MiX Telematics Reports Second Quarter Fiscal Year 2023 U.S. GAAP Financial Results

Second Quarter Highlights:

• Total revenues of $35.3 million, up 8% year-over-year in constant currency
• Subscription revenues of $30.7 million, up 10% year-over-year in constant currency
• Concluded the acquisition of Trimble’s Field Service Management business (“FSM”)
• Annual recurring revenue (“ARR”) of $128.4 million, up 17% year-over-year in constant currency
• Record organic net subscriber adds of 38,300
• Ending total active subscriber base of 914,600, including 38,000 from the acquisition of FSM
• Cash and cash equivalents of $19.7 million at quarter end

MIDRAND, South Africa & BOCA RATON, Fla.–(BUSINESS WIRE)–MiX Telematics Limited (“MiX Telematics” or the “Company”) (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 second quarter of fiscal year 2023, which ended September 30, 2022.

Management Commentary

“In Q2, we delivered solid results and further positioned MiX to take full advantage of the growing demand for cloud-based telematics solutions,” said CEO Stefan Joselowitz. “We organically added 38,300 subscribers to our platform, a quarterly record. We also completed our acquisition of Trimble’s FSM business, which added 38,000 subscribers and $10.6 million of ARR to our USA business and serves to significantly expand our footprint outside of the energy sector in that geography. These are notable milestones as we execute on our dual-pronged organic growth and M&A strategy.

“For the second half of the fiscal year, in addition to maintaining our growth trajectory, we plan to continue to execute on ongoing cost savings initiatives and working-capital optimization, to improve operating margins and cash generation.”

Financial Results for the Three Months Ended September 30, 2022

Subscription Revenues: Subscription revenues were $30.7 million, compared to $30.9 million for the second quarter of fiscal year 2022. The FSM business acquired on September 2, 2022 contributed $0.9 million to the subscription revenues for the second quarter of fiscal year 2023. Subscription revenues increased by 10.1% on a constant currency basis, year over year. 3% of this increase is attributable to the FSM business acquisition. During the second quarter of fiscal year 2023, the Company’s subscriber base increased by a net 76,300 subscribers. The group reported record organic net subscriber growth of 38,300 subscribers with contributions across all solution categories. 38,000 subscribers were added by MiX Telematics North America Inc. from the acquired FSM business. Refer below for additional information regarding the acquisition. Subscription revenues represented 87.1% of total revenues during the second quarter of fiscal year 2023.

The majority of the Company’s revenues and subscription revenues are derived from currencies other than the U.S. Dollar. Accordingly, the strengthening of the U.S. Dollar against these currencies (in particular against the South African Rand) following continued currency volatility, has negatively impacted the Company’s revenue and subscription revenues reported in U.S. Dollars. Compared to the second quarter of fiscal year 2022, the South African Rand weakened by 16% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate averaged R17.01 in the second quarter of fiscal year 2023 compared to an average of R14.62 during the second quarter of fiscal year 2022. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the second quarter of fiscal year 2023 led to a 10.7% decrease in reported U.S. Dollar subscription revenues.

Total Revenues: Total revenues were $35.3 million, compared to $36.1 million for the second quarter of fiscal year 2022. Total revenues increased by 8.4% on a constant currency basis, year over year. Hardware and other revenues were $4.6 million, a decrease of 12.1%, compared to $5.2 million for the second quarter of fiscal year 2022. Hardware and other revenues decreased by 1.7% on a constant currency basis, year over year.

The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the second quarter of fiscal year 2023 led to a 10.7% decrease in reported U.S. Dollar revenues.

Gross Margin: Gross profit was $22.1 million, compared to $23.0 million for the second quarter of fiscal year 2022. Gross profit margin was 62.7%, compared to 63.7% for the second quarter of fiscal year 2022. The subscription revenue margin during the second quarter of fiscal year 2023 was 67.9%, compared to 70.2% for the second quarter of fiscal year 2022.

Income From Operations: Income from operations was $1.5 million, compared to $3.7 million for the second quarter of fiscal year 2022. Operating income margin was 4.2%, compared to 10.3% for the second quarter of fiscal year 2022. Operating expenses of $20.6 million increased by $1.4 million, or 7.2%, compared to the second quarter of fiscal year 2022. The increase in operating expenses was mainly due to acquisition-related costs of $0.8 million and also included a $0.2 million increase in sales and marketing investments.

