Q2 2026 PowerFleet Inc Earnings Call

Speaker #1: Greetings. Welcome to PowerFleet's second-quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Speaker #1: 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, Carolyn Capaccio, of Alliance Advisors.

Speaker #1: You may begin.

Speaker #2: Thanks, Holly. Good morning, everyone. This presentation contains forward-looking statements within the meeting of Federal Securities Laws, forward-looking statements include statements with respect to Powerfleet's beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties, and other factors which may be beyond Powerfleet's control, and which may cause its actual results, performance, or achievements to be materially different from future results—excuse me—performance or achievements expressed or implied by such forward-looking statements.

Speaker #2: All statements other than the statements of historical fact are statements that could be forward-looking statements. For example, forward-looking statements include statements regarding prospects for additional customers, potential contract values, market forecasts, projections of earnings, revenues, synergies, accretion, or other financial information, emerging new products and plans, strategies, and objectives of management for future operations, including growing revenue, controlling operating costs, increasing production volumes, and expanding business with core customers.

Speaker #2: The risks and uncertainties referred to above are not limited to risks detailed from time to time in PowerFleet's filings with the Securities Exchange Commission, including PowerFleet's annual report on Form 10-K for the year ended December 31, 2020.

Speaker #2: These risks could cause actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of PowerFleet. Unless otherwise required by applicable law, PowerFleet assumes no obligation to update the information contained in this presentation.

Speaker #2: An expressly disclaimed any obligation to do so, whether a result of new information, future events, or otherwise. Now I'll turn the call over to Powerfleet CEO, Steve Towe.

Speaker #2: Steve,

Speaker #3: Good morning, everyone. It's great to be here this morning with key members of the leadership group to walk you through what's been a statement quarter for PowerFleet.

Speaker #3: This set of results marks a transition point for the company. It signals the end of an integration period following the two major acquisitions we completed, and the start of a new chapter, one focused squarely on accelerating sustainable growth.

Speaker #3: Just six months into aligning into one global enterprise and operating level, we're clicking into gear. Starting to deliver expanding revenue growth and healthy business momentum in our key operating metrics.

Speaker #3: In Q2, our top growth metric, annual services recurring revenue, reached the double-digit growth milestone originally targeted for year-end ahead of schedule. The true strength of growth is how you get there.

Speaker #3: For us, that means responsibly and efficiently. The extensive synergy programs we aggressively executed are already moving the dial meaningfully. And we're delighted to also post meaningful adjusted EBITDA expansion this quarter both sequentially and year over year.

Speaker #3: This quarter clearly demonstrates the shape of the future of Powerfleet. Integrated, efficient, and built for profitable growth. Next slide, please. When you step back and look at the quarter, you can see a clear pattern of balanced execution.

Speaker #3: Services and ARR are growing strongly. Margins are expanding both at total gross margin level and particularly encouragingly within the services line. This consistent improvement speaks to the strength of our SaaS-led model and our operating discipline.

Speaker #3: What's also particularly pleasing for this quarter is the return to growth in product revenue, inclusive of expanding margins. It underscores the durability of our business and the effectiveness of the actions we took to offset tariff pressures and broader macroeconomic challenges.

Speaker #3: Together, these results demonstrate a company that's accelerating profitable growth, scaling efficiently while maintaining quality and control. Next slide, please. We felt it was the right time in our evolution to add a high-quality executive as Chief Revenue Officer.

Speaker #3: With a proven track record in driving SaaS growth at scale, someone who's led multiple A-player teams and brings deep SaaS enterprise go-to-market experience. It's a crucial role with the major accelerated growth opportunity directly in front of us.

Speaker #3: It brings executive bandwidth and further high-revenue expansion experience to the global team. I'm delighted to welcome Jeff Lautenbach. Jeff, over to you.

Speaker #4: Thanks, Steve. Great to be here. Having spent time with the teams and customers, I've been able to see for myself momentum building across the business.

Speaker #4: One key element of our future success is North America, and it's been encouraging to walk into a double-digit year-over-year revenue performance in that region.

