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MiX Telematics Reports Third Quarter Fiscal 2022 U.S. GAAP Financial Results

Third Quarter Highlights:

  • Total revenues of $36.2 million
  • Subscription revenues of $30.3 million
  • Net subscriber additions of 20,300, bringing the total base to over 790,500 subscribers
  • Net income of $0.6 million
  • Adjusted EBITDA of $7.1 million, at a 19.6% margin
  • Cash and cash equivalents of $35.9 million at quarter end

MiX Telematics Limited (“MiX Telematics”) (NYSE: MIXT, JSE: MIX), a leading global Software-as-a-Service (“SaaS”) provider of connected fleet management solutions, today announced financial results, in accordance with accounting principles generally accepted in the United States (“GAAP”), for the third quarter of fiscal 2022, which ended December 31, 2021.

“MiX’s third quarter performance reflected an improved demand environment, particularly for enterprise opportunities. We added 20,300 subscribers in the quarter, our best performance since before the pandemic,” said Stefan Joselowitz, Chief Executive Officer of MiX Telematics.

Joselowitz continued, “Now that we have returned to sustainable revenue growth, we are increasingly optimistic about our ability, over the longer-term, to deliver our stated growth and profitability targets.”

Financial Results for the Three Months Ended December 31, 2021

Subscription Revenues: Subscription revenues were $30.3 million, an increase of 4.3% compared to $29.1 million for the third quarter of fiscal 2021. Subscription revenues represented 83.7% of total revenues during the third quarter of fiscal 2022. Subscription revenues increased by 3.5% on a constant currency basis, year over year. During the third quarter of fiscal 2022, the Company’s subscriber base grew by a net 20,300 subscribers.

The majority of our revenues and subscription revenues are derived from currencies other than the U.S. Dollar. Accordingly, the weakening of the U.S. Dollar against these currencies (in particular against the South African Rand) following recent currency volatility, has positively impacted our revenue and subscription revenues reported in U.S. Dollars. Compared to the third quarter of fiscal 2021, the South African Rand strengthened by 1% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate averaged R15.42 in the third quarter of fiscal 2022 compared to an average of R15.65 during the third quarter of fiscal 2021. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the third quarter of fiscal 2022 led to a 0.8% increase in reported U.S. Dollar subscription revenues.

Total Revenues: Total revenues were $36.2 million, an increase of 6.2% compared to $34.1 million for the third quarter of fiscal 2021. Total revenues increased by 5.0% on a constant currency basis, year over year. Hardware and other revenues were $5.9 million, an increase of 17.0%, compared to $5.0 million for the third quarter of fiscal 2021.

The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the third quarter of fiscal 2022 led to a 1.2% increase in reported U.S. Dollar revenues.

Gross Margin: Gross profit was $22.5 million, compared to $21.3 million for the third quarter of fiscal 2021. Gross profit margin was 62.0%, compared to 62.5% for the third quarter of fiscal 2021. The decline in the gross profit margin was due to the increase in hardware and other revenues which carry lower margins than subscription revenue. The subscription revenue margin during the third quarter of fiscal 2022 was 70.8%.

Income From Operations: Income from operations was $2.6 million, compared to $5.0 million for the third quarter of fiscal 2021. Operating income margin was 7.1%, compared to 14.8% for the third quarter of fiscal 2021. Operating expenses of $19.9 million increased by $3.6 million, or 22.1%, compared to the third quarter of fiscal 2021.

Net Income and Earnings Per Share: Net income was $0.6 million, compared to net income of $5.9 million in the third quarter of fiscal 2021. During the third quarter of fiscal 2022, net income included a net foreign exchange gain of $0.1 million before tax, as well as a $1.1 million deferred tax charge on a U.S. Dollar intercompany loan between MiX Telematics and MiX Telematics Investments Proprietary Limited (“MiX Investments”), a wholly-owned subsidiary of the Company. During the third quarter of fiscal 2021, net income included a net foreign exchange loss of $0.1 million before tax and a $2.7 million deferred tax credit on a U.S. Dollar intercompany loan between MiX Telematics and MiX Investments.

Earnings per diluted ordinary share was 0.1 U.S. cents, compared to 1.1 U.S. cents in the third quarter of fiscal 2021. For the third quarter of fiscal 2022, the calculation was based on diluted weighted average ordinary shares in issue of 564.6 million compared to 559.8 million diluted weighted average ordinary shares in issue during the third quarter of fiscal 2021. On a ratio of 25 ordinary shares to one American Depositary Share (“ADS”), earnings per diluted ADS were 3 U.S. cents compared to 26 U.S. cents in the third quarter of fiscal 2021.