Net Loss and Earnings Per Share: Net loss was $1.2 million, compared to net income of $1.3 million in the second quarter of fiscal year 2022. During the second quarter of fiscal year 2023, net income included a net foreign exchange gain of $0.7 million before tax and a $2.0 million charge from the income tax effect of net foreign exchange gains (which includes a $1.8 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, as well as a $0.2 million deferred tax charge on other foreign exchange gains). During the second quarter of fiscal year 2022, net income included a net foreign exchange gain of $0.1 million before tax and a $1.1 million charge from the income tax effect of net foreign exchange gains (which includes a $0.9 million deferred tax charge on a U.S. Dollar intercompany loan between MiX Telematics and MiX Investments, as well as a $0.2 million deferred tax charge on other foreign exchange gains).

Earnings per diluted ordinary share was negative 0.2 U.S. cents, compared to positive 0.2 U.S. cents in the second quarter of fiscal year 2022. For the second quarter of fiscal year 2023, the calculation was based on diluted weighted average ordinary shares in issue of 555.7 million compared to 565.6 million diluted weighted average ordinary shares in issue during the second quarter of fiscal year 2022. On a ratio of 25 ordinary shares to one American Depositary Share (“ADS”), earnings per diluted ADS were negative 5 U.S. cents compared to positive 6 U.S. cents in the second quarter of fiscal year 2022.

Adjusted Effective Tax Rate: The Company’s effective tax rate was 161.5%, compared to 65.7% in the second quarter of fiscal year 2022. Adjusted effective tax rate, a non-GAAP measure which excludes the impact of net foreign exchange losses and gains net of tax and acquisition-related costs, is the tax rate used in determining adjusted net income below. Adjusted effective tax rate was 63.4% compared to 38.6% in the second quarter of fiscal year 2022.

Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, was $6.0 million, compared to $7.9 million for the second quarter of fiscal year 2022. Adjusted EBITDA margin, a non-GAAP measure, for the second quarter of fiscal year 2023 was 17.0%, compared to 21.9% for the second quarter of fiscal year 2022.

Adjusted Net Income and Adjusted Net Income Per Share: Adjusted net income was $0.8 million, compared to $2.3 million for the second quarter of fiscal year 2022. Adjusted net income per diluted ordinary share was 0.1 U.S. cents, compared to 0.4 U.S. cents in the second quarter of fiscal year 2022. At a ratio of 25 ordinary shares to one ADS, the adjusted net income per diluted ADS was 3 U.S. cents compared to 10 U.S. cents in the second quarter of fiscal year 2022.

Cash and Cash Equivalents and Cash Flow: At September 30, 2022, the Company had $19.7 million of cash and cash equivalents, compared to $33.7 million at March 31, 2022.

Net cash provided by operating activities for the second quarter of fiscal year 2023 was $2.3 million compared to $5.9 million net cash provided by operating activities for the second quarter of fiscal year 2022. The Company invested $7.4 million in capital expenditures (including investments in in-vehicle devices of $5.8 million), leading to negative free cash flow, a non-GAAP measure, of $5.1 million in the quarter. The Company generated negative free cash flow of $3.1 million for the second quarter of fiscal year 2022 when the Company invested $9.1 million in capital expenditures (including investments in in-vehicle devices of $6.8 million).

Net cash used in investing activities for the second quarter of fiscal year 2023 was $17.7 million, which includes $3.7 million paid by MiX Telematics North America for the acquisition of Trimble’s FSM business, compared to $13.4 million net cash used in investing activities for the second quarter of fiscal year 2022.

Net cash from financing activities amounted to $4.9 million for the second quarter of fiscal year 2023, compared to $2.3 million used during the second quarter of fiscal year 2022. The cash from financing activities during the second quarter of fiscal year 2023 mainly consisted of short-term debt facilities utilized of $6.3 million, offset by dividends paid of $1.3 million and ordinary shares repurchased of $0.1 million. The cash used in financing activities during the second quarter of fiscal year 2022 consisted of dividends paid of $1.5 million and repayment of facilities of $0.8 million.

During the quarter, the South African Rand weakened against the U.S. Dollar from R16.15 at June 30, 2022 to R17.98 at September 30, 2022 and as a result, cash decreased by $1.3 million due to foreign exchange losses.

Quarterly Dividend

The last dividend payment of 4 South African cents (0.2 U.S. cents) per ordinary share and 1 South African Rand (6 U.S. cents) per ADS was paid on September 1, 2022 to ADS holders on record on August 19, 2022. A dividend of 4 South African cents per ordinary share and 1 South African Rand per ADS will be paid on December 1, 2022 to ADS holders on record as of the close of business on November 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, November 17, 2022
Record date		Friday, November 18, 2022
Approximate date of currency conversion		Monday, November 21, 2022
Approximate dividend payment date		Thursday, December 1, 2022

Share Repurchases

In the second quarter of fiscal year 2023, the Company repurchased 328,228 ordinary shares on the open market at prevailing market prices, for a total consideration of $0.1 million.

Conference Call Information

MiX Telematics management will host a conference call and