Speaker #4: A clear sign of traction and developing brand strength. One of the proof points of our scale strategy was that as Powerfleet grew, we'd see more invitations to large RFPs and greater visibility in the enterprise market.

Speaker #4: That's now happening with a 26% increase in new logo wins as more customers recognize us as a top-tier provider. Our core value proposition, safety, compliance, sustainability, and efficiency continue to resonate strongly.

Speaker #4: We've seen a sharp rise in demand within our on-site and in-warehouse safety segment, where we're delivering real impact. To give you a sense of the traction, one of our largest new deals this quarter came from a major engagement with a global industrial manufacturer.

Speaker #4: A multibillion-dollar enterprise recognized as one of the world's leading producers of heavy machinery and power systems serving construction, mining, and energy markets worldwide. Their deploying unity to modernize asset visibility, optimize equipment utilization, and reinforce compliance standards across their international operations.

Speaker #4: We also notably secured a major North American logistics and fleet management company. One of the world's largest providers of third-party logistics and supply chain services operating thousands of vehicles and hundreds of distribution facilities across the region.

Speaker #4: They've selected unity to enhance operator safety, strengthen compliance, and deliver deeper operational visibility across their nationwide logistics network. Both our multi-year strategic programs with significant expansion runway indicators of the scale of opportunity ahead and the value our platform is delivering.

Speaker #4: Next slide. Looking forward, we’re seeing strong progress in our strategic partner channels and other key pillars of our growth plan. Global channel bookings increased meaningfully in Q2 from Q1, particularly with partners like AT&T and TELUS.

Speaker #4: Where momentum in the North American channel continues to grow with a 32% sequential increase in quarterly pipeline build. More generally, our global cross-sell pipeline activity grew substantially, notably we are seeing solid traction with AI video, upselling into our base, and that's showing up with a healthy 23% expansion in the video pipeline this quarter.

Speaker #4: These are encouraging proof points. Evidence that our commercial engine is working as designed and that we're building a flywheel capable of sustaining double-digit growth into FY27.

Speaker #4: With that, I'll hand it over to David to walk through the financials.

Speaker #1: Thanks, Jeff. Before running through our regular financial reviews, I'll begin with the headline. Service revenue excluding legacy fleet complete book of business grew 12% organically year over year.

Speaker #1: Even as we've continued deliberately exiting non-core revenue streams in the quarters following our combination with mix in April 2024. High-margin recurring SaaS revenue is the cornerstone of our future.

Speaker #1: And that progress is clearly visible in our sales mix. With service revenue now representing 80% of total revenue, up from 74% last year. Next slide.

Speaker #1: Now onto our regular financial review, starting with a quick recap of the key pro forma adjustments, as well as a change in our prior methodology for calculating adjusted EBITDA.

Speaker #1: One-time expenses: This quarter, expenses include $2.1 million in one-time charges for restructuring, integrations, and transaction costs, which are excluded from adjusted EBITDA and DPS for ongoing run rates.

Speaker #1: Amortization impact. Results include $5.8 million in non-cash amortization related to the mix and fleet complete acquisitions, impacting services gross margins by over 5%. Change to the calculation of adjusted EBITDA.

Speaker #1: Following consultation with the SEC, including a detailed review of question 100.04 of the compliance and disclosure interpretations on non-GAAP financial measures, we concluded our presentation of adjusted EBITDA will no longer include an EBITDA adjustment for recognition of pre-October 1, 2024, contract assets fleet complete.

Speaker #1: These amounts reflect certain in-vehicle devices delivered by fleet complete prior to the acquisition that invoiced and collected thereafter. This treatment was applicable for a finite transition period and reflects cash received for hardware that will never be recognized as revenue by Powerfleet.

Speaker #1: The adjustment was intended to align reporting results more closely with operating cash flows, and the change has no impact on underlying economics or cash generation.

Speaker #1: Now on to Q2, which was a banner period delivering records top and bottom line performance. Total revenue increased 45% year over year to $111.7 million, including strong organic growth of 9% overall and 12% in strategically important services.

