Powerfleet, Inc. Q2 FY2026 earnings call

• Steve Towe noted Q2 marks transition point after acquisitions, with annual services recurring revenue reaching double-digit growth ahead of schedule, adjusted EBITDA expansion, and balanced execution with services and ARR growing strongly, margins expanding. - Added chief revenue officer Jeff Lautenbach with proven SaaS growth track record. - North America had double-digit year-over-year revenue performance, 26% increase in new logo wins. - Strong progress in strategic partner channels, global channel bookings increased, cross-sell pipeline activity grew, AI video upselling showed 23% expansion in video pipeline. - David Wilson walked through financials, total revenue increased 45% year over year, adjusted EBITDA rose over 70%, margins improved. - Melissa Ingram discussed adjusted EBITDA optimization progress, including organizational model evolution, vendor and partner consolidation, technology improvements. - PowerFleet received Frost and Sullivan's 2025 North America Product Leadership Award.

Service revenue, excluding legacy Fleet Complete book of business, grew 12% organically year over year. Service revenue now represents 80% of total revenue, up from 74% last year. Product revenue saw return to growth with expanding margins. Annual services recurring revenue reached double-digit growth milestone ahead of schedule. Adjusted EBITDA expanded both sequentially and year over year. Service gross margins at 77%, product margins at 31.5%.

• Expect 10% organic growth in Q4. - Net debt to EBITDA ratio expected to close year at approximately two and a quarter times. - Maintain expectations to exit year with net debt of approximately $220,000,000.

Q: About services and organic SaaS growth into third and fourth quarter, guidance, Fleet Complete blending, early thoughts on '27.

A: David Wilson said expect 10% organic growth in Q4, things going well, trajectory clear. Steve Towe said ahead of schedule, momentum building, flywheel will continue to turn.

Q: North America sales cycles, closing deals, hedging strategy.

A: Steve Towe said strong demand for efficiency, safety, compliance, solutions resonating, large wins seen. David Wilson said have portion of debt in shekel and South Africa feds denominated debt for hedging.

Q: Warehouse solutions growth, channel partners update.

A: Steve Towe said across the board growth, better sales execution, combination of solutions resonating, channel partners like AT&T, TELUS with pipeline growth.

Q: New business awards, Unity products with services.

A: Steve Towe said everything sold within Unity ecosystem, solutions differentiating, seen as integrated partner by medium-large enterprises.

Q: 12% organic services, pipeline strength, reinvestment.

A: Steve Towe said held back $4,000,000 investment, can flex model dependent on growth rate.

Q: New logo momentum, cross selling opportunity.

A: Jeff Lautenbach said great opportunity with new logo, selling pivot to on-site envision, sales organization resonating, opportunity to expand with installed base.

Q: Enterprise momentum, brand awareness.

A: Steve Towe said night and day difference in enterprise opportunities, building brand momentum, still work to do.

Q: Back to base motion, NRR.

A: David Wilson said NRR positive, major part of growth, similar to MiX and Fleet Complete revenue shedding in past.

Q: Cross-sell pipeline, demand environment.

A: Steve Towe said cross-sell in warehouse to over the road, video solutions, demand still cautious but rebound seen.

Q: Accounting adjustment impact.

A: David Wilson said this quarter about $1,300,000 impact, percentage point over of EBITDA margin.