Powerfleet, Inc. Q3 FY2026 earnings call

Key Points

• Q3 was a strong quarter demonstrating consistent delivery across the combined business, with progress in accelerating high-margin recurring revenue growth, expanding profitability, and strengthening the balance sheet.
• Secured a landmark South African public sector contract to deliver AI video and visibility services to government fleets with over 100,000 total assets, expected to generate meaningful recurring SaaS and services revenue.
• Customer momentum with continued acceleration in closed wins, pipeline growth, and selection by leading enterprise brands, driven by Unity platform's capabilities and focused enterprise sales motion.
• Data highway strategy connecting fragmented data across enterprises, harmonizing it, and enabling consumption, action, and monetization, with examples of integrating Unity with enterprise systems to improve safety, compliance, and operations.
• Long-standing customer relationship with Origin Energy, showing evolution into a unified data ecosystem for predictive safety management.

Services revenue grew 11% year over year and now represents 80% of total revenue. Total revenue increased 7% year over year, with adjusted EBITDA increasing 20% year over year and margins expanding by 4% to 23%. Net debt to adjusted EBITDA exited the quarter at 2.7 times. On an apples-to-apples basis, total revenue growth was 9% year over year.

Forward-Looking Statements

• FY '26 Q4 exit run rate targets total revenue growth north of 10% and recurring revenue growth north of 10%.
• Adjusted EBITDA guidance revised to annual growth of approximately 45% versus prior guidance of 45% to 50%.
• Net debt to EBITDA expected to decline to around 2.4 by year-end, compared to prior expectation of ~2.25 times, driven by investments for the South African public sector win and working capital dynamics.

Known and unknown risks, uncertainties, and other factors beyond PowerFleet's control could cause actual results to differ materially from forward-looking statements. Risks include those detailed in PowerFleet's SEC filings, which could impact results from forward-looking statements.

Q: Competitiveness and cost structure of South Africa contract?

A: Contract was competitive with few tier-one providers, won due to Unity capabilities, referenceability, and partnership with MTN. Costs involve people, process, and systems optimization, with focus on building scalable processes and using existing systems to drive incremental value.

Q: Mechanics of South Africa government contract?

A: Led by National Treasury, enrollment has been strong, not a mandate but an enrollment opportunity, with Unity deploying AI video and visibility capabilities to enhance safety and situational awareness across large-scale operational estate.