Speaker #1: Turning to adjusted EBITDA, which rose more than 70% to $24.8 million. Alongside this strong performance, we also invoiced $1.3 million in fleet complete IVD recoveries, which historically were included in adjusted EBITDA and will continue to flow through operating cash as collected.

Speaker #1: These results validate the strategic rationale for our M&A program and highlight the powerful market opportunities emerging through our unity product strategy. Next slide. Turning to margins, we continued to deliver strong year-over-year improvement.

Speaker #1: A stronger mix and 77% service gross margins drove a 400 basis point increase in adjusted EBITDA gross margins to 68%. Product margins also improved by 640 basis points sequentially to 31.5%, supported by a rebound in higher-margin on-site demand following Q1 tariff headwinds.

Speaker #1: On operating expenses, we are driving G&A efficiencies, investing in go-to-market, and maintaining gross R&D at 8% of revenue. G&A declined to 25% of revenue, 3 points lower than last year.

Speaker #1: Reflecting synergy capture and operating leverage. We expect G&A as a percent of revenue to continue stepping down by roughly one point per quarter in the second half.

Speaker #1: Sales and marketing represented 18% of revenue. As we continue to invest in enablement and capacity to support momentum. R&D remained steady at 8% of revenue, or 4% net of capitalized software, as we advance innovation in AI, safety, and compliance.

Speaker #1: Overall, we're very pleased with our continued P&L progression. Expanding margins, disciplined reinvestment, and strong execution across the organization. Next slide, please. Closing on leverage, where previously reported leverage ratios have been amended to exclude the previously discussed fleet complete EBITDA add-back.

Speaker #1: We exited Q2 with a net debt to EBITDA ratio of 2.9 times, an improvement of half a turn from 3.4 times at the end of FY25.

Speaker #1: Looking ahead, we now expect to close the year at approximately 2.25 5 times compared to our prior guidance of below 2.25 5 times. Net debt and quarter-end was $243 million, compared to adjusted net debt of $229 million at the end of fiscal 25.

Speaker #1: This represents a $14 million increase, or $6 million better than our initial guidance of a $20 million increase in the first half. For the year, we are maintaining expectations to exit the year with net debt of approximately $220 million, representing a reduction of $20 million in the second half.

Speaker #1: Finally, and as discussed in last week's 8K, we extended the maturity date of our initial term loan A with RMB by one year to March 31, 2028.

Speaker #1: With that, I'll hand over to Melissa to walk through our adjusted EBITDA optimization progress. Melissa.

Speaker #2: Thanks, David. I want to pause to recognize what we've achieved as a company. After 18 months of complex work, the integration is complete, with more than $30 million in annualized synergies realized, and that's a real milestone worth noting.

Speaker #2: To have maintained the level of top-line performance we have, while executing a multi-business integration is no small task. Now, with integration behind us, we will move decisively into the next phase, optimization and efficiency.

Speaker #2: We'll evolve our organizational model to ensure we're structured for long-term efficiency, with clear accountability across functions and regions, and we'll continue to optimize our resource mix, ensuring the right capabilities are in the right places, balancing internal expertise with flexible external partnerships to stay agile.

Speaker #2: We're embedding automation and AI more deeply to simplify how we work and enhance our customer experience. Across support, service, and operations, we're advancing further the tools that reduce manual effort, improve response time, and free our people to focus on higher-value activities.

Speaker #2: We will refine how we serve sub-scale segments to improve strategic fit and margin contribution, ensuring every part of the business is aligned to sustainable, profitable growth.

Speaker #2: In parallel, we'll centralize core operating functions further, strengthening our organizational centers of gravity and embedding best practices globally. Another area of focus is vendor and partner consolidation.

Speaker #2: We've made real progress here, capturing economies of scale and ensuring we're working with strategic partners who can grow with us. On the technology front, we'll complete our core systems rollout and streamline our technical architecture and hosting to enhance speed, reliability, and cost efficiency.

Speaker #2: All of these initiatives share one goal: to further expand adjusted EBITDA margins and create capacity for reinvestment in sustainable growth. Next slide, please. Looking ahead, I'm very excited about our upcoming Unity AIoT Innovation Showcase later this week.