The Company’s effective tax rate was 76.0%, compared to negative 18.7% in the third quarter of fiscal 2021. Ignoring the impact of net foreign exchange losses net of tax, the tax rate used in determining non-GAAP net income below was 35.5% compared to 34.3% in the third quarter of fiscal 2021.

Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, was $7.1 million, compared to $9.5 million for the third quarter of fiscal 2021. Adjusted EBITDA margin, a non-GAAP measure, for the third quarter of fiscal 2022 was 19.6%, compared to 28.0% for the third quarter of fiscal 2021.

Non-GAAP Net Income and Non-GAAP Net Income Per Share: Non-GAAP net income was $1.6 million, compared to $3.4 million for the third quarter of fiscal 2021. Non-GAAP net income per diluted ordinary share was 0.3 U.S. cents, compared to 0.6 U.S. cents in the third quarter of fiscal 2021. At a ratio of 25 ordinary shares to one ADS, the non-GAAP net income per diluted ADS was 7 U.S. cents compared to 15 U.S. cents in the third quarter of fiscal 2021.

Cash and Cash Equivalents and Cash Flow: At December 31, 2021, the Company had $35.9 million of cash and cash equivalents, compared to $45.5 million at March 31, 2021.

Net cash provided by operating activities for the third quarter of fiscal 2022 was $4.0 million compared to $10.2 million for the third quarter of fiscal 2021. The Company invested $5.5 million in capital expenditures (including investments in in-vehicle devices of $3.7 million), leading to negative free cash flow, a non-GAAP measure, of $1.5 million in the quarter. The Company generated free cash flow of $8.7 million for the third quarter of fiscal 2021 when the Company invested $1.5 million in capital expenditures (including investments in in-vehicle devices of $0.4 million).

Net cash used in financing activities amounted to $2.0 million for the third quarter of fiscal 2022, compared to $1.7 million used during the third quarter of fiscal 2021. The cash used in financing activities during the third quarter of fiscal 2022 mainly consisted of ordinary shares repurchased of $0.8 million and dividends paid of $1.4 million, offset by facilities utilized of $0.2 million. The cash used in financing activities during the third quarter of fiscal 2021 consisted of dividends paid of $1.4 million and $0.3 million from a reduction in facilities utilized.

During the quarter, the South African Rand weakened against the U.S. Dollar from R15.12 at September 30, 2021 to R15.95 at December 31, 2021 and as a result, cash decreased by $0.4 million due to foreign exchange losses.

Quarterly Dividend

The most recent dividend payment of 4 South African cents (0.3 U.S. cents) per ordinary share and 1 South African Rand (6 U.S. cents) per ADS was paid on December 2, 2021 to shareholders on record on November 19, 2021. A dividend of 4 South African cents per ordinary share and 1 South African Rand per ADS will be paid on March 3, 2022 to shareholders on record as of the close of business on February 18, 2022.

The details with respect to the dividends declared for holders of our ADSs are as follows:

Ex dividend on New York Stock Exchange (NYSE)

Thursday, February 17, 2022

Record date

Friday, February 18, 2022

Approximate date of currency conversion

Monday, February 21, 2022

Approximate dividend payment date

Thursday, March 3, 2022

Share Repurchases

In the third quarter of fiscal 2022, the Company repurchased 1,567,791 ordinary shares on the open market at prevailing market prices, for a total consideration of $0.8 million.

Business Outlook

Due to the uncertainty surrounding the level of business disruption as a result of the spread of COVID-19, the Company has suspended its practice of issuing financial guidance and as a consequence no guidance has been issued for the full 2022 fiscal year.

Conference Call Information

MiX Telematics management will host a conference call and audio webcast at 8:00 a.m. (Eastern Daylight Time) and 3:00 p.m. (South African Time) on Thursday, February 3, 2022 to discuss the Company’s financial results and current business outlook.

  • To access the call, dial 1-877-451-6152 (within the United States) or 0-800-983-831 (within South Africa) or 1-201-389-0879 (outside of the United States). The conference ID is 13726444.
  • A replay of this conference call will be available for a limited time at 1-844-512-2921 (within the United States) or 1-412-317-6671 (within South Africa or outside of the United States). The replay conference ID is 13726444.

About MiX Telematics Limited

MiX Telematics is a leading global provider of connected fleet and mobile asset solutions delivered as SaaS to over three-quarters of a million subscribers in over 120 countries. The Company’s products and services provide enterprise fleets, small fleets and consumers with solutions for efficiency, safety, compliance and security. MiX Telematics was founded in 1996 and has offices in South Africa, the United Kingdom, the United States, Uganda, Brazil, Australia, Romania and the United Arab Emirates as well as a network of more than 130 fleet partners worldwide. MiX Telematics shares are publicly traded on the Johannesburg Stock Exchange (JSE: MIX) and MiX Telematics American Depositary Shares are listed on the New York Stock Exchange (NYSE: MIXT). For more information, visit www.mixtelematics.com.

Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements regarding our position to execute on our growth strategy, and our ability to expand our leadership position. These forward-looking statements include, but are not limited to, Company’s beliefs, plans, goals, objectives, expectations, assumptions, estimates, intentions, future performance, other statements that are not historical facts and statements identified by words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates” or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in, or suggested by, these forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved.

Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of known and unknown risks and uncertainties, some of which are beyond our control including, without limitation:

  • the severity and duration of the COVID-19 pandemic, the pandemic’s economic impact on the geographical locations of our regional service organizations and central service organization, the impact of the pandemic on our customers’ ability to meet their financial obligations, our ability to implement cost containment and business recovery strategies during the pandemic, local and foreign government regulations implemented to combat the pandemic and any future developments on the pandemic;
  • our ability to attract, sell to and retain customers;
  • our ability to improve our growth strategies successfully, including our ability to increase sales to existing customers;
  • our ability to adapt to rapid technological change in our industry;
  • competition from industry consolidation;
  • loss of key personnel or our failure to attract, train and retain other highly qualified personnel;
  • our ability to integrate any businesses we acquire;
  • the introduction of new solutions and international expansion;
  • our dependence on key suppliers and vendors to manufacture our hardware;
  • our dependence on our network of dealers and distributors to sell our solutions;
  • businesses may not continue to adopt fleet management solutions;
  • our future business and system development, results of operations and financial condition;
  • expected changes in our profitability and certain cost or expense items as a percentage of our revenue;
  • changes in the practices of insurance companies;
  • the impact of laws and regulations relating to the Internet and data privacy;
  • our ability to protect our intellectual property and proprietary technologies and address any infringement claims;
  • our ability to defend ourselves from litigation or administrative proceedings relating to labor, regulatory, tax or similar issues;
  • significant disruption in service on, or security breaches of, our websites or computer systems;
  • our dependence on third-party technology;
  • fluctuations in the value of the South African Rand;
  • economic, social, political, labor and other conditions and developments in South Africa and globally;
  • our ability to issue securities and access the capital markets in the future; and
  • other risks set forth in our filings with the U.S. Securities Exchange Commission.

We assume no obligation to update any forward-looking statements contained in this press release and expressly disclaim any obligation to do so, whether as a result of new information, future events or otherwise, except as required by law.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include references to Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per share, free cash flow and constant currency, which are non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses these measures, please see Annexure A titled “Non-GAAP Financial Measures”. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP is provided in Annexure A.

 

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

 

 

 

March 31,

2021

 

December 31,

2021

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

45,489

 

 

$

35,863

 

Restricted cash

 

 

854

 

 

 

835

 

Accounts receivables, net

 

 

19,265

 

 

 

24,879

 

Inventory, net

 

 

3,109

 

 

 

3,440

 

Prepaid expenses and other current assets

 

 

8,509

 

 

 

8,866

 

Total current assets

 

 

77,226

 

 

 

73,883

 

Property and equipment, net

 

 

23,463

 

 

 

28,753

 

Goodwill

 

 

43,938

 

 

 

41,796

 

Intangible assets, net

 

 

18,303

 

 

 

18,256

 

Deferred tax assets

 

 

3,782

 

 

 

5,121

 

Other assets

 

 

4,434

 

 

 

4,291

 

Total assets

 

$

171,146

 

 

$

172,100

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Short-term debt

 

$

1,674

 

 

$

2,298

 

Accounts payables

 

 

6,560

 

 

 

6,502

 

Accrued expenses and other liabilities

 

 

17,330

 

 

 

18,762

 

Deferred revenue

 

 

5,788

 

 

 

7,662

 

Income taxes payable

 

 

1,345

 

 

 

1,936

 

Total current liabilities

 

 

32,697

 

 

 

37,160

 

Deferred tax liabilities

 

 

9,187

 

 

 

9,991

 

Long-term accrued expenses and other liabilities

 

 

5,863

 

 

 

5,513

 

Total liabilities

 

 

47,747

 

 

 

52,664

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

MiX Telematics Limited stockholders’ equity

 

 

 

 

Preference shares: 100 million shares authorized but not issued

 

 

 

 

 

 

Ordinary shares: 605.6 million and 608.1 million no-par value shares issued and outstanding as of March 31, 2021 and December 31, 2021, respectively

 

 

67,401

 

