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Image source: The Motley Fool. Monday, Aug. 10, 2026 at 8:30 a.m. ET CFO - David Wilson Chief Executive Officer - Steve Towe President and CFO - Paul Lalljie Chief AI Officer - Vishal Vallabha Operator: Greetings. Welcome to the Powerfleet's First Quarter 2027 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, David Wilson, CFO at Powerfleet. You may begin. David Wilson: Thanks, operator. Good morning, everyone. This presentation contains forward-looking statements within the meaning 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 may 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, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical facts are statements that could be forward-looking statements. For example, forward-looking statements include statements regarding prospects of additional customers, potential contract values, market forecasts, projections of earnings, revenue, 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. The risks and uncertainties referred to above are not limited to risks detailed from time to time in Powerfleet's filings with the Securities and Exchange Commission, including Powerfleet's annual report on Form 10-K for the year ended March 31, 2026, and subsequent 10-Q filings. These risks could also cause results to differ materially from those expressed in any forward-looking statements made by on behalf of Powerfleet unless otherwise required by applicable law, Powerfleet assumes no obligation to update the information contained in this presentation and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise. I'll now hand the call over to Steve. Steve? Steve Towe: Good morning, everyone, and thank you for joining us. The momentum we've been building over the last several quarters has accelerated. Our pipeline is strong and customer demand has exceeded our expectations. Next slide, please. Let me start with the breadth and scale of new business. In Q1, we were selected as vendor of choice by a European headquartered construction leader operating across 26 countries to significantly expand its deployment with us into AI premium video, both on the road and in the yard, a multimillion dollar ARR deal and a strong proof point of the land-and-expand model we've built. Our on-site business continues to gain traction with strong cross-sell expansion quarter-over-quarter as we drive adoption across our existing customer base. Predominantly in North America, we secured a $2 million expansion with a Fortune 500 manufacturing leader, a $1.3 million deployment with a national transportation and logistics enterprise and a $1 million win with a national automotive technology leader. 12 Fortune 500 companies expanded their on-site footprint this quarter and 10 global Fortune 500 customers broadened their AI video adoption. AI video bookings increased 20% sequentially. 16 diverse industries delivered enterprise wins above $100,000 in total contract value this quarter. On to the next slide, please. The major South African contract has seen material acceleration since last time we spoke, a testament to the strength of our solution capabilities and strong execution of our sales efforts. We came into this contract expecting $20 million to $30 million in ARR to ramp over an 18- to 24-month period. We now have in excess of $27 million in ARR required for near-term activation with more pipeline building. On a 5-year basis, that puts the potential total contract value above the top end of our original expectations. To put this in context, at this point in the year, we had originally anticipated 10,000 assets to be set for installation. As of today, we have over 70,000 vehicle installations to deploy in the near term, and we expect this to increase to between 80,000 to 90,000 assets over the next couple of quarters. That represents roughly 7 to 9x the deployment volume we originally expected to be addressing at this stage of the program. It's a substantial and exciting undertaking that requires focus to ensure smooth execution. This philosophy presents choices. We, therefore, have taken the decision to forgo a portion of the current and projected revenue base, predominantly in South Africa that we have deemed to be nonstrategic. It frees more capacity to deploy 90,000 vehicles at the pace this contract demands. It derisks delivery on our largest and most important customer relationships in the region, and it removes the operational complexity that would otherwise compete with this rollout for our team's focus. This targeted reprioritization from lines of business that are consuming operational capacity, working capital and management attention, maximizes our ability to deliver well. Sharp execution on the first 90,000 vehicles increases our odds of winning more of the 150,000 total addressable fleet and gives us room to sell incremental services to this new base. Turning to Q1. The underlying performance was solid and bookings were strong. Normalizing for the South Africa actions I just described, we delivered double-digit ARR growth. In addition, we expanded gross margin and adjusted EBITDA year-over-year. The reported numbers this quarter reflect 2 discrete items, neither changes our underlying trajectory. Firstly, South African revenue was approximately $1.6 million lower as the company began the reprioritization I've just described. Secondly, late in the quarter, we experienced a production constraint affecting a single product line related to a compatibility issue with a new component. This delayed approximately $3.2 million of product revenue in the quarter. We've identified the issue and the solution and production is being restored. Importantly, the underlying customer demand and orders remain intact, and this issue does not impact the deployment of our major South African contract. Given the timing of the recovery, the company anticipates that some associated Q2 revenue may shift into Q3 with the full amount expected to be fully captured within the fiscal year. David will shortly update you in detail on the in-year guidance amendment. Our revised guidance reflects a single item, our deliberate decision to forego some nonstrategic revenue ahead of the ARR ramp from the substantially larger new contract. Our updated guidance reflects that timing gap. We believe this decision strengthens the quality, scale and long-term economics of the revenue base we are building. We also expect the revenue CAGR from fiscal 2026 to fiscal 2028 to remain consistent with our prior expectations with stronger growth in fiscal 2028, fueled by the ramp of the South African projects. We anticipate annualized Q4 '27 revenue of approximately $495 million with adjusted EBITDA margins of approximately 27%. Overall, our land and expand strategy is compounding, bigger deals, broader adoption and deeper wallet share with the customers we already have. Our response to the acceleration in South Africa demonstrates the operating discipline we're bringing to the business, prioritizing resources towards the opportunities with the greatest strategic and economic return. Our optimization programs are running to schedule with our focus remaining on cash flow and deleveraging. As we continue to compound the business, investing in talent is also a key component for future success. Next slide, please. We continue to strengthen our executive team, and I'd like to share 2 important additions. Firstly, I'm delighted to announce that Paul Lalljie joins Powerfleet this week as our President and CFO. Paul brings 25 years' experience in finance and technology, including as both CFO and CEO of 2U and CFO of Neustar. Paul has acted as a strategic adviser to the business over the last few months, and I'm delighted that he's able to hit the ground running to help spearhead our future growth. As President and CFO, Paul will combine financial leadership with a broader mandate around operating execution, capital allocation and the enablement of the next phase of profitable growth. I want to sincerely thank David Wilson for his significant contribution and partnership through a period of extensive transformation for the company. David will serve in a consultancy role for the next few months to support Paul with a smooth transition. Secondly, I'm excited to announce that Vishal Vallabha has joined Powerfleet as Chief AI Officer. Vish has also been acting as a strategic adviser to the business in recent months on AI transformation. Vish brings over 20 years of experience as a senior technology and AI executive. He's held CTO and Chief Data and AI Officer roles at large global businesses, including Freeman Company, Lumen Technologies, and he has significant domain expertise from his time as CTO of TomTom Telematics. He's led enterprise AI, cloud and platform modernization programs directly to commercial growth and margin expansion. Most recently, as founding partner and CTO of NexGen.ai, he's led AI-enabled transformation engagements for major clients, including Microsoft and Bain Capital. Vish is going to be central to how we scale our AI-first platform strategy. So as we execute on the plan, we're delighted to be able to attract this caliber of talent. Both Paul and Vish have already added significant value to the business, having worked closely with the team as trusted advisers over the last few months, and we're thrilled to now have them on board. With that, I'll turn it over to David. David Wilson: Thank you, Steve, and good morning, everyone. I'm glad to be with you today. I'll start with our first quarter highlights and then provide more details on revenue, margins, operating expenses, profitability and cash flow and close with our updated fiscal 2027 outlook and the bridge to that guidance. Next slide, please. Total revenue for the first quarter was $110.8 million, up 6.4% year-over-year. Adjusted EBITDA was $21.5 million compared to $20.1 million a year ago at a margin of 19.4%. GAAP income from operations was $300,000 compared to an operating loss of $2 million in the prior year quarter. Net loss attributable to common stockholders was $8.4 million or $0.06 per share, an improvement from $0.08 a share a year ago. As Steve covered, two discrete items affected first quarter revenue. First, South Africa revenue was approximately $1.6 million lower, reflecting the early impact of the reprioritization he described. Second, late in the quarter, we experienced a production constraint affecting a single product line related to a compatibility issue with a new component. This delayed approximately $3.2 million of product revenue. We identified the issue and the solution and production is being restored. Importantly, the underlying customer demand and orders remain intact, and this issue does not impact the deployment of a major South Africa contract. Given the timing of the recovery, the company anticipates that some associated Q2 revenue may shift into Q3 with the full amount expected to be recaptured within the fiscal year. Next slide, please. Services revenue increased 9.1% year-over-year to $94.3 million and represented approximately 85% of total revenue, while services gross margin expanded nearly 1 percentage point to 61.1%. Adjusted EBITDA services gross margin expanded by 40 basis points to 75.9%. The South African National Treasury contract is now ramping with bookings momentum building behind this recurring higher-margin revenue base. Product revenue was $16.5 million, down 6.7% year-over-year, reflecting the production timing issue I just described. Product margin was 21.3%. The deferred shipments were concentrated in our higher-margin business, while the lower volume also limited fixed cost absorption. Total GAAP and adjusted EBITDA gross margins continue to expand despite the pressure on product margin, increasing approximately 1 percentage point year-over-year to 55.2% and 67.8%, respectively, reflecting the continued shift in revenue mix towards recurring services. Next slide, please. Total operating expenses were $60.9 million or 55% of revenue, an improvement of roughly 1 percentage point year-over-year. SG&A was $56.5 million, up 5.3% against revenue growth of 6.4%. So we continue to generate leverage on that line. Research and development was $4.4 million or 3.9% of revenue. GAAP income from operations was $300,000 compared with an operating loss of $2 million in the prior year quarter. Net interest expense was $6.7 million and accounted for most of the gap between operating income and our net loss. Free cash flow improved by more than $6.5 million year-over-year to negative $500,000 from negative $7.1 million in the prior year quarter. Net debt to adjusted EBITDA was 2.5x at quarter end, essentially unchanged from fiscal 2026 year-end. Next slide, please. Now let me turn to our outlook for fiscal 2027. We're updating full year revenue guide to a range of $468 million to $473 million and adjusted EBITDA guide to a range of $111 million to $114 million from our prior ranges of $485 million to $490 million and $122 million to $125 million, respectively. Here's the bridge. The guidance update is driven by the South African reprioritization Steve described. Relative to the midpoint of our prior guidance, we are reducing projected fiscal 2027 revenue by approximately $17 million as we reallocate capacity to support over $27 million of committed demand. The associated impact on adjusted EBITDA is approximately $11 million, comprising approximately $6 million of flow-through from lower revenue and $5 million of onetime costs. This change in guidance is purely a timing gap rather than a change in our underlying trajectory. We expect the revenue CAGR from fiscal 2026 to fiscal 2028 to remain consistent with our prior expectations with growth accelerating in fiscal 2028 as the South African National Treasury contract ramps. The near-term financial impact is reflected in the revised revenue and adjusted EBITDA guidance I just outlined. We anticipate annualized Q4 '27 revenue of approximately $495 million with adjusted EBITDA margins of approximately 27%. The updated adjusted EBITDA outlook also flows through to net loss and free cash flow. Net loss is expected to range from $6 million to $8 million compared with our prior range of net income of $4 million to $8 million. Free cash flow is expected to range from $20 million to $23 million compared with our prior range of $30 million to $35 million. Our capital allocation priorities remain unchanged, including our commitment to deleveraging. Next slide, please. The bridge from adjusted EBITDA to free cash flow includes CapEx of approximately $52 million, cash interest of approximately $24 million, cash taxes of approximately $8 million and restructuring and other costs of approximately $8 million. Given the timing variables associated with the South Africa National Treasury contract, we continue to present its balance sheet impact separately from free cash flow. Importantly, favorable payment terms and financing options are expected to substantially offset the upfront investment in-vehicle device CapEx, resulting in approximately breakeven cash performance for the fiscal year. To wrap, services revenue remains the growth engine of the business, up 9% year-over-year. We expect to exit fiscal 2027 at a Q4 annualized revenue run rate of approximately $495 million with an adjusted EBITDA margin of approximately 27% and are well positioned for accelerating growth as we enter fiscal 2028. I'll now turn the call back to Steve. Steve? Steve Towe: Thank you, David. So let me leave you with three things. Customer demand is strong and broadening across our platform. The South Africa opportunity is developing materially faster and at a greater scale than we originally anticipated, and we're deliberately reallocating and investing resources to capture it effectively. We remain confident in the underlying growth, margin expansion and cash generation trajectory of this business. The opportunity ahead of us continues to grow across geographies, verticals and the Unity suite. We have the team, the platform and the financial foundation to capture that opportunity and deliver sustainable, profitable growth. Operator, let's open the line for questions. Operator: [Operator Instructions] Your first question for today is from Scott Searle with ROTH Capital. Scott Searle: Dave, I want to wish you all the best in your future endeavors. It's been a pleasure working with you over the past couple of years. Maybe just to dive in, in terms of the cadence over the course of this year, could you just kind of take us through a little bit? It sounds like there might be some headwinds in the second quarter, but acceleration then into the third and fourth quarter. And I'm not sure if I heard a SaaS number in terms of growth for fiscal '27. I'd love to get your thoughts on that. And then I just want to make sure to clarify a couple of numbers. I think you said $495 million is the exit rate in terms of fourth quarter revenue. But I think from a 27% EBITDA margin standpoint, that's looking at over $30 million in EBITDA, so an exit rate of north of $130 million. I want to make sure that's correct. And then SaaS growth into fiscal '28, it sounds like we're accelerating into double digits, low teens, mid-teens kind of number. I wonder if you could comment on some of those items. David Wilson: Yes. Sure, Scott. And keep me honest as we work through the list. In terms of timing, think about the revenue growth sequential quarter about 4% each quarter between now and Q4. So that would be the way to think about that. In terms of the services revenue, it will be sort of obviously higher than the growth imputed in terms of our annual guide. So sort of high-ish single digits would be the way to think about that. And then in terms of -- as we go into next year, it is going to accelerate. So in essence, there's a lot of $27 million of National Treasury revenue that will be up and running. Obviously, we won't get a full year's