Thank you. Good morning. Thanks for taking the questions and congrats on the quarter. Great job in seeing the, uh, organic SAS growth, uh, you know, break through that, that 10% barrier to 12%. Hey, maybe, maybe to dive in on that front. Uh, Stephen Dave, looking at the guidance for this year. I'm wondering if you could provide a little bit of color about how you're thinking uh about Services, um and organic s growth into the third and fourth quarter of this year's. Um, also as part of that, it sounds like if we complete has got some Revenue, recognition transition issues going on. So how you're thinking about that particularly as we start to go into 27 and I think Jeff, indicated, sustainable, double digit growth. As we get into fiscal, 27. I'm wondering if you give us some early thoughts on that front, and then I had a follow-up.

Cool. So, Scott, let me just start with the guidance. So we were pretty clear from the get-go that we expected to be growing, sort of 10% organically for Q4, so no change in terms of expectations there. Obviously, within a nice job increasing the midpoint of the range over time, so you can see that coming through. But again, things have gone well; things are going well, we're building up momentum. But, you know, this is not a steady state business, so the trajectory is very clear, up and to the right. But, you know, it's not as if it's just a smooth road all the way. But we feel good about where we are. Obviously, it's very clear in the numbers.

In terms of what we're posting and uh again you'll see that 10% organic growth in Q4 as expected.

And and yeah. Oh, sorry, my apologies. Yeah, that's you.

No, I was just going to say on, on the uh, the outlooks and in terms of how you're thinking about Fleet complete kind of being blended into that organic number and and early thoughts on 27, particularly given the build of of the opportunity pipeline, it sounds like across the board you know both from a a carrier partner standpoint. Um AI video standpoint and Warehouse seems like everything is on the upswing.

Yeah, no. It's it's yeah. But I'll say that 1 there. So, so look, I think, you know, we are ahead of schedule which is great. Um, momentum is building. If you look at our internal dashboard from our uh, growth perspective, you know, we're we're ahead of where we wanted to be and now it's about, you know, that consistency that rhythm.

And driving the opportunity. That's ahead of us. We've got absolute Stellar momentum. Uh, We've bought Jeff in and team, to help, you know, with that execution. And so, you know, the flywheel will continue to turn. So, you know, we're very optimistic about what we've put out in terms of 2027 previously. Uh, you'll hear at the end of the week, some more, um, granularity around that. Um, but, in general, you know, from a, from a market perspective, from a solution set, resonating perspective, from an app, who expansion perspective, from a wallet share perspective, then, you know,

You know we're in a very very uh good spot. I think you can hear the pride that the team has in terms of the numbers.

Um, in terms of Fleet complete there there's no kind of Revenue recognition charges. I asked David to kind of walk through he's not on on fleet complete again but you know, Fleet complete as as bought those channels um with us, you know, the the uh the likes of AT&T and tell us

So, you know, we we now don't, you know, as of we get into 2027, we know, don't think about, you know, Fleet complete all of the parts of the business. It's, um, it's all 1 and the message Remains the Same, so strong durable profitable, double digit. Um, um, both SAS growth and and Topline growth in general.

So you can see that's an eido adjustment. So this is basically invoicing that happens cash that's collected, post to close the fleet complete transaction.

It's not stuff. We recognize historically as Revenue, we will never recognize it as Revenue, but it does generate significant cash. So the thought was to include that as part of the ibao adjustments, just the mirror operating cash flow. Obviously, it's, it's a huge economic positive, uh, but that was the ibida adjustment for Fleet complete, which based on concentration with the FCC. We will no longer be included.

Great. And as a quick follow-up, just a wonder. If you could provide some more high-level thoughts. In terms of North America, obviously, it's a pretty dynamic environment. From a supply chain perspective, I'm wondering how you're seeing the sales cycles and the ability to close deals. It certainly seems like the pipeline is building on that front. Also, Dave, just kind of in this current environment, how you guys are thinking about hedging policy for some of the international markets. Thanks.