 

 

67,401

 

Less treasury stock at cost: 53.8 million and 55.4 million shares as of March 31, 2021 and December 31, 2021, respectively

 

 

(17,315

)

 

 

(18,116

)

Retained earnings

 

 

76,710

 

 

 

77,669

 

Accumulated other comprehensive income

 

 

1,924

 

 

 

(3,201

)

Additional paid-in capital

 

 

(5,326

)

 

 

(4,322

)

Total MiX Telematics Limited stockholders’ equity

 

 

123,394

 

 

 

119,431

 

Non-controlling interest

 

 

5

 

 

 

5

 

Total stockholders’ equity

 

 

123,399

 

 

 

119,436

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

171,146

 

 

$

172,100

 

 

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

Revenue

 

 

 

 

 

 

 

Subscription

$

29,072

 

 

$

30,324

 

 

$

82,570

 

 

$

92,299

 

Hardware and other

 

5,032

 

 

 

5,889

 

 

 

9,979

 

 

 

14,886

 

Total revenue

 

34,104

 

 

 

36,213

 

 

 

92,549

 

 

 

107,185

 

Cost of revenue

 

 

 

 

 

 

 

Subscription

 

8,889

 

 

 

8,869

 

 

 

23,914

 

 

 

27,215

 

Hardware and other

 

3,915

 

 

 

4,893

 

 

 

7,765

 

 

 

11,696

 

Total cost of revenue

 

12,804

 

 

 

13,762

 

 

 

31,679

 

 

 

38,911

 

Gross profit

 

21,300

 

 

 

22,451

 

 

 

60,870

 

 

 

68,274

 

Operating expenses

 

 

 

 

 

 

 

Sales and marketing

 

2,882

 

 

 

4,027

 

 

 

8,075

 

 

 

11,411

 

Administration and other

 

13,384

 

 

 

15,841

 

 

 

40,506

 

 

 

46,214

 

Total operating expenses

 

16,266

 

 

 

19,868

 

 

 

48,581

 

 

 

57,625

 

Income from operations

 

5,034

 

 

 

2,583

 

 

 

12,289

 

 

 

10,649

 

Other (expense)/income

 

(95

)

 

 

114

 

 

 

(270

)

 

 

178

 

Net interest income/(expense)

 

58

 

 

 

(75

)

 

 

(82

)

 

 

(294

)

Income before income tax expense

 

4,997

 

 

 

2,622

 

 

 

11,937

 

 

 

10,533

 

Income tax benefit/(expense)

 

936

 

 

 

(1,992

)

 

 

(130

)

 

 

(5,073

)

Net income

 

5,933

 

 

 

630

 

 

 

11,807

 

 

 

5,460

 

Less: Net income attributable to non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to MiX Telematics Limited

$

5,933

 

 

$

630

 

 

$

11,807

 

 

$

5,460

 

 

 

 

 

 

 

 

 

Net income per ordinary share:

 

 

 

 

 

 

 

Basic

$

0.01

 

 

$

0.001

 

 

$

0.02

 

 

$

0.01

 

Diluted

$

0.01

 

 

$

0.001

 

 

$

0.02

 

 

$

0.01

 

 

 

 

 

 

 

 

 

Net income per American Depositary Share:

 

 

 

 

 

 

 

Basic

$

0.27

 

 

$

0.03

 

 

$

0.54

 

 

$

0.25

 

Diluted

$

0.26

 

 

$

0.03

 

 

$

0.53

 

 

$

0.24

 

 

 

 

 

 

 

 

 

Ordinary shares:

 

 

 

 

 

 

 

Weighted average

 

551,106

 

 

 

552,452

 

 

 

548,752

 

 

 

552,234

 

Diluted weighted average

 

559,845

 

 

 

564,580

 

 

 

559,172

 

 

 

565,076

 

 

 

 

 

 

 

 

 

American Depositary Shares:

 

 

 

 

 

 

 

Weighted average

 

22,044

 

 

 

22,098

 

 

 

21,950

 

 

 

22,089

 

Diluted weighted average

 

22,394

 

 

 

22,583

 

 

 

22,367

 

 

 

22,603

 

 

 

MIX TELEMATICS LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended December 31,

 

 

 

2020

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

Cash generated from operations

 

$

33,156

 

 

$

18,621

 

Interest received

 

 

496

 

 

 

300

 

Interest paid

 

(281

)

 

 

(262

)

Income tax paid

 

 

(2,437

)

 

 

(3,999

)

Net cash provided by operating activities

 

 

30,934

 

 

 

14,660

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Acquisition of property and equipment – in-vehicle devices

 

 

(2,957

)

 