benefit of that. But as we build that book up, we're going to get many months' worth of revenue next year than we did this year. So I do expect services revenue to be growing comfortably north of 10% as we go into fiscal 2028. So that would be the key points there. And just keeping honest in terms of your list, in terms of EBITDA, yes, it would be north of $30 million in terms of where we would be exiting the year. So it would be north of $130 million on a run rate basis. Scott Searle: Got you. And just to clarify, David, in terms of the South African contract starting to kick in from a services standpoint, a lot of implementation this quarter. Do you get full contribution in the third quarter? Or is that ramping up into the fourth quarter? David Wilson: Yes. So in terms of the current guide, the current guide holds that revenue pretty consistently with what we had in our initial guide. There is upside to that. For the moment, it really is a question about getting everything installed. So we're working on sort of opening up those capacity constraints so we can do more. But in terms of where we would be, it will start flowing through. It's too early to be sort of definitive now in terms of when it's all going to start flowing through. But we're working hard to get as much in as possible. And obviously, that will be a boost both for this year as well as the jump-off point for next year. Steve Towe: Sorry, Scott, just how to frame it is the down spike of taking out and reprioritizing the revenue is quite sharp. The spike back up in terms of the new contract spikes harder and faster. So think about it, we'd originally planned to do at this point in time, around 10,000 installs in total. I think we talked last time about we were in dialogue around 60,000 at that point. We've actually converted to mandate 72,000. So these are big, gnarly, complex contracts with government departments that take time, probably 6 to 9 months to kind of really ramp that all the way through. And it's really hard to predict the actual smoothness of the revenue incline because ultimately, you've got to go and these are tens of thousands of vehicles per government contract and work that through. So it's just a challenging period in order to get -- it's not a smooth kind of pure SaaS, you turn a button off and you turn the button on. We've taken the decision to reprioritize. We're pushing everything we can towards the new revenue, and then that comes with a sharp incline. So what we're kind of saying is it's almost like shifting our previous expectations to the right by one quarter as we ramp through the remainder of 2027 and into 2028. I would also kind of just -- there's a lot of focus on the South Africa contract. But at the start of the call, we talked about a number of contracts, predominantly in North America with big land and expand, big Fortune 500 expansion, plus this other major contract, a vendor of choice to deploy both over the road and in the yard across 26 countries. So this is a result really of we're actually selling much better, and there's phenomenal demand for our products and services, and our strategy is resonating. The hard part with such a big growth transformation is to make it linear, and that's kind of where we've taken these decisions. And once all this flows through, we'll be far more consistent. Scott Searle: Steve, maybe just quickly follow up on that, and then I'll get back in the queue. But some of the other areas of development, you mentioned some of the Fortune 500, but you also have other strategic relationships in terms of MNO ramps, right, and getting those sales forces trained. And I think you were pursuing some MNO opportunities in other geographies as well as the Accenture relationship. I wonder if you could give us some quick thoughts on that in terms of how that ramps up. And just from a global perspective, in terms of where you guys think you sit from a share perspective because we got some onetime items here that I think are obscuring the core growth capabilities, but win rates or kind of how you see your global share perspective? Steve Towe: Yes. So I mean, if we stand back from this, and we appreciate there's a lot of noise and ins and outs and there's been a confluence of a couple of things all at once. But the reality is, so all these decisions we're making have in mind exactly what you just said. The expansion of the MNOs, both with our current and further MNOs, the Accenture relationship that we talked about and moving that to a global basis, and that's getting some very nice traction. We're winning more business. We're winning bigger deals, as I said, and we're doing that on a global basis. So it's kind of -- we put these 3 companies together. We scaled the organizations, and then it was all about could we produce the products and services that resonate well with customers for us to improve our growth. We brought Jeff Lauten back in kind of around about this time last year. We've been talking about talent. And I think Jeff is a great example where we've bought better talent. Jeff has brought better talent, better rigor, bigger process from a sales perspective. And now we're really seeing those opportunities come to fruition. So our win rates are growing, as I said, our share is growing. We're growing in the geographies that we want to as well in terms of some of the high-quality geographies that have always been important to the company. Plus, obviously, we've got this substantial contract in South Africa, which is going to be an absolute diamond in terms of future growth as well into 2028. So we're juggling all of that, and that's why we're making some of these decisions. But I just want to reiterate and double down. This is actually because our growth trajectory is spiking. Operator: Your next question is from Anthony Stoss with Craig-Hallum. Anthony Stoss: Steve, I wanted to follow up on the component shortages. Was this a new supplier to this component or you just got a bad batch? And then I had a couple of follow-ups. Steve Towe: It was purely, Tony, we had an end-of-life component for a WiFi chip. We put the new component in. We thought it was good. It wasn't. It's been a pain and frustration for a few weeks as we've kind of -- we need to get the operability much better than it was. We've now solved the problem. We're starting production back. It was one product line, painful in the quarter, just got to ramp back up, but nothing else, nothing more substantial than that. So painful and frustrating in the short term, but we're through it now. Anthony Stoss: Then to follow up on Scott's question. What kind of incremental impact are you seeing from AT&T, Rogers and others? For instance, I mean, maybe this is a tough question to answer right now, but how much revenue do you think was attributable to those folks in the quarter? And then lastly, I'd love to hear kind of your traction still on your in-warehouse solutions. Steve Towe: Yes. So I think we talk a lot about the over-the-road and in-warehouse stuff in terms of the wins that we've had. So again, the differentiated solutions are what are driving our growth. If we pro forma for the South African thing, we remained in double-digit growth from our services, and that is coming from and being helped and supported by those channels. And our North America growth is improving off the back of those channels as well. So doing what it said on the tin, lots more to come from those guys. If you look at the AI video bookings growth, that -- a good part of that can also be attributed to those channels. Operator: Your next question for today is from Gary Prestopino with Barrington Research. Gary Prestopino: Just want to understand exactly what's going on here, Steve, I'm trying to write it down and keep up with you. You're seeing an acceleration in the South African business with the government contract. But you're walking away from some revenues in South Africa and deploying those resources towards the new contract. Is that how -- the best way to read this? Steve Towe: Yes, it's the demand has outweighed our original expectations substantially. And with any company that's starting to really get green shoots of growth, and we brought three companies together with heritage sets of revenues in order to focus and be very disciplined in terms of capital allocation, resource allocation, focusing on business going to bring us future growth because there is major growth still to obtain a lot more vehicles within the government contract. There's also a substantial opportunity to sell lots more services to these bigger customers, so you have fewer customers. So we've looked at our revenue base and said, how best do we amplify that, compared with -- when you bring three companies together, you can spread yourself thin in terms of your sources of revenue. So whether that's we've decided to take our throttle off growing some areas of that revenue in order to pivot to getting more from the South African contract, whether that's stopping some product lines, whether that's being able to remove ourselves from onerous contracts, all of that has built itself in to our abilities to, a, make sure this goes really, really well with this phenomenal new demand; and b, then maximize that opportunity and use our capital globally to really kind of double down where Scott and Tony have been in terms of our over-the-road and in warehouse solution capability in tandem, in terms of our other channel opportunities, in terms of our Accenture opportunity. So as Powerfleet has transformed organizationally, we're now transforming really from a revenue perspective. And because we're seeing such positivity and confidence and demand for the products and services, we're taking what we think is smart and disciplined decisions to help grow the business in the best possible way. And from a consistency perspective and make sure that we get to a consistency of growth, both on the ARR line and also less lumpiness in some of the business we do, we think this is a very fair move for us to do, brought on by the phenomenal demand and the execution of that demand by our sales team from, as I said, we started -- in our own internal expectations when we first won this mandate, we thought we'd be doing around 10,000 vehicles over the next few months, and we're doing 72,000, and that's a big undertaking. We want to do that super well. Gary Prestopino: So I guess the next question I would have is on this overall South Africa contract. you're going from initially planned 10,000 to 72,000 vehicles. What's the total TAM there? And do you have the ability to capture most of that TAM in this contract? Steve Towe: Yes. So total TAM is 180,000, relevant for us, we think there's 150,000 in terms of vehicle opportunity. And then once we're in these accounts, and think about it, Gary, we can kind of chase smaller contracts and smaller customers. We've got captive for the next 5 years, some large customers who we can sell lots more of the portfolio to that have obviously by the fact that they've signed mandates to take our solutions so quickly in the cycle are excited about further opportunity with us, and that's really where we want to concentrate. So there's an expansion in terms of more vehicles, and there's a significant expansion opportunity in terms of more products and services to those customers that we've now captured. Operator: Your next question is from Dylan Becker with William Blair. Dylan Becker: Steve, maybe for you, going from 10,000 to 72,000 in such short order, I guess, what's driving kind of the urgency or pull forward from the customer perspective there? And then as you're thinking about deploying against those 72,000, maybe the importance for other customers around kind of proving out the scalability of that, right, like driving traction across a broader enterprise base. I'm sure there's going to be a lot of eyeballs on the success of that deployment as well, too. Steve Towe: Yes. So I think, firstly, there's a big shift in the territory for safety, and there's a big need for efficiency. So that bodes well. And I think some of these customers have had legacy solutions that they've looked at the Unity platform, they've looked at our capabilities and feel that there's a very big value add. And remember that this was previously a bunch of different contracts, and this is the first time it's been consolidated into one kind of umbrella. So I think those guys coming together, seeing the capabilities, looking at how they can be used for different departments, I think, has also helped for that perspective. So I think this is something that the demand is there, and we fit that demand very, very well. And I'm very proud of the team in South Africa who have been able to bring this to the table a lot faster than we expected. So that's why we want to do this really well. And to your point, it's already starting to emerge other large-scale opportunities. I mean we talked about some of the deals at the top of the call, which kind of are dwarfed by this, but these are still big deals for the company, including a lot of expansion with Fortune 500. And there's a lot of eyes on us doing this really well because we can see and we have pipeline towards doing more enterprise and pure enterprise deals, which is -- these companies have been -- Fleet Complete was a mid-market company. I would say Powerfleet and MiX were kind of small enterprise, but we're now getting more share and more confidence in the larger enterprises. So all of these decisions are based on that forward thinking and what we can see. And we've been very proud of the fact and throughout the time that we've been in the company, we always -- we will not sacrifice on quality. We will not sacrifice in terms of getting customers long-term outcomes. And we see the shift we're making as an important stage to ensure we can do that on a much bigger scale. And it's so exciting for us as a team. But we have trade-offs. We have to make some decisions to ensure that we don't put -- stretch ourselves too thin. You've heard me say many times when people said, what's the challenges to the success of the company. And I've always said you can spread yourself too thin. So this is operational discipline that we're taking these decisions that we've done. Dylan Becker: Very helpful. And then just to kind of clarify one other piece, too. As a part of this, right, all of that reorganization is taking place purely around for the South African operations side of the business. Because it does sound like, right, 20% quarter-over-quarter video safety bookings momentum, everything kind of ex South Africa dynamic seems to be tracking quite well. Just kind of maybe a sense of resource prioritization there and broader kind of business momentum outside of this one segment. Steve Towe: Yes. So Melissa Ingram, I think -- was it last call? Took you through some of the centralization pieces we're doing, which is the next part of our optimization, which will support this contract as well. But this has changed predominantly for our South Africa team and their focus. But what we're making sure that we do is, we're bringing the best practice so we can repeat this in other geographies, and we can get -- as I say, we're kind of two years into that operational cadence and organizational change. So we're making sure that we do a lot of repeatability across the business, which not only supports the South Africa contract, but also as well these other large-scale contracts that we have going on in North America and Europe and elsewhere. Operator: Your next question is from Alex Sklar with Raymond James. Alexander Sklar: Steve, just following up on Gary and Dylan's questions on South Africa. The $17 million of foregone revenue, can you just elaborate what exactly is that -- is that tied to existing revenue that's churning off? Is that projected bookings that you just can't sell anymore given the reprioritized go-to-market or implementation team? And then as we think about the kind of implied margins of that revenue you put on the slide were kind of accretive to the overall business. So maybe just a bit more color on your kind of internal deliberation on why that has to be foregone versus maybe staffing up a bit and trying to delay it. David Wilson: Let me take that one. So in terms of the revenue, it is a combination. So part of it is walking away from certain books of business that just the operation -- the OpEx overhead is so high that it sort of drags things down, and we need to free up that capacity, obviously, for the growth that's coming through. So that's a piece part of it. To Steve's earlier point in terms of spreading ourselves too thinly, we do have to sort of refocus in terms of working through the backlog of the bookings that are coming through the National Treasury contract. So that does mean foregoing revenue that we plan to get elsewhere in the market. That's a piece part of it as well. And then in terms of the implied margins, obviously, there's significant operating leverage from an OpEx standpoint. So in terms of the margin, it's -- you're losing a lot of gross margin without necessarily an average recovery in terms of OpEx. So the implied margin would actually be higher as it flows through than you would expect just looking at EBITDA margins by themselves. So that's why it's a relatively high number from an EBITDA standpoint. Alexander Sklar: Okay. I appreciate that answer and the clarification. Maybe... Steve Towe: And just to add to that -- sorry, Alex, it's about quality of revenue. It's around cash, right? So the South African contract comes with more opportunity to improve cash collection as well. So that also was in our minds as we look to make the deliberations. And you can stack it up and you can kind of think can you do both? But I think where we've got the weathered eye on what's going on in the rest of the world and the continued growth there. I mean, we're dominating this call on South Africa quite rightly, but