Yeah, so I I'll tell you the first 1. So look, I mean as as Jeff. Alluded to he's walked in to a, a double digit growth rate, uh, for North America. Um, we we believe, you know, everything, everything being equal. Now that, you know, customers are buying again. Um, so where we saw kind of some of that product softness with the, the Tariff decisions, you know, the the strong rebound, um, both in the Topline growth but also in the margin as well. Um, you know, his Testament to the work that we've done. Um, and you know what we are seeing

Is a strong demand and need for efficiency and for safety and compliance. So you know where where customers are needing more optimization, they're needing to be more efficient to what they do and they need

Stronger visibility because of these Changing Times, our Solutions are really resonating. So, you know, I think that, you know, the couple of large wins that Jeff alluded to too are you know, strategic wins that because of the power of the combination, we are now winning that business, uh, at large Enterprises. So we feel really good about um, the future there.

From a heading strategy, start from a from an fx standpoint. We do have a portion of our debt in both shackle, which has been traditionally a powerful Cash Generator for us. So we have just south of $30 million of shekel, denominated debt. And then, for South Africa, we have around about 20 million dollars of as our denominated, um, revolver debt. So we do have the balance sheet sort of hedging from an fx standpoint.

Your next question for today is from Anthony Stosh with Craig Hallam.

Morning, Stephen crew, and my congrats on strong execution. A couple of questions: the up 67% in your Warehouse Solutions. Steve, do you attribute that to, um, or what do you attribute that to? Is it mainly one big customer, or is it across the board? And then also, perhaps an update on all your channel partners, AT&T, tell us about the European giant, where do they stand training and launch-wise? Thanks. Yeah, so it's across the board. So I think we are doing a better job in terms of sales execution, number one. I think, you know, the combination of solutions there where customers can get through visibility of what's going on on their side to on their warehouse, but also combine that with what's going on over the road, which is our unique proposition. That's a real game changer for our customers, and I think that's kind of resonating through. And then the evolution, really, of kind of, you know, more advanced video technology to save lives in the warehouse. Again, I I would...

encourage everyone to tune in on Friday where you'll hear from our customers talking about what those are solutions are doing for them and how it's it's changing the world. So, you know, that's um, that's a really, uh, I think positive trend generally. And and that's that's, you know, we've done a lot of that in the US, but we're now getting real Traction in other markets as well and through those Channel Partners. So I think, you know, we talked about, you know, the pipeline growth, um, in terms of the channel Partners, you know, and we talked about the bookings improved.

Movement globally, that's all from those Partnerships that we've talked about whether that's AT&T, tell us MTN. Um, and we're still gearing up with a couple of other partners that we talked about earlier in the year for 2027.

So, you know, that just brings real strength and diversity to our opportunity base. And, um, you know, we've got some exciting future conversations going on with those channel partners about how we get more integrated into their solution set, how they can take the best of Unity and offer broader new solutions and more innovation to their customers as well. And again, you'll hear some of that, um, if you tune in on Friday.

Very good. Congrats again, guys. Thanks

Your next question for today, is from Gary Presto Pino with barington research.

Hi, good morning everyone. Hey Steve, um

In terms of, you know, great new business Awards and all that. But could you maybe tell us how this is starting to shake out in terms of are the majority of new business Awards coming from Unity or is it products with Services attached?

so,

Everything that we sell is within the unity ecosystem and platform. So there isn't something that that's kind of separate, I think the differentiators really are, you know, adding in the single pane of glass. So the ability for customers to look at, you know, multiple different devices or sensors or data streams coming into the platform being integrate, being able to integrate our data into their other third-party systems. Again we've got some good visibility for investors and Partners at the event uh later that this week and you'll see some demos of that. But it's really I think about this expanding from being a point supplier to a mission critical Partners. So you know people are looking for connected intelligence, you know the day, the telematics and and and boxes and Hardware software is really moving. Now is to you can be a high-grade partner in providing context, connected intelligence,