 

(13,413

)

Acquisition of property and equipment – other

 

 

(264

)

 

 

(1,462

)

Proceeds from the sale of property and equipment

 

 

 

 

 

54

 

Acquisition of intangible assets

 

 

(2,968

)

 

 

(4,083

)

Net cash used in investing activities

 

 

(6,189

)

 

 

(18,904

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from issuance of ordinary shares in relation to stock options exercised

 

 

854

 

 

 

 

Cash paid for ordinary shares repurchased

 

 

 

 

 

(801

)

Cash paid on dividends to MiX Telematics Limited stockholders

 

 

(3,901

)

 

 

(4,484

)

Movement in short-term debt

 

 

428

 

 

 

666

 

Net cash used in financing activities

 

 

(2,619

)

 

 

(4,619

)

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents, and restricted cash

 

 

22,126

 

 

 

(8,863

)

Cash and cash equivalents, and restricted cash at beginning of the period

 

 

18,652

 

 

 

46,343

 

Effect of exchange rate changes on cash and cash equivalents, and restricted cash

 

 

4,001

 

 

 

(782

)

Cash and cash equivalents, and restricted cash at end of the period

 

$

44,779

 

 

$

36,698

 

Segment Information

Our operating segments are based on the geographical location of our Regional Sales Offices (“RSOs”) and also include our Central Services Organization (“CSO”). CSO is our central services organization that wholesales our products and services to our RSOs who, in turn, interface with our end-customers, distributors and dealers. CSO is also responsible for the development of our hardware and software platforms and provides common marketing, product management, technical and distribution support to each of our other operating segments.

Each RSO’s results reflect the external revenue earned, as well as its performance before the remaining CSO and corporate costs allocations. Segment performance is measured and evaluated by the chief operating decision maker (“CODM”) using Segment Adjusted EBITDA, which is a measure that uses income before income tax expense excluding net interest income/(expense), foreign exchange gains or losses, depreciation, amortization, operating lease expenses, stock-based compensation costs, restructuring costs, non-recurring legal costs, gains or losses on the disposal or impairments of long-lived assets and subsidiaries and corporate and consolidation entries. Product development costs are capitalized and amortized and this amortization is excluded from Segment Adjusted EBITDA.

The segment information provided to the CODM is as follows (in thousands and unaudited):

 

Three Months Ended December 31, 2020

 

Subscription

Revenue

 

Hardware and

Other Revenue

 

Total Revenue

 

Segment Adjusted

EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

16,205

 

$

1,858

 

$

18,063

 

$

8,407

 

Europe

 

3,116

 

 

1,305

 

 

4,421

 

 

1,718

 

Americas

 

4,582

 

 

236

 

 

4,818

 

 

1,332

 

Middle East and Australasia

 

4,174

 

 

1,596

 

 

5,770

 

 

2,516

 

Brazil

 

978

 

 

27

 

 

1,005

 

 

347

 

Total Regional Sales Offices

 

29,055

 

 

5,022

 

 

34,077

 

 

14,320

 

Central Services Organization

 

17

 

 

10

 

 

27

 

 

(1,836

)

Total Segment Results

$

29,072

 

$

5,032

 

$

34,104

 

$

12,484

 

 

Three Months Ended December 31, 2021

 

Subscription

Revenue

 

Hardware and

Other Revenue

 

Total Revenue

 

Segment Adjusted

EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

18,242

 

$

3,196

 

$

21,438

 

$

9,047

 

Europe

 

3,421

 

 

687

 

 

4,108

 

 

1,452

 

Americas

 

3,481

 

 

560

 

 

4,041

 

 

(88

)

Middle East and Australasia

 

4,176

 

 

1,325

 

 

5,501

 

 

2,327

 

Brazil

 

993

 

 

108

 

 

1,101

 

 

230

 

Total Regional Sales Offices

 

30,313

 

 

5,876

 

 

36,189

 

 

12,968

 

Central Services Organization

 

11

 

 

13

 

 

24

 

 

(2,786

)

Total Segment Results

$

30,324

 

$

5,889

 

$

36,213

 

$

10,182

 

 

Nine Months Ended December 31, 2020

 

Subscription

Revenue

 

Hardware and

Other Revenue

 

Total Revenue

 

Segment Adjusted

EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

44,983

 

$

4,094

 

$

49,077

 

$

22,901

 

Europe

 

8,885

 

 

1,913

 

 

10,798

 

 

4,556

 

Americas

 

13,543

 

 

631

 

 

14,174

 

 

4,910

 

Middle East and Australasia

 

12,173

 

 

3,253

 

 

15,426

 

 

6,839

 

Brazil

 

