strength you had in Q1 with product revenue? Yeah, so the right questions to ask, so in terms of the product revenue, obviously, was exceptionally strong this quarter. We're not forecasting that level of performance between now and the end of the year. So, again, it's tough for us to sort of talk about the individual pieces of revenue, and given we have guidance for the blended, but do expect the level of product growth to remain robust, remain strong, but certainly not at levels we enjoyed in Q1.

Speaker Change #106: Yeah. So the right question to ask so in terms of the product revenue obviously it was exceptionally strong this quarter.

Greg Gibas: Yeah, so the right questions to ask. So in terms of the product revenue obviously was exceptionally strong this quarter. We're not forecasting that level of performance between now and the end of the year. So again, it's tough for us to sort of talk about the individual pieces of revenue. And given we have guidance for the blended, but do expect the level of product growth to remain robust remain strong, but certainly not levels we enjoyed in Q1.

Speaker Change #107: We're not forecasting that level of performance between now and the ended the year.

No.

Speaker Change #107: Again, it's tough for us to sort of talk about.

Speaker Change #107: The individual pieces of revenue and given we have guidance for the blended but do you expect.

Speaker Change #107: The level of product growth to remain robust remained strong, but certainly not at levels. We enjoyed in Q1, and then from a services side of things.

Speaker Change #107: Clearly that is the future.

David Wilson: And then from a service side of things, clearly that is the future. Everything that Steve discussed in terms of being able to get all of the mixed devices ingested in the unity that gives us some additional benefit in the second half of the year, which will be helpful. And we also have work to do in terms of sort of leveraging the indirect channel that the mix has; that will initially be a pickup in terms of product revenue, but as always, the more product revenue you have, the more momentum you have from a service standpoint as well.

Greg Gibas: And then from a service side of things clearly that is the future. Everything that Steve discussed in terms of being able to get all of the next devices in Jeff in the unity that gives us some additional benefit in the second half of the year, which will be helpful. And we also have work to do in terms of when sort of leveraging the indirect channel that the mix has that will initially be a pickup in terms of product revenue.

Speaker Change #108: Are you seeing that Steve discussed in terms of being able to get all of the mixed devices ingested into unity that gives us some additional benefit in the second half of the year, which will be helpful. And we also have work to do in terms of really sort of leveraging the indirect channel.

The mix has that will initially be a pickup in terms of product revenue, but as always the more product revenue have the momentum you have from a service standpoint as well. So again, we feel good about our overall guidance to be in terms of being north of $300 million.

Greg Gibas: But as always, the more product revenue you have, the more momentum you have from the service standpoint as well. So again, we feel good about our overall guidance of the year in terms of being north of $300 million, but at this point, we're not going to sort of break it down into the individual line items that make up that revenue. Yeah, and what I would just add from just a kind of contextual perspective is, you know, people are buying our product because we have uniqueness within the safety and compliance space.

David Wilson: So, again, we feel good about our overall guidance of the year in terms of being north of $300 million, but at this point, we're not going to sort of break it down into the individual line items that make up that revenue.

Speaker Change #108: But at this point, we're not going to sort of break it down into the individual.

Speaker Change #108: Line items that make up that revenue number.

And what I would just add from just kind of contextual perspective is.

Steve Towe: Yeah. And what I would just add from just a kind of contextual perspective is, you know, people are buying our product because we have uniqueness within the safety and compliance space. All of that revenue in the product that we share comes with services attached. So, you know, that will, you'll see that layer in over time. But the reason that we have the strength is the uniqueness that we have in the overall solution, and people are looking to choose our hardware as part of that. Which, if you think about the double saw that we now have, both in terms of, you know, the strength and capabilities of our own product, and then the ability for us to ingest other devices, you know, it makes us very, very well placed to be that overall partner of choice in large organizations.

Steve Towe: So, we see it as a very, very significant growth area not just from the safety element itself, but the regulatory requirements that are coming in on a global fashion in terms of organizations having to be super, super competent in making sure that they keep their employees safe, that they're managing working out and fatigue and distraction and ultimately manage your risk. And if you then, you know, extrapolate that to the likes of insurance companies who are more and more looking to create risk-based profile premiums in their estates and then, you know, be able to adjust premiums off the base of, you know, what the risk profile is for that fleet from a safety and security perspective.

Speaker Change #109: Who are buying our product because we have uniqueness within the safety and compliance space all of that revenue in the product that we sell comes with services attach so that will that youll see that layer in over time, but the reason that we have the strength is the uniqueness that we have in the overall solution and people are looking to choose our.

Greg Gibas: All of that revenue in the product that we share comes with services attached. So, you know, that will, you'll see that layer in over time. But the reason that we have the strength is the uniqueness that we have in the overall solution and people are looking to choose our hardware as part of that. Which if you think about the double saw that we now have both in terms of, you know, the strength and capabilities of our own product, and then the ability for us to ingest other devices, you know, it makes us very, very well placed to be that overall partner of choice in large organizations where not only will they want us to ingest their data sources, but any future hardware purchases, they will look to do through PowerFleet. So, you know, there's a combination there, which is super, super good for all future revenue growth. Thanks guys. Appreciate the color. Thanks.

