Q4 2025 PowerFleet Inc Earnings Call
Operator: Greetings. Welcome to PowerFleet's fourth quarter in full year 2025 earnings At this time, all participants are in a listen-only A question-and-answer session will follow the formal process. If anyone should require operator assistance during the conference, please press star zero on your telephone.
Greetings welcome to power fleets of fourth quarter and full year 2025 earnings call. At this time, all participants are in a listen only mode.
Speaker Change: A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host David Wilson, Chief Financial Officer, you may begin.
Operator: Please note, this conference is being recorded.
David Wilson: I will now turn the conference over to your host, David Wilson, Chief Financial You may begin. Thank you, Operator, and welcome, everyone, to our extended year-end 2025 earnings call.
Thank you operator.
Speaker Change: Hmm, everyone tour extended to year end 2025 earnings call.
David Wilson: I'll begin with a brief review of our safe harvest statement before handing things over to our CEO, Steve Towe, to kick off today's discussion. Our remark today contains forward-looking statements. Our actual results may differ from those contemplated by those forward-looking statements. Factors that may cause our 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 release and accompanying slides. Any forward-looking statements that we make on this call are made as of only today, and we assume no obligation, nor do we intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.
Speaker Change: I'll begin with a brief review of our Safe Harbor statements before handing things over to Steve to kick off today's discussion.
Speaker Change: Our remarks today contain forward looking statements. Our actual results may differ from those contemplated by those forward looking statements factors that may cause our 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 release and accompanying slides.
Speaker Change: Any forward looking statements that we make on this call are made as ammonia today and we assume no obligation nor do we intend to publicly update or revise any forward looking statements to reflect subsequent events or circumstances.
David Wilson: During this call, we will present both GAAP and certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's press release and slide deck.
Speaker Change: Joined this call we will present, both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP measures is included in today's press release and slide deck. The press release and the accompanying slides we will share on today's call are available on Investor section of our website at <unk>.
David Wilson: The press release and the accompanying slides we will share on today's call are available on the investor section of our website at ir.powerfleet.com.
Speaker Change: <unk> Dot com.
Steve Towe: I'll now turn the call over to Steve. Thank you, David. And good morning, everyone. I appreciate you joining us for today's full year and Q4 2025 earnings call. I'm here with key members of the leadership team, and we're excited to walk you through what has been, without question, a transformative year for the business. Over the past 12 months, we've taken bold, decisive steps, integrating two major acquisitions, streamlining our global operating model, and laying down the foundation for durable, profitable growth. But what's most exciting is the momentum and investor proof points we're now building not just in the numbers, but in independent recognition of our solution capabilities, the highly expanding customer landscape, and the caliber of talent we brought together across the organization.
Steve: I'll now turn the call over to Steve Steve.
Steve: Thank you David and good morning, everyone. I appreciate you joining us for today's full year and Q4 of 2025 earnings call.
Steve: With key members of the leadership team and we're excited to walk you through what has been with that question and transformative year for the business.
Steve: Over the past 12 months, we've taken bold decisive steps integrating two major acquisitions streamlining our global operating model and laying down the foundation for durable profitable growth.
Steve: But what's most exciting is the momentum and invest to proof points. We're now building not just in the numbers.
Steve: An independent recognition of our solution capabilities, the highly expanding customer landscape and the caliber of talent, we bought together across the organization.
Steve Towe: This is fundamentally a very different company than it was just a year ago.
Steve: This is fundamentally a very different company than it was just a year ago and today Youll see exactly how far we've come.
Steve Towe: And today you'll see exactly how far we've It's important for investors to remain cognizant of the speed and the depth of the extensive high-quality business change programme the business has successfully executed in context of evaluating PowerFleet as a strong value accretion opportunity.
Steve: It's important for investors to remain cognizant of the speed and the depth of the extensive high quality business change program. The business has successfully executed in context of evaluating past eight is a strong value creation opportunity.
Steve Towe: To help with that, and we'll begin today's presentation with a short review of the last 12 months transformations.
Steve: To help with that and we will begin today's presentation with a short review of the last 12 months transformation story.
Melissa Ingram: I'll hand over to Melissa Ingram, our Chief Corporate Development Officer, Melissa. Thank you, Steve. Over the past 12 months, PowerFleet has undergone an extraordinary transformation. The company you see today is nearly unrecognizable compared to the three legacy businesses from which it emerged. This next slide captures just how comprehensive this reinvention has been. We now have the revenue scale, subscriber base, customer reach, product portfolio, and a fortified balance sheet to cement a market leading position in our sector. We're operating across six continents with a go-to-market model that includes both direct and indirect channels. Some of the key highlights are a company of more than $400 million of annualized revenue with over 75% of ongoing SAAS revenue, scaling from 700,000 subscribers to 2.8 million, a dramatic move in adjusted EBITDA from $7 million to $71 million, and significant growth in the number of customers and our ability to drive increased wallet share in that extended customer base.
Melissa Inger: With that Melissa Inger.
Speaker Change: <unk> corporate development Officer Melissa.
Speaker Change: Thank you Steve.
Speaker Change: Last 12 months, Paul features on to call an extraordinary transformation.
Speaker Change: The company you see today isn't any unrecognizable compared to the three legacy businesses from which to matched.
Speaker Change: This next slide captures just how comprehensive this reinvention has been.
Speaker Change: We now have the revenue scale subscriber base customer reach quite a portfolio and a fortified balance sheet to cement market leading position in our sector.
Speaker Change: Well pricing across six continents with a go to market model that includes both direct and indirect channels.
Speaker Change: Some of the key highlights of our company with more than $400 million of annualized revenue with over 75% of ongoing soft revenue scaling from 700000 subscribers to $2 8 million a dramatic move in adjusted EBITDA from 7 million to $71 million.
Speaker Change: Significant growth in the number of customers and our ability to drive increased wallet share and that's extended customer base.
Melissa Ingram: PowerFleet is now a scaled, modern SaaS company. We're unifying our operating systems, sharpening our execution model, and are delivering measurable value across AI video, our unique data highway, and in warehouse solutions. Our transformation has turned complexity and weakness in three individual businesses into the strength of one combined top tier provider, and we're now positioned to scale with speed and profitability.
Speaker Change: Paul features now scaled modern SaaS company.
Speaker Change: We are unifying our operating system sharpening our execution model on the deal.
Speaker Change: Delivering measurable value across the AOE video are unique data highway and in warehouse solutions.
Speaker Change: Our transformation has ton complexity and weakness in three individual businesses into the strength of one combined top tape of Ida and we're now positioned to scale with speed and profitability.
Melissa Ingram: Moving on to the next slide. We recognize early skepticism from the investor community concerns that three moderately performing companies might combine into one larger underperforming entity. that this narrative does not reflect reality. Instead, we have strategically extracted the strengths of each business, eliminated legacy inefficiencies, and added a disruptive differentiated solution strategy to an expanded customer base. This gives us the ability to perform as a high growth focused and Our M&A strategy wasn't opportunistic, it was deliberate and disciplined, designed to allow rapid forward movement after a targeted cleanup period. Our global scale in premium geographies now enables us to tackle customer pain points more strategically, positioning PowerFleet as a mission critical partner across markets and channels.
Speaker Change: Moving onto the next slide.
Speaker Change: We recognized early skepticism from the Investor community concerns that three moderately performing companies might combine into one larger underperforming entity.
Speaker Change: But this narrative does not reflect reality.
Speaker Change: Instead, we have strategically extracted the strengths of each business eliminated legacy inefficiencies and added a disruptive differentiated solution strategy to an expanded customer base.
Speaker Change: This gives us the ability to perform at a high growth focused enterprise.
Speaker Change: Our M&A strategy wasn't opportunistic it was deliberate and disciplined designed to allow rapid fourth movement offshore targeted cleanup period.
Speaker Change: All global scale in premium geographies now enables us to tackle customer pain points more strategically positioning policy as a mission critical partner across markets and channels.
Melissa Ingram: Moving on to the next slide. Thanks to six months of pre-planning, our integration execution was immediate and decisive. In the first half of FY25, our focus was on structure and rapid mobilization, and we executed with intensity. The closure of the MIGS deal gave us global scale and engineering depth. Integration for us is about building a better company. So we hit the ground running with a clear and deliberate execution plan. In half one, we launched a top-down synergy program, identifying and fast-tracking the highest ROI savings initiatives. We unified our product roadmap under unity, sunsetting legacy overlaps and aligning teams to one platform vision.
Speaker Change: Moving onto the next slide.
Speaker Change: Thanks to six months to pre planning, our integration execution with immediate and decisive.
Speaker Change: In the first half of FY 'twenty five I'll focus was on structure and rapid mobilization and we executed with intensity.
Speaker Change: The closure of the mixed deal gave us global scale and engineering depth integration for US It's about building a better company. So we hit the ground running with a clear and deliberate execution plan.
Speaker Change: In half one we launched a top down synergy program identifying and fast tracking the highest rois savings initiatives.
Speaker Change: We unified our product roadmap on the unity sunsetting legacy overlaps and aligning teams to one platform vision.
Melissa Ingram: The business centralized key functions to drive scalability and consistency and we rationalized underperforming spend across tools, systems and facilities. The team began to rebuild our customer success function from the ground up, aligning teams around lifecycle value and platform expansion. Another key priority was to enhance a high-caliber leadership team, with performance metrics aligned to our post-combination priorities. This was a highly coordinated execution effort which laid the groundwork for an even more aggressive posture in half-team.
Speaker Change: The business centralized key functions to drive scalability, and consistency and we rationalized underperforming spend across tools systems and facilities.
Speaker Change: The team began to rebuild our customer success function from the ground up aligning teams around lifecycle value platform expansion.
Speaker Change: Another key priority was to enhance the high caliber leadership team with performance metrics aligned to our post combination priorities.
Speaker Change: This was a highly coordinated execution effort, which laid the groundwork for an even more aggressive posture in half two.
Melissa Ingram: Next slide, please. Half Two was about acceleration. With the close of the Fleet Complete Acquisition, we shifted gears, moving from organizational blocking and tackling to creating scale and momentum. Here's what we delivered. We hit our full synergy target ahead of schedule, showing that we could integrate while still growing. We quadrupled our Unity focused engineering headcount to over 400 FTE, giving us the muscle to scale innovation across AI video in warehouse and data ingestion. We built and activated a modern sales enablement function, giving reps the tools, training and the data to close more faster. The business transitioned from siloed regional teams to a unified commercial engine structured around value drivers, not geography.
Speaker Change: Next slide please.
Speaker Change: Half two was about acceleration with the close of the fleet complete acquisition, we shifted case moving from organizational blocking and tackling to creating scale and momentum here's what we delivered.
Speaker Change: We hit our full synergy target ahead of schedule showing that we could integrate while still growing.
Speaker Change: We quadrupled our unity focused engineering head count to over 400, FTE, giving us the muscle to scale innovation across AI video in warehouse and data ingestion.
Speaker Change: We built they're not debated a modern sales enablement function, giving reps the tools training and the data to close more pasta.
Speaker Change: The business transitioned from Siloed regional teams to a unified commercial engine structured around value drivers not geography.
Melissa Ingram: The team also simplified our product architecture, reducing go-to-market friction and enabling multi-solution modularity. Performance rigor was embedded across the organization from daily sales stand up calls, weekly pipeline reviews to monthly operating cadences. This phase of the year demonstrated our ability to transform while building to stay aggressive without losing financial discipline. A key fundamental of the transformation is now coming to life as we enter FY26 aggressively implementing new operating systems. We now have the quantum and quality of people and the group strategy is being implemented across the whole business. And that gives us full confidence in what comes next.
Speaker Change: The team also simplified I'll put up to architects you would you think go to market friction and enabling multi solution modularity.
Speaker Change: Goldman's rigor, what's embedded across the organization from daily sales Standup calls weekly pipeline reviews to monthly operating cadences.
Speaker Change: This phase of the <unk> demonstrated our ability to transform while building to stay aggressive without losing financial discipline.
Speaker Change: He fundamental up the transformation is now coming to life as we enter FY 'twenty six aggressively implementing new operating systems.
Speaker Change: We now have the quantity and quality of people and the group's strategy is being implemented across the whole business.
Speaker Change: And that gives us full confidence and what comes next next slide please.
Melissa Ingram: Next slide, please. One of the most important proof points from FY25 is that we didn't just promise synergy, we delivered it. We committed to $16 million in adjusted EBITDA synergies, and I'm pleased to report we executed every dollar of that on time and in full while simultaneously driving growth vectors and building out innovation. This Synergy Achievement came from four strategic levers. Firstly, organisation efficiency. We streamlined redundant functions across legacy businesses, flattened reporting structures, and built centralised centres of expertise. This was a surgical approach focusing on role clarity, performance and scalability. Secondly, systems and process consolidation.
Speaker Change: One of the most important proof point from FY 'twenty five is that we didn't just promised synergy we delivered it.
Speaker Change: We committed to $16 million and adjusted EBITDA synergies and I'm pleased to report we executed every dollar of that on time and in full while simultaneously driving growth vectors and building out innovation.
Speaker Change: The synergy achievement came from four strategic levers firstly organization efficiency, we streamlined redundant functions across legacy businesses flattened the reporting structure unbuilt centralized centers of excellence. This was a surgical approach focusing on role clarity performance and scalability.
Speaker Change: Secondly systems and process consolidation, we're rationalizing dozens of overlapping systems from a L. P H area to customer support tools and moving towards a harmonized operating backbone.
Melissa Ingram: We're rationalizing dozens of overlapping systems from ERP to HRIS to customer support tools and moving towards a harmonized operating backbone. This allows us to scale without adding overhead. Thirdly, procurement and vendor spend optimization. With greater volume came greater negotiating power. We consolidated vendor relationships, exited duplicative contracts, and implemented cost governance across engineering and operations. And finally, commercial simplification. We restructured go-to-market motions to align around SAS, eliminating product overlap, and focusing reps on higher velocity, higher margin opportunities. Most importantly, we delivered these results while maintaining organic growth, investing in customer experience, and laying the foundation for FY26 cost leverage.
Speaker Change: This allows us to scale without adding overhead.
Speaker Change: Sadly procurement and then the spend optimization.