we could also dominate this call on some of the other growth areas. So all of that is not just like an individual kind of balance sheet and P&L view for South Africa. This is a much broader set of deliberations that have brought us to this choice. Alexander Sklar: Okay. I appreciate that. And maybe let's talk about the rest of world then. So that 26 country European construction win, you're obviously in a strong competitive position. You've got the global footprint. It's a pretty good differentiation. You have some enterprise customers already. Can you just talk about -- did that deal start off looking for someone globally across 26 countries? Or was that the team really able to expand the size of the opportunity? And then you mentioned kind of vendor of choice. Is that a book deal? Or is that still coming in the next couple of quarters? Just those questions. Steve Towe: Yes. So it's in contract at the moment. It was a customer who had a smaller footprint with us. But what they wanted on a global basis was someone who can provide safety and visibility both in the yard and over the road. So obviously, that is the key differentiation, both nationally and internationally. So that's why it's been so exciting for us as a vendor of choice because we are the company who can, a, cover that footprint with our global footprint that we have. And secondly, in terms of the unique proposition to give consistency, single visibility, single source of truth through Unity, as I say, in a yard and over the road and in a warehouse, that gives us that unique capacity. Operator: Your next question for today is a follow-up question from Scott Searle. Scott Searle: Dave, just to follow up a little bit on the cost front. Gross margins on the product front down because of component availability and absorption issues. I think it was 21% versus 29% in the prior quarter. What's the recovery look like into the second half of this year? And thinking about the -- that 27% EBITDA margin exiting the year, what do product gross margins look like at that point in time? And also on the OpEx front, a little bit higher this quarter, but you've been going through some integration and otherwise, right, trying to optimize the cost structure. What is the non-GAAP OpEx that we should be thinking about exiting the year? David Wilson: So in terms of the product margins, it will sort of come back in terms of the second half of the year. In terms of expectations, I think sort of 31%, 32% is the right expectation there, Scott, in terms of where we're at. In terms of OpEx, as we said on the last call, we are investing ahead of taking significant costs out. So we've got a target of $12 million of annual costs to come out in the second half. So in terms of what that means from a sort of a sales and marketing, SG&A standpoint, that will be 19 percentage points or so in terms of sales and marketing and then expect G&A expenses to come down to much closer to sort of 20% as we exit the year. Steve Towe: And Scott, if I can just be really, really clear on the product margin. So the only reason that it was down at that level was the lightness on the production thing. All of that -- those orders are being fulfilled. They're all intact. It's just a timing thing that will recover either through this quarter or maybe a little bit into Q3. And it's a very high-margin business. And we're actually seeing a lot of strength in our high-margin product line. So just want absolute clarity there that, that was the only reason that was down. As production ramps back up, as we're able to fulfill customers, it just brings back. Operator: We have reached the end of the question-and-answer session, and I will now turn the call over to Steve Towe for closing remarks. Steve Towe: Thank you, operator. Just before we do, we do have Paul Lalljie on the call with us. So we're delighted to have Paul join us as our President and CFO. So Paul, you might just want to say a quick hello to everybody. Paul Lalljie: Thank you, Steve, and good to meet everyone on the call. I'm genuinely excited to join Powerfleet as President and Chief Financial Officer. Over the past several months, I had the opportunity to work alongside Steve and the executive team as a strategic adviser. One example that stood out for me was the South Africa opportunity, which grew from an initial estimate of roughly 10,000 vehicles to more than 70,000 in a matter of months. That kind of expansion don't happen by accident. It happens when a differentiated platform addresses a real customer need and when the team behind it knows how to execute. That experience helped make my decision straightforward. I believe in what Powerfleet is building, and I want to help turn the momentum that we're seeing in the business today into durable and profitable growth. A little bit about me. I bring more than 25 years of experience leading finance and operations across technology companies, including more than a decade as a public company CFO, and most recently, as Steve pointed out, CEO of a publicly traded company. I've led businesses through growth, acquisitions, capital raises and transformations and at times in markets that were anything but easy. Those experiences have shaped three commitments I bring to Powerfleet. Clarity, discipline and delivery. First, clarity means communicating transparently with investors, with customers and with our teams and building trust through honest and consistent dialogue. Second, discipline. Discipline for us means making deliberate choices about where we invest, how we allocate capital and how we balance growth, profitability and risk. I believe finance could be an engine for better decisions, not simply a scorekeeper. And third, delivery. Delivery means converting strategy into measurable results. A compelling strategy creates the opportunity. Consistent execution creates value. So what does this mean? You should expect me to be transparent about our progress, rigorous about how we measure performance and accountable for the commitments that we make. Thank you, Steve, David and the Board for your confidence and warm welcome. I'm excited to get started and help write Powerfleet's next chapter. Thank you. Steve Towe: Thank you, Paul, and we're delighted to have you on board full time. Paul has made a big difference to us already. And both having him and Vish, and we haven't really spoken too much about Vish, but our AI capabilities have won us awards, they're resonating really well. And we think that Vish can help us amplify that on a much broader global stage. So excited about Vish joining us as well, and you'll get to meet Vish next time around. I want to thank the Powerfleet team for their continued execution, our customers for their trust and our shareholders for their confidence. We continue to execute with focus, appreciating that this is sometimes a bit of an in and out story, and we look forward to getting to a place of consistency, and we're excited about what's ahead. Thanks, everyone, for your time. Bye-bye. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. PowerFleet (AIOT) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

Powerfleet Inc. (NASDAQ:AIOT) shares dropped 17.69% in pre-market trading on Monday after the company reported mixed fiscal first-quarter 2027 results, with earnings coming in ahead of expectations but revenue falling short of Wall Street forecasts. The connected-operations technology company posted an adjusted loss of $0.01 per share, slightly better than the analyst consensus for a loss of $0.02 per share. Revenue reached $110.8 million, below the $115.73 million expected by analysts. However, sales still increased 6.4% year-on-year from $104.1 million in the corresponding quarter. Services remained the largest contributor to Powerfleet’s business, with revenue from the segment increasing 9.1% year-on-year to $94.3 million. Services accounted for approximately 85% of total quarterly revenue. Chief Executive Steve Towe said the overall revenue shortfall was partly connected to the company’s decision to reprioritise resources around its South African National Treasury contract. “Near-term demand under our South African National Treasury contract has accelerated significantly faster than anticipated, with vehicles ready for near-term installation now approximately seven times our original expectation,” Towe said. Powerfleet is redirecting resources towards the accelerated deployment and sacrificing some previously projected non-strategic revenue in South Africa to support the larger opportunity. The change in priorities reduced South African revenue by approximately $1.6 million during the quarter. Powerfleet also experienced a $3.2 million delay in product revenue because of a production constraint affecting a single product line. Management said the issue has since been resolved. Although revenue missed expectations, several profitability and cash-flow measures improved during the quarter. Gross margin expanded to 55.2% from 54.2% a year earlier, supported by the continued shift towards higher-margin services revenue. Adjusted EBITDA increased 6.9% year-on-year to $21.5 million, while operating cash flow climbed 79% to $8.4 million from $4.7 million in the comparable period. The figures showed improving operating efficiency even as the company dealt with revenue timing issues and redirected resources towards the South African contract. Powerfleet also updated its full-year fiscal 2027 guidance, forecasting revenue of between $468 million and $473 million. That range sits below the analyst consensus estimate of $487.2 million. At the midpoint of $470.5 million, Powerfleet expects annual revenue growth of approximately 6%. Adjusted EBITDA is forecast at between $111 million and $114 million, with the midpoint representing growth of approximately 16% compared with the previous year. The lower revenue forecast added to the pressure on Powerfleet shares following the quarterly report, despite management continuing to anticipate stronger EBITDA growth. Powerfleet highlighted its South African National Treasury contract as an important growth opportunity, with more than $27 million in annual recurring revenue expected to be activated in the near term. The number of vehicles mandated for immediate deployment has increased to more than 70,000, significantly expanding the scale of the rollout and prompting the company to redirect resources towards the programme. While the first-quarter earnings beat, improving margins and stronger cash generation provided positive signals, investors focused on the revenue miss and below-consensus full-year sales guidance, sending Powerfleet (NASDAQ:AIOT) shares sharply lower before Monday’s opening bell. PowerFleet stock price

Interested in PowerFleet, Inc.? Here are five stocks we like better. Q1 performance improved: Revenue rose 6.4% year over year to $110.8 million, while adjusted EBITDA increased to $21.5 million and total gross margin expanded to 55.2%. Services revenue grew 9.1% and supported margin expansion despite a temporary product-revenue delay. South African contract is scaling faster than expected: PowerFleet now has more than 70,000 vehicle installations to deploy in the near term, potentially rising to 80,000–90,000, prompting the company to redirect resources toward the contract. Full-year guidance was reduced: Fiscal 2027 revenue guidance fell to $468 million–$473 million and adjusted EBITDA guidance to $111 million–$114 million, reflecting timing effects, reprioritization costs and a projected net loss of $6 million–$8 million. The Bottom Is in for Powerfleet: An Intelligent Time to Buy PowerFleet (NASDAQ:AIOT) reported first-quarter fiscal 2027 revenue growth and higher adjusted EBITDA, while lowering its full-year outlook as it reallocates resources toward a rapidly expanding South African government contract. Total first-quarter revenue rose 6.4% year over year to $110.8 million. Adjusted EBITDA increased to $21.5 million from $20.1 million in the prior-year quarter, producing a 19.4% margin. The company reported GAAP operating income of $300,000, compared with a $2 million operating loss a year earlier. → MarketBeat Week in Review – 08/03 - 08/07 Net loss attributable to common stockholders was $8.4 million, or $0.06 per share, compared with a loss of $0.08 per share in the prior-year period. CFO David Wilson said net interest expense of $6.7 million accounted for most of the difference between operating income and the net loss. Services revenue increased 9.1% year over year to $94.3 million and represented about 85% of total revenue. Services gross margin expanded by nearly one percentage point to 61.1%, while adjusted EBITDA services gross margin rose 40 basis points to 75.9%. → Quantum Earnings Week: Winners and Losers Are Finally Emerging Product revenue declined 6.7% to $16.5 million after a compatibility issue involving a new component delayed about $3.2 million of product revenue late in the quarter. Steve Towe said the issue affected a single product line after an end-of-life Wi-Fi chip was replaced with a component that did not perform as expected. The company said it identified a solution and is restoring production. Management said customer orders remain intact and the issue does not affect deployments under the major South African contract. Some related second-quarter revenue could shift into the third quarter, though PowerFleet expects the full amount to be captured during the fiscal year. → Take-Two’s Q1 Results Leave GTA 6 Bulls Stuck in the Fog of War Despite pressure on product margins, total GAAP gross margin expanded about one percentage point year over year to 55.2%, while adjusted EBITDA gross margin increased to 67.8%, reflecting a greater mix of recurring services revenue. Management emphasized the accelerating scale of a South African National Treasury contract. The company had initially expected $20 million to $30 million in annual recurring revenue to ramp over 18 to 24 months. It now has more than $27 million in ARR required for near-term activation, with additional pipeline building. PowerFleet originally expected to have approximately 10,000 assets ready for installation at this point in the program. Towe said the company now has more than 70,000 vehicle installations to deploy in the near term and expects that number to increase to between 80,000 and 90,000 assets over the next several quarters. The company sees a total addressable opportunity of roughly 150,000 vehicles under the program, within an overall fleet of 180,000 vehicles. Towe said successful execution on the first installations could improve PowerFleet’s opportunity to win more vehicle deployments and sell additional services to the customer base. To support the accelerated rollout, PowerFleet is exiting or reducing certain non-strategic South African activities and redirecting capacity, working capital and management attention to the larger contract. Management described the action as a decision to prioritize higher-quality revenue, cash collection and long-term growth rather than a reduction in underlying demand. The company cited continued enterprise demand across its platform. During the quarter, a European-headquartered construction company operating in 26 countries selected PowerFleet as a vendor of choice to expand deployments of AI premium video across on-road and yard operations. Management characterized the engagement as a multimillion-dollar ARR opportunity. PowerFleet also reported several onsite expansion wins in North America, including: A $2 million expansion with a Fortune 500 manufacturing company. A $1.3 million deployment with a national transportation and logistics enterprise. A $1 million win with a national automotive technology company. The company said 12 Fortune 500 companies expanded their onsite footprints during the quarter, while 10 global Fortune 500 customers broadened adoption of AI Video. AI Video bookings rose 20% sequentially, and 16 industries produced enterprise wins exceeding $100,000 in total contract value. PowerFleet reduced its fiscal 2027 revenue guidance to a range of $468 million to $473 million from a prior range of $485 million to $490 million. It lowered adjusted EBITDA guidance to $111 million to $114 million from $122 million to $125 million. Wilson said the revised outlook reflects an approximately $17 million reduction in projected revenue relative to the midpoint of prior guidance, stemming from the South African reprioritization. The company expects an approximately $11 million adjusted EBITDA impact, including about $6 million of flow-through from lower revenue and $5 million of one-time costs. The company now expects a fiscal 2027 net loss of $6 million to $8 million, compared with its prior expectation for net income of $4 million to $8 million. Free cash flow is projected at $20 million to $23 million, down from prior guidance of $30 million to $35 million. Management said the revised forecast represents a timing gap rather than a change in its longer-term trajectory. PowerFleet expects to exit the fourth quarter with annualized revenue of approximately $495 million and an adjusted EBITDA margin of approximately 27%. It also expects services revenue growth to accelerate to comfortably above 10% in fiscal 2028 as the South African contract ramps. PowerFleet said Paul Lalljie joined the company as president and CFO after serving as a strategic adviser in recent months. Lalljie previously held CFO and CEO roles at 2U and served as CFO of Neustar. Wilson will remain in a consulting role for several months to support the transition. The company also appointed Vishal Vallabha as chief AI officer. Vallabha has held technology and AI leadership roles at Freeman Company, Lumen Technologies and TomTom Telematics, according to PowerFleet. Towe said Vallabha will help advance the company’s AI-first platform strategy. PowerFleet, Inc (NASDAQ: AIOT) develops and delivers Internet of Things (IoT)–based telematics and asset-tracking solutions designed to help businesses monitor, manage and optimize fleets of vehicles and industrial equipment. Its core offerings include wireless sensors, GPS tracking devices and cloud-hosted software platforms that provide real-time visibility into vehicle whereabouts, usage patterns, fuel consumption and maintenance needs. The company's systems also support regulatory compliance and safety monitoring, enabling customers to reduce operational costs, minimize theft and improve overall asset utilization. The company's hardware portfolio features RFID readers, active and passive tags, onboard diagnostics (OBD) adapters and temperature or motion sensors that can be deployed on trucks, trailers, forklifts, containers and other high-value assets. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "PowerFleet Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Services revenue increased 9.1% to $94.3 million, representing 85% of total revenue of $110.8 million. Cash flow from operating activities increased 79% to $8.4 million. More than $27 million ARR for near term activation with the South African National Treasury contract. New President & Chief Financial Officer and Chief AI Officer, enhancing leadership team capability and experience for next phase of the business. WOODCLIFF LAKE, N.J., Aug. 10, 2026 /PRNewswire/ -- Powerfleet, Inc. ("Powerfleet" or the "Company") (Nasdaq: AIOT), a global leader in the artificial intelligence of things (AIoT) software-as-a-service (SaaS) mobile asset industry, today reported its financial results for the first quarter ended June 30, 2026. "Our results demonstrate continued momentum across growth, profitability, and cash generation. High-value services revenue increased 9.1%, representing 85% of total revenue. Gross margin increased to 55.2%, operating cash flow nearly doubled to $8.4 million, and free cash flow improved by $6.6 million year-over-year," said Powerfleet CEO Steve Towe. "Near-term demand under our South African National Treasury contract has accelerated significantly faster than anticipated, with vehicles ready for near-term installation now approximately seven times our original expectation. To support this rollout, we are reallocating resources and forgoing portions of projected non-strategic South African revenue. Our revised 2027 guidance reflects the timing mismatch between the non-strategic revenue we're forgoing and the larger, higher-quality revenue we're expecting from the contract. We expect the revenue CAGR from fiscal 2026 through fiscal 2028 to remain consistent with our prior expectations, with stronger growth in fiscal 2028 fueled by the ramp of the South Africa project. We anticipate annualized Q4'27 revenue of approximately $495 million, with adjusted EBITDA margins of approximately 27%," Towe concluded. Business Highlights In excess of $27 million of ARR is expected for near term activation under the South African National Treasury contract, against original expectations of $20–30 million in ARR ramping over 18 to 24 months. Vehicles mandated for immediate deployment increased to over 70,000 — a 7x increase over the original expectation of approximately 10,000 at this stage of the program — and are expected to reach 80,000 to 90,000 over the next two quarters, against a total addressable fleet of 150,000 vehicles. Selected as vendor of choice by a European-headquartered global construction leader to expand its existing on-road deployment into premium AI video solutions, both on-the-road and in-the-yard, across 26 countries. Signed three $1 million+ revenue multi-product contracts with manufacturing, logistics, and automotive leaders, reinforcing the quality of Unity's platform and portfolio. Increased AI video bookings 20% sequentially, driven by strong customer demand for Unity's differentiated safety intelligence SaaS solutions. Strong cross-sell expansion quarter-over-quarter; 12 Fortune 500 customers expanded their on-site footprint and 10 broadened their AI video adoption in the quarter. Results for First Quarter Fiscal 2027 Compared to First Quarter Fiscal 2026 Revenue increased 6.4% to $110.8 million. Services revenue increased 9.1% to $94.3 million. Gross margin increased to 55.2% from 54.2%. Net loss attributable to common stockholders improved 17.5% to $8.4 million; loss per share improved to $(0.06) from $(0.08). Adjusted EBITDA increased 6.9% to $21.5 million. Operating cash flow increased to $8.4 million from $4.7 million in the prior-year quarter, while continuing to invest in growth through capitalized software development costs of $4.1 million and capital expenditures of $4.9 million. Free cash flow improved $6.6 million year-over-year, to a net use of cash of $0.5 million from a net use of cash of $7.1 million in the prior-year quarter. Leadership Additions President and Chief Financial Officer. Paul Lalljie joins Powerfleet this week as President & Chief Financial Officer following a role as a strategic finance advisor to the Company in recent months. Mr. Lalljie brings 25 years of finance and technology leadership, including as both CFO and CEO of 2U and as CFO of Neustar. David Wilson will remain with the Company in a consulting capacity for several months to support a smooth transition. The Company thanks Mr. Wilson for his significant contribution and partnership through a period of extensive transformation. As President and CFO, Mr. Lalljie will combine financial leadership with a broader mandate around operating execution, capital allocation and the Company's next phase of profitable growth. Chief AI Officer. Vishal Vallabha joins Powerfleet this week as Chief AI Officer following a role as a strategic AI advisor to the Company in recent months. Mr. Vallabha brings more than 20 years of experience as a senior technology and AI executive, including CTO and Chief Data/AI Officer roles at Freeman Company and Lumen Technologies, and most recently as Founding Partner and CTO at NexGen.ai, where he led AI-enabled transformation engagements for clients including Microsoft and Bain Capital. Discussion of First Quarter Results Revenue for the quarter totaled $110.8 million, a 6.4% increase from $104.1 million in the first quarter of fiscal 2026, driven by 9.1% growth in services revenue, which represented approximately 85% of total revenue. South African revenue was approximately $1.6 million lower in the quarter, reflecting the early impact of the reprioritization in the South African business. In addition, $3.2 million of product revenue was delayed by a production constraint late in the quarter, affecting a single product line related to a compatibility issue with a new component. The Company identified the problem and the solution, and production is being restored. Importantly, underlying customer demand and orders remain intact, and the issue does not impact deployment of the South African National Treasury contract. This is a discrete production and revenue-recognition timing issue, not a reflection of customer demand or a broader production constraint. Given the timing of the recovery, the Company anticipates that some associated Q2 revenue may shift into Q3, with the balance expected to be recaptured within the fiscal year. Gross profit was $61.2 million, and gross margin expanded to 55.2% from 54.2% in the prior-year quarter, reflecting the continued shift in mix toward higher-margin services revenue. Income from operations increased to $0.3 million, compared with an operating loss of $2.0 million in the prior-year quarter. GAAP net loss attributable to common stockholders improved to $8.4 million, or $(0.06) per basic and diluted share, from a net loss of $10.2 million, or $(0.08) per basic and diluted share, in the prior-year quarter. Adjusted EBITDA, a non-GAAP measure, was $21.5 million in the first quarter, a 7% increase from $20.1 million in the prior-year quarter. A reconciliation of adjusted EBITDA to GAAP net loss, the most directly comparable GAAP measure, is provided in the tables below. Balance Sheet and Capital Resources As of June 30, 2026, the Company's total available liquidity was $62.7 million, comprising cash and cash equivalents of $32.8 million, and available borrowing capacity of $29.9 million under the Company's existing revolving credit facilities. Total outstanding debt was $278.4 million, and net debt (net of cash, cash equivalents, and restricted cash) was $241.7 million. Adjusted net debt-to-trailing 12-month adjusted EBITDA ratio remained stable at 2.5x compared with fiscal 2026 year-end. Financial Outlook The Company is updating its full year fiscal 2027 guidance, reflecting the South African reprioritization: Revenue is expected to range from $468 million to $473 million, representing approximately 6% year-over-year growth at the midpoint. Net loss is expected to range from $6 million to $8 million, with weighted-average fully diluted shares outstanding of approximately 134 million. Adjusted EBITDA is expected to range from $111 million to $114 million, representing approximately 16% year-over-year growth and a margin of approximately 24% at the midpoint. Free cash flow is expected to range from $20 million to $23 million, consistent with the revised adjusted EBITDA guidance. Powerfleet provides guidance for adjusted EBITDA and free cash flow, which are non-GAAP financial measures. Powerfleet does not provide guidance for the most directly comparable GAAP financial measures or a reconciliation of each of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure because it is unable to predict, without unreasonable effort, the timing or amount of certain items that are included in the applicable GAAP financial measure but excluded from adjusted EBITDA and/or free cash flow. These items may include, among others, stock-based compensation, acquisition-related expenses, fair-value adjustments, restructuring charges and other non-recurring items. The variability of these items could have a significant impact on Powerfleet's future GAAP financial results, and therefore, Powerfleet is unable to provide a reconciliation at this time. INVESTOR CONFERENCE CALL AND BUSINESS UPDATE Powerfleet management will hold a conference call on Monday, August 10, 2026, at 8:30 a.m. Eastern time (5:30 a.m. Pacific time) to discuss results for the first quarter ended June 30, 2026, and provide a business update. Date: Monday, August 10, 2026Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)Toll Free: 888-506-0062International: 973-528-0011Participant Access Code: 417796 The conference call will be broadcast simultaneously and available for replay here. Additionally, both the webcast and accompanying slide presentation will be available via the investor section of Powerfleet's website at ir.powerfleet.com. USE OF NON-GAAP FINANCIAL MEASURES Management evaluates the financial performance of our business on a variety of key indicators, including non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA gross margin, adjusted net income per share, adjusted EBITDA leverage ratio, free cash flow, net debt and adjusted net debt. Reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of Powerfleet's current financial performance. Specifically, Powerfleet believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses and fluctuations in currency rates that may not be indicative of its core operating results and business outlook. These non-GAAP measures are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as an alternative to total revenues, net income, net income margin, gross margin, net income per share, net cash provided by operating activities or total debt as an indicator of operating performance or liquidity. Because Powerfleet's method for calculating the non-GAAP measures may differ from other companies' methods, the non-GAAP measures may not be comparable to similarly titled measures reported by other companies. A reconciliation of all non-GAAP financial measures included in this press release to the most directly comparable GAAP financial measures is provided in Annex A titled "Non-GAAP Financial Measures," including a description of these non-GAAP financial measures and the reasons why management uses these measures. Powerfleet also presents an illustrative annualized revenue run-rate metric based on the ARR currently under contract and assuming full deployment of the South African National Treasury contract. This illustrative metric is not prepared in accordance with GAAP, is not intended to represent fiscal 2027 revenue guidance or a forecast of future revenue and should not be considered a substitute for GAAP revenue. ABOUT POWERFLEET Powerfleet (Nasdaq: AIOT; JSE: PWR) is a global leader in the artificial intelligence of things (AIoT) software-as-a-service (SaaS) mobile asset industry. With extensive experience, Powerfleet unifies business operations through the ingestion, harmonization, and integration of data, irrespective of source, and delivers actionable insights to help companies save lives, time, and money. Powerfleet's ethos transcends our data ecosystem and commitment to innovation; our people-centric approach empowers our customers to realize impactful and sustained business improvement. The Company is headquartered in New Jersey, United States, with offices around the globe. Explore more at www.powerfleet.com. Powerfleet has a primary listing on The Nasdaq Global Market and a secondary listing on the Main Board of the Johannesburg Stock Exchange (JSE). CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This press release contains forward-looking statements within the meaning of federal securities laws. Powerfleet's actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements may be identified by words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions. These forward-looking statements include, without limitation, our expectations with respect to our beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions and future performance, as well as including our revised financial outlook and guidance for fiscal 2027 and the anticipated financial impacts of recent business combinations and acquisitions. Forward-looking statements involve significant known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. Most of these factors are outside our control and are difficult to predict. The risks and uncertainties referred to above include, but are not limited to, risks related to: (i) the possibility that we may not fully realize the anticipated benefits of our acquisitions and ongoing business transformation initiatives; (ii) significant losses, accumulated deficits and an inability to achieve or sustain profitability; (iii) future global economic, political and business conditions, including inflation, interest rate increases, foreign exchange instability, geopolitical conflicts, sanctions, export controls and the potential imposition of tariffs; (iv) the commercial, financial, reputational and regulatory risks to our business associated with operating across multiple geographies, including exposure to foreign exchange fluctuations and economic instability in certain emerging markets; (v) disruptions in our global supply chain, performance issues or failures by subcontractors, and reliance on a limited number of suppliers for critical components and services; (vi) the loss of any of our key customers, reductions in customer demand or purchasing levels, and reliance on third-party channel partner relationships, including telecommunication companies and regional distributors; (vii) changes in technology, products and customer expectations, which may be more rapid, costly or difficult to address, or less effective, than anticipated; (viii) risks associated with the deployment and use of artificial intelligence and machine learning technologies, including operational, legal, regulatory and reputational risks arising from their development, use or outputs; (ix) potential breaches, disruptions or failures of our information technology systems, including risks that could impair operations, customer access to services, or vendor and customer relationships; (x) our inability to adequately protect our intellectual property rights or defend against third-party intellectual property claims; (xi) our ability to obtain additional capital to fund our operations; and (xii) such other factors as are set forth in the periodic reports filed by us with the Securities and Exchange Commission (SEC), including but not limited to those described under the heading "Risk Factors" in our annual reports on Form 10-K, quarterly reports on Form 10-Q and any other filings made with the SEC from time to time, which are available via the SEC's website at http://www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by these forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. The forward-looking statements included in this press release are made only as of the date of this press release, and except as otherwise required by applicable securities law, we assume no obligation, nor do we intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances. Powerfleet Investor [email protected] Powerfleet Media [email protected] Annex A: Non-GAAP Financial Measures In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of organic revenue growth, adjusted EBITDA, adjusted EBITDA margin, adjusted net income/loss per share, adjusted EBITDA gross profit margin, adjusted EBITDA products gross profit margin, adjusted EBITDA services gross profit margin, non-GAAP selling, general and administrative expense ratios, adjusted operating expenses, free cash flow, net debt and adjusted net debt, and adjusted net debt to adjusted EBITDA ratio as supplemental measures of our operating performance. We believe they provide useful information to our investors as they eliminate the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. In addition, we use them as an integral part of our internal reporting to measure the performance and operating strength of our business. We believe organic revenue