Steve Towe: So, we're very excited about that. You know, it's seeing very much as, you know, cameras leads that and we see a very strong element for that, but the use of that data to feed other systems, other operators, other value propositions that surround the safety space is significant.

Anthony Stoss: Very good to see you. Thank you for that.

David Wilson: And then David, just an overall gross margin. I'm curious if you have any change or what you see the trajectory to hitting your overall gross margin targets down the road. Yeah, so Tony, obviously, if you look at the midpoint of our current guidance, it's 57 and a half percentage points for the year. We feel very comfortable with that out there in the public realm. So well positioned. And as I noted earlier, expect services, most margins to improve satellite between now and the end of the year.

Speaker Change #108: Hmm.

Hardware as part of that which if you think about the double so that we now have both in terms of you know the strengths and capabilities of our own product and then the ability for us to ingest other devices.

Speaker Change #110: Makes it very very well placed to be the overall partner of choice in large organizations, where not only will they want us to ingest the data sources, but any future hardware purchases they will look to do.

Steve Towe: We're not only will they want us to ingest their data sources, but any future hardware purchases, they will look to do through PowerFleet. So, you know, there's a combination there, which is super, super good for future revenue growth.

Through powerplay soup.

Power fleet so.

Speaker Change #110: There's a combination there which is super super good for all future revenue growth.

Speaker Change #110: Thanks, guys I appreciate the color.

Speaker Change #110: Thanks.

Steve Towe: Thanks, guys. Appreciate the color.

Anthony Stoss: Perfect. Very good guys. Thank you. Thanks.

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

Dylan Becker: Your next question is from Dylan Becker with William Blair. Hey guys, it's Faith on for Dylan. I'm just kind of wanted to talk about this unity platform. And as you continue to migrate the mixed capabilities over houses resonating with maybe additional stakeholders or use cases that you haven't been able to direct. And then maybe adding on those investments, you called out in sales capacity. How are you thinking about unlocking this cross sell opportunity as productivity ramps.

Steve Towe: We have reached the end of the question and answer session, and I will now turn a call over to Steve Tow for closing remarks. So, thanks everyone for the for the support. Obviously, this earnings call is later than it would have liked to be. We're delighted that we've got through the SEC review.

Steve Towe: We have reached the end of the question and answer session, and I will now turn a call over to Steve Toe for closing remarks. So, thanks everyone for the, for the support. Obviously, this earnings call is later than it would have liked to be. We're delighted that we've got through the SEC review. And we very much look forward to speaking to you again, most notably at Invest Today on November the 21st. So, once again, thank you for your support. We're highly, highly encouraged with the start that we've made as a combined organization, and we look forward to future updates in the future. Have a great day. Thanks.

Dylan Becker: Yeah, so in terms of the use cases and opportunities, traditionally the market, you know, we've been selling to the operators who manage the asset itself. What this is doing is evolving into very much a broader set of stakeholders across the organizations who want to use this technology. And, you know, that's from a unity perspective. And, you know, we've just used safety as a great example. But we're seeing, you know, the ability for us to have great conversations and do business with CIOs, with CTOs, with CFOs.

So thanks, everyone for the support and obviously this.

Speaker Change #112: Earnings call is lighter than it would have liked to be we're delighted that we've got through the SEC review.

Dylan Becker: And the compliance director, the safety director, as we said, and even, you know, the need for CIOs to have a visibility across their organization from a compliance perspective is something which is becoming more and more important. So this is moving to a true SAS cell across the organization. We're selling the same data points into multiple applications for different use cases. And so it's extrapolating our opportunity, you know, multi-dimensionally moving forward. And then in terms of, can you just remind me of your second question?

Dylan Becker: Just as you guys continue to invest in your sale and go to market. Yeah, so, you know, the efforts that we're putting in there, the growth with putting those twofold, one is more enterprise SAS salespeople who can sell that multi-dimensional solution, whether it's around the device, the diagnostic piece, further applications or integrations. And then secondly, it's more in quota carrying customer success individuals, because when we talk about that stickiness and we talk about being able to harvest into the account, you know, new modular applications, new AI and data science led insights, then you can do that more from an install based perspective and a customer success perspective.

Steve toe: And we very much look forward to speaking to you again.

Dylan Becker: So those two things, mix with the adi capabilities, prime is very much for that accelerated growth. And unity is built in a way as we've said where it's very, very easy for a customer to maintain their current service and solutions, and then add on incremental layers with us over time.

Speaker Change #113: Notably at Investor Day.

Steve Towe: And we very much look forward to speaking to you again, most notably at Investor Day on November the 21st. So once again, thank you for your support, and we're highly, highly encouraged with the start that we've made as a combined organization, and we look forward to future updates in the future. Have a great day. Thanks.

Speaker Change #113: November 21 so.

Speaker Change #113: Once again, thank you for your support and we are highly highly encouraged with the start that we've made as a combined organization and we look forward to future updates in the future have a great day.