Speaker Change: With greater bogie that came great to negotiating PA, we consolidated vendor relationships exited duplicative contracts and implemented cost governance across engineering and operations.
Speaker Change: And finally Camacho simplification, we restructured the go to market motions to align around staff, eliminating product overlap and focusing reps on higher velocity higher margin opportunities.
Speaker Change: Most importantly, we delivered these results while maintaining organic growth investing in customer experience and laying the foundation for FY 'twenty fixed cost leverage.
Melissa Ingram: This wasn't integration at the expense of performance, it was integration fueling performance.
Speaker Change: This wasn't integration at the expense of performance it was integration fueling performance.
Steve Towe: I'll now hand back to Steve to take us through some of the business highlights from the year.
Speaker Change: I'll now hand back to Steve to take us through some of the business highlights from the year.
Steve Towe: Thanks, Melissa. Before we dive into the numbers, let's take a moment to step back and look at the big picture. Because FY25 was not just a year of integration, it was a breakout year for PowerFleet. Simultaneously, we brought Mix and Fleet complete under one roof. A clear sign that our strategy is resonating where it matters most. This was a truly foundational year. And what we've built now positions us for a durable, efficient and scalable growth into FY26 and beyond.
Steve: Thanks Melissa.
Steve: Before we dive into the numbers, let's take a moment to step back and look at the Big picture because FY 'twenty five was not just a year of integration. It was a breakout year for pathway.
Steve: Simultaneously, we bought makes them fleet complete under one roof.
Speaker Change: He says a clear sign that our strategy is resonating where it matters most.
Steve: This was a truly foundational year.
Steve: And what we've built and positioned us for durable efficient scalable growth into FY 'twenty six and beyond.
Steve Towe: Let's move to the next. One of the core pillars of our strategy is revenue expansion through cross-sell and up-sell, and FY25 gave us some of the clearest signals yet it's working at scale. This slide spotlights just a few of our standout enterprise expansions. each one strategically significant from contracts with multiple Fortune 500 sectors like energy mining and construction to large multinational and global service organizations. and each one a powerful proof point of the traction our unity platform is generating across key verticals. These aren't just headline wins, they're part of a repeatable, durable, land and expand motion.
Steve: Let's move to the next slide.
Steve: One of the core pillars of our strategy is revenue expansion through cross sell and up sell in FY 'twenty five gave us some of the Cleveland signals yet it's working it's good.
Steve: This slide spotlights, just a few of our standout enterprise expansion wins, each one strategically significant for contracts with multiple fortune 500 sectors like energy mining and construction to large multinational and global services organization and each one a powerful proof point of the trucks now.
Steve: The platform is generating across key verticals.
Steve: These aren't just headline wins that path of a repeatable durable land and expand motion.
Steve Towe: In many cases, we entered through a single solution and quickly on the right to grow into multiple unity pillars, spanning AI video in warehouse operations and compliance data layer. What we're seeing now is a flywheel in motion. Customers are leaning in because Unity solves real, everyday challenges, improving safety, enhancing visibility, and boosting operational efficiency, all in one integrated platform. We're embedding ourselves deeper into customer workflows, driving long term value and securing recurring revenue streams that scale over time. Put simply, these larger multi-product expansions signal something bigger. PowerFleet is becoming a mission-critical partner to the enterprises we serve.
Steve: In many cases, we entered through a single solution and quickly on the right to grow into multiple unity pillars spanning II video in warehouse operations and compliance data lives.
Steve: What we're seeing now is a flywheel motion customers are leaning in because unit T solve real everyday challenges improving safety enhancing visibility and boosting operational efficiency all in one integrated platform.
Steve: We're embedding ourselves deeper into customer workflows, driving long term value and secure and recurring revenue streams that scale over time.
Steve: Put simply these larger multi product expansions signals something digging powerpcs, becoming a mission critical partner to the enterprises we serve.
Steve Towe: Next slide. While customer expansion was a major story in FY25, what's just as powerful, and maybe even more telling, is our newfound ability to consistently land new, high-quality logos. And we are now beginning to do that scale.
Steve: Excellent.
Steve: Well customer expansion with a major story in FY 'twenty fine, what's just as powerful and maybe even more telling is that new found ability to consistently landing new high quality logos.
Steve: And we are now beginning to do that Scott.
Steve Towe: As you can see on this slide, we signed contracts with over 600 new mid-size and large customers this year, cutting across a wide range of industries, geographies, and deal profiles. We have many of the world's top companies choosing PowerFleet as their long-term partner of choice, from Fortune 500 manufacturing and food and beverage leaders, to multi-million dollar TCB deals with national transport and leasing companies. That level of diversification speaks volumes about the breadth of our product market fit and the growing reputation of PowerFleet as a serious player in enterprise and mid-market sectors. We're now being invited into more competitive RFPs, our presence in key verticals is expanding, and most importantly, our win rates are climbing.
Steve: As you can see on this slide we signed contracts with over 600, new mid size and large customers. This year cutting across a wide range of industries geographies and deal profiles, we have many of the world's top companies choosing powerfully as their long term partner of choice from Fortune 500 manufacturing improved.
Steve: And beverage leaders to multimillion dollar PCB deals with Nashville transport and leasing company.
Steve: That level of diversification speaks volumes about the breadth of our product market fit and the growing reputation a pathway to the serious player in enterprise and mid market segments.
Steve: We'll now being invited into more competitive rfps a presence in key verticals is expanding and most importantly, our win rates decline.
Steve Towe: More and more customer for you PowerFleet, not as a challenger brand, but as a credible tier one solution provider. Our strategy is earning trust at the enterprise level and opening the door for long term platform wide relationships. Our top tier geographies, North America, Europe, and Australasia, continue to deliver strong performance. But what really stands out is the consistency and breadth of that momentum across key segments. This represents systemic traction that reinforces the strength of our growth model.
Steve: More and more customer few power fleet and also as a challenger brand, but it has incredible tier one solution provider.
Steve: Our strategies and interest at the enterprise level and opening the door for long term platform wide relationships and excellent.
Steve: Our top two geographies North America, Europe, and Australasia continue to deliver strong performance.
Steve: But what really stands out is the consistency and breadth of that momentum across key segments.
Steve: This rash presents systemic traction that reinforces the strength of our growth model, let's take a look at some of the highlights.
Steve Towe: Let's take a look at some of the highlights. Cross-sell revenue was up 96% year-over-year, which tells us that our customers are leaning into the Unity platform as a result of the business combination. They're consolidating point solutions, expanding their footprint and seeing fast returns on investments, and we're capturing that momentum with precision. Aaron Warehouse Solutions grew 71% in high-intensity verticals of automotive, food and beverage, and heavy industrials. These are sectors that run on efficiency, risk mitigation and uptime. And Unity delivers all three with measurable ROI that accelerates buying. And finally, our AI video deployments increased 52% within our largest indirect channel partner in the US.
Steve: Cross sell revenue was up 96% year over year, which tells us that our customers are leaning into the unity platform as a result of the business combination.
Steve: That consolidate point solutions, expanding that footprint and seeing fast returns on investments and we're capturing that momentum with precision.
Steve: Ironwood has solutions grew 71% in high intensity verticals of automotive food and beverage in heavy industrials.
Steve: These are sectors that run on efficiency risk mitigation and uptime and you need to do it as all three with measurable ROI that accelerates buying decisions.
Steve: And finally, I II video deployments increased 52% within our largest indirect channel partner in the U S.
Steve Towe: We're seeing increased demand for intelligence, safety and compliance tools, not as standalone modules, but as core components of operational strategy. This is what we mean when we say the strategy is working across a variety of industries, customer tiers and multi-region go-to-market models. The Unity Suite is scaling with real person.
Steve: We're seeing increased monetary intelligence safety and compliance tools, notwithstanding modules, whereas core components of operational strategy.
Steve: This is what we mean when we say the strategy is working across a variety of industries customer tiers and multi region go to market motions.
Steve: The unity suite is gaining with real purpose.
Steve Towe: Moving on to the next slide. We've also taken bold, deliberate steps to sharpen our revenue. pruning non-strategic contracts and sunsetting product lines that no longer align with our long-term vision. That's allowed us to reallocate resources to the highest value opportunities. Also, in our legacy mix and fleet complete operations, there's been a clear underinvestment in customer success in recent and it showed in retention. We entered both acquisitions in the knowledge of churn erosion that would hit in FY25 with a tail into early FY26 in some complex legacy large accounts that had previously been underserved, accounting collectively for circa $10 million of ARR or 3% of their combined revenue estate.
Steve: Moving onto the next one.
Steve: We've also taken bold deliberate steps to sharpen our revenue mix.
Steve: <unk> non strategic contracts and synthetic product lines that no longer align with our long term vision.
Steve: That's allowed us to reallocate resources to the highest value opportunities.
Steve: Also in our legacy mix and fleet complete operations that have been a clear under investment in customer success in recent times I think showed in retention.
Steve: We entered both acquisitions in the knowledge of churn erosion that was shipped in FY 'twenty five with a tail into early FY 'twenty six in some complex legacy large accounts that had previously been underserved accounts and collectively to circa $10 million of IRR or 3% of their combined.
Steve: Revenue estate.
Steve Towe: We're now building a proactive high impact customer success organization, and the turnaround is already visible. We've delivered three consecutive quarters of improved retention, driven by faster onboarding, more predictive engagement, and a clearer connection between platform usage and business outcomes. At the same time, our data hiring integrations are driving higher customer making it easier for clients to scale with us and harder to walk away. The key here is we are creating durable growth through deeper, smarter customer relations. And we're doing it all with real discipline.
Steve: We are now building a proactive high impact customer success organization and the turnaround is already visible.
Steve: We have delivered three consecutive quarters of improved retention driven by faster onboarding more predictive engagement and a clear connection between platform usage and business outcomes.
Steve: At the same time I think its highway integrations are driving higher customer stickiness.
Steve: Easier for clients to scale with us and hardest to walk away.
Steve: The key here is we are creating durable growth through deeper smarter customer relationships and we're doing it all with real discipline.
Steve Towe: Next.
Steve: Next slide.
Steve Towe: At the end of the day, product traction and revenue growth only matter if we're delivering real measurable customer value. And this slide shows exactly that. Our customers are transforming how they operate, and they're doing it fast. The feedback we're getting is unambiguous. Unity helps executives to sleep at night. It de-risks daily operations, elevates safety standards, boosts efficiency, and unifies data into one intuitive, integrated view, whether you're in compliance, safety, logistics, or warehouse operations. These are hard dollar benefit outcomes delivered at scale. And the impact is strong enough that our customers are becoming strong Our sponsors are introducing us into other divisions, expanding from a single module to full platform adoption, and becoming multi-product, multi-site customers within 12 months of initial deployment.
Steve: At the end of the day product traction and revenue growth only matter, if we're delivering real measurable customer value and this slide shows exactly that.
Steve: Our customers are transforming how they operate and doing it fast the.
Steve: The feedback we're getting is an ambiguous.
Steve: Unity helps executives to sleep at night and day.
Steve: With daily operations elevate safety standards boost efficiency, a unified data into wanting to achieve integrated view, whether you're in compliance safety logistics or warehouse operations.
Steve: These are hard dollar benefit outcomes delivered in scatter and the impact of a strong enough that our customers are becoming strong equities ASP.
Steve: Our sponsors are introducing us into other divisions expanding from a single module to full platform adoption and becoming multi product multi site customers within 12 months of initial deployment.
Steve Towe: This is the Unity flywheel in motion. That's time to value, referenceable outcomes, and growing customer lifetime value.
Speaker Change: This is the unity flywheel emotion.
Speaker Change: Time to value referenced outcomes and growing customer lifetime value.
Steve Towe: Next.
Steve: Excellent.
Steve Towe: A true defining moment this year was our recognition as the number one global leader in platform solutions and innovation by the most respected product research firm in Africa. ABI Research ranked PowerFleet as number one in innovation ahead of other market leaders. This isn't a vanity rant.
Steve: A true defining moment. This year was that recognition is the number one global leader in platform solutions and innovation by the most respected product resets.
Steve: The space.
Steve: Abi research ranked pathway. It is number one innovation ahead of other market leaders.
Steve: This isn't to balance the rank Abi devaluation is rigorous measuring platform breadth II maturity usability scalability and ecosystem readiness.
Steve Towe: ABI's evaluation is rigorous, measuring platform breadth, AI maturity, usability, scalability and ecosystem readiness. We weren't even on the radar two years ago, and now we lead the global marketplace in innovation. That's a testament to the unity platform strategy, to our execution on hardware agnostic ingestion, AI driven insight layers, and our ability to solve multiple use cases across fleet, fixed sites such as warehouses, and mobile operations. This ranking gives us added credibility in enterprise conversations. It builds confidence with channel partners, and it's a tangible differentiator as we compete for larger platform scale. In short, the market is recognizing the transformation and is putting PowerFleet firmly at the front of the pack.
Steve: We weren't even on the radar two years ago and now we lead the global marketplace and innovation, that's a testament to the unity platform strategy to our execution on hardware agnostic ingestion AI driven insight lies in our ability to solve multiple use cases across fleet fixed sites such as warehousing.
Steve: Our mobile operations.
Steve: This ranking gives us added credibility in enterprise conversations it builds confidence with channel partners and it's a tangible differentiator as we compete for larger platform scale deals.
Steve: In short the market is recognizing the transformation and it's putting power fleet firmly at the front of the pack next slide.
Steve Towe: Now let's close out FY25 with a view of our Q4 performance.
Steve: Now, let's close of FY 'twenty five with a view of our Q4 performance next slide.
Steve Towe: Next slide. Q4 was a disciplined, on-point close to the year to what has been a transformational year for PowerFleet. We delivered $104 million in total revenue, representing 40% year over year growth, and generated $20 million in adjusted EBITDA, up an impressive 80% from the prior year. Our gross margins held steady at over 60% and recurring revenue made up 79% of the total. A clear sign of our shift to a subscription first business. This was achieved in a quarter marked by significant integration activity.
Steve: Q4 was that a disciplined on point close to the year two office being a transformational year for passing.
Steve: We delivered $104 million in total revenue, representing four 2% year over year growth and generated $20 million in adjusted EBITDA up an impressive 80% from the prior year.
Steve: Gross margins held steady at over 60% and recurring revenue made up 79% of the total.