2,937

 

 

78

 

 

3,015

 

 

1,120

 

Total Regional Sales Offices

 

82,521

 

 

9,969

 

 

92,490

 

 

40,326

 

Central Services Organization

 

49

 

 

10

 

 

59

 

 

(5,373

)

Total Segment Results

$

82,570

 

$

9,979

 

$

92,549

 

$

34,953

 

 

Nine Months Ended December 31, 2021

 

Subscription

Revenue

 

Hardware and

Other Revenue

 

Total Revenue

 

Segment Adjusted

EBITDA

Regional Sales Offices

 

 

 

 

 

 

 

Africa

$

55,639

 

$

6,007

 

$

61,646

 

$

26,825

 

Europe

 

10,207

 

 

3,285

 

 

13,492

 

 

4,885

 

Americas

 

10,548

 

 

1,223

 

 

11,771

 

 

484

 

Middle East and Australasia

 

12,732

 

 

4,180

 

 

16,912

 

 

7,535

 

Brazil

 

3,134

 

 

156

 

 

3,290

 

 

835

 

Total Regional Sales Offices

 

92,260

 

 

14,851

 

 

107,111

 

 

40,564

 

Central Services Organization

 

39

 

 

35

 

 

74

 

 

(7,830

)

Total Segment Results

$

92,299

 

$

14,886

 

$

107,185

 

$

32,734

 

The following table (unaudited and shown in thousands) reconciles total Segment Adjusted EBITDA to income before income tax expense for the periods shown:

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

Segment Adjusted EBITDA

$

12,484

 

 

$

10,182

 

 

$

34,953

 

 

$

32,734

 

Corporate and consolidation entries

 

(2,253

)

 

 

(2,358

)

 

 

(7,090

)

 

 

(7,208

)

Operating lease costs (1)

 

(423

)

 

 

(383

)

 

 

(1,214

)

 

 

(1,163

)

Product development costs (2)

 

(262

)

 

 

(328

)

 

 

(776

)

 

 

(1,026

)

Depreciation and amortization

 

(4,099

)

 

 

(3,584

)

 

 

(11,563

)

 

 

(10,931

)

Impairment of long-lived assets

 

(6

)

 

 

 

 

 

(7

)

 

 

(28

)

Stock-based compensation costs

 

(366

)

 

 

(310

)

 

 

(960

)

 

 

(1,004

)

Restructuring costs (3)

 

(31

)

 

 

(117

)

 

 

(1,028

)

 

 

(169

)

Net (loss)/profit on sale of property and equipment

 

 

 

 

(1

)

 

 

(8

)

 

 

42

 

Net foreign exchange (losses)/gains

 

(105

)

 

 

126

 

 

 

(288

)

 

 

110

 

Net interest income/(expense)

 

58

 

 

 

(75

)

 

 

(82

)

 

 

(294

)

Non-recurring legal costs

 

 

 

 

(530

)

 

 

 

 

 

(530

)

Income before income tax expense

$

4,997

 

 

$

2,622

 

 

$

11,937

 

 

$

10,533

 

 

 

 

 

 

 

 

 

Description of reconciling items:

1.

For the purposes of calculating Segment Adjusted EBITDA, operating lease expenses are excluded from the Segment Adjusted EBITDA. Therefore, in order to reconcile Segment Adjusted EBITDA to income before income tax expense, the total lease expense in respect of operating leases needs to be deducted.

2.

For segment reporting purposes, product development costs, which do not meet the capitalization requirements under ASC 730 Research and Development or under ASC 985 Software, are capitalized and amortized. The amortization is excluded from Segment Adjusted EBITDA. In order to reconcile Segment Adjusted EBITDA to income before income tax expense, product development costs capitalized for segment reporting purposes need to be deducted.

3.

For the nine months ended December 31, 2020, $0.6 million, $0.2 million, $0.1 million and $0.1 million of the restructuring costs related to CSO, Africa, North America and Middle East and Australasia reporting segments, respectively.

Annexure A: Non-GAAP Financial Measures

We use certain measures to assess the financial performance of the business. Certain of these measures are termed “non-GAAP measures” because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with GAAP, or are calculated using financial measures that are not calculated in accordance with GAAP. These non-GAAP measures include Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP net income, non-GAAP net income per share, free cash flow and constant currency information.