Steve Towe: All right, great. Thanks for the color. Then one more if I can add on maybe just from an innovation standpoint. Now that you have this increased capacity with your engineers, in the next six months, once you're done kind of mixing the mix, legacy mix and powerfully capabilities together. Is there anything else on the horizon that you guys are going to focus in on, whether it's platform expansion, or is there any adjacencies that you're looking to enter into?

Steve Towe: No, we've got more than enough capabilities for the time being. That said, we are building new applications, which we will bring to market over time. But the very laser focus that we have now is around scaling the platform to the early questions and dialogue in terms of pipeline build. And, you know, the willingness and want to need from our customers, both new logo and existing base to take these added capabilities. Then we're very much committing the resource to be able to cope with that scale.

This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Operator: This concludes today's conference, and you may disconnect your lines at this time.

Steve Towe: And that's something that we will see will differentiate us and allow us to increase our speed to revenue and and speed to adoption. So that's very much the immediate focus right now. That said, as people that know as well, we are always innovating and we will be bringing some new solutions and value solutions to market, but with the first priority has to be to manage that scale because we're getting more and more anchor accounts now who want to take these added capabilities that exist today.

Operator: Thank you for your.

Operator: As a reminder, if you would like to ask a question, please press star one on your phone at this time.

Jonathan McCarrion: Just one quick one for you, David. So it's probably been a good progress. I had a schedule on the cost and utilization. And then I, you know, good, good color on some of the go-to-market investments you spoke to.

David Wilson: So I just, how should we think about the linearity of cost savings, implied in evid outlook just through the rest of the year? Yeah, so we spoke about realizing $8.7 million of run rate savings. If you think about the guidance that Melissa shared in April, the target was 60 million of exit run rates at the end of March. So that will be obviously an add-on to the 8.7 realize. I would view that as being more sort of second half of the year in terms of incremental pickup in terms of seeing the benefit there.

David Wilson: But in terms of the 8.7 million that we realized we didn't get the full benefit of that this quarter. So do expect to see an improvement in terms of a TNA, E2R from the next quarter onwards. Great.

Greg Gibas: Thank you. Your next question is from Greg Gibas with Northland securities. Good morning, Steve and David. Thanks for taking the questions. Congrats on the quarter once again.

Steve Towe: You know, wanted to kind of get some color on, could you remind us what the drivers were of the expected term from the mixed customer base were? And did I guess that level of turn play out as you anticipated? Was it potentially less impactful than originally anticipated? Yes. I'll take it, David. So no, I mean, you know, we worked very seamlessly with the mixed leadership team and had full transparency. It played out as expected.

Steve Towe: And that was really, I think the, you know, the particular industries that a couple of customers were playing in, had evolved and, you know, mix was. Mix hadn't really had the investment capability to move at the speed that maybe some of the competitors had in the very, in the very niche markets in which these customers play. So, you know, we, we feel very good about moving forward now. And as David said, we've been able to mitigate that, you know, but it was as expected, nothing different. Got it. That's helpful.

David Wilson: And you know, if I could just kind of overall growth expectations this year, or upon the product side versus the service side. Is there anything you can address in terms of your expectations there and maybe when we would get a sense that those segments maybe normalize given the strength you had in Q1 with product revenue? Yeah, so the right questions to ask. So in terms of the product revenue obviously was exceptionally strong this quarter.

David Wilson: We're not forecasting that level of performance between now and the end of the year. So again, it's tough for us to sort of talk about the individual pieces of revenue. And given we have guidance for the blended, but do expect the level of product growth to remain robust remain strong, but certainly not levels we enjoyed in Q1. And then from a service side of things clearly that is the future. Everything that Steve discussed in terms of being able to get all of the next devices in Jeff in the unity that gives us some additional benefit in the second half of the year, which will be helpful.

David Wilson: And we also have work to do in terms of when sort of leveraging the indirect channel that the mix has that will initially be a pickup in terms of product revenue. But as always, the more product revenue you have, the more momentum you have from the service standpoint as well. So again, we feel good about our overall guidance of the year in terms of being north of $300 million, but at this point, we're not going to sort of break it down into the individual line items that make up that revenue.

Steve Towe: Yeah, and what I would just add from just a kind of contextual perspective is, you know, people are buying our product because we have uniqueness within the safety and compliance space. All of that revenue in the product that we share comes with services attached. So, you know, that will, you'll see that layer in over time. But the reason that we have the strength is the uniqueness that we have in the overall solution and people are looking to choose our hardware as part of that.

Steve Towe: Which if you think about the double saw that we now have both in terms of, you know, the strength and capabilities of our own product, and then the ability for us to ingest other devices, you know, it makes us very, very well placed to be that overall partner of choice in large organizations where not only will they want us to ingest their data sources, but any future hardware purchases, they will look to do through PowerFleet. So, you know, there's a combination there, which is super, super good for all future revenue growth. Thanks guys. Appreciate the color. Thanks.

Operator: This concludes today's conference, and you may disconnect your lines at this time.

Operator: Thank you for your.

Q1 2025 PowerFleet Inc Earnings Call

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