Steve: A clear sign of our shift to a subscription first business model.
Steve: This was achieved in a quarter marked by significant integration activity.
Steve Towe: In our opinion, this makes these results more compelling. They reflect the operating leverage we're beginning to unlock as we scale effectively and efficiently with precision.
Steve: In our opinion. This makes these results more compelling.
Steve: They reflect the operating leverage we're beginning to unlock as we scale effectively and efficiently with precision.
Steve Towe: You'll hear more financial details on the court from David Shaw. But the key takeaway is this, our strategy is working. Pipeline Growth, our recent large win announcements and improved customer sentiment all supported and our continued margin trajectory and improving underlying cash performance will confirm it.
Steve: You'll hear more financial details on the quarter from David shortly.
Steve: But the key takeaway is this strategy's working.
Steve: Pipeline growth our recent large win in accidents and improved customer sentiment all supported and that continued margin trajectory and improving underlying cash performance will confirm.
Steve: Excellent.
Steve Towe: Now turning to Q4 business highlights, this is a quarter where we saw diverse, high quality ARR wins spanning multiple industries and job . We're now building the muscle to consistently land multiple 100k plus ARR deals each quarter. It's more than encouraging, it's foundational to scaling our future. What's even more exciting is where the growth is coming from. We're seeing a clear shift in both pipeline and closed deals towards our highest value solution. In fact, over half of our new sales revenue signed in Q4 came from AI video and in-wear head products, two of the most strategic high-impact components of the Unity platform.
Steve: They extend into Q4 business highlights this is a quarter, where we saw a diverse high quality <unk>.
Steve: Spanning multiple industries and geographies.
Steve: When they are building the muscle to consistently land multiple 100, K plus <unk> deals each quarter. It's.
Steve: More than encouraging it's foundational to scaling our future performance.
Steve: What's even more exciting is where the growth is coming from.
Steve: We're seeing a clear shift in both pipeline and closed deals towards our highest value solutions is in fact over half of our new sales revenue signed in Q4 came from AI video and in warehouse products to the most strategic high impact components of the unity platform.
Steve Towe: and our AI video pipeline grew 120% quarter over quarter, which is a powerful indicator of increasing market demand and successful deployment. This is exactly what we are driving towards. Larger deal sizes, stronger product mix, and a sales motion that aligns directly with our platform value and margin goals.
Steve: And our AI video pipeline grew 120% quarter over quarter, which is a powerful indicator of increasing market demand and successful deployments.
Steve: This is exactly what we are driving towards larger deal sizes stronger product mix and a sales motion that aligns directly with that platform value and margin goals.
Steve Towe: Moving on to the next. Building on the momentum from last quarter's strategic win with a global beverage leader, we're thrilled to share another high-impact enterprise expansion this quarter in the U.S. EverDriven has agreed a large-scale deployment of Unity's safety solutions, a great relationship with a multi-million dollar contract value spanning operations across 30 forces. This is a standout example of a customer not only scaling with us, but doing so with conviction and high levels of confidence. It also underscores the power of unity to support mission critical operations across large distributed fleets. We're really proud to support Mitch and the entire team at Everdriven as they enter the next phase of their journey of improving safety and reducing risk for their community.
Steve: Moving on to the next slide.
Steve: Building on the momentum from last quarter's strategic win with a global beverage leader, we're thrilled to share another high impact enterprise expansion this quarter in the U S market.
Steve: Avid driven as agreed a large scale deployment of unity safety solutions, a great relationship with a multimillion dollar contract value spanning operations across 34 states.
Steve: This is a standout example of a customer not only scaling with us, but doing so with conviction and high levels of confidence in.
Steve: It also underscores the power of unity to support mission critical operations across a large distribution plays.
Steve: We're really proud to support mentioned the entire team ever driven as they enter the next phase of their journey of improving safety and reducing risk for that community.
Steve Towe: With that, let's pivot to what lies ahead in FY20.
Steve: With that let's pivot to what lies ahead in FY 'twenty six.
Craig Fisk: I'll now hand it over to our EVP of sales, Craig Fisk, to walk you through the commercial outlook for FY26. Thanks, Steve. Hi, everybody. I'm excited to share with you our sales outlook for FY26. This year is about activation. FY25 was about integration and transformation, and we execute that at speed. FY26 is now about unlocking the full value of what we've built.
Speaker Change: I'll now hand, it over to our EVP of sales create risk to walk you through the commercial outlook for FY 'twenty correct.
Speaker Change: Thanks, Steve Hi, everybody I'm excited to share with you our sales outlook for FY 'twenty. Six this year is about activation FY 'twenty five was about integration and transformation and we execute that speed FY 'twenty six is now about unlocking the full value of what we've built.
Speaker Change: Slide.
Craig Fisk: Let's talk about what is happening in the market. We're seeing three urgent shifts. First, The cost of data fragmentation is exploding. Typically, enterprises run in the region of four or more legacy platforms, wasting time and limiting visibility. Second, resilience can't wait. Macroeconomic disruptions are increasing. The thirst for highly intuitive, simplified, proactive, and predictive data analytics are becoming mission critical, and legacy systems can't keep up. And third, safety is no longer optional. It is a board-level concern.
Speaker Change: Let's talk about what is happening in the market, we're seeing three urgent shifts first.
Speaker Change: The cost of data fragmentation is exploding typically enterprises run in the region of four or more legacy platforms wasting time and limiting visibility.
Speaker Change: Second Brazilians can't wait macroeconomic disruptions or increasing the thirst for highly intuitive simplified proactive and predictive data analytics are becoming mission critical and legacy systems can't keep up.
Speaker Change: And third safety is no longer optional it is a board level concern usually hits right at the heart of all three of these market drivers.
Craig Fisk: Unity hits right at the heart of all three of these market drivers. Q1 has shown a clear and compelling signal. Unity's momentum in the market is accelerating. Across all key categories, pipeline growth is strong. Our data highway pipeline has increased 50% quarter over quarter, driven by customers seeking to consolidate fragmented systems into a single data ingestion and orchestration layer. In-warehouse new local pipeline grew 121% quarter over quarter. Fueled by Demand in Automotive, F&B, and Logistics. Verticals are now prioritizing real-time visibility and safety. AI video, one of our fastest growing modules, saw a 50% jump in pipeline, reflecting increased awareness and strong early results from recent deployment.
Speaker Change: Next slide please.
Speaker Change: Q1 is showing a clear and compelling signal unities momentum in the market is accelerating across all key categories pipeline growth is strong our data highway pipeline has increased 50% quarter over quarter, driven by customers seeking to consolidate fragmented CIS.
Speaker Change: <unk> into a single data ingestion and orchestration layer.
Speaker Change: In warehouse, new logo pipeline grew 121% quarter over quarter.
Speaker Change: Fueled by demand in automotive F&B and logistics verticals are now prioritizing real time visibility and safety.
Speaker Change: AI video one of our fastest growing module saw a 50% jump in pipeline, reflecting increased awareness and strong early results from recent deployments, perhaps most notably our cross sell pipeline has doubled signaling real traction and bundling unity capabilities across the existing accounts.
Craig Fisk: Perhaps most notably, our cross-cell pipeline has doubled, signaling real traction in bundling Unity capabilities across existing We also added 38 new major enterprise opportunities to the Data Highway Pipeline this quarter, a leading indicator that awareness is up, the value proposition is resonating, and our go-to-market teams are active. This is the early flywheel effect, and we've been building toward product differentiation is driving demand. Enablement is increasing velocity, and the references from our single pane of glass data highway deployments are starting to pay dividends across the funnel. We expect this acceleration to continue throughout FY 2021. What's powering this pipeline acceleration is not just Unity's breadth, it's how well differentiated each solution area is within our target market.
Speaker Change: We also added 38, new major enterprise opportunities to the data highway pipeline this quarter, a leading indicator that awareness is up the value proposition is resonating and our go to market teams are executing.
Speaker Change: This is the early flywheel effect and we've been building toward product differentiation is driving demand enablement is increasing velocity and the references from our single pane of glass data highway deployments are starting to pay dividends across the funnel. We expect this acceleration to continue throughout FY 'twenty six.
Speaker Change: Next slide.
Speaker Change: What's powering this pipeline acceleration is not just unities breadth, it's how well differentiated each solution area is within our target markets.
Craig Fisk: Take our single pane of glass data highway, a Fortune 500 automotive leader selected Unity to consolidate compliance, driver performance, and data over six disparate systems into a single system of record. That level of harmonization is something other point solutions can't deliver. Shifting to in-warehouse, our work with TELUS as an example, who launched Unity in Q1, is opening up major indirect channeling channels. AI video continues to be one of our biggest leavers. We're seeing multi-thousand subscription opportunities from customers like EverDriven, who are rapidly scaling across 34 states. That deployment alone includes deep integration with compliance and behavioral-based alerts, driving both safety and efficiency improvement.
Speaker Change: Take our single pane of glass data highway.
Speaker Change: Fortune 500, automotive leader selected unity to consolidate compliance driver performance and data over six dispirit systems into a single system of record that level of harmonization is something other point solutions can deliver.
Speaker Change: Shifting to warehouse or work with tell US as an example, who launched unity in Q1 is opening up major indirect channel in Canada.
Speaker Change: AI video continues to be one of our biggest leavers were seeing multi thousand subscription opportunities from customers like average Rubin, who are rapidly scaling across 34 states that.
Speaker Change: That deployment alone includes deep integration with compliance and behavioral based alerts driving both safety and efficiency improvements.
Craig Fisk: What ties all these together is Unity's flexibility and end-to-end visibility. We're not selling isolated features, we're offering a modular, extensible platform that adapts to each customer's operations and expands easily once value is proven. That's why deal sizes are growing, sales cycles are tightening, and referenceability is rising.
Speaker Change: What ties all these together as you use flexibility and end to end visibility. We're not filling isolated features we're offering a modular extensible platform that adapt to each customer's operations and expanse easily once value has proven that.
Speaker Change: Why deal sizes are growing sales cycles are tightening and reference ability is rising.
Speaker Change: Next slide please.
Craig Fisk: Our indirect channel, especially through our telco partners, is now becoming a meaningful and scalable growth engine.
Speaker Change: Our indirect channel, especially through our telco partners is now becoming a meaningful and scalable growth engine.
Craig Fisk: I'll cover TELUS in more depth on the next slide, so let's start with AT&T, where we're in pre-launch phase for the enterprise segment. This is an enormous opportunity. AT&T serves a large base of commercial fleet customers, many of whom are underpenetrated or using fragmented solutions. We're also working closely with the third major North American telco, where early integration work and go-to-market planning are already underway. Once live, this will extend our reach even further into mid-market and public sector. We're also delighted to have signed with a major European telco with go-to-market plans being ready for launch in Q4.
Speaker Change: Covered tell us some more depth on the next slide so let's start with AT&T, we're in prelaunch phase for the enterprise segment.
Speaker Change: This is an enormous opportunity AT&T serves a large base of commercial fleet customers, many of whom are underpenetrated or using fragmented solutions. We're also working closely with a third major north American telco, where early integration work and go to market planning are already underway. Once lives. This will extend our reach even further.
Speaker Change: Into mid market and public sector verticals. We're also delighted to have signed with a major European telco with go to market plans being readied for launch in Q4.
Craig Fisk: What's exciting is how quickly these partners are ramping. The Unity platform is easy to demo, it's fast to deploy, and solves real pain points for their customers. This is one of our highest leveraged growth plays going into second half and beyond.
Speaker Change: What's exciting is how quickly. These partners are ramping the unity platform is easy to demo, it's faster deploy and solves real pain points for their customers. This is one of our highest leverage growth plays going into second half and beyond.
Craig Fisk: Moving on to the next slide. This is what real partner activation looks like. Telus launched on May 15th, and their commercial teams are now fully engaged. The feedback has been phenomenal. They're excited about the value we're bringing in warehouse for safety, efficiency, asset optimization, and their pipeline is already in the millions.
Speaker Change: Moving on to the next slide.
Speaker Change: This is what real partner activation looks like tell US launched on May 15th and our commercial teams are now fully engaged the feedback has been phenomenal they're excited about the value, we're bringing in warehouse safety efficiency asset optimization and their pipeline is already in the millions we have a tremendous.
Craig Fisk: We have a tremendous partnership and an outstanding growth opportunity with lots of runway that's executing on right now. This slide captures the power of Unity. It's the only system of record covering agnostic data adjustment, end-to-end warehouse to over-the-row visibility, and AI video insights harmonizing customer operations across the whole supply chain. The result of Unity's consolidation engine, customers are seeing a 30% plus reduction in vendor spend and wasted time, and a 35% increase in value by integrating into their other operating systems, as well as all of the safety, operational and compliance benefits from being able to use the full power of their data.
Speaker Change: Mendes partnership and outstanding growth opportunity with lots of runway that's executing on right now.
Speaker Change: Next slide.
Speaker Change: This slide captures the power of unity is the only system of record covering agnostic data adjusted and in warehouse to over the road visibility and AI video insights harmonizing customer operations across the whole supply chain.
Speaker Change: The result of unity is consolidation engine.
Speaker Change: Customers are seeing a 30% plus reduction in vendor spend and waste of time and a 35% increased in value by integrating into their other operating systems as well as all of the safety operational and compliance benefits from being able to use the full power of their data at huge unity is now a mission critical.
Craig Fisk: That's huge. Unity is now a mission critical strategic platform for our customers.
Speaker Change: Strategic platform for our customers.
Craig Fisk: Next slide. In Q1 alone so far, Unity's single pane of glass gained serious traction. For example, we signed a Fortune 500 energy customer for 1,500 new subs. We also secured a top three US freight broker with over 4,500 subs. This has been added to with 4,000 subs signed with a top multi-service mobility leader.
Speaker Change: Thanks, a lot.
Speaker Change: In Q1 alone so far unity single pane of glass gains serious traction for example, we signed a fortune 500 energy customer for 1500, New subs. We also secured a top three U S freight broker with over 4500 subs. This has been added to with 4000.
Speaker Change: Hubs signed with a top multi service mobility leader.