growth, adjusted EBITDA, adjusted EBITDA margin, adjusted net income/loss per share, adjusted EBITDA gross profit margin, adjusted EBITDA products gross profit margin, adjusted EBITDA services gross profit margin, non-GAAP selling, general and administrative expense ratios, adjusted operating expenses, free cash flow, net debt and adjusted net debt, and adjusted net debt to adjusted EBITDA ratio, are relevant and provide useful information frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and are indicators of the operational strength of our business. Organic revenue growth represents the year-over-year percentage change in revenue, excluding the impact of acquisitions. We believe organic revenue growth provides insight into the underlying performance of the Company's existing operations by removing the effects of changes in the scope of consolidation. Adjusted EBITDA is equal to net loss attributable to common stockholders, excluding non-controlling interest, preferred stock dividend, interest expense (net), other income (net), income tax expense, depreciation and amortization, stock-based compensation, foreign currency losses, restructuring-related expenses, derivative mark-to-market adjustment, acquisition-related expenses and integration-related expenses. Following a detailed review of relevant SEC guidance on disclosure of non-GAAP financial measures, we refined our definition of adjusted EBITDA by removing recognition of pre-October 1, 2024 contract assets (Fleet Complete). Comparative information has been adjusted to conform with the updated presentation. We believe adjusted EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation and amortization, stock-based compensation and other items that might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. Adjusted net income/loss is equal to net loss excluding incremental intangible assets amortization expense as a result of business combinations, stock-based compensation (non-recurring/accelerated cost), foreign currency losses, restructuring-related expenses, derivative mark-to-market adjustment, acquisition-related expenses, integration-related expenses and inventory rationalization and other, net of tax. We define adjusted net income/loss per share as adjusted net income/loss divided by the weighted-average number of shares outstanding during the period. We believe adjusted net income/loss provides additional means of evaluating period-over-period operating performance by eliminating certain non-cash expenses and other items that might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. We define adjusted EBITDA gross profit as gross profit excluding inventory rationalization and other and depreciation and amortization, and adjusted EBITDA gross profit margin as adjusted EBITDA gross profit as a percentage of revenues. Our adjusted EBITDA gross profit is a measure used by management in evaluating the business's current operating performance by excluding the impact of prior historical costs of assets that are expensed systematically and allocated over the estimated useful lives of the assets, which may not be indicative of the current operating activity. We define non-GAAP selling, general and administrative expense ratios as selling, general and administrative expenses adjusted for restructuring-related expenses, acquisition-related expenses, integration-related expenses, depreciation and amortization, and stock-based compensation, and expressed as a percentage of total revenues. We define adjusted operating expenses as total operating expenses adjusted for acquisition-related expenses, integration-related expenses, stock-based compensation (non-recurring/accelerated cost) and restructuring-related expenses. We present non-GAAP selling, general and administrative expense ratios and adjusted operating expenses to provide a clearer view of our operating cost structure by excluding items that are not directly tied to ongoing business operations. Free cash flow is equal to net cash provided by operating activities, excluding proceeds from the sale of fixed assets, capitalized software development costs and capital expenditures. We present free cash flow because we believe it provides useful information to investors and others in understanding and evaluating the Company's cash flows by providing detail of the amount of cash the Company generates or utilizes after accounting for all capital expenditures as well as costs that do not relate to our core business operations. We define adjusted net debt as total debt less cash, cash equivalents, and restricted cash, resulting in net debt less unsettled transaction costs. Adjusted net debt to adjusted EBITDA ratio is calculated as adjusted net debt divided by adjusted EBITDA for the trailing 12-month period. We present adjusted net debt and adjusted net debt to adjusted EBITDA ratio to help investors and others better understand our true leverage position and financial flexibility. Unsettled transaction costs – often related to acquisitions, integrations, or financing activities – can temporarily inflate net debt figures and obscure comparability across periods. Adjusted EBITDA, adjusted EBITDA margin, adjusted net income/loss per share, adjusted EBITDA gross profit margin, adjusted EBITDA products gross profit margin, adjusted EBITDA services gross profit margin, non-GAAP selling, general and administrative expense ratios, adjusted operating expenses, free cash flow, net debt and adjusted net debt, and adjusted net debt to adjusted EBITDA ratio are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with U.S. GAAP. The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted net income/loss per share, adjusted EBITDA gross profit margin, adjusted EBITDA products gross profit margin, adjusted EBITDA services gross profit margin, non-GAAP selling, general and administrative expense ratios, adjusted operating expenses, free cash flow, net debt and adjusted net debt, and adjusted net debt to adjusted EBITDA ratio, may not be comparable to similarly titled measures presented by other companies. A reconciliation of net loss attributable to common stockholders (the most directly comparable financial measure presented in accordance with GAAP) to adjusted EBITDA for the periods shown is presented below (in thousands and unaudited): The following table (in thousands, except per share data, and unaudited) reconciles net loss to adjusted net income (loss) for the periods shown: The following table (in thousands and unaudited) reconciles gross profit margins to adjusted EBITDA gross profit margins for the periods shown: The following table (in thousands and unaudited) reconciles selling, general and administrative ("SG&A") expenses to non-GAAP SG&A expenses for the periods shown: The following table (in thousands and unaudited) reconciles total operating expenses to adjusted operating expenses for the periods shown: The following table (in thousands and unaudited) reconciles net cash provided by operating activities to free cash flow for the periods shown: The following table (in thousands and unaudited) reconciles total debt to adjusted net debt for the periods shown: View original content to download multimedia:https://www.prnewswire.com/news-releases/powerfleet-reports-results-for-first-quarter-fiscal-2027-302846710.html

Powerfleet, Inc. AIOT used its fourth-quarter fiscal 2026 earnings call to press a forward-looking message: the transformation phase is giving way to a year centered on margin expansion, cash generation and larger enterprise deployments. Revenue and adjusted earnings both topped the Zacks Consensus Estimate, but management’s focus stayed on fiscal 2027 execution. The call mattered because executives framed the next year as increasingly second-half weighted, with the South African National Treasury rollout, cost actions and newer channel relationships expected to do more of the work later in the year. Chief executive officer Steve Towe said Powerfleet has now delivered on the first stage of its combination thesis, pointing to scale, technology integration and financial discipline as the base for the next leg of growth. He emphasized that the company did not trade away growth to capture synergies, and instead exited the year with stronger recurring revenue momentum. Chief financial officer David Wilson reinforced that point by outlining a fiscal 2027 model in which revenue builds through the year and adjusted EBITDA expands faster than sales. Management guided for revenue of $485 million to $490 million, adjusted EBITDA of $122 million to $125 million and free cash flow of $30 million to $35 million. That setup comes with a clear timing caveat. Wilson said sales investments and optimization spending land early, while the revenue and cost benefits arrive later, making quarterly progression less linear than the full-year outlook suggests. The quarter itself supported management’s margin narrative. Revenue rose 11% year over year to $114.5 million, while services revenue climbed 14% to $92.9 million and accounted for more than 81% of total revenue. Gross margin expanded to 56.5%, and adjusted EBITDA increased 42% to $26.4 million, with margin reaching 23.1%. That performance also came in ahead of expectations. Adjusted EPS was $0.04 versus the Zacks Consensus Estimate of $0.00, while revenue topped the Zacks Consensus Estimate of $112.9 million. The reported revenue surprise was 1.4%. Towe and Wilson tied the stronger profitability directly to a higher recurring services mix and the realization of more than $34 million in annualized synergy savings over the past two years. That combination remains central to the investment case management presented on the call. PowerFleet, Inc. price-consensus-eps-surprise-chart | PowerFleet, Inc. Quote The biggest strategic growth lever remains the South African National Treasury contract. Management described it as the largest win in company history, with an anticipated total contract value of $100 million to $120 million over a minimum five-year term. Deployment planning is underway for 60,000 assets, with revenue expected to ramp over the next 18 months. Towe told analysts the contract can broaden beyond the initial scope as PowerFleet proves out the deployment. He also framed it as an important public-sector proof point that could support similar opportunities in other markets. At the same time, Wilson made clear that this opportunity contributes to the back-end weighting of fiscal 2027. Upfront device investment and deployment timing pressure first-half cash flow, even as the company expects payment terms to help offset that burden over time. Beyond South Africa, management highlighted strong traction in the company’s highest-value offerings. AI Video bookings grew more than 50% in fiscal 2026, onsite revenue rose 39% in the fourth quarter, and fourth-quarter ARR increased 13% year over year. Towe also said the quarter marked the strongest retention period in two years. Those products matter because they are opening larger enterprise doors. Management said onsite and AI Video now represent 65% of the pipeline, up from 50% entering fiscal 2026, and described the onsite suite as an effective land-and-expand entry point into broader customer operations. The channel story is widening too. Towe described Accenture as a new business development relationship aimed at large digital transformation programs, though he said the revenue contribution is more weighted to late fiscal 2027 and fiscal 2028. Analyst questions centered on timing, not direction. A Roth Capital analyst pressed management on how revenue and services growth should ramp across fiscal 2027, and Wilson responded with unusually explicit cadence commentary, including a roughly 48% to 52% first-half to second-half revenue split and a more second-half-weighted EBITDA profile than in fiscal 2026. A Craig-Hallum analyst pushed on why Accenture chose PowerFleet and whether the South Africa contract could expand. Towe’s answer underscored the value of the company’s warehouse data, integrated Unity platform, and ability to support broader data use cases once deployments are live. A Raymond James analyst asked about bookings and channel mix, prompting management to disclose that indirect channels represented 30% of new business in the fourth quarter, versus 70% direct. That added useful context around how PowerFleet is scaling go-to-market without relying solely on direct sales. The call’s overall tone was confident but operationally grounded. Towe presented fiscal 2027 as a year to amplify revenue growth, compound EBITDA, and strengthen the balance sheet, while Wilson kept returning to execution timing and cash conversion rather than making broader claims. That posture left investors with a fairly clear roadmap. PowerFleet is asking the market to judge the business on whether enterprise wins, recurring-services mix and optimization savings convert into the second-half improvement management laid out. AIOT currently carries a Zacks Rank #4 (Sell), alongside a Value Score of C, Growth Score of A, a Momentum Score of F and a VGM Score of A. Under the Zacks framework, Style Scores can help distinguish stocks with stronger value, growth, and momentum characteristics, but they are meant to complement, not override, the Zacks Rank. You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. That matters here. A strong VGM Score can point to attractive combined style characteristics, yet the Zacks framework is clear that stocks with a Zacks Rank #4 are not favored even when some Style Scores look appealing. As always, the Zacks Rank can change as earnings estimate revisions move in the wake of newly reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PowerFleet, Inc. (AIOT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Monday, June 15, 2026 at 8:30 a.m. ET Chief Executive Officer — Steve Towe Chief Financial Officer — David Wilson Chief Operating Officer — Melissa Ingram Operator Good day, everyone. Welcome to PowerFleet's fourth quarter and full year 2026 earnings call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, David Wilson, Chief Financial Officer. The floor is yours. David Wilson Thanks, operator. Good morning, everyone. This presentation contains forward-looking statements within the meaning of federal securities law. 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, performance, or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical facts are statements that could be forward-looking statements. For example, forward-looking statements include statements regarding prospects of 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 operation costs, increasing production volumes, and expanding business with core customers. The risks and uncertainties referred to above are not limited to risks detailed from time to time in PowerFleet's filings with the SEC, including PowerFleet's annual report on Form 10-K for the year ended March 31, 2025. These risks could cause 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 and expressly disclaims any obligation to do so, whether a result of new information, future events, or otherwise. I'll turn the call over to PowerFleet CEO, Steve Towe. Steve? Steve Towe Good morning, everyone, and thank you for joining us today. I'm here with key members of the leadership team, and we're excited to walk you through what has been a defining year for PowerFleet. Before we get into the quarter, I want to take a few minutes to step back and talk about the journey, because the context really matters, and it's helpful to orient investors to fully understand what this team has delivered and why we feel confident about where we go from here. Two years ago, we set a very clear strategy for PowerFleet. We said we would use consolidation to build scale. We said we would invest that scale into technology differentiation, and we said we would run this business with the kind of financial discipline that compounds value for shareholders over time. That was the thesis. I'm pleased to stand and tell you we're delivering against that plan in full. Within 18 months, we restructured the global operating model, unified the product roadmap under Unity, centralized core functions, and delivered more than $34 million in annualized cost synergies on time and in full. Importantly, we didn't do that at the expense of growth. We did it while simultaneously accelerating organic revenue performance, expanding margins, and winning at a level in the enterprise market that the heritage PowerFleet could simply never have achieved. That was deliberate. On technology differentiation, this is where really the future value of the company sits. Unity has become the system of work for some of the world's largest and most demanding enterprises. Independently, we've received validated safety, data highway ingestion, and the unified operations layer is what makes us truly mission-critical for our customers. You can see that differentiation showing up directly in the commercial performance of the business. We've secured landmark enterprise wins, Fortune 500 accounts across energy, mining, food and beverage, logistics, manufacturing, and we're now winning tier 1 public sector contracts at a scale that simply wasn't possible 2 years ago. Our AI Video pipeline compounded through the year. Our On-Site solutions saw rapid adoption. Cross-sell revenue accelerated. Customers are leaning in because Unity solves everyday operational challenges, improving safety, enhancing visibility, boosting efficiency, all through one integrated platform. Next slide. Let me frame the year through these 3 priorities we set ourselves and executed against. The first, durable revenue growth. We've proven that the combined business is delivering consistent, high-quality organic growth anchored in recurring SaaS revenue. The second, compounding EBITDA growth. We've demonstrated that as the top line scaled, the operating model we've built is converting that growth into expanding