That allows us to make real-time decisioning, can you give us visibility with your AI capabilities? You're, you're able to shortcut where we need to go to make the changes that we need to and that is done in a seamless integrated way. And I think all of that together is what is ultimately, you know, we're now being seen as a, as a different level in terms of the opportunity, we can provide to medium large customers and I think, you know, that that's where we've seen this real shift, I think in both who we talked to in the organization, um, what people are willing to pay for our Solutions because of the, the level of benefit that we provide. And ultimately, we're now seeing as an integrated partner and because of the, The increased scale that we've got the credibility of our offerings, you know have have gone exponentially in terms of where we're now seeing with medium to large Enterprises. So it's not 1 single thing area. I think it's a it's a play out of the thesis in the strategy which is resonating well and what's really exciting is we're only scratching the surface at the moment. So if you think about the solutions coming together from the

The 3 companies, you know, we're only kind of 6 months into that and you're already seeing the traction and the the, the strength of the results and the durability is, is of those results coming through. So, uh, again, you know, we've got a lot to do, there's a lot we can do better. Uh, we are still a work in progress but you know, ultimately we're very, very confident about the future.

Yeah, I guess I guess what I was just trying to get at Steve is is you know, your your Unity is device agnostic. So I guess is the traction pretty good with entities that are not using your products.

It absolutely is 8. Absolutely. So um, and and as, as we said before, you know, a lot of uh customers have multi-source for this stuff, uh and it's also it's not just kind of the sensors that you would. We would traditionally think about with powerfully. These are other iot sensors that they have in their state, their other data streams that they have in their state. So people now saying look, you know, and and when we go and talk to cios and ctOS and they said, look, we've just got this data mess. Can you simplify this for me? Can you allow us to see the word for the trees? And then once you're able to do that, you know, can you make sure that we it's usable? It's simple and we can action it and that's where I think, you know, the power of unity's unique capabilities, really make Swift business change. And you know some sometimes when we've deployed these Solutions and and and our competitors deploy these Solutions it can take you a decent amount of time to actually start to get the value back.

Whereas, I think you know, we are now ahead of Break. Even, you know, within the first 12 months of deployment, we're making meaningful change. We're seeing it customers who we expected to kind of, you know, do second phase rollouts over. Maybe a 12, 18 months, kind of shortcutting that to a 6 to 12 month period. Now because they, they've got the Rhythm and because we've been able to simplify, uh, the spaghetti, uh, mess that they had in their organization.

And then just 1 last quick question. I mean, in in feedback from your customers I think you had 6 modules for Unity, as you initially rolled out, are you developing any further and and and what? What

Anything. Yeah, I see.

So it's more about enhancing the modules to the next level. So on, it sounds like I'm plugging Friday. I'm not mean to but, uh, ultimately you will see how the strength of our AI capabilities, the data that we can pull our real-time interventions that we make with our customers that, you know, a, a topic of safety is a very broad topic and you'll see just how we're really kind of doubling down on the granularity of what we're able to achieve that customer. So I wouldn't say it's we're expanding kind of horizontally into more different sets of modularity, but the strength of those modules and I come back to this, you know, from from the question we had earlier to have true visibility of your safety environment across all your employees whether that's on a site or whether it's over the road is transformational for customers in a number of in a number of ways. So you know really doubling down on that you know the advancement of the data analytics, we can provide the speed and accuracy of those is where we're spending the majority of our time at the moment.

Thank you very much.

Your next question is from Dylan. Becker with William Blair.

Hey gentlemen, appreciate it. Really nice job here. Maybe Steve starting with you. The 12th percent organic Services. Uh, obviously, I had a plan is, is quite impressive. I wonder if, um, if given kind of the pipeline strength that you guys are seeing that said, forwarding you the ability to kind of unlock some of that, that held back spin around. Go to markets, uh, and maybe if that kind of shifts, how you think about the model going forward, given the vast opportunity here, um, kind of reinvesting, maybe some of that incrementally. But uh growth, um, or or even to upside that you would see traditionally back into go to market and product development initiatives because it feels like, uh, the Market's really kind of resonating relative to the the the the solutions you're able to provide at this point.

Yeah, so we talked about how we held back on a $4 million.