Craig Fisk: With momentum growing, we have confidence around signing a global automotive leader for over 10,000 subs and a food and beverage distributor for over 14,000 subs, both expected in the first For more information visit www.powerfleet.com These are transformative rollouts using unity to solve for holistic safety, visibility and system consolidation. The single pane of glass value prop is winning, and the numbers prove it. Our sales teams are pumped up for this year, and we have superbly differentiated value props to take to the market.
Speaker Change: With momentum growing we have confidence around signing a global automotive leader for over 10000 subs and our food and beverage distributor for 14000 subs both expected in the first half.
Speaker Change: These are transformative rollouts using unity to solve for holistic safety visibility and system consolidation the single pane of glass value prop is winning.
Speaker Change: The numbers prove it our sales teams are pumped up for this year and we have superbly differentiate value props to take to the market.
David Wilson: With that, I'll hand it over to David Wilson, PowerFleet CFO, to walk you through the financial highlights. Thanks, Craig. I'll begin by providing additional details on our Q4 financial highlights, starting with a quick reminder of key pro forma adjustments.
Speaker Change: That I'll hand, it over to David Wilson Powerfully CFO to walk you through the financial highlights David.
David Wilson: Thanks Bryce.
David Wilson: By providing additional details on our Q4 financial highlights starting with a quick reminder of key pro forma adjustments pro forma comparisons.
David Wilson: Proforma Comparison All prior-period comparisons are based on pro forma financials for the combined mix and PowerFleet businesses, whereas our 10-Q reflect only legacy PowerFleet numbers. One-time expenses. This quarter's expenses included $10.1 million in one-time costs for restructuring, integrations and transactions, which are excluded from adjusted EBITDA and EPS. Amortization Impacts. Results also include $5.2 million in non-cast amortization by just the mix and fleet complete acquisitions, impacting service gross margins by 8%.
David Wilson: All prior period comparisons are based on pro forma financials for the combined mix impact fleet businesses.
David Wilson: 10-Q reflects only legacy power fleet numbers.
David Wilson: One time expenses. This quarter's expenses included $10 1 million in one time cost for restructuring integration and transaction, which were excluded from adjusted EBITDA and EPS.
David Wilson: Amortization impacts results also include $5 2 million and noncash amortization by just the mix and fleet complete acquisitions impacting service gross margins by 8% next slide please.
David Wilson: Next slide, please. Now on to the detail, beginning with revenue, which grew by 42% year over year, reaching $103.6 million. This increase was driven by fleet complete and underlying organic growth, which more than offset continued headwinds in legacy U.S. track and trace and niche offerings, as well as the planned wind down of legacy mix FSM business. Looking at the components of revenue, product grew by $4 million or 23% to $22 million. Product margins for the quarter of 17% reflect an inventory write-off of $2.6 million as part of a planned, post-transaction rationalization of product lines and offerings.
David Wilson: Now on to the detail beginning with revenue, which grew by 42% year over year, reaching $103 $6 million.
David Wilson: This increase was driven by fleet complete and underlying organic growth, which more than offset continued headwinds in legacy U S track and trace our niche offerings as well as the planned wind down of legacy mix FSM business.
David Wilson: Looking at the components of revenue product grew by $4 million or 23% to $22 million.
David Wilson: Product margins for the quarter up 17%, reflecting the inventory write off was $2 $6 million. It's part of a planned post transaction rationalization of product lines and offerings.
David Wilson: Pro forma for this write-off, adjusted product gross margin was 29% up from 27% in the prior year. Service revenue grew by 49% to $82 million, fueled by FleetComplete and the strength of our SaaS operation. Service margins adjusted for $5.2 million in non-cash amortization expanded by 8%, 69%, and 61% in the prior year. Combined adjusted gross margins exceeded 60% versus 53% in the prior year. Turning to operating expenses, which totaled $61.7 million for the quarter, including $7.5 million in one-time transaction and restructuring costs. After adjusting for these costs, total OPEX was $54.2 million. Research and Development Investment, including four million of capitalized software totaled $9 million.
David Wilson: Performance of this write off adjusted product gross margin was 29.
David Wilson: 9% up from 27% in the prior year.
David Wilson: Service revenue grew by 49% to $82 million fueled by fleet complete and the strength of our SaaS operations.
David Wilson: Service margins adjusted for $5 2 million of noncash amortization expanded by 8%, 69% from 61% in the prior year.
David Wilson: Combined adjusted gross margins exceeded 60% versus 53% in the prior year.
David Wilson: Turning to operating expenses, which totaled $61 7 million for the quarter, including 751 time transaction and restructuring costs.
David Wilson: After adjusting for these costs total opex was $54 2 million.
David Wilson: Research and development investment, including $4 million of capitalized software totaled $9 million.
David Wilson: Turning to adjusted EBITDA, which increased by 84% to $20.4 million, up from $11.1 million in the prior year. This increase is driven by the complete transaction, organic growth, gross margin expansion, and the success of our cost program. Net loss attributed to common stockholders was $12.4 million, a loss of $0.09 for basic and diluted share compared to a loss of $0.19 in the prior year. An adjusted non-gap basis Income to common stockholders was $2.9 million, or two cents for basic share, compared to a loss of one cent in the prior year. Closing with cash in the balance sheet, where we ended the quarter with net debt of $225 million, consisting of $49 million in cash and $274 million in total debt.
David Wilson: Turning to adjusted EBITDA, which increased by 84% to $20 4 million up from $11 1 million in the prior year.
David Wilson: This increase is driven by the fleet complete transaction organic growth gross margin expansion and the success of our cost program.
David Wilson: Net loss attributed to common stockholders was $12 4 million or a loss of nine.
David Wilson: Basic and diluted share compared to a loss of 19 in the prior year.
David Wilson: On an adjusted non-GAAP basis.
David Wilson: Income to common stockholders was $2 9 million.
David Wilson: Or two cents per basic share compared to a loss of one in the prior year.
David Wilson: Coated with cash on the balance sheet, we ended the quarter with net debt of towards $25 million consisting.
David Wilson: Consisting of $49 million in cash and <unk> $74 million in total debt.
David Wilson: Adjusted net debt, inclusive of $4 million in transaction fees for a complete transaction settled in Q126, was $229 million, or $6 million better than our $235 million year-end guidance.
David Wilson: Adjusted net debt inclusive of $4 million in transaction piece that we complete transaction settled in Q1, 2006 was $229 million or 6 million better than our $235 million year end guidance next month.
David Wilson: Next. As we close Fiscal 25, it's helpful to take a step back to assess the scale of transformation we've achieved and where we're heading. Revenue grew from $135 million in FY24 to $362.5 million in FY25, nearly tripling. We're targeting approximately $430 million in revenue for FY26, which would represent a full three-times increase versus FY24, underscoring multiple vectors for growth and the strength of our integration execution. On the earnings front, Adjusted EBITDA rose from $7 million in FY24 to $71 million in FY25. That's a tenfold increase reflecting our focus on profitable scale and synergy realization. FY 26, we are targeting approximately 105 million EBITDA, a 15 times increase from our FY 24 baseline.
David Wilson: As we closed fiscal 'twenty five it's helpful to take a step back reassess the scatter transformation, we have achieved and where we're headed.
David Wilson: Revenue grew from $135 million in FY 'twenty four to $362 $5 million in FY 'twenty five nearly tripling, we're targeting approximately $430 million in revenue for FY, 'twenty, six which would represent a four three times increase versus FY 'twenty four.
David Wilson: Underscoring multiple vectors for growth and the strength of our integration execution.
David Wilson: On the earnings front, adjusted EBITDA Rose $7 million in FY 'twenty for $71 million in FY 'twenty five.
David Wilson: That's a tenfold increase reflecting our focus on profitable scale and synergy realization.
David Wilson: FY 'twenty six we are targeting approximately 105 million in EBITDA, a 15 times increase from an FY 'twenty for both sides.
David Wilson: Next slide. As we look to fiscal 26, we see a major opportunity to unlock value through accelerating growth, particularly in the second half of We are targeting 20% total revenue growth in FY26, bringing us to approximately $430 million in revenue, supported by momentum that is building.
David Wilson: Next slide.
David Wilson: As we look to fiscal 'twenty six we see.
David Wilson: A major opportunity to unlock value through accelerated growth, particularly in the second half of the year.
David Wilson: We are targeting 20% total revenue growth in FY, 'twenty, six bringing us to approximately $430 million in revenue supported by momentum that is building the <unk>.
David Wilson: to break it down. We've rebased our FY25 revenue to $352 million after adjusting for $10 million in revenue restructuring that includes U.S. GAAP accounting impacts for pre-completes and the shutdown of non-core lines of business. From that base, we're expecting $55 million of inorganic growth from Fleet Complete. We're also projecting approximately 25 million organic growth with a Q4 exit growth rate of 10% year-over-year. The fundamentals of our business are very strong. The reason for our previously reported tempering of revenue growth in the first half of the year is a level of prudence from anticipated customer slowdown of execution of contracts for CapEx requirements due to the ongoing uncertainty driven by tariffs, which are meaningful in terms of quarterly revenue, particularly in warehouse solutions.
David Wilson: <unk>.
David Wilson: We have rebased, our FY 'twenty five revenue to $352 million.
David Wilson: Resting for $10 billion revenue restructuring that includes U S. GAAP accounting impacts for three complete and the shutdown of noncore lines of business.
David Wilson: From that base, we expect $55 million.
David Wilson: Panic growth complete complete.
David Wilson: We're also projecting approximately 25 million organic growth with a Q4 exit growth rate of 10% year over year.
David Wilson: The fundamentals of our business are very strong.
David Wilson: The reason for our previously reported tempering of revenue growth in the first half of the year is the level of prudence from anticipated customer slowdown execution of contracts to capex requirements due to the ongoing uncertainty driven by tariffs, which are meaningful in terms of quarterly revenue, particularly and warehouse solutions.
David Wilson: Secondly, as good stewards of capital, we made the responsible decision to pause 50% of originally planned $8 million in go-to-market investment for the year. This investment, initially slated for early FY26, was expected to drive productivity gains in the second half. We intend to resume the activation of this investment once there's greater stability and clarity in the macroeconomic environment. Importantly, we expect organic momentum to accelerate in the second half of FY26 as we ignite the pipeline from our indirect channel partnerships and we see extended productivity gains from managed investments in incremental sales capacity.
David Wilson: Secondly, as good stewards of capital we made the responsible decision to post 50% of erection planned $8 million and go to market investments for the year.
David Wilson: This investment initially slated for early FY 'twenty six was expected to drive productivity gains in the second half.
David Wilson: We intend to resume the activation of this investments once there is greater stability and clarity in the macroeconomic environments.
David Wilson: Importantly, we expect organic momentum to accelerate in the second half of FY 2006, as we ignite the pipeline from our indirect channel partnerships and we see extended productivity gains for managed investments and incremental sales capacity next slides.
David Wilson: Next slide. Looking at the bottom line for Fiscal 26, we're projecting another year of significant progress. EBITDA is expected to increase by approximately 50% rising from $71 million to approximately $105 This projected increase is underpinned by tangible, well-identified drivers. First, $17 million is highly assured, as this includes the run rate impact of cost synergies realized exiting FY25, along with the full year run rate EBITDA contribution from the fleet complete acquisition. Second, we're highly confident in an additional $11 million in in-year costs, and indeed in FY26, as part of an annualized $18 million cost reduction. This continues to be a core area of execution strength for our team, as demonstrated by our performance today.
David Wilson: Looking at the bottom line for fiscal 'twenty six we are projecting another year of significant progress.
David Wilson: EBITDA is expected to increase by approximately 50% rising from $71 million to approximately 105.
David Wilson: This projected increase is underpinned by tangible while identified drivers first $17 million as highly as short as this includes the run rate impact of cost synergies realized exiting FY 'twenty five.
David Wilson: Along with a full year run rate EBITDA contribution from the fleet complete acquisition.
David Wilson: Second we are highly confident in an additional $11 million in EMEA cost synergies in FY 'twenty six as part of an annualized $18 million cost reduction.
David Wilson: This continues to be a core area of execution strength RFC as demonstrated by our performance to date.
David Wilson: Offsetting these gains slightly is the $4 million investment in our go-to-market engine covered on the last slide, which is critical to unlocking our long-term growth potential, particularly through new channel activation. Finally, we're forecasting $10 million in organic evidel growth driven by top line expansion and continue to operate leverage across The result is a clear and achievable path to $105 million in EBITDA FY26, with the vast majority of the increase tied to identified controllable levers.
David Wilson: Offsetting these gains slightly is the $4 million investment in our go to market engine covered on the last slide which is critical to unlocking our long term growth potential, particularly through new channels deductions. Finally, we're forecasting $10 million in organic EBITDA growth driven by top line expansion and continued operating leverage across the.
David Wilson: Business.
David Wilson: The result is a clear and achievable path to $105 million in EBITDA FY 'twenty six.
David Wilson: The vast majority of the increase tied to identify controllable led us thanks a lot.
David Wilson: Next slide. A key theme underpinning our near-term value creation is our disciplined execution on cost synergy. We're on track to realize a total of $34 million in annualized cost synergies by the end of FY26 from the successful integration of the mix, telematics, and fleet complete transactions. Of the $34 million, to date, we've achieved a total of $16 million exiting FY25. In FY26, we expect to realize an additional $13 million annualized in the first half, with a further $5 million annualized in the second half, bringing us to the total of $34 million. Looking at the right-hand side of the slide, you can see our EBITDA margin expanded from 15% in FY24 to 20% in FY25.
David Wilson: A key theme underpinning our near term value creation is our disciplined execution on cost synergies. We're on track to realize a total of $34 million in annualized cost synergies by the end of FY 'twenty six from the successful integration of the mix telematics and fleet complete transactions.
David Wilson: All of the $34 million to date, we've achieved a total of $16 million exiting FY 'twenty five and that's why.
David Wilson: By 'twenty six we expect to realize an additional $30 million annualized in the first half with a further 5 million annualized in the second half, bringing us to the total of $34 million.
David Wilson: Looking at the right hand side of the slide you can see our EBITDA margin expanded from 15% in FY 'twenty, 4% to 20% in FY 'twenty.
David Wilson: And we expect the realization of costs and dues to continue to be a key driver of ongoing EBITDA margin expansion to north of 20% in the first half of fiscal 26, and north of 25% for the second half.
David Wilson: And we expect the realization of cost synergies to continue to be a key driver.