margins and compounding profitability. The third, driving towards sustainable free cash flow. We've proved the pivot, showing that this business is moving from an investment and integration phase into a cash generative model that strengthens the balance sheet and compounds shareholder value. Let me take you through each one. Next slide, please. Starting with revenue. Services revenue, which is really the engine of the business, grew to $360 million and now represents 81% of our total revenue, up from 76% in FY 2025. That shift in mix is deliberate and is significant, because every percentage point of that shift brings higher margins, greater predictability, and strong customer lifetime value. Total revenue increased to $444 million. What is most encouraging is the growth acceleration we saw as the year progressed. In Q4, total revenue grew 11% year-over-year. Service revenue grew 14%. That's the exit rate we've been signaling to investors. We've delivered it. The trajectory is clear, the quality of the growth is high, and the durability of the recurring revenue base gives us real visibility and confidence heading into FY 2027. Next slide, please. On the customer side, we signed multimillion contracts with 2 of the world's largest brands, a top 3 global food and beverage company, and a major global manufacturer, both choosing our differentiated On-Site solutions. These are exactly the kind of large-scale enterprise wins that the heritage PowerFleet of 2 years ago could not have competed for, let alone won. Then, of course, there's the South African Treasury contract, the single largest win in our company's history, with anticipated 5-year total contract value of between $100 million-$120 million once fully implemented. This has been powered by Unity safety solutions and AI Video capabilities in partnership with MTN. That's a transformational piece of business for PowerFleet, and I'll talk more about how that's progressing when we get to our FY 2027 growth multipliers. On the solution side, our AI Video bookings grew more than 50% in FY 2026, meaningfully outpacing market growth. Our On-Site revenue grew 39%, powered by North America sales acceleration. These are the two highest ARPU, highest differentiation parts of our portfolio, and the fact that they're driving such strong growth tells you the strategy is working where it matters most. On retention, Q4 was our strongest retention quarter in the last two years, driven by Unity's differentiated solutions and the deeper, stickier customer relationships we're building. That's an important proof point as it speaks to the quality of what we're delivering to our customers. Next slide. Turning to EBITDA, adjusted EBITDA for FY 2026 grew 44% to $97 million, with margins expanding 330 basis points to 21.9%. In Q4, adjusted EBITDA grew 42% year-over-year to $26.4 million with margins hitting 23.1%, a five percentage point increase year-over-year. The compounding effect was the result of disciplined synergy execution, a deliberate shift towards high-margin recurring services, and an operating model that is built to generate expanding leverage as the top line scales. What's particularly pleasing is that we've achieved this while simultaneously investing in growth in our go-to-market capabilities, in our channel partnerships, and currently in the South African deployment. We've made a deliberate choice to be good stewards of investment opportunity, and even with those investments, we've still delivered meaningful adjusted EBITDA expansion. This is a solid indication of the inherent leverage in this model. Next slide, please. The third priority, free cash flow. This is where FY 2026 represents a genuine inflection point for the business. We generated $4.1 million of free cash flow in the second half, a meaningful swing from the $13.7 million use of cash in the first half. Operating income reached $11 million, an $18 million improvement from FY 2025 when we were in an operating loss position. Net leverage improved to 2.47 times, down from 3.39 times. That's almost a full turn of deleveraging within the fiscal year. We've been very clear with investors throughout this year that as we move through the final stages of integration and stood up investments to support large-scale growth opportunities, there will be periods of elevated cash use. This was a temporary and necessary cost of building the business we have today. What the second-half trajectory demonstrates is that the true underlying cash generation of this model is now coming through and will continue to strengthen as we scale into FY 2027. Next slide, please. With that context, let me now turn to what lies ahead. We've delivered the FY 2026 plan. We've proven the thesis, and we now have the scale, the differentiation, the operating model, and the financial foundation to step forward confidently from here. FY 2027 is about building further momentum. Next slide, please. This slide captures the strategic levers we've assembled to drive future shareholder value creation, and they frame why we're seeing such a compelling multi-year opportunity ahead. First, our warehouse and On-Site solutions are the category-defining wedge. This is where we have true differentiation, where win rates are our highest, and where we're opening doors into the largest enterprises in the world. We deliver a unique data set for the industry through AI-powered safety and compliance across the full operational environment On-Site and over the road in a single platform. Second, we now have the high impact channels to market, such as AT&T, Telus, and MTN, with additional partnerships in development. These are force multipliers that can create meaningful growth expansion without proportional increases in our cost base. The channel flywheel is beginning to turn. Third, Unity capitalizes on a powerful industry tailwind. Enterprises are consolidating fragmented point solutions and data into unified operating platforms. That is exactly what the data highway was built to deliver. We're not fighting the market, we're navigating a successful path. Fourth, our proprietary operational data creates a defensible moat. As customers integrate more deeply into Unity, ingesting data from ERP, HR, safety, maintenance, and IoT systems, the stickiness compounds. Finally, the compounding EBITDA growth opportunity remains substantial. With services at 81% of revenue and growing, the cost optimization program still delivering, and with scale benefits compounding as the top line accelerates, there is meaningful further margin expansion ahead. Next slide, please. Our priorities for FY 2027 are consistent and clear. Amplify revenue growth, continue to compound adjusted EBITDA growth, and enhance the balance sheet. On revenue, we're doubling down on the two differentiators that are driving the most traction, On-Site and AI Video. These solutions now represent 65% of our pipeline, up from 50% entering FY 2026. We're seeing these differentiators play out in real wins, with some of our largest customers expanding to adopt Unity's full solution stack. We're going to replicate these top-tier deal successes through extended direct sales capacity, expanded go-to-market channels, and the growing bank of referenceable customer outcomes. On adjusted EBITDA, you'll hear more on this from Melissa shortly, but the key point is we see a clear path to further meaningful efficiency gains that support continued adjusted EBITDA expansion while freeing capacity for reinvestment in growth. On the balance sheet, we're doubling down on working capital improvement. We have a finance partner network in place for customer financing aligned with industry best practice. We're making material shift towards annual and first quarter in advance customer payment terms. The operating leverage in this model means higher conversion of EBITDA to cash as the revenue growth compounds. This creates a virtuous cycle: de-leveraging, reduced cash interest costs, and compounding returns for shareholders. Next slide, please. Over and above core execution, we have significant growth multipliers entering FY 2027. First, the National Treasury deal. 60,000 assets are now moving to the deployment planning phase. This meaningful new revenue contribution is expected to contribute in growth in late FY 2027 and wholeheartedly in FY 2028 and is a powerful validation of Unity's capabilities at tier 1 scale. Secondly, a new partnership with Accenture. Accenture has selected PowerFleet as a strategic safety solutions innovation partner and is now recommending our end-to-end Unity portfolio. This opens a significant new enterprise go-to-market channel that dramatically extends our reach into large-scale digital transformation programs globally. Lastly, a story I'm particularly proud of. FEMSA is the largest Coca-Cola franchise bottler in the world. They first came to PowerFleet for connected intelligence that would deliver efficiency and control across their on-road operations, subsequently adding AI Video to drive elevated safety performance. The next step in that relationship is On-Site. FEMSA is now adding PowerFleet's On-Site solutions to their deployment to manage the safety and compliance of their warehouse operations, which is our land and expand motion working exactly as intended. A customer that trusted us with their on-road operations is now trusting us with their end-to-end estate. That pattern, replicated across our enterprise base, is one of the most important growth opportunities we have. Each one of these is a high-conviction, high-impact growth driver. Taken together, they give us real confidence in the acceleration opportunity ahead. With that, I'll hand over to Melissa to walk through our optimization and efficiency progress. Melissa Ingram Thanks, Steve. Turning now to our progress on optimization and efficiency, which continues to be a key area of focus and execution for the business. Over the past two fiscal years, we've delivered $34 million in annualized synergies across the integration program, that's a significant achievement, one the entire team is proud of. In our November earnings call, I outlined our pivot from integration into optimization in order to efficiently drive profitability and growth. I shared that among our priorities, which you can see on this slide, we would continue to evolve our organizational model, optimize our resource mix, expand AI and automation, and continue to unlock economies of scale in our vendor spend base. We're now six months into executing against that agenda, I want to share where we've focused. The first area of progress is simplification across the organization. We've continued to evolve our spans and layers within our organizational design, ensuring we have clear accountability and appropriate management breadth across the business. At the same time, we're further centralizing and streamlining core functions within G&A, as well as our customer-facing units such as implementation. Removing duplication and driving consistency within the operating model. The goal here is to ensure we're structured for scale and efficiency across the global company footprint. The second area is continued product line rationalization, where we're further consolidating partners and hardware SKUs across the business. Simplifying the portfolio reduces complexity and improves our margins, the effects are cumulative. Fewer supply chain variables, a more efficient cost base, and a more focused go-to-market motion. The third area is expanding our AI, automation, and self-service capabilities to drive efficiency in our cost to serve. We're working with a third-party partner to augment our support functions with AI and automated capabilities, improving responsiveness and efficiency while freeing our teams to focus on higher-value customer interactions. Alongside these three areas, we continue to reduce the number of operating business systems we use across the company and to consolidate our vendor spend, both of which contribute directly to our efficiency target. Collectively, we expect these initiatives to deliver $12 million in annualized efficiency in FY 2027. These moves will result in a small increase in operating costs in the first half of the year to deliver the expected EBITDA efficiencies for full-year FY 2027 in the second half. This is the natural next chapter. Integration built the foundation, optimization is how we convert that foundation into sustained margin expansion and reinvestment capacity for growth. I'll now turn the call over to David to cover the full financial results and look ahead to FY 2027. David? David Wilson Thank you, Mel, and good morning, everyone. As you saw in our press release, we closed fiscal 2026 with a strong fourth quarter, demonstrating that our model is working and scaling. For the full year, revenue grew 22% to $443.8 million, and adjusted EBITDA grew 44% to $97 million. Just as importantly, we turned the corner on GAAP operating profitability, generating $19.6 million in operating income for the year, up from an operating loss a year ago. This is a strong indication of the business converting durable, recurring revenue growth into compounding profitability. Of note, the third and fourth quarters of fiscal 2026 were the first periods that fully reflected the combined businesses on a like-to-like basis. Today, I'll start with our results for the quarter, adding full-year context where it's useful. I'll walk through the operating expense and profitability, our balance sheet and cash flow, and I'll close with our outlook for FY 2027. Next slide. Total revenue for the fourth quarter was $114.5 million, up 11% year-over-year and up 1% sequentially. This was high-quality growth led by our recurring services revenue. Services revenue totaled $92.9 million, up 14% year-over-year, and now represents more than 81% of total revenue. This high-margin revenue stream is the true engine of the business. Product revenue for the quarter was $21.5 million, broadly stable on a year-over-year basis. Consistent with our strategy, product is increasingly a deployment vehicle for recurring services rather than an end in itself. The contrast between these two lines is deliberate and is the key to our profitability story. As the mix tilts towards recurring services, every incremental dollar of revenue carries a higher margin and converts more efficiently to adjusted EBITDA. This dynamic is reflected in our revenue growth this quarter of 11%, translating into adjusted EBITDA growth of 42%, because the growth came from the highest quality, highest margin part of the revenue base. The rest of the roadmaps on profitability follow directly from this dynamic. Next slide. Now onto profitability and margins, where gross profit for the quarter was $64.7 million, a GAAP gross margin of 57%, up roughly four points from a year ago. The expansion is being driven by a richer mix of recurring services. Moving down the income statement, GAAP income from operations was $11 million, an operating margin of approximately 10% compared to an operating loss in the prior year quarter. This swing of $18 million year-over-year is the clearest single proof point that operating leverage and cost synergies from our integrations are now flowing through to the bottom line. GAAP net loss for the quarter narrowed to $2.7 million, a substantial improvement from a net loss of $12.4 million a year ago. For the full year, GAAP net loss improved by 60% to $20.6 million, and full GAAP operating income was $19.6 million compared to an operating loss of $25.9 million in FY 2025. The remaining gap between our positive operating income and our net loss is almost entirely interest expense on our debt. Adjusted EBITDA for the quarter was $26.4 million, up 42% year-over-year, with adjusted EBITDA margins expanding more than five points to 23%. For the full year, adjusted EBITDA was $97 million, up 44% at a margin of approximately 22%. The year-over-year improvement reflects organic revenue growth, the realization of cost synergies, and disciplined operating expense management. Next slide. Now let me turn to a few key efficiency measures centered on adjusted EBITDA to revenue ratios that we use to measure the health of the business. We are continuing to perform well on both the gross margin and expense to revenue ratios. On a total revenue basis, gross margin was a steady 67% when compared to last year. While the mix of revenue improved, services gross margin was impacted by immaterial out-of-period adjustments in cost of sales. We expect gross margin for services on a total basis to continue to expand in FY 2027. Moving to OpEx, where our continued focus on cost management and operating efficiency is evident across each component. In sales and marketing, we're investing intentionally because this spend is closely tied to revenue growth. We are actively managing the ratio appropriately while continuing to support top-line momentum. At the same time, we remain focused on reducing overhead, which is reflected in the improving G&A ratio, down six points year-over-year to 21%. As an innovative technology company, our R&D spend may fluctuate modestly, but we expect it to remain around the high single-digit range on a gross basis and approximately 4% on a net basis. Next slide. Now to the balance sheet, where our progress on deleveraging is one of the year's most important achievements. Through a combination of adjusted EBITDA growth and disciplined cash management, we reduced our leverage ratio by roughly a full turn to 2.47 times over the course of the year. A step change that materially strengthens our financial position and gives us increased flexibility to invest behind our growth priorities. Next slide. Free cash flow, which we define as operating cash flow, less net capital expenditures and capitalized software development, was -$9.5 million for the full year, representing a $27.6 million improvement from -$37.1 million in FY 2025. Importantly, the full-year result understates