As the Tariff um challenges hit, um, we have pressed the button on that. Um that's that's in the sales channels and in kind of customer and account engagement, plus some more um resources into the channel opportunity and over time, you know, we will we will be good stewards in terms of ensuring that we feel confident about the growth and we can, we can stand behind any more investment, but we have the ability to flex the model, you know, dependent on that growth rate and on our confidence levels. Um, and we will Flex in the model through 27 and 28 appropriately. Um, because as you say, you know, as this flywheel starts to turn

As we kind of open up more opportunities. Um, and you know, we just get more, I think exposure into the global markets that we're now. You know, we're now attacking then, you know, we will we will uh, maintain flexibility and optionality to to double down on on, go to market Investments.

Perfect. Okay. Thank you very helpful and maybe, uh, following up again with you here, Steve or maybe this is, this is for Jeff, as well to encouraging to see some of the new logo moments. I'm in the business. Um, but if I look at it to, uh, low single digit, Millions for a Fortune, 500 entity, feels like you're kind of just scratching the surface relative to that opportunity. So maybe if you could kind of help reconcile obviously getting more uh shots on goal getting a foot in the door but maybe also how that kind of breeds conviction in the opportunity to significantly expand within several of those accounts, maybe better line of sight. Uh, now that you have built an established, uh, that relationship kind of the opportunity, uh, from across selling perspective as well, too. Thank you.

Jeff for anything that 1 on our follow up. Yeah.

So there is great opportunity with uh, with new logo moving forward. We as we talked about, we made a pivot, right? From a selling perspective to on-site and vision and the sales organization that's resonating really well with the opportunity. You've heard about the pipeline increases, we can do so much better, uh, moving forward and are so much opportunity out there in these markets that are untapped for us. I feel like we're just getting our

Our sea legs underneath us relative to the opportunity statement and enabling the field on the new value propositions, as we move into these, these different market segments, but leveraging, the the install base that we already have. So the customers are there for us to expand and then from a new logo perspective, uh, it's attacking the verticals too and that opportunity is there as well. So I'm I'm really optimistic about the opportunity around new logo, especially as we continue to gain skills, um, and progress skills in those areas.

In those accounts, um, both nationally and internationally as well. So we're strengthening our Global accounts model. Um, you will, um, hit again here from some of the customers that we alluded to earlier in the year about, you know, some large scale deployments and and how they're feeling about expansion opportunities with us as well. So you know what's exciting is its multi-dimensional. Um, and it's, you know, if you look around the modularity of the solution to Gary's Point, people can grow in the solution whether that, you know, in terms of do more of the same with us on a global basis. Expanding sites, expanding, you know, the the volume of, um, vehicles that they have with us all growing different divisions or, or territories. So, you know, we we're really, um, I think, infused by the space, we're creating for ourselves, particularly in that kind of large Enterprise Market.

Very helpful. Thank you guys.

Your next question for today is from Alex Scar with Raymond James.

Great, thank you. Uh, Steve or David. I just wanted to follow up. I'm Dylan's question there on the Enterprise momentum and just ask it a little bit differently but if you go back 1 to 2 years in time, can you just help put some context behind how incremental these Enterprise opportunities have become for powerfully in terms of pipeline mix today and then with that and and kind of overall brand awareness, how much more room do you have to go on the brand?

Earnest marketing side, thanks.

Yeah, so I think it's night and day, you know, our exposure, our win rates, our abilities to be successful, in those large Enterprise Arenas. Um, you know, Heritage power Fleet of, you know, 1824 months ago. He's he's unrecognizable from the opportunity and The credibility and the trust frankly in terms of, you know, being a mission critical provider and partner to, to those Enterprise, uh, markets. So, I think, you know, we're building brand momentum. So, you know, the Innovation awards that we get. Um, you know, we're getting I think recognized now as a very much a top tier provider, you know, 1 of the top 3 in the world, that's really leading in terms of, you know, its Innovation and profitable growth. So, ensuring that we are, you know, being good, stewards of of the company's capital and making sure that we

Um you know are doing things responsibly. Um, I think he's he's a very good sign in these times. Is having a partner that does that. And I think, you know, that's always been our Mantra and we continue to excel there. So, um, there's always more work to do. And, you know, there are Market, there are markets that we are attacking where, you know, we have less brand presence and than than others in the marketplace. But that offers great opportunity for us. So, um,

But overall, I think, you know, we are, we're in a different Paradigm and in a different sphere to, to where we were 2 years ago. Um, and I think, you know, the, the upside opportunity there remains fairly immense

Okay, great. And then David maybe, maybe 1 for you on the back to base motion, I know we're working through some final Senate system integration to get precise, NR. But can you help frame? Directionally what you're seeing from the installed base through? Maybe, uh, end of second quarter October where, where cross kind of retention upsell cross. So, have you seen the the biggest level of improvement? Where are you still kind of pushing hardest to get to kind of some of the aspirational goals. Thanks.