David Wilson: Ongoing EBITDA margin expansion to north of 20% in the first half of fiscal 2006, and north of 25% for the second hubs next slide please.
David Wilson: Next slide, please. Let me briefly touch on our pro forma adjusted EBITDA margin and expense to revenue trends, which reflect disciplined execution and the strength of our service-led model. We saw a meaningful improvement in adjusted gross margin, increasing from 64% in the first half of FY25 to 66% in the second half, with an incremental 1% in gross margin expansion to 67% expected in FY26. favorable shifts towards service revenue, which carries significantly higher margins, with the key driver of margin expansion, second half 25. And this trend is expected to continue in FY 26, with service revenue growth outpacing product revenue growth.
David Wilson: Let me briefly touch on our pro forma adjusted EBITDA margin and expense to revenue trends, which reflect disciplined execution and the strength of our service led model.
David Wilson: So a meaningful improvement in adjusted gross margin increasing from 64% in the first half of FY 'twenty, 5% to 66% in the second half with an incremental 1% and gross margin expansion to 67% expected in fiscal 2006.
David Wilson: Favorable shift towards service revenue, which carry significantly higher margins was the key driver of margin expansion second half 'twenty five a.
David Wilson: And this trend is expected to continue in FY 'twenty six with service revenue growth outpacing product revenue growth.
David Wilson: G&A, as a percentage of revenue, is expected to decline from 29% in first half 25 to 24% for the full year FY26, with the ongoing realization of cost synergies, the key driver. R&D remains consistent at 8%, with about half tied to capitalized investments to support ongoing Unity innovation.
David Wilson: G&A is besides the revenue as expected declined from 29% in first half 'twenty, 524% for the full year FY 'twenty six with the ongoing realization of cost synergies the key driver.
David Wilson: R&D remained consistent at 8% with about half tied to capitalized investments to support ongoing innovation.
David Wilson: Moving on to the next slide. Our net debt to EBITDA ratio stood at approximately three and a quarter times a year end 25. In fiscal 26, we are targeting a full turn improvement with a goal to reduce this ratio to below two and a quarter times by year end. We expect adjusted net debt to increase by approximately $20 million in the first half of 2026 due to upfront investments to capture synergies, back office system upgrades, and settlement of FY25 incentive compensation. Importantly, we expect an improvement of approximately $30 million in net debt in the second half, driven by lower investment levels, working capital recovery and continued EBITDA growth.
David Wilson: Moving on to the next slide.
David Wilson: Our net debt to EBITDA ratio stood at approximately three and a quarter times, a year and 'twenty five.
David Wilson: In fiscal 2006, we are targeting a full turn improvement with the Gulf reduced this ratio to below two and a quarter times by year end.
David Wilson: We expect adjusted net debt increased by approximately $20 million in the first half of 2006 due to upfront investments to capture synergies back office system upgrades and settlement of FY 'twenty fast incentive compensation.
David Wilson: Importantly, we expect an improvement of approximately $13 million and net debt in the second half driven by lower investment levels working capital recovery and continued EBITDA growth.
David Wilson: Next slide please.
David Wilson: We are forecasting 10 million in de-leveraging in the year with calls against EBITDA from CapEx, which is expected to be 11.5% of revenue in FY26, temporarily elevated by approximately two percentage points due to one-time back-office investments and tariff-related impacts. Interest expense is forecast to be an effective rate of approximately 9% and cash taxes are expected to run about 10% of EBITDA. From a synergy perspective, we estimate a one-time cost of $0.50 for every realized dollar of annuity cost saving.
David Wilson: We are forecasting $10 million in deleveraging in the year.
David Wilson: With Kohl's against EBITDA from Capex, which is expected to be 11, 5% of revenue in FY 'twenty six temporarily elevated by approximately two percentage points due to onetime back office investments and tariff related impacts.
David Wilson: <unk> expense is forecast to be an effective rate of approximately 9% and cash taxes are expected to run about 10% of EBITDA.
David Wilson: Synergy perspective, we estimate at one time cost of 50.
David Wilson: Airline installer of annuity cost savings.
David Wilson: And that wraps up Financial Outlook for FY26.
David Wilson: And that wraps our financial outlook for FY 'twenty six.
Melissa Ingram: I'm now going to pass the call back to Melissa. Melissa. FY26 is a pivotal year, not just for growth, but for continued execution excellence. We're now in the third and final phase of our transformation, converting integration into scale, speed and leverage. In the first half of the year, we're making big strides. We're onboarding high quality talent across sales and customer success. We're enhancing our lead generation engine with the support of a Fortune 500 demand generation expert. Sales operations is being further upgraded and enablement is being rolled out to drive global front line performance. One of the lesser seen but critically important wins so far this year has been our execution around supply chain strategy, especially in the face of rising tariffs and ongoing global cost volatility.
Speaker Change: To pass the call back to Melissa Melissa.
Speaker Change: FY 'twenty is a pivot towards not just the glory continued execution excellence.
Speaker Change: Now on the third and final phase of our transformation.
Speaker Change: <unk> integration into scale speed and leverage.
Speaker Change: In the first half of the year, we're making big strides.
Speaker Change: Onboarding high quality talent across sales and customer success.
Speaker Change: We're enhancing our lead generation engine with the support of a 14 500 demand generation expense.
Speaker Change: Sales operations is being further upgraded and enablement is being rolled out to drive global frontline performance.
Speaker Change: One of the lesser seen a critically important wins. So far this year has been on execution around supply chain strategy, especially in the face of rising tariffs and ongoing global cost volatility.
Melissa Ingram: This has included restructuring our sourcing footprint, relocating key components to more favorable regions, leveraging allowable exceptions where applicable, we've negotiated new Incoterms, and we've made strategic buys of key components ahead of known or anticipated tariff implementations. Through our actions, we've already mitigated over $13 million in identified cost-of-sales risk, helping to protect both gross margin and pricing stability, reducing to a current expected impact the cost of sales to less than $5 million. The outcome is a structurally leaner and a more resilient supply chain, and is a great example of the kind of proactive, cross-functional execution that now defines the PowerFleet operating model.
Speaker Change: This included restructuring our sourcing footprint relocating key components to more favorable regions, leveraging allowable exceptions, where applicable we have negotiated new incoterms and we've made strategic buys are key components ahead of known or anticipated tariff implementations.
Speaker Change: Through our actions, we've already mitigated over $13 million in identified cost savings may be helping.
Speaker Change: Helping to protect both gross margin and pricing stability, where do you think you are current expected impact cost of sales less than 5 million.
Speaker Change: The outcome is a structurally leaner and a more resilient supply chain and it's a great example of the kind of proactive cross functional execution that now defines the policy to operating model.
Melissa Ingram: We're also taking creative commercial action to support customers through macroeconomic conditions, deploying flexible third party financing models for our customers. In the second half, our focus shifts to acceleration. We're scaling our sales motion to boost rep productivity and deal close velocity. Indirect channels are expanding, especially in enterprise, opening new lanes of growth. We're rolling out unified business systems across all regions, which will streamline post-sale execution and reduce cost to serve. In the field, we're scaling deployment capacity, combining internal teams and strategic outsourcing. And finally, we're focused on unity, continuing legacy platform retirement, while doubling down on differentiated high ROI functionality.
Speaker Change: We're also taking creative commercial action to support customers through macroeconomic conditions deploying flexible third party financing models for our customers.
Speaker Change: In the second half our focus to acceleration with scaling our sales motion to boost productivity and deal velocity.
Speaker Change: And can I add channels are expanding especially in enterprise opening new named Cori.
Speaker Change: The rolling out unified business systems across all regions, which will streamline pace of execution and reduced cost of SaaS.
Speaker Change: In the field with scaling deployment capacity, combining internal teams and strategic outsourcing.
Speaker Change: And finally, we're focused on unity, continuing legacy platform retirement, while doubling down on differentiated high RLI functionality.
Melissa Ingram: Next slide. As we grow, we're also continuing to execute with discipline, and that means unlocking further cost efficiencies while protecting growth investments. In FY26, we're targeting $18 million in annualized cost savings, and I'm pleased to report that more than 50% are already in execution. These annual savings come from four main areas. We're removing structural redundancies across regions and departments, simplifying management layers and aligning teams under a unified operating model. By consolidating central functions like enablement, support, finance and HR, we're eliminating duplication and unlocking scale efficiencies, especially post-M&A. We're rationalizing overlapping vendor relationships, rebidding key contracts, and we're reducing spend on legacy software and services we no longer need.
Speaker Change: Next slide.
Speaker Change: As we acquire while also continuing to execute with discipline and that means unlocking further cost efficiencies while protecting question investments.
Speaker Change: In FY 'twenty, six we're targeting $18 million in annualized cost savings and I'm pleased to report that more than 50% are already in execution.
Speaker Change: These annual savings come from four main areas.
Speaker Change: Moving structural redundancies across regions and departments, simplifying management layers and aligning teams under a unified operating model.
Speaker Change: By consolidating central functions like enablement support finance and HR, we're eliminating duplication and unlocking scale efficiencies, especially post M&A.
Speaker Change: We're rationalizing overlapping vendor relationships rebating key contracts and reducing spend on legacy software and services, we no longer need.
Melissa Ingram: We're increasing installation efficiency through better workforce planning, outsourcing where appropriate, and leveraging automation across project coordination. These are structural changes to support strengthening the organization, increasing our EBITDA margin, improving operating leverage, and creating capacity to reinvest in the business, all while driving toward our long-term financial model.
Speaker Change: We're increasing installation efficiency through better black forthcoming outsourcing, where appropriate and leveraging automation across project coordination.
Speaker Change: These are structural changes to support strengthening the organization, increasing our EBITDA margin, improving operating leverage and creating capacity to reinvest in the business all while driving towards our long term financial model.
Steve Towe: Now I'd like to hand back to Steve. Steve? Thanks, Melissa.
Steve: Now I'd like to hand back to Steve Steve.
Steve: Thanks Melissa.
Steve Towe: Let's close by attempting to answer a critical question for investors. Why PowerFleet? And why now?
Steve: Let's close by attempting to answer a critical question for investors why powerfully unwind them.
Steve Towe: Next slide. Quite simply, a large chunk of the surgical execution and heavy lifting is behind us, allowing us to focus on the company reaching its full potential. In essence, we've integrated, we're scaled, we're growing, and we're profitable. Now, the full potential of PowerFleet is within our reach. We can credibly state that we are now a scale business expecting to achieve $430 million in total revenue this year, of which approximately 75% is recurring tax revenue. Our gross margins are continuing to expand. We've created a strong global footprint with more than 2.8 million subscribers and 48,000 customers, seeing solid momentum in cross-sell and up-sell sales motions, including near-term opportunity with more than half of the Fortune 500 in key sectors.
Steve: Next slide.
Steve: Quite simply a large chunk of the surgical execution and heavy lifting is behind us, allowing us to focus on the company, reaching its full potential.
Steve: In essence, we've integrated with scales, we're growing and we're profitable.
Steve: The full potential of <unk> is within our reach.
Steve: We can credibly state that we are now a scale business expecting to achieve $430 million in total revenue this year of which approximately 75% is recurring fast foods.
Steve: Our gross margins are continuing to expand.
Steve: We've created a strong global footprint with more than $2 8 million subscribers and 48000 customers seeing solid momentum in cross sell and upsell sales motions, including near term opportunity with more than half of the fortune 500 in key segments.
Steve Towe: We are now the number one ranked innovation platform in our space, according to ABI Research. Our product strategy is differentiated and disruptive to the marketplace, and customers are responding superbly to our ability to soothe their pain. We've created a go-to-market engine that is multi-channel, multi-national, and multi-product. and we're developing a durable free cash flow profile with 25% plus EBITDA margins within our site. Unity is the winning data delivery engine for medium to large global customers, and our proven execution capabilities set us apart. We're not a point solution. We're an AIoT platform that's already delivering results at scale with strong financial discipline and a clear roadmap to shareholder value.
Steve: We are now the number one ranked innovation platform in our space. According to Abi research.
Steve: Our product strategy is differentiated and disruptive to the marketplace and customers are responding superbly to our ability to suit their pain points.
Steve: We've created a go to market engine that is multichannel multinational and multi product.
Steve: We are developing a durable free cash flow profile with 25% plus EBITDA margins within that science.
Speaker Change: Unity is the winning data delivery engine for medium to large global customers and our proven execution capabilities set us apart.
Speaker Change: We're not a point solution, where an Iot platform that is already delivering results at scale with strong financial discipline, and a clear roadmap to shareholder value.
Steve Towe: PowerFleet now has all the core ingredients to be a margin-expanding, cash-generating category leader.
Speaker Change: Power Fleet now has all of the core ingredients to be a margin expanding cash generating category leader.
Steve Towe: Last slide.
Speaker Change: Last slide please.
Steve Towe: To finish off, we want to say a big thank you for your support. We're proud of the progress we've made and excited about the path ahead.
Speaker Change: To finish off we want to say a big thank you for your support.
Speaker Change: We're proud of the progress we've made and excited about the path ahead.
Operator: Let's open the line for questions. Operator. Certainly.
Speaker Change: Let's open the line for questions.
Speaker Change: Alright.
Speaker Change: Certainly 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: 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 queue. You may press star 2 if you would like to remove your question from the queue.
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, one moment, please while we poll for questions.
Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start One moment, please, while we poll for questions.
Scott Searle: Your first question for today is coming from Scott Searle with Ross Capaccio. Hey, good morning. Thanks for taking the questions and thanks for all the detailed look at the Combined Entity going forward. Hey, maybe, Steve and Dave, just to start, All the commentary, all the data that you're providing today, it looks like there's a nice pipeline that continues to build with Unity, AI, video, warehouse, etc. And it seems like you're increasingly upbeat in terms of the opportunity set there. Could you reconcile that a little bit with the macro environment, what you guys are seeing with extended sales cycles?
Scott Searle: Your first question for today is coming from Scott Searle with Roth capital.
Scott Searle: Hey, good morning, Thanks for taking the questions and thanks for all the detailed look at the combined entity going forward.
Scott Searle: Hey, maybe.
Dave: And Dave just to start.
Dave: All the commentary on all the data that you're providing today. It looks like there is a nice pipeline that continues to build with unity.