the momentum we built during the year. Free cash flow was -$13.7 million in the first half before swinging to +$4.1 million in the second half, a $17.8 million improvement within the year. Q3 and Q4 were both free cash flow positive, meaning the business is exiting the year with a firmly positive trailing run rate. As you can see, cash generation is not perfectly linear quarter-to-quarter. We do see seasonal working capital dynamics, and in the near term, we are deliberately funding investment and working capital ahead of the large South African agreement ramp. The trajectory is clear, as adjusted EBITDA compounds and integration-related costs roll off, our free cash flow conversion improves and our leverage continues to decline. Next slide. Let me turn to our outlook for fiscal 2027. Our priorities for the year center on three objectives: accelerating recurring services growth, continuing to expand margins, and reducing leverage. For the full year, we expect revenue to be in the range of $485 million-$490 million, representing growth of approximately 10% at the midpoint, and with services revenue exceeding $400 million. We expect adjusted EBITDA to be in the range of $122 million-$125 million, representing approximately 27% growth at the midpoint and continued margin expansion to roughly 25%. We expect positive free cash flow in the range of $30 million-$35 million. Next slide. More detail on free cash flow generation, where we start with adjusted EBITDA of $123 million. Our core earnings power before capital allocation decisions such as deleveraging. From there, CapEx is the largest use of cash at $52 million, reflecting continued investment in the business to support growth. Interest expense takes another $24 million, a function of our current debt structure. Taxes account for another $8 million in restructuring and other costs, largely tied to the cost restructuring program that Mel covered earlier, add another $8 million as we work through synergy capture. Working capital is a modest $4 million source of cash. Given timing variables associated with the South Africa agreement, we are presenting its balance sheet impact as a separate component of free cash flow for transparency. Importantly, favorable payment terms are expected to help mitigate the upfront investment in-vehicle device CapEx. Brings us to operating free cash flow of $33 million and a solid foundation as integration costs wind down and leverage decreases. Some additional context on our guidance, where financial performance is expected to build progressively throughout the year, driven by two factors. As covered earlier by Steve, the commencement of the South Africa National Treasury contract in the second quarter, with revenue and margin contribution accelerating sequentially through year end, and as covered by Mel, the next wave of our productivity and cost optimization initiatives, which require upfront investment in the first half and are expected to yield meaningful savings beginning in the second half. Together, these dynamics are expected to drive sequential margin improvement in each quarter of fiscal 2027 as we exit the year generating GAAP net income. Next slide. We brought the businesses together, delivered the cost synergies we committed to, grew revenue 22% and adjusted EBITDA 44%, turned GAAP operating income positive, and cut our leverage by roughly a full turn. We exit the year with clean comparables, accelerating recurring revenue, and a landmark public sector win poised to ramp. Looking out over the next three years, our objective is straightforward: sustainable revenue growth and profitable cash generative scaling that creates durable long-term shareholder value. The entire PowerFleet team is focused and motivated to execute against these goals. Back to Steve. Steve? Steve Towe Thank you, David. We can say with confidence that FY 2026 was the year we achieved our two-year strategic milestones set out for the initial stages of the combination thesis. In FY 2027, the opportunity in front of this business across geographies, verticals, and the full modularity of the Unity Suite is the largest it has ever been, and we have the team, the platform, and the financial foundation to go capture it responsibly and at scale. I want to thank our colleagues around the world for their extraordinary effort this year. The depth and pace of change they've navigated while delivering these results is remarkable. I want to thank our customers for their continued trust and our shareholders for their confidence in what we're building. The best is very much ahead of us. Operator, let's open the line for questions. Operator Certainly. The floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide the optimum sound quality. Please hold for just a few moments while we poll for questions. Your first question is coming from Scott Searle with Roth Capital. Please pose your question. Your line is live. Scott Searle Hey, good morning, good afternoon. Thanks for taking the questions. Nice to see that the work over the past couple of years is translating its way into the P&L and the outlook. I think maybe, Steve, just to hop in from a top-line perspective, I love to see the guide this year. It implies about 11% growth in services for the year. I think I heard a couple of things such as South Africa ramping up in the back half of this year. Meanwhile, near term, the opportunity pipeline seems like it's being driven by warehouse and AI camera. I'm wondering if you could provide a little bit more color in terms of the opportunity pipeline. I think you referenced that it's larger and higher quality. How we should expect to see things ramping over the course of this year and what the key swing factors are in terms of AI camera, warehouse, and South Africa kicking in. Steve Towe Sure. Thanks, Scott. I think you'll remember that we put forward that we were investing more in sales and marketing in the back half. We're seeing improved productivity. We're seeing as identified in the script in terms of increasing AI Video and Warehouse pipelines. All of those vectors are super strong, and that's the future value of the business. That combined with the productivity increases from the maturity of that sales investment, the continued ramp of our partnerships which are amplifying through the quarters. You will see sequential growth in revenue step by step, quarter by quarter. There's opportunity for upside. Obviously, as we continue to improve our win rates, as we get better as an organization, then I think there's a lot more opportunity ahead. And then incremental to that, obviously, is the South African contract. We're being conservative in terms of rollout timescales. We articulated that there was 60,000 vehicles plus. You'll remember originally we talked about 100,000 being kind of the barometer in terms of vehicle deployment. We've already got 60,000 in deployment planning. That will start to click in and phase in. Naturally, we are a little bit cautious. These are very complex in terms of their implementations. That will hit the back half of 2027 and then wholeheartedly into 2028. If we think about the core vectors of the business, the On-Site business is growing substantially. It was our strongest ever year, strongest ever pipeline, strongest ever win rates. We're outpacing the pipeline growth in terms of AI Video. We have not only the South Africa contract but also the ability for some of these other partnerships to deliver more. We also mentioned about Accenture, which is a great business development and opportunity in itself. Very strong indications. We're always conservative by nature. All the proof points that I would want in terms of are those investments paying off, we're starting to see the green shoots. Scott Searle Hey, Steve, maybe just to quickly follow up on that. I want to make sure that we're seeing sequential growth over the course of this year, then it sounds like we've got some other opportunities that start to kick in. The MNOs have been early, I think, in their training process. It sounds like that kicks in over the course of this year, South Africa towards the end of the year. Then it sounds like Accenture as well is new. Does that start to contribute this year? David Wilson Hey, Scott. Before Steve answers the specifics there, maybe let me just give you a quick high-level overview in terms of fiscal 2027, both from a top line and a bottom-line standpoint as well. In essence, it's built around three things. Firstly, revenue expectations grounded in a playbook we've already proven, adjusted EBITDA expectations reflect real operating leverage, and a rinse and repeat execution story. In terms of what we delivered this year, obviously, we're incredibly proud of what we delivered this year in terms of the momentum, both from a top and a bottom line standpoint. When we talk about fiscal 2027, we're not asking investors to believe in a theoretical plan. We've already shown that we can execute this type of transformation. That said, this is still a business in transformation, not a steady state one. The year will not move in a perfectly straight line quarter to quarter, that is one of the reasons we provide annual guidance, not quarterly guidance. We believe annual guidance gives a more accurate view of how we run the business and how value is created. Revenue adjusted EBITDA did not accrue evenly across quarters, managing to a quarterly number could distort the decisions we make. Our focus is on making the right decisions to create long-term shareholder value. We do, however, want to give investors helpful context on expected timing and progression of our key financial measures across the first half and the second half of fiscal 2027. Our revenue expectations are built on a proven foundation. We expect the fiscal 2027 first half and second half revenue split to be broadly similar to the 48%-52% split we delivered in fiscal 2026, with revenue building as the year progresses. More specifically, we expect first quarter fiscal 2027 revenue to grow sequentially at a rate broadly in line with the average sequential growth rate we delivered during the second half of fiscal 2026, with growth then accelerating from the second quarter onwards. That progression is supported by increased go-to-market investment, expected pipeline conversion, the Accenture partnership, and the South Africa round. We've demonstrated that these investments can drive strong growth, we expect the same playbook to support fiscal 2027. On adjusted EBITDA, the progression will be less linear than revenue. Revenue growth should drive EBITDA expansion through operating leverage, the quarterly cadence will also be shaped by the timing of our investments and cost actions. First, as Steve mentioned earlier, we are making incremental go-to-market investments early in the year to support stronger revenue growth as it progresses. There is a natural timing lag between these investments. The cost comes first, while the productivity and revenue contribution build over time as sales productivity ramps. Second, as Melissa discussed, we are investing early in fiscal 2027 to unlock meaningful efficiencies. Together, these investments create some near-term margin pressure, with first quarter adjusted EBITDA margin expected to be about one percentage point lower than fourth quarter 2026. We expect the returns to build later in the year as sales productivity improves, revenue ramps, and cost savings begin to flow through. The timing of these cost savings is the key difference versus fiscal 2026. In fiscal 2026, the majority of annualized cost savings were realized in the first four months of the year, which drove a meaningful adjusted EBITDA step-up in the second quarter. In fiscal 2027, the majority of the savings are expected to begin flowing through from the start of the third quarter. That shifts more of the adjusted EBITDA benefit to the second half of the year. That timing is the primary reason we expect fiscal 2027 first half to second half adjusted EBITDA build to be a couple of points more second half weighted than the 46%-54% split we delivered in fiscal 2026. The key message is simple. First, our revenue expectations are built on a proven foundation. Second, our adjusted EBITDA expectations reflect clear operating leverage, even though the quarterly progression will not be linear. Third, the strength of execution story is evident in the financial results. Fiscal 2027 is designed to build on that playbook and further compound growth, margin expansion, and cash generation. A couple of other final points that will be helpful in terms of key EBITDA revenue measures. We expect gross margin to be close to 70% for the year from an EBITDA standpoint, SG&A spend for the year to be close to 40% of revenue, and expensed R&D be consistent at about 4% of revenue. From a GAAP income standpoint, we expect to be GAAP income positive in the second half. For cash flow, we expect cash flow to be approximately 90% of the guide coming in the second half of the year. I just wanted to share that, Scott. It's just helpful in terms of people thinking about the ramps that we discussed on the call and in the release. Now I'll hand it back to Steve for your specific questions. Steve Towe Cheers, David. In terms of Accenture, Scott, it's a business development relationship just kicking off. It's a relationship where Accenture are looking to really cement themselves as an AI and digital transformation partner with some of the largest clients that you can imagine around the world. As part of that stable and that portfolio, they're wanting PowerFleet solutions to be part of that. It will take a while to ramp as these things do. We've just literally launched in the last four to six weeks. It's more kind of, again, a back-end loaded stroke FY 2027 stroke 2028 opportunity, but significant opportunity. I think another significant proof point where the quality of our data, the accuracy of our data, the uniqueness of the data sets we have, particularly where we have both warehouse and over-the-road mobile resource data, is important to some of the largest clients and integration partners in the world. Scott Searle Great. Very helpful. If I could, then I'll get back in the queue. Dave, just to follow up on the free cash flow for the year. I think you just indicated that's very back-end loaded. I'm wondering if you could address just the CapEx timing of that as well. Big CapEx number, I think that was related to South Africa, but you also mentioned some other financing alternatives on that front. I wonder if you could provide a little bit of color on that front. Then in terms of potential use of cash, just think about debt reduction and further delevering, or are there some other things that you're thinking about? Thanks. David Wilson Yeah. Thanks, Scott. In terms of the CapEx, we are presenting the balance sheet impact as a separate component of CapEx. For the year, it is very modest, but in terms of timing, there is a timing impact that is pretty significant. In the first half of the year, we will be investing, as Steve referred to earlier, we've got a backlog of close to 60,000 vehicles to go implement, which is obviously fantastic. The IVD, the in-vehicle investment, will happen first. In terms of payment terms, we're negotiating with these large public entities. We have line of sight to get paid annually in advance. There will be a significant cash outflow for the in-vehicle devices. As and when they are implemented and installed, we do expect to see significant cash coming in terms of annual advance payments that will largely offset that. That's a key reason why cash is lower in the first half than the second half. The other key driver is what Melissa covered earlier in terms of rationalizing the cost base. There's obviously a cost attached to doing that. That is going to be something we'll be executing in the first half, and we'll get the returns in the second half. That's a key driver that's happening there. Then to your final point, in terms of driving improved cash flow, it's as much about improved cash flow as it is about actually landing more deals. Particularly when you think about On-Site in terms of that piece of our business, an ability for key customers to actually get access to vendor financing, I think is going to improve our win rate and the size of the pipe we can generate. In terms of how that's structured, that'll bring cash in more quickly. We'll also be doing that in terms of what others, large players in the industry do in terms of on-road, in terms of allowing customers to, in essence, find a way to pay us more quickly from a payment in advance standpoint. Important changes, important shifts will have a positive impact in terms of absolute cash generation in fiscal 2027. Steve Towe David, just cover the other part of Scott's question about uses of capital. David Wilson Yes. In terms of uses, obviously an obvious one is paying down the debt. That's clearly line of sight there. We have meaningful portion of the debt that is revolver-based, so that is an action we can take. There's also a lot of inbound questions from investors in terms of, as you start to generate meaningful cash, just given where the stock is trading, are there more shareholder-friendly avenues available to you? We're clearly sympathetic to that. Ultimately a board decision, this is a board that is focused on how do we maximize shareholder value, shareholder returns. It's certainly something that the board will want to think through in terms of potential stock repurchase programs, those types of things, as things progress over time. Scott Searle Great. Very helpful. Thanks so much. Great quarter. I'll get back in the queue. David Wilson Thanks, Scott. Operator Your next question is coming from Anthony Stoss with Craig-Hallum. Please pose your question. Your line is live. Anthony Stoss Morning, everybody. Congrats on the 14% recurring revenue growth especially. Steve, on the South African