So clearly if you look at just the acceleration in growth, you know a huge part of that is nrr in terms of selling more to our existing customers. And to everyone's point that we're we're really there in terms of the potential both in terms of the customer demand, as well as Solutions we're bringing in the market. So it is moving positively if you look back in the last couple of quarters, um, obviously we were clear in terms of our prepared remarks that for next. For example, uh, this time last year, we were still actively shedding Revenue in terms of getting the right base and getting rid of distractions from a product delivery standpoint and a market Focus standpoint. Um, so that's working well, uh, as you look at the sort of second half of this year from a fleet complete standpoint, there was a similar exercise in terms of shedding some Revenue as well. So what I would say is when you look at just the traditional power, Fleet business,

As opposed to holding things holding on to things that sort of a distraction and create friction in terms of where we need to go. So very, very positive and uh, things are playing out as expected.

Okay, great. Thank you, both.

Thanks.

Your next question for today is from Greg Gibbus with New Orleans Securities.

Great. Good morning guys. Thanks for taking the questions and congrats on the results.

Uh you know, really nice to see that 23% increase in the cross sell pipeline. Wondering, if you could maybe provide some color on where you're seeing success or or solid traction with your cross sell efforts.

Yeah, so it's um, it it's in Warehouse uh, to over the road and and vice versa. So this is, you know, well there there is a lot of traction in video um,

And that is, you know, multiple different, uh, videos, um, solutions that the base around safety and compliance. Um, but really kind of, you know, expanding our um, reach in terms of the breadth of the organizations, whether that's, you know, from insurance perspective. As a, as I said compliance, whether it's getting true safety visibility or just operational efficiency for the end-to-end supply chain. So it's really that kind of you know, where we where we've had strengths in 1 either. The over the road or the in Warehouse section. It's really kind of transferring those uh, either way. And um, because we have that unique

Because we're talking to the right people in the organization who care about the objectives of both of those different parts of the business. That's resonating super strongly.

Great to hear. Um, and if I could, you know, can you maybe characterize the greater demand environment and, I guess, demand trends as it relates to what you're hearing on pauses on purchasing? Like, would you say that that headwind has fully subsided at this point?

Um, I think, you know, people are still cautious, right? I mean, they're still, um, you know, dynamics in the macroeconomic conditions that cause people to be very, um, I think, um,

thinking through just how much Capital they're going to spend and when they're going to spend it. But obviously we, you know, if you look at the rebound we've had from a product perspective,

And then we asked the seeing people making those decisions, and that's really positive. Uh, and on top of that, you know, we've been able to improve price and improve margin as we go.

So I think, you know, there's always, there's always a watchtower on these things and, you know, we continue to be cautious and in, in our approach towards things but we've seen, you know, I think there's a real shift and a, and a need for change in organizations transformation, efficiency, optimization and visibility. And, you know, it's, it's kind of where do we sit in the food chain of decisions, in terms of being kind of mission critical to businesses? I think that's only improving.

Great and I guess 1 last 1 if I could you know as it relates to the accounting adjustment. Um, you know you mentioned the 4 million impact on uh 25. Um, how much are you guys taking out of 26? That was baked in

Yeah.

The number for this quarter was about 1.3 million, so it's probably a percentage point just over of EBITDA margin.

Would be the way to think about it, right?

Okay, got it.

Thanks very much.

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

Thanks everyone for joining us today and you continued support. We look forward to updating you on our progress. Next quarter, have a great day and we look forward to our Innovation event on Friday. Thank you. Bye. Bye.

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