Scott Searle: AI video.
Speaker Change: Warehouse et cetera.
Speaker Change: And it seems like Youre increasingly upbeat in terms of the opportunity set there could you reconcile that a little bit with the macro environment. What you guys are seeing with extended sales cycles and kind of the outlook here feels incredibly positive, particularly as we get to the second half of this year and just kind of help us understand what you're seeing in the near term customer behaviors are we seeing sales.
Steve Towe: And, you know, kind of the outlook here feels incredibly positive, particularly as we get to the second half of this year, and just kind of help us understand what you're seeing in the near term, customer behaviors, are we seeing sales cycles push out? Yeah, so thanks, Scott. Good to talk to you as always. So we are extremely positive, and that positivity is backed up from our perspective with credibility of the wins, not just from a pipeline perspective, but actually the sales execution. As David kind of stated, the reason for our little bit of conservatism and caution is a proportion of our business is based on capex in the warehouse space.
Speaker Change: Push out.
Scott Searle: Yeah. So thanks, Scott good to talk to us away.
Speaker Change: So we are extremely positive and that positivity is back to from a perspective of credibility of the wins not from a pipeline perspective actually the sales execution.
Speaker Change: As David stated the reason for a little bit of conservatism and caution is a proportion of our business is based on capex in the warehouse space.
Steve Towe: You know, the units that we provide are not, you know, 100 bucks hardware, they're $1,500 to $5,000. So that is a significant investment for customers. So we've seen a proportion of that, in terms of customers saying, hey, let's just see where we land in terms of what the total cost of our asset is going to be from, say, a forklift perspective. And we'll get back to you once we know and our capex budget budgets are final. And that's kind of what we're seeing in a number of the larger opportunities. So the pipeline is not going away.
Speaker Change: The units that we provide.
Speaker Change: 100 books.
Speaker Change: Hardware that 500 to $5000 so that is <unk>.
Speaker Change: Significant investment for customers. So we've seen a proportion of that in terms of customers, saying, Hey, let's just see where we land in terms of what the total cost of our assay is going to be from CFO perspective.
Speaker Change: We will get back to you once we know in our Capex budget budgets are finalized.
Speaker Change: And that's kind of what we're seeing in a number of the larger opportunities. So the pipeline is not going away, but if you look at that in context of the overall growth vectors that we had in the year. So that in warehouse space irrespective of all of that that slowdown continues to get good momentum.
Steve Towe: But if you look at that, you know, in context of the overall growth vectors that we had in the years, so that in warehouse space, irrespective of that, that slowdown continues to get good momentum. AI video is, you know, 20% plus growth. And we're seeing, you know, large traction for those solutions. And then it being underpinned by the stickiness of the Unity platform where people are pivoting to that device agnostic piece. So all the health vectors of the business are super strong. The second thing we did was, as David said, we were planning eight million dollars because of the pipeline, because of the momentum in terms of, you know, more headcount and more go to market spend.
Speaker Change: <unk> is 20% plus growth and we're seeing a large traction for those solutions and then have been underpinned by the stickiness of the unity platform, where people are pivoting to that device agnostic piece. So all the health vectors of the business are super strong.
Speaker Change: The second thing we did was as David said, we were planning $8 million because of the pipeline because of the momentum in terms of more head count and we will go to market spend.
Steve Towe: We just toggle back on that. We've we've done the first half. And, you know, once things kind of play out over the next quarter to two quarters, we fully envisage, you know, pressing the button on that extra investment. But just as you know, a good skews of capital and making sure that, you know, we look after our fiscal requirements. We've just said, hey, let's just pause that. So in general terms, we couldn't be more excited. If you remember the the last earnings call we did, we announced the big win with the beverage provider and narrative hasn't changed.
Speaker Change: Toggle back on that we've done the first half and once things kind of play out over the next quarter to two quarters, we fully envisage pressed.
Speaker Change: Pressing the button on that extra investment, but just as you know a good.
Speaker Change: Good stewards of capital and making sure that we look after our fiscal requirements. We've just said hey, let's just pause that so in general terms, we couldnt be more excited if you remember the last earnings call. We did we announced the big.
Speaker Change: When with the beverage provider and narrative Hasnt changed in fact, it only been enhanced and I think you've seen from today's presentation, we're able to give more credible proof points.
Steve Towe: In fact, it's only been enhanced. And I think you've seen from today's presentation, we're able to give more credible proof points. So in general, you know, the macro is having, you know, a little bit of weathering on us, but not substantially in terms of once we feel the clarity, that we'll be able to, you know, accelerate again. And then secondly, as Melissa alluded to, to help with some of that CapEx investment, we're putting in place in Q2, some third party finance options for customers to manage that outlay. So we think that will help as well in terms of allowing people to make buying decisions, because the need for our solutions, the use cases for our solutions, the value propositions we're providing.
Speaker Change: So in general the macro is having a little bit of weathering on us, but not substantial in terms of once we feel this clarity that we'll be able to.
Speaker Change: Accelerate again, and then secondly, as Melissa alluded to.
Speaker Change: Help with some of that Capex investment, we're putting in place in Q2, some third party finance options for customers to manage their advice. So we think that will help as well in terms of allowing people to make buying decisions because the need for our solutions. The use cases for our solutions the value proposition that we're providing as you've seen from the customer example.
Scott Searle: And as you've seen from the customer examples, the results that we're achieving, people want to deploy these solutions, even more important in difficult times. Right now, it's just about having the mechanism to and the affordability to do that, while they're still waiting to see, you know, what happens at the start of July, as we all know. Great. Very helpful. And if I could just for a follow-up, and I'll get back in the queue. We've talked about metrics going forward in terms of how you're going to help us understand that. You provided a lot of data today.
Speaker Change: The results that we're achieving people want to deploy these solutions, even more important in difficult times right now, it's just been having the mechanism and the affordability to do that while theyre still waiting to see what happens at the start of July as we all know.
Great very helpful and if I.
Speaker Change: I could just for a follow up and I'll get back in the queue.
Speaker Change: We've talked about metrics going forward in terms of how you're going to help us understand that you've provided a lot of data today. If you have you kind of settled on what those metrics are maybe around that it sounds like the pipeline continues to grow I'm wondering if you could gauge that a little bit for us and lastly.
Steve Towe: Have you kind of settled on what those metrics are and maybe around that? It sounds like the pipeline continues to grow. I'm wondering if you could gauge that a little bit for us. And lastly, telco relationships, clearly important. Sounds like you've got a couple of them up and running now, but I think you also referenced in the presentation another North American relationship and a European one. I just wanted to clarify that if the North American one is new or if that is still AT&T or on top of AT&T, and then the European relationship and when we can expect to see those kind of ramping up.
Speaker Change: Telco relationships clearly important sounds like you've got a couple of them up and running now trained on the unity platform, but I think you also referenced in the presentation.
Speaker Change: Other north American relationship any European one I just wanted to clarify that.
Speaker Change: The North American one is new or if that is still AT&T. We're on top of AT&T and then the European relationship and when we could expect to see those kind of wrap it up thank you.
Steve Towe: Thank you. So I think, you know, from the quality of our presentation in terms of the metrics that we're starting to be able to deliver, you're seeing that come forward. And, you know, we'll continue to evolve that from a pipeline perspective, an NRR perspective, you know, and different vectors that give you that sense. That will be a lot easier for us once we're through the business systems integration, which you've heard, you know, for our core main regions, we're kind of two quarters away from having that done, but we'll continue to evolve that system. It was a commitment we made, I think, you know, you've been around Scott for a long time, you're seeing more credible data come from us now.
Speaker Change: So I think from the quality of our presentation in terms of the metrics that we are starting to be able to deliver.
Speaker Change: You're seeing that come forward and we will continue to evolve that from a pipeline perspective, and an hour on perspective.
Speaker Change: And different vectors that keep you that sense that will be easy for us once we're through the business systems integration, which you've heard you know for our core main regions, we're kind of two quarters away from having that done, but we will continue to evolve them. It was a commitment we made I think you've been around for a long time youre seeing more credible data come from.
Speaker Change: Matt and that will only continue to move going forward.
Steve Towe: And that will only continue to move going forward. So, and then on the telco front, this is two new relationships in terms of PowerFleet and telcos, one being North America and the other one being in Europe. And, you know, I think this is, you know, AT&T and TELUS, it was a core part of what we wanted to do to understand the opportunity with FleetComplete. You know, the excitement is, you know, is growing. You've seen what Jody has said in terms of, from a TELUS perspective. If you look closely at the slides, you'll see a couple of references to AT&T who are in pilot with some very large names pre-launch.
Speaker Change: And then on the Telecom front. This is two new.
Speaker Change: Relationships in terms of power fleet, and telcos, one being North America and the other one being in Europe.
Speaker Change: I think this is AT&T and tell us.
Speaker Change: It was a core part of what we wanted to do to understand the opportunity with fleet complete.
Speaker Change: The excitement is growing.
Speaker Change: Growing <unk> seen what Joe just said in terms of from a catalyst perspective, if you look closely at the slide you'll see a couple of references to AT&T you are in pilot with some very large names prelaunch.
Speaker Change: That is particularly exciting for us but this is now.
Steve Towe: So that is particularly exciting for us. But this is now alternative telcos who are looking for a data highway IoT play. So they both have agreed to move forward with us. As we've previously articulated, this takes a while to get the motion going. But when we think about, you know, that credibility from first half to second half, as AT&T and TELUS are mobilized, then on top of that, we'll get the mobilization of, you know, these two partners as well. It makes logical sense that this business is going to expand. And, you know, it's on us to invest to make sure those relationships are successful.
Speaker Change: Tentative telcos, who are looking for a data highway Iot play so.
Speaker Change: Both have agreed to move forward with this as we've previously articulated this takes a while to get the motion going but when we think about that credibility from first half to second half at AT&T and tell us are mobilized and on top of that we will get the mobilization of.
Speaker Change: These two partners as well it makes logical sense. This business is going to expand and it's on us to invest to make sure. Those relationships are successful, but the fact that we've got two new one signed up I think is another good Testament solid testament to what's being able to leverage that channel for accelerated growth.
Scott Searle: But the fact that we've got two new ones signed up, I think, is another good testament, solid testament to us being able to leverage that channel for accelerating. Gary, thanks so much. Great to see the pipeline and the channel continue to expand. Thanks.
Speaker Change: Great. Thanks, so much great to see the pipeline in the channel continuing to extend thanks.
Anthony Stoss: The next question is coming from Anthony Stoss with Craig Thanks, Steve and team for the presentation. A couple questions. So you're talking about accelerating growth, exiting fiscal year 2026 at 10% revenue growth. Steven, I'm curious if you could just shed some light on is it across the board, all the product lines or which product lines you think are going to be the biggest mover for the needle? And I have a couple of follow So I think there's a couple of things to reference there. So, you know, we talked about in terms of the shift in revenue mix.
Anthony Stoss: The next question is coming from Anthony Stoss with Craig Hallum.
Anthony Stoss: Thanks, Stephen team for the presentation.
Anthony Stoss: Couple of question. So you are talking about the accelerating growth exiting fiscal year, 2026% to 10% revenue growth Steve I'm curious if you could just shed some light on is it across the board all the product lines or which product lines, you think are going to be.
Anthony Stoss: The biggest mover for for the needle then I have a couple of follow ups.
Anthony Stoss: Yes, So I think there's a couple of things to reference that so we talked about in terms of the shift in revenue mix.
Steve Towe: So, you know, when we've taken on these acquisitions, you know, as businesses end cycles, you know, some of the revenue streams that were previously good for the businesses, you know, aren't strategic anymore, or they're highly bespoke and difficult to maintain. So, you know, we've actually shared as part of this growth story in FY25 and early 26, you know, $10 million plus in terms of those revenue streams that are dilutive in terms of effort, in terms of profitability. And we've shifted the business to this real data highway play with the backbone of AI video in warehouse, and then the integration capabilities.
Anthony Stoss: When we've taken on these acquisitions.
Anthony Stoss: As businesses and cycles some of the revenue streams that were previously good for the business as you know on strategic anymore, or they're highly bespoke and difficult to maintain so we've actually shared as part of the growth story in FY 'twenty five in early 'twenty $610 million plus in <unk>.
Anthony Stoss: Turns of those revenue streams that are dilutive in terms of efforts in terms of profitability and we've shifted the business to this real data highway play with the backbone of Iberia in warehouse and then the integration capabilities. So in terms of being warehoused.
Steve Towe: So in terms of in warehouse, it links to over the road. So it's the dual visibility. And, you know, I think FY25 annualized is 17% growth. across that vector. Then we're 20% plus growth in terms of the camera space. I mean, the industry has really evolved to a camera first strategy. Our businesses haven't done that. You're seeing the shift in terms of pipeline momentum and sales growth in terms of doing that. So those are really the two that kind of stand out. And what I would say is we're adopting those across the business. So the 13% growth in the year in international operations is coming from more adoption of those kind of high value segments.
Anthony Stoss: It links to over the road so it's the dual visibility and.
Anthony Stoss: I think FY 'twenty five annualized 17%.
Anthony Stoss: Both.
Anthony Stoss: Across across that vector than with 20% plus growth in terms of the camera space.
Anthony Stoss: The industry has really evolved to a camera for our strategy.
Anthony Stoss: Our business is having done that you're seeing the shift in terms of pipeline momentum and sales growth in terms of doing that so those are really the two that kind of standout so and what I would say, we're adopting those across the business. So the 13%.
Anthony Stoss: Both in the year in international operations is coming from more adoption of those kind of high value segments. So.
Steve Towe: So in a lot of our narrative, we talk about those things. That's where the high value is. That's where we're differentiated. That's where safety, compliance, sustainability all plays a role. And we want to be very much at forefront of that. And I think if you look at the logo wins, the new logo wins, if you look at the expansion, it's all based around those solutions, which is what we would want it to be. And then if I could just follow up on Scott's question a little bit further, again, the European giant and the new North American telco, was there a particular particular product line that drove them to you?
Anthony Stoss: And in a lot of our narrative, we talk about those things that's where the high value is that's where we're differentiated that's where safety compliance sustainability. All plays a role and we want to be very much at the.
Anthony Stoss: Full front of that and I think if you look at the logo wins the new logo wins. If you look at the expansion into all based around those solutions, which is what we would want it to be.