contract, I'm curious, sounds like you're starting at AI Video. Is there room for expansion within that contract? If there is, how quickly do you think that would happen? Then the second part of my question is, why did Accenture choose you? Was it for the in-warehouse solutions or was it for Unity? I'd love to hear more on both those fronts. Steve Towe Sure. Great questions. Hi, Tony. In terms of the South Africa contract, we have the ability to sell more services. I think there was guardrails around the initial tender, there's a lot of opportunity both in one-off services and other future revenues. We're already seeing requests for broader plays in terms of the data requirements that we've been able to have. That will take a while to kick in. Obviously, you're deploying major enterprises with large scale deployments. We have to get our feet wet in terms of doing that. But we're very encouraged about potential amplification of those accounts once they are installed. It really is a stellar opportunity for us to sell broader concepts, more integrated data plays, and more visibility to the end client. We couldn't be happier with that. In terms of Accenture, I think a couple of things. In terms of the uniqueness of the data sets that we have, particularly based around the warehouse. The connected warehouse space is very, I think, key and ripe for digital transformation. You'll remember our Pepsi video that we put out in November where they were saying they were doing a lot with spreadsheets and pens and paper. There's a big drive there. I think in terms of AI transformation, people ask me about the defensibility of the company and, I think the likes of Accenture choosing us rather than trying to use AI to create those data sets themselves is key testament to the proprietary data that we keep. I think, the quality of that data. Thirdly, they're very excited by the integration possibilities and the automation possibilities of the data highway from a Unity perspective. All those things are key and apparent. The strategies that we've always had around, once you get the data highway in, you're able to connect multiple devices, whether that's on the road, it's in the yard, it's wherever it is, to provide much deeper levels, much stronger levels of mission-critical data. That was another key piece of that. Again, very proud of having the opportunity. We've now got to maximize that opportunity. I think it's another key tenet in that, just the different level of capability that we now seem to have and the fact that we can stand side by side with some of these major organizations. Anthony Stoss Great. Thanks a lot, Steve. Appreciate it. Congrats. Operator Your next question is coming from Dylan Becker with William Blair. Please pose your question. Your line is live. Jackson Bogley Hey, guys. This is Jackson Bogley on for Dylan Becker. I wanted to go back to the South African deal. I know we've talked about that a lot, but obviously it's a very big deal for you guys. Could you maybe walk us through how the deployment de-risks over the ramp period? On top of that, do you see this as a repeatable template for other public sector or large enterprise opportunities globally? Or do you see this more as a unique implementation given the size and scale of the deal? Steve Towe Great question. Firstly, in terms of the rollout, the process that we went through was we had to be awarded, which we got the award letter, which was what we discussed last time out. We then signed the overall contract, which is all of the key consistent agreements with the National Treasury. We're now in the process of getting to deployment phases with, as we've said, 60,000-plus vehicles. We originally said 100,000 would be a good barometer. There's up to 200,000 in terms of the overall estate that we have the opportunity to work with. As this matures and progresses, you start having conversations, you get into agreements with each different entity. That is now the process that we're in. Once we get those confirmed, which we feel very confident about, the original 100,000, and I think, and some that we'll be able to do over time, you're then into that true deployment phase, which takes a number of weeks or a number of months, just dependent on the size and complexity of the organization that you're in. This is recurring revenue. You're talking $20 million-$30 million of ARR that comes through. Then, to the question that came earlier, we're then able to sell multiple one-off and incremental services to that contract. It's a minimum of five years. There is normally a long tail off the back of that. Previously, some of the contracts that we're now replacing were in process for more than 15 years. It's a very strong and solid base for us to build on as we go through this phase. In terms of being able to replicate it, we absolutely see the opportunity in different territories. One of the great things about PowerFleet is its global nature, operating across six continents. I think, from a credibility factor, I mentioned in the prepared remarks that we would have struggled to be able to achieve such a contract previously. We've now got interest with other opportunities, and this kind of feeds on itself in terms of your track record and reputation and also the value that you drive. We only see more of these to come. It is a phenomenally big contract, we're not expecting lots of wins like that in short order. I think it's a great proof point, and it gives us a lot of motivation for the future. Jackson Bogley Great. That's super helpful. Then maybe on the Unity platform, the On-Site safety, you've positioned that On-Site safety segment as a key entry point into the broader enterprise operations. How are you thinking about the durability of that land and expand motion, and what gives you guys conviction that early On-Site wins can convert into those larger multi-product deals over time? Thanks. Steve Towe Yeah. Think about what we're doing. We're delivering safety, compliance, efficiency, maintenance, and sustainability services for major enterprises. We talked about the two, which were previously our largest contract wins ever in the company. That also happened in fiscal year 2026 with Fortune 500 companies. When you get into those organizations and you're providing those services and you are making real difference to safety and compliance requirements, the people that are responsible for that are ultimately the C-suite of the organization. A lot of times, the people who are responsible on a day-to-day basis for that, for safety and compliance in particular, also have the same remit for their mobile resources. We're already seeing customers who are wanting to bring in third-party data from some of our competitors and OEMs to provide that full holistic view. We call that On-Site+. Then we're also displacing some of those competitors because ultimately we have the full suite to do it. We've already proven that model. We're now getting more mature in how we handle that from a sales perspective. That gives us good confidence that is durable. Because ultimately we're selling to the safety guys, the C-suite, and also to the CIOs in the business. They have the full data sharding problem and the integration automation challenge. We're getting to different audiences versus the majority of our competitors. Ultimately, that single pane of glass is seemingly something that is mission-critical to a lot of organizations that are struggling to make use of the datasets that they've got. That's kind of that. Then even if you take the FEMSA opportunity, which is actually the other way. We started with safety and compliance over the road, and you've heard there that FEMSA are now rolling out the warehouse solution for that exact same reason. To get that single view across their whole enterprise, both nationally and potentially internationally as well. Operator Your next question is coming from Gary Prestopino with Barrington. Please pose your question. Your line is live. Gary Prestopino Hi. Good morning, Steve and David. Most of my questions have been answered, but a couple of things here. First of all, with this new contract, this is going to probably, in South Africa, it's going to move your South African-generated revenues up versus where they have been. Could you maybe talk about the composition of your business in South Africa? Is it with South African-centric based companies? What's the economic situation over there? I'm only asking this because there was an article in The Wall Street Journal a couple of months back where it said that international companies are pulling out of South Africa because of the instability over there with the government and what's going on. Maybe could you address that for us, please? David Wilson Yeah, Gary, I can pick that one up. That Wall Street Journal article, I recall when it came out, we have a pretty good relationship, to say the least, with RMB, actually met with some of their leaders that week. In terms of the substance behind that, there's no real significant sort of shift out, I think that was overblown, to say the least. Just to kill that point. In terms of the business itself, it is primarily centered in South Africa. There's a portion of it which is a phenomenal franchise business. From a stolen vehicle recovery standpoint, we have the highest recovery rates. That is a high margin, strong cash generation business. People buy based on the brand, it's a great repeat business. That is a meaningful portion of our South Africa business. In terms of the remaining business, it's really a mix between sort of large, successful enterprises within South Africa, as well as global multinationals, both within South Africa and across Africa as a whole. It's a healthy book of business. It's a strong cash-generating book of business. In terms of are we seeing any sort of significant headwinds, we're not seeing any significant headwinds. Steve Towe Yeah, David, maybe just cover off our composition of revenue, because although South Africa is a key part of it- David Wilson Yeah Steve Towe there's a lot more to it, right? David Wilson Yeah. On a rough and ready basis, about 35% of it comes from North America. 25% of it, sort of the South Africa centric piece. 25% of it would be Europe and EMEA. Sorry. Europe and Middle East. Then in terms of the rest, about 10% of it comes from Australia, and then the 5% is the rest of the world. We have a good geographical spread. Clearly, we have the best footprint in terms of reach globally with 350 resale partners, those types of things. We have the best access to global market than anyone else in our space. Gary Prestopino Okay. Thank you. David Wilson Thanks, Gary. Operator Your next question is coming from Alex Sklar with Raymond James. Please pose your question. Your line is live. Alexander Sklar Great. Thank you. Steve or David, a couple questions on the positive fourth quarter bookings commentary. Can you just provide a little bit more quantitative context on the magnitude of bookings increase exiting the year, either on an ARR or new ACV perspective versus last year? And then just in terms of the indirect channel, how much did that channel contribute as a % of the new business in Q4? Thanks. Steve Towe Yeah. In terms of 30% is indirect, 70% is direct. We're seeing an increasing amount of indirect channel business. That's good in terms of that. Just repeat your first question, if you would. Alexander Sklar Yeah. There was just some really impressive TCV wins you spoke to. Steve Towe Yeah Alexander Sklar on a kind of comparable basis, adjusted for duration, anything on kind of ARR or ACV versus Q4 of last year, FY 2026 versus FY 2025? Steve Towe Yeah. I think the one stat that I will give you is that ARR grew 13% year-over-year. Alexander Sklar Okay, great. David, maybe a follow-up for you. The nice step up in services gross margin. I heard you continue to expect that to continue into FY 2027. Can you just talk about some of the puts and takes just driving that in terms of services mix, the recurring piece within services, device costs? How should those all play into FY 2027? David Wilson Yeah. From a composite basis, services grows at a faster rate than total revenue. We saw a nice increase year-over-year in terms of moving sort of 75%-21% in terms of that breakout. We do expect that to continue. In terms of as you double click into services, in terms of the growth there, round about 95% of that line is recurring revenue. In terms of how that changes over time, there may be an increase in terms of non-recurring in the short term just as we work through the South Africa ramp, but nothing material there. Again, the mix will continue to improve. There is underlying operating leverage in the model. Around about 20%-25% of the cost base you should assume is fixed. As we scale up, it naturally drives operating leverage there. The final point is what Mel discussed in her prepared remarks. There's still work we will be doing and can be done in terms of consolidating the underlying platforms. If you think about the ability to code at scale and speed with AI, we've never had a richer set of opportunities to make a massive impact in terms of just that underlying cost base. We do expect to see that sort of start to flow through as we work through fiscal 2027. Long way of saying there's both current trajectory, current momentum that works in our favor from a mix standpoint, as well as there's incremental levers we can pull and will pull that will naturally amplify and extend margins over time too. Alexander Sklar All right, great. Thank you both. David Wilson Thanks. Operator Your next question is coming from Greg Gibas with Northland Securities. Please pose your question. Your line is live. Gregory Gibas Hey, great. Congrats on the quarter, guys. Thanks for taking the questions. Wondering if you could quantify the net impact on profitability you expect the South African contract will have, maybe as implied by your annual guidance. Maybe going back to your commentary around the timing of free cash flow or I guess the cadence first half, second half. I understand kind of rationalizing the cost base and associated costs there, CapEx timing and the South African deal. As it relates to maybe the go-to-market investments, more of that being recognized probably in the back half as you discuss the pipeline conversion increases. Can you be a little bit more specific on kind of those investments there and timing as it relates to those? David Wilson Yeah, sorry, Greg. Repeat that first question again. Gregory Gibas Yeah. Quantification of the South African contract on profitability. David Wilson Got it. Thank you. Yeah, the South Africa contract in terms of margin profile, we've said in the past, it's similar growth margin profile to the typical business that we do. No significant change there. If you think about it from an operating leverage standpoint, obviously there's clear operating leverage there. We get to sort of leverage our existing install base. It is accretive from a margin standpoint, and obviously Steve's walked you through just the timing of the ramp, the quantum of the ramp from an ARR standpoint over time. That'll give you a sense on a go-forward basis. In terms of the cash generation sort of first half to second half, again, there's investments up front, in terms of both the cost out as well as the South Africa business. There is gains happening in the second half. pretty much consistent with what I shared earlier, Greg, in terms of just the timing of that stuff flowing through. Steve Towe I think, David, it's fair to say. Gregory Gibas Okay both top line and bottom line. I think it's fair to say it's pattern recognition, right? David Wilson Yeah. Steve Towe if you look at the way that 2026 scaled top line and bottom line, and cashing, you look the way that David's remarks, I think this is just a very similar trajectory and way of working, in what is still a transformational business, still a business with lots more opportunity to grow and we're flexing our muscles and some of that takes some investment up front to do so. I think, if you see the track record that we've now done over the last two years, expect the same kind of performance in FY 2027. Gregory Gibas That's fair. Appreciate it, guys. I guess just lastly, could you remind us of your net leverage targets and any rough expectations on when you reasonably can reach those, that target range? David Wilson Yeah. You can see obviously good trend line, great progression, great progress that we did in fiscal 2026. As you look to fiscal 2027, we'll be comfortably under 2 times levered as we exit the year. In essence, that's the sort of target range, as you know, somewhere between 1.5, less than two, so 1.5-1.75 times, I think is a pretty good sweet spot to be shooting for. Gregory Gibas That's great. Thanks very much. David Wilson Thanks, Greg. Operator There appear to be no further questions in queue at this time. I would now like to turn the floor back over to the CEO, Steve Towe, for closing remarks. Steve Towe Thanks everybody for attending today. Appreciate it was a longer call, but I think there was a lot to actually get through, which was great. Look forward to speaking to you all again in about eight weeks' time from now. I think, David, you just want to say something before we finish? David Wilson Yeah, just a quick update before we close. In terms of filing the 10-K, everything's lined up for it to be filed today. In terms of material weaknesses, all the material weaknesses are cleared based on where we are today. Some good news as the 10-K comes out during the day today. Steve Towe Thanks everyone. Enjoy your day. We'll speak soon. Bye-bye. Operator Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation. Before you buy stock in PowerFleet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PowerFleet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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