An explanation of the relevance of each of the non-GAAP measures, a reconciliation of the non-GAAP measures to the most directly comparable measures calculated and presented in accordance with GAAP and a discussion of their limitations is set out below. We do not regard these non-GAAP measures as a substitute for, or superior to, the equivalent measures calculated and presented in accordance with GAAP or those calculated using financial measures that are calculated in accordance with GAAP.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA and Adjusted EBITDA margin are two of the profit measures reviewed by the chief operating decision maker (“CODM”). We define Adjusted EBITDA as the income before income taxes, net interest income/(expense), net foreign exchange gains/(losses), depreciation of property and equipment including capitalized customer in-vehicle devices, amortization of intangible assets including capitalized internal-use software development costs and intangible assets identified as part of a business combination, stock-based compensation costs, restructuring costs, non-recurring legal costs and profits/(losses) on the disposal or impairments of assets or subsidiaries. We define Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue.

We have included Adjusted EBITDA and Adjusted EBITDA margin in this press release because they are key measures that the Company’s management and Board of Directors use to understand and evaluate its core operating performance and trends; to prepare and approve its annual budget; and to develop short and long-term operational plans. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA and Adjusted EBITDA margin can provide a useful measure for period-to-period comparisons of the Company’s core business. Accordingly, the Company believes that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating its operating results.

A reconciliation of net income (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):

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

Net income

$

5,933

 

 

$

630

 

 

$

11,807

 

 

$

5,460

 

(Less)/plus: Income tax (benefit)/expense

 

(936

)

 

 

1,992

 

 

 

130

 

 

 

5,073

 

(Less)/plus: Net interest (income)/expense

 

(58

)

 

 

75

 

 

 

82

 

 

 

294

 

Plus/(less): Foreign exchange losses/(gains)

 

105

 

 

 

(126

)

 

 

288

 

 

 

(110

)

Plus: Depreciation (1)

 

3,132

 

 

 

2,621

 

 

 

8,914

 

 

 

7,965

 

Plus: Amortization (2)

 

967

 

 

 

963

 

 

 

2,649

 

 

 

2,966

 

Plus: Impairment of long-lived assets

 

6

 

 

 

 

 

 

7

 

 

 

28

 

Plus: Stock-based compensation costs

 

366

 

 

 

310

 

 

 

960

 

 

 

1,004

 

Plus/(less): Net loss/(profit) on sale of property and equipment

 

 

 

 

 

 

 

8

 

 

 

(43

)

Plus: Restructuring costs

 

31

 

 

 

117

 

 

 

1,028

 

 

 

169

 

Plus: Non-recurring legal costs

 

 

 

 

530

 

 

 

 

 

 

530

 

Adjusted EBITDA

$

9,546

 

 

$

7,112

 

 

$

25,873

 

 

$

23,336

 

Adjusted EBITDA margin

 

28.0

%

 

 

19.6

%

 

 

28.0

%

 

 

21.8

%

 

 

 

 

 

 

 

 

1.

Includes depreciation of owned equipment (including in-vehicle devices).

2.

Includes amortization of intangible assets (including intangible assets identified as part of a business combination).

Our use of Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, and should not be considered as performance measures in isolation from, or as a substitute for, analysis of our results as reported under GAAP.

Some of these limitations are:

  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
  • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
  • Adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
  • Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to the Company;
  • other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure; and
  • certain of the adjustments (such as restructuring costs, impairment of long-lived assets and others) made in calculating Adjusted EBITDA are those that management believes are not representative of our underlying operations and, therefore, are subjective in nature.

Because of these limitations, Adjusted EBITDA and Adjusted EBITDA margin should be considered alongside other financial performance measures, including income from operations, net income and our other results.

Non-GAAP Net Income and Non-GAAP Net Income Per Share

Non-GAAP net income is defined as net income excluding net foreign exchange gains/(losses) net of tax.

We have included non-GAAP net income per share in this press release because it provides a useful measure for period-to-period comparisons of our core business by excluding net foreign exchange gains/(losses) net of tax and associated tax consequences from earnings. Accordingly, we believe that non-GAAP net income per share provides useful information to investors and others in understanding and evaluating our operating results.

The following tables (in thousands, except per share data, and unaudited) reconcile Net Income to Non-GAAP Net Income and Diluted Net Income Per Ordinary Share or ADS to Non-GAAP Net Income Per Ordinary Share or ADS for the periods shown:

 

Three Months Ended December 31,

 

 

Nine Months Ended December 31,

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

Net income

$

5,933

 

 

$

630

 

 

$

11,807

 

 

$

5,460

 

Net foreign exchange losses/(gains)

 

105

 

 

 

(126

)

 

 

288

 

 

 

(110

)

Income tax effect of net foreign exchange (losses)/gains

 

(2,688

)

 

 

1,107

 

 

 

(3,691

)

 

 

1,417

 

Non-GAAP net income

$

3,350

 

 

$

1,611

 

 

$

8,404

 

 