Scott Searle: And then if I could just follow up on Scott's question with further again, the European giant and the new North American Telco was there a particular particular product line that drove them to you do you expect them to start with one and end up with all three of them just curious on that and what you expect for timing.
Steve Towe: Do you expect them to start with one and end up with all three? I'm just curious on that and what you expect for timing? Yep, so rinse and repeat in terms of in-warehouse AI video and Unity's data highway. In terms of timing, we think the North American one, it will probably be, you know, we'll get we'll get active, you know, Q3 into Q4. The European one is slightly further behind. So you know that we've just signed that agreement in the last three to four weeks. So you know, its major impact will be in FY27. But delighted to have them.
Speaker Change: Yeah. So.
Speaker Change: Rinse and repeat in terms of in way. It has AI video and unity data highway in terms of timing, we think the north American wanting it will probably be we will get we will get active Q3 into Q4. The European one is slightly further behind so that we've just signed that agreement in the law.
Speaker Change: Last three to four weeks. So you know at major impact will be in FY 'twenty seven but then.
Speaker Change: Delighted to have them.
Gary Prestopino: And, you know, what I would say is, as individual businesses, we probably wouldn't have won these expanded partnerships. So it's another proof point of why scale was important from our Very good. Thanks, Steve.
Speaker Change: And what I would say as individual businesses, we probably wouldn't have won these these expanded partnership. So it's another proof point of why scale was important from our perspective.
Speaker Change: Very good thanks, Steve.
Steve Towe: The next question for today is coming from Gary Prestopino with Barrington. Good morning, everyone. A couple of things here. First of all, with this ever-driven, this new contract, was that a competitive takeaway or was this a totally new implementation? Safety Solutions that you have. So this is they were an original customer that went into a competitive bid in order to overhaul their technological solutions for AI video. When would this when this is up and running and mature with this considering the amount of vehicles they'll have on this is this one of your bigger contracts, Steve?
Speaker Change: The next question for today is coming from Gary Prest, Pitino with Barrington Research.
Speaker Change: Okay.
Speaker Change: Good morning, everyone couple.
Speaker Change: Couple of things here first of all.
Speaker Change: With this ever driven this new contract will want a competitive takeaway or or is this a totally new implementation.
Speaker Change: These safety solutions that you have out there.
Speaker Change: This is they were in our original customer that went into a competitive bid in order to overhaul their technological solutions for <unk>.
Speaker Change: Okay.
Speaker Change: With this one this is up and running and mature with this considering the amount of vehicles will have on this is this one of your bigger contract Steve.
Steve Towe: Absolutely. And, you know, it, you know, it's, it's significant. And, you know, I think this shows, you know, our versatility in terms of vertical we serve. It's a very nice win. It's something that we we care about a lot in terms of our community in the US market. And I think it's a strong signal, when this was a highly attractive account for some of our competitors. And we've been able to achieve that relationship, you know, with Everdriven. So we're very proud of it. It's significant for our business. Okay, yeah, it's a nice win. And then just another couple of questions.
Speaker Change: Absolutely.
Speaker Change: Yeah.
Speaker Change: It's and.
Speaker Change: It's significant and I think this shows.
Speaker Change: Our versatility in terms of vertical we serve it's a very nice win assuming that we care about a lot in terms of our community.
Speaker Change: In the U S market and I think it's a strong signal.
Speaker Change: When this was a highly attractive account for some of our competitors and we've been able to achieve that relationship.
Speaker Change: With LP driven so we're very proud of it it's significant for our business.
Speaker Change: Okay, Yeah, that's a nice win and then just another couple of questions.
Gary Prestopino: You said organic growth on slide 20 was greater than 9% in the quarter. And I seem to recall that organic growth was 7% in Q3, so an acceleration there, am I correct? So I'm not sure which vector on the, it wasn't organic growth, it was 90%. Was it the 9% in international operations? Yeah, so 7% was what we previously reported across the business. The 9% is international operations. Okay, so it was 7% organic growth in the quarter then total. Yeah, that's what we reported. Okay. All right, thank you very much.
Speaker Change: You said organic growth on slide 'twenty was greater than 9% in the quarter.
Speaker Change: And I seem to recall that organic growth was 7% in Q3, so an acceleration there or am I correct.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: I'm not sure, which Victor on the it wasn't organic growth was 90%.
Speaker Change: Was it the 9% and international operations, Yeah. So 7% was what we previously reported across the business. The 9% is international operations. Okay. So it was 7% organic growth in the quarter in total.
Speaker Change: Yeah, that's what we reported here.
Speaker Change: Okay. That's fine alright, thank you very much.
Alexander Sklar: Your next question is coming from Alex Sklar with Raymond. Great, thank you. Steve or David, really strong diversity of bookings with that 100,000 plus cohort. Any color, how meaningful those customers are today in aggregate? Or the makeup of the pipeline from those larger opportunities in maybe relative to a year ago? It's a big shift.
Speaker Change: Your next.
Speaker Change: Next question is coming from Alex Sklar with Raymond James.
Alex Sklar: Great. Thank you.
Speaker Change: Steve or David really strong diversity of bookings would that would that 100000, plus cohort any color how meaningful those customers are today in aggregate.
Alex Sklar: The makeup of the pipeline from those larger opportunities and maybe relative to a year ago.
Alex Sklar: It's a big shift.
Steve Towe: So, you know, to have, I think it's nine different verticals with 100k ARR wins is something that we didn't see 12 months ago. And, you know, we've referenced a lot, I think, within this presentation around the, you know, the movement in mix of product, the movement in terms of size of opportunity. And, you know, that was a very pleasing, you know, testament to the latest quarter in terms of us being able to do that. So major shift, and these will become even more meaningful.
Alex Sklar: So.
Alex Sklar: To have.
Alex Sklar: It's nine different verticals with a 100 K IRR wins is something that we didn't see 12 months ago, and we've referenced I think within this presentation around the.
Alex Sklar: The movement in mix of product the movement in terms of size of opportunity and that was a very pleasing.
Alex Sklar: In a testament to the lightest quarter in terms of us being able to do that so.
Alex Sklar: A major shift and these will become even more meaningful. So this is entry level and if you think about the modularity of fleet completion, our ability to add wallet share within each individual customer then.
Steve Towe: So this is entry level. And if you think about the modularity of fleet complete and our ability to add wallet share within each individual customer, then, you know, that is something that ultimately, we, we feel really good about winning those types of opportunities. This is absolutely the sweet spot of where we want to be. Okay, great color.
Alex Sklar: That is something that ultimately we we feel really good about winning those types of opportunities. This is absolutely the sweet spot of where we want to be.
Speaker Change: Okay, Great color and then maybe one more follow up on that indirect channel. So great to get tell us start up in the quarter. What's next from tell us in terms of when you think of channel enablement is that as of May 15 to all of their reps now have.
Craig Fisk: And then maybe one more follow up on that indirect channel. So great to get TELUS stood up and in the quarter. What's next from TELUS in terms of when you think of channel enablement? Is that as of May 15, all of their reps now have PowerFleet kind of quota in their bag? Do they sell the full suite now? Is it a portion of the sellers are selling PowerFleet today? And over the next year or two, you're going to see more get stood up. I'm just kind of curious how to think about enablement from from the indirect channel.
Alex Sklar: Power fleet kind of quarter in the end there.
Alex Sklar: In their.
Alex Sklar: Bag do they sell the full suite now is it a portion of the sellers are selling power fleet today and over the next year or two youre going to see mortgage stood up I'm just kind of curious how to think about enablement from from the indirect channel.
Craig Fisk: So, Craig, why don't you take that one? Yeah, sure. Thanks, Steve. So the way I'd answer that is all of the reps have a AIoT quota inside their commissions. All can earn commissions on it. They can all sell the full IoT platform.
Speaker Change: So quick one I can take that one.
Speaker Change: Yeah sure. Thanks, Steve So the way I'd answer that is all of the reps have a.
Alex Sklar: Quota is inside their their.
Speaker Change: Commissions.
Speaker Change: Ill can earn commissions on it they can all sell the full Iot platform today.
Craig Fisk: Okay, great.
Speaker Change: Okay great.
David Wilson: And then maybe one last one for David. So on the slide, it talked about the 10 million of organic EBITDA improvements embedded in the 26 guide on top of that 25 ish million of organic revenue improvement. That's a nice, really strong 40% kind of incremental margins. Is that the right anchor to think about the potential of the business longer term absent kind of any additional growth investments or or anything kind of unique about this next year when we think about that incrementality? No, Alex, that's the right way to think about it. If you think about the calls on top line, we have gross margin expanding, increasing this as services revenue, which is growing at a faster rate.
Speaker Change: And then maybe one last one for David.
Speaker Change: On the slide Ive talked about the $10 million of organic EBITDA improvement embedded in the 2000 <unk> on top of that 25 ish million dollars of organic revenue improved.
Speaker Change: Nice really strong 40% incremental margins is that the right anchor to think about the potential of the business longer term absent kind of any additional growth investments or or anything kind of unique about this next year, when we think about that incrementally.
Speaker Change: No Alex that's the right way to think about it.
Speaker Change: Think about the calls on topline.
Speaker Change: Gross margin expanding increasing as services revenue, which is growing at a faster rate so thats higher contribution than the blended <unk>.
David Wilson: So that's higher contribution than the blended. And if you look at the offex side of things, G&A should continue to come down in both percentages, and we're working on absolute dollar reductions there as well. And in terms of R&D, there's an expectation that there will be some leverage on the R&D side as well. So I think it's a good way to think about it as the business matures and evolves over time.
Speaker Change: You look at the Opex side of things G&A should continue to come down and bugs percentages and we're we're kind of absolute dollar reductions there as well.
Speaker Change: In terms of R&D.
Speaker Change: Is the expectation that there will be some additional leverage on the R&D side as well. So I think it's a good way to think about it as the business matures.
Speaker Change: Of all of this over time.
David Wilson: All right, great.
Speaker Change: Alright, great. Thank you all.
Dylan Becker: Thank you all. Your next question is from Dylan Becker with Hey, gentlemen. Steve, maybe starting with you, a lot of commentary right around in-warehouse in the AI camera, not only adoption in the quarter, but pipeline momentum. I guess how much of that in your mind is a function of kind of where the market's going and the need for visibility and solutions like this in kind of the current context, alongside kind of your growing base as a referenceable and strategic partner, and maybe how that kind of ties into the confidence as you think about conversion, and even in a period of some kind of short term elongation within some of your particular.
Speaker Change: Your next question is from Dylan Becker with William Blair.
Dylan Becker: Hey, gentlemen.
Dylan Becker: Steve maybe starting with you a lot of commentary right around in warehouse and the AI camera not only adoption in the quarter, but pipeline momentum I guess, how much of that in your mind as a function of kind of where the market's going and the need for visibility and solutions like this and kind of the current context, along side kind of you're growing.
Dylan Becker: <unk> as a reference a bowl and strategic partner and maybe how that kind of ties into the confidence as you think about conversion even in a period of some kind of short term elongation within some of your particular customers.
Steve Towe: Yeah, so there's an undoubted shift in the marketplace from these solutions being a nice to have to be a necessity. And I think also from a privacy perspective in the camera space, it's becoming far more common now to adopt these solutions. But there's a big market with a lot of people playing in that market. And I think, you know, what we're, we're encouraged about and pleased about is our improvement in execution. So whether that is from a customer satisfaction perspective in in existing accounts, whether that's bringing in the right salespeople who can take customers more on a long term value proposition solution sale ROI journey, and whether it's confidence, really, that actually now we're a player that has the investment and the future producing with the platform, that means we can be a higher quality partner.
Dylan Becker: Yes.
Dylan Becker: And then that should shift in the marketplace from the solutions being a nice to have to be a necessity and I.
Dylan Becker: I think also from a privacy perspective, and the camera bank is becoming far more common name to adopt these solutions, but there's a big market with a lot of people playing in that market and I think.
Dylan Becker: What we were encouraged about and pleased about is our improve maintain execution. So whether that is from a customer satisfaction perspective, meaning in existing accounts, whether that's bringing the right salespeople, who can take customers more on a long term value proposition solution sell our ROI journey.
Dylan Becker: And whether it's confidence really the actually now we are a player that has the investment and the future proofing with the platform that means we can be a higher quality partner.
Steve Towe: You know, my prepared remarks in the presentation, we talked a lot about the shift to being a mission critical partner. And I think the kind of, you know, the really jam on top of that is therefore, you know, being being that central system of record, single pane of glass device agnostic piece, because, you know, all of this information, it can be overwhelming to customers. I was having dialogue with a very strategic customer of ours, who is just, you know, they've got 40,000 different drivers, who are all driving different vehicles. And from a safety perspective, they want to know what real risk is within that portfolio.
Dylan Becker: My prepared remarks, and the presentation, we talked a lot back the shift to being a mission critical partner and I think the kind of the really jam on top.
Dylan Becker: All of that is therefore being bringing that central system of record single pane of glass device agnostic peak because.
Dylan Becker: All of this information it can be overwhelming to customers I was having dialogue with a very strategic customer mass and Kiwis just they've got 40000 different drivers.
Dylan Becker: Who are all driving different vehicles and from a safety perspective, they want to know what real risk is within that portfolio. This was just last week and what they're saying is with the other platforms that they have a pad within their state with the challenges that they have in their business. They just don't have the time to be able to do that effectively.
Steve Towe: This was just last week. And what they're saying is, you know, with the other platforms that they have, have had within their estate, with, you know, the challenges that they have in their business, they just don't have the time to be able to do that effectively. It needs a platform to be able to do that and the right business support to do it. But it's absolutely a necessity. And as they start to roll out this solution, they can't roll out safety and compliance to part of the fleet, they have to do it to the whole fleet, which is obviously highly encouraging from where we can sit in and how we can expand, you know, and multiply within those types of customers.
Dylan Becker: Needs a platform to be able to do that in the right business support to do it but it's absolutely a necessity and as they start to roll out the solution. They cant rollout of safety and compliance to part of the fleet. They have to do to the whole fleet, which is obviously highly encouraging from where we can see it and how we can expand.
Dylan Becker: And multiply within those types of customers.
Dylan Becker: Got it. Very helpful.