$

6,767

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per ordinary share – diluted

$

0.01

 

 

$

0.001

 

 

$

0.02

 

 

$

0.010

 

Effect of net foreign exchange losses/(gains) to net income

#

 

 

#

 

 

#

 

 

#

 

Income tax effect of net foreign exchange (losses)/gains

#

 

 

 

0.002

 

 

#

 

 

 

0.003

 

Non-GAAP net income per ordinary share – diluted

$

0.01

 

 

$

0.003

 

 

$

0.02

 

 

$

0.012

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per ADS – diluted

$

0.26

 

 

$

0.03

 

 

$

0.53

 

 

$

0.24

 

Effect of net foreign exchange losses/(gains) to net income

 

0.01

 

 

*

 

 

 

0.01

 

 

*

 

Income tax effect of net foreign exchange (losses)/gains

 

(0.12

)

 

 

0.05

 

 

 

(0.16

)

 

 

0.06

 

Non-GAAP net income per ADS – diluted

$

0.15

 

 

$

0.07

 

 

$

0.38

 

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

# Amount less than $0.001

 

 

 

 

 

 

 

 

 

 

 

* Amount less than $0.01

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

Free cash flow is determined as net cash provided by operating activities less capital expenditure for investing activities. We believe that free cash flow provides useful information to investors and others in understanding and evaluating the Company’s cash flows as it provides detail of the amount of cash the Company generates or utilizes after accounting for all capital expenditures including investments in in-vehicle devices.

The following table (in thousands and unaudited) reconciles Net Cash Provided by Operating Activities to Free Cash Flow for the periods shown:

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

Net cash provided by operating activities

$

10,176

 

 

$

3,995

 

 

$

30,934

 

 

$

14,660

 

Less: Capital expenditure payments

 

(1,467

)

 

 

(5,534

)

 

 

(6,189

)

 

 

(18,958

)

Free cash flow

$

8,709

 

 

$

(1,539

)

 

$

24,745

 

 

$

(4,298

)

Constant Currency

Constant currency information has been presented to illustrate the impact of changes in currency rates on the Company’s results. The constant currency information has been determined by adjusting the current financial reporting period results to the prior period average exchange rates, determined as the average of the monthly exchange rates applicable to the period. The measurement has been performed for each of the Company’s currencies, including the South African Rand and British Pound. The constant currency growth percentage has been calculated by utilizing the constant currency results compared to the prior period results.

The constant currency information represents non-GAAP information. We believe this provides a useful basis to measure the performance of our business as it removes distortion from the effects of foreign currency movements during the period.

Due to the significant portion of our customers who are invoiced in non-U.S. Dollar denominated currencies, we also calculate our subscription revenue growth rate on a constant currency basis, thereby removing the effect of currency fluctuation on our results of operations.

The following tables (in thousands, except year over year change) provide the unaudited constant currency reconciliation to the most directly comparable GAAP measure for the periods shown:

Subscription Revenue:

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Over Year

Change

 

 

2020

 

 

2021

 

 

 

Subscription revenue as reported

$

29,072

 

$

30,324

 

 

4.3 %

Conversion impact of U.S. Dollar/other currencies

 

 

 

(234

)

 

(0.8)%

Subscription revenue on a constant currency basis

$

29,072

 

$

30,090

 

 

3.5 %

 

 

 

 

 

 

Total Revenue:

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Over Year

Change

 

 

2020

 

 

2021

 

 

 

Total revenue as reported

$

34,104

 

$

36,213

 

 

6.2 %

Conversion impact of U.S. Dollar/other currencies

 

 

 

(404

)

 

(1.2)%

Total revenue on a constant currency basis

$

34,104

 

$

35,809

 

 

5.0 %

Subscription Revenue:

 

 

 

 

 

 

Nine Months Ended December 31,

 

Year Over Year

Change

 

 

2020

 

 

2021

 

 

 

Subscription revenue as reported

$

82,570

 

$

92,299

 

 

11.8 %

Conversion impact of U.S. Dollar/other currencies

 

 

 

(7,169

)

 

(8.7)%

Subscription revenue on a constant currency basis

$

82,570

 

$

85,130

 

 

3.1 %

 

 

 

 

 

 

Total Revenue:

 

 

 

 

 

 

Nine Months Ended December 31,

 

Year Over Year

Change

 

 

2020

 

 

2021

 

 

 

Total revenue as reported

$

92,549

 

$

107,185

 

 

15.8 %

Conversion impact of U.S. Dollar/other currencies

 

 

 

(7,972

)

 

(8.6)%

Total revenue on a constant currency basis

$

92,549

 

$

99,213

 

 

7.2 %

 

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