Speaker Change: Got it very helpful. Thank you, Steve and then maybe for <unk>.
Steve Towe: Thank you, Steve. And then maybe for Dave as well here, on the implied second half acceleration, maybe, Steve, your perspective here as well too, but how much of that is, we walked through kind of the strong pipeline and demand drivers, but how much of that is actually unlocking capabilities from a supply constraint perspective versus maybe incremental demand flowing into the system? And if it is supply, can you walk through whether that's, again, engineering partnerships, data integration, what's kind of easing the accessibility of onboarding there? Thank you.
Speaker Change: For Dave as well here all the implied second half acceleration, maybe Steve your perspective here as well too, but how much of that is we walked through kind of a strong pipeline and demand drivers, but how much of that is actually unlocking capabilities.
Speaker Change: From a supply constraint perspective versus maybe incremental demand flowing into the system and if it is supply can you walk through whether that's again engineering partnerships data integration, what's kind of easing the accessibility of Onboarding there. Thank you.
David Wilson: So I'll say that first, and then David, you can you can back it up. So, you know, if you look at the the acceleration coming out in the second half, first of all, it's the indirect channels maturing pipeline into sales, right, which we have a high confidence of. These aren't new channels with new partners. We you know, we've been doing this for a long time. It's about broader opportunities with a broader base of customers. So we feel really good about that. And then secondly, in terms of, you know, that shift in terms of the mindset of our salespeople to be a camera-led proposition and a safety-led proposition, that will continue to expand as we go as well.
Speaker Change: So I'll tell you that first and then David you can you can back it up so if you look at the the acceleration coming out in the second half first of all.
David Wilson: The indirect channels maturing pipeline into sales right, which we have a high confidence of these aren't new channels with new partners.
David Wilson: <unk> been doing this with a long time, it's about broader opportunities with a broader base of customers. So we feel really good about that and then secondly in terms of that shift in terms of mindset of our salespeople to be a camera lens.
David Wilson: Proposition and our safety led proposition that will continue to expand as we go as well in terms of the constraints that we've talked about previously that's been very much around.
Steve Towe: In terms of the constraints that we've talked about previously, that's been very much around, you know, there's a slide in our deck which talks about the subs that are being added from a unity perspective, from a device agnostic single pane of glass perspective. And if you actually see in the slide, you know, there's I think 1.5K subs, 4,000 subs, 4.5K subs to opportunities coming in the second half, which is, you know, 12,000 plus subs. So, you know, as we do more of those, that's where we are ramping up and we've really pivoted in the last six months, the capabilities in terms from an R&D perspective to do that at scale.
David Wilson: There's a slide deck, which talks about the subs being added from a unit perspective from a device agnostic single pane of glass perspective, and if you actually see in the slide.
David Wilson: One five case of $4004 five K subs two opportunities coming in the second half, which is 12000 plus so as we do more of those that's where we are ramping up and we really pivoted in last six months the capabilities in terms from an R&D.
David Wilson: Perspective to do that at scale that continues to need work because we are supply constrained sorry. We are we are not demand constrained, but we have the <unk>.
Steve Towe: That continues to need work because we are supply constrained. Sorry, we are not demand constrained, but we have the need to get better and more efficient and effective at doing that. And that's just a matter of scaling for something that is really solving a customer pain point.
David Wilson: Need to get better and more efficient and effective at doing that.
David Wilson: And that's just a matter of scaling.
David Wilson: He is really solving a customer pain point.
Steve Towe: What I would say in terms of the final vector is we've added more sales feet to the street. So, you know, their pipeline is building that we expect a number of reps to come online with productivity. You know, we've been able to capture different quality of rep as well, you know, with the new company, with the differentiated proposition. So we're hopeful. And Craig gives me a lot of confidence to believe that, you know, those guys are going to come come.
David Wilson: What I would say in terms of the final victories, we've added more sales feet.
David Wilson: The street so their pipeline is building that we expect the number of reps to come online with productivity.
David Wilson: We've been able to capture different quality of rep as well with the new company with a differentiated proposition. So we.
David Wilson: We are hopeful and Craig gives me a lot of confidence to believe that.
David Wilson: Those guys are going to come.
David Wilson: Good.
Greg Gibas: Great, thank you. Your next question is from Greg Gibas with Northland. Hey, good morning, Steve and David, appreciate the presentation. If I could drill down on the near term a little bit more, you know, progression of revenue and EBITDA in Q1 and Q2, you know, you've spoken to the anticipated acceleration in the back half, but you know, to what extent, I guess, and what are kind of your expectations on the bridge to get to that point? So, yeah, Greg, we've talked about growth in the first half of the year, and this is on sort of absolute growth of 40% or so for Q1 and Q2.
David Wilson: Great. Thank you.
Speaker Change: Your next question is from Greg <unk> with Northland Securities.
David Wilson: Hey, good morning, Stephen David I appreciate the presentation.
David Wilson: If I could drill down on the near term a little bit more progression of revenue and EBITDA in Q1, and Q2, you know you've spoken to the anticipated acceleration in the back half, but to what extent I guess and.
David Wilson: What are kind of your expectations on the bridge to get to that point.
Speaker Change: So yes, we have talks about growth in the first half of the year and this is on sort of absolute growth of 40% also for Q1 and Q2.
David Wilson: In order to hit that 40%, you do need to adjust down for some of the proactive steps that we've taken, particularly, for example, the FSM business, which, you know, rounding up to about $1.5 million per quarter. In terms of the second half, to Steve's comments earlier, we do expect to see that sort of 10 percentage points of growth as we exit the year. Again, and turning back to the slides, that's adjusted both for FSM, as well as the U.S. gap changes for the Fleet Complete business. But in terms of what's driving that, it's everything that Steve's been talking about.
Speaker Change: In order to hit that 40% you do need to adjust down for some of the proactive steps that were taken particularly for example, the FSM business, which in a rounding up to about $1 $5 million per quarter in terms of the second half to Steve's comments. So yeah, we do expect to see that sort of 10 percentage points of growth as we exit the year again.
David Wilson: And turning back to the slides that suggested both FSAM as well as the U S. GAAP changes for the fleet complete business, but in terms of what's driving that is everything that Steve's been talking about so we have been investing more in terms of sales capabilities.
David Wilson: So we have been investing more in terms of sales capabilities. That will have a compounding impact in terms of turning up the channel, in terms of high-quality leads coming through. We continue to get stronger in terms of AI video. Obviously, that's the fastest-growing piece of the market. And then you layer on top of that the comment that Steve just made in terms of our ability to increasingly handle sort of single pain of breath data ingestions in the thousands and then, you know, north of 10,000. So all of these things, as planned, are being worked, coordinated, and they'll have an increasingly large impact to see accelerating growth in the second half.
David Wilson: That will have a compounding impact in terms of turning up the channel in terms of high quality leads coming through.
David Wilson: Continue to get stronger in terms of AI video, obviously, that's the fastest growing piece of the market and then you layer on top of that the comment that Steve just made in terms of our ability to increasingly handle sort of single pane of glass a data ingestion and the thousands and then north of 10000. So all of these things as planned.
David Wilson: And well coordinated and they'll have an increasingly large impact to see accelerating growth in the second half.
Steve Towe: Okay, got it. And to follow up on, you know, the commentary on customer decision cycles, wanted to just ask to how much of an extent maybe that was a headwind or had an impact on your outlook for the year. Any context you can provide regarding what you're hearing from customers would be very helpful as well. So, you know, it has no doubt had a weathering effect. And I think we're not alone in that in most businesses are reporting that, you know, in terms of people just saying, look, we just need to see where the tariffs end.
Speaker Change: Okay got it and to follow up on the commentary on customer decision cycles wanted to just ask how much of an extent maybe that was a headwind or had an impact on your outlook for the year any context, you can provide regarding what youre hearing from customers would be very helpful as well.
David Wilson: So yes.
David Wilson: Yeah.
David Wilson: It is no doubt had a weather effect and I think we're not alone in that in most businesses are reporting.
David Wilson: In terms of people, just saying look we just need to see where the tariffs and if you think about buying a forklift truck.
Steve Towe: You know, if you think about buying a forklift truck. and buying new forklift trucks and on new cycles, you know, potentially the costs of those things, you know, are significantly higher. And therefore, people are juggling CapEx abilities, they're looking at stuff in their own business. But, you know, in terms of the overall quantum of revenue that that is going to affect, we don't think that is substantial. And that is being bought out in, you know, in terms of the pipeline that we're building the OpEx deals that we do, particularly in the camera space, the international operations that we are, we are, you know, really growing nicely across the estate.
David Wilson: And buying new forklift trucks, and all new cycles.
David Wilson: Potentially the cost of those things.
David Wilson: Significantly higher.
David Wilson: And therefore people are juggling capex abilities, there looking at stuff in their own business, but in terms of the overall quantum of revenue that is going to affect we don't think that is substantial and that is being bought.
David Wilson: In terms of the pipeline that we're building the opex deals that we do particularly in the camera space. The international operations that we are.
David Wilson: We all.
David Wilson: Really growing nicely across the state.
Steve Towe: You know, we think we've been sensible, just in terms of that level of caution. And, you know, we do believe that, you know, I believe and hope that there is clarity that comes to organizations to allow them to make buying decisions, the needs are there. But, you know, just naturally, there is when the CapEx deployments can be quite large, you know, people are saying, well, I just need to see, see how this kind of shakes out. And that's kind of the cycle we're in. And, you know, and I don't think I don't think we need to overplay that in any way, shape or form.
David Wilson: We think we've been sensible just in terms of that level of caution.
David Wilson: We do believe that.
David Wilson: I believe and hope that there is clarity that comes to organizations to allow them to make buying decisions. The needs are there, but just naturally there is when the capex deployments can be quite large.
David Wilson: People are saying well I just need to see see how these kind of shakes out and thats kind of the cycle. We're in.
David Wilson: I don't think I don't think we need to out of the play that in any way shape or form, but because there is a level of that that comes from from app into our business each quarter than it does temper down in the short term.
Steve Towe: But because there is, you know, a level of that that comes from a bit from our into our business each quarter, then it does temper down in the short term, you know, some of the growth expectation. But, you know, as we keep saying, and I think, you know, the proof points provide the health factors of growth for this business are super strong. The proof points are there, the credibility is growing. And if you look at the reference ability, you know, with there's a slide in there of customer quotes that, you know, we've been able to produce.
David Wilson: Some of the growth expectation, but.
David Wilson: As we keep saying and I think the proof points provide the health vectors of growth for this business is super strong the proof points are there the credibility is growing.
David Wilson: Look at the reference ability.
David Wilson: There's a slide in there of customer quotes.
David Wilson: We've been able to produce.
Steve Towe: And, you know, when we think about the notable wins, and, you know, people said to me, why did you need scale? Last quarter, we gave you the large beverage provider. This quarter, we've given you Evergreen. This company is not being able to communicate deals like that until this point. So we feel very confident. We're just managing our way through the best we feel and the most appropriately fit we feel, understanding that there is a little bit of caution in sentiment, but people are still buying our solutions at scale. And, you know, what I would just add to that just for kind of a view, you know, if you think about that $10 million of ARR that we have shed over probably the last six to nine months, it gives you a fairly good view of the health of our growth.
David Wilson: When we think about the notable wins and people said to me why did you need scale last quarter. We gave you the.
David Wilson: Large beverage provider this quarter. We've given you have at this company is not being able to communicate deals like that until this point. So we feel very confident with.
David Wilson: Just managing our way through the best we feel in the most appropriately if we fail understanding that there is a little bit of caution in sentiment, but people are still buying our solutions at scale and what I would just add to that just with kind of a view. If you think about that $10 million of IRR that we have shared.
David Wilson: Our probably the last six to nine months. It gives you a fairly good view of the health of our gross adds and once we've lapped that and stuff that we've proactively taken often we have been very supportive to customers to help them to a new place.
Steve Towe: And once we've lapped that stuff that we've proactively taken off and we've been very supportive to customers to help them to a new place, then, you know, you can do the math in terms of, you know, how the growth rate should expand as part of, you know, all the other stuff that we've been discussing.
David Wilson: Then.
David Wilson: You can do the math in terms of has the growth rate should expand as part of.
David Wilson: Albeit the stuff that we've been discussing.
Steve Towe: That's helpful, Steve.
David Wilson: That's helpful. Thanks, guys.
Steve Towe: Thanks, guys.
Steve Towe: We have reached the end of the question and answer session, and I will now turn the call over to Steve Towe for closing. I think it's time, so David. Yeah, so firstly, again, I appreciate everyone's time today.
Speaker Change: We have reached the end of the question and answer session and I will now turn the call over to Steve <unk> for closing remarks.
David Wilson: Okay.
David Wilson: So David.
David Wilson: So firstly I appreciate your time today, just a quick update in terms of the audit so before concluding the call.
David Wilson: Just a quick update in terms of the audit. So before concluding the call, a quick update in terms of the audit of our 10K. While the audit is substantially complete with no areas of disagreements and no anticipated changes to the figures shared today, it's worth noting this is Deloitte's first year auditing PowerFleet. The scope includes a global engagement and follows a year in which we executed two transformative M&A transactions. Prior to filing, Deloitte does require a little further time to complete their internal quality procedures. We are working with them on a daily basis and both parties firmly believe we are on track to file the 10k well ahead of the 15 day grace period.
David Wilson: Pick up there in terms of the audit of our 10-K, while we already are substantially complete with no areas of disagreement no anticipated changes that they can share today. It's worth noting this is deloitte first year order to calculate the <unk>.
David Wilson: <unk> includes a global engagement and follows a year in which we executed two transformative M&A transactions.
David Wilson: Prior to filing.
David Wilson: It does require a little further time to complete their internal quality procedures, we're working with them on a daily basis from both parties firmly believe we are on track to file the 10-K, well ahead of the 15 day Grace period.
David Wilson: Thank you again for attending today. We appreciate your ongoing interest and support and we look forward to providing further updates as momentum continues to build in fiscal 2026.
David Wilson: Thank you again for attending today, we appreciate your ongoing interest and support and we look forward to providing further updates as momentum continues to build in fiscal 2026, sorry. Thank you will and that concludes today's call.
Operator: So thank you all and that concludes today's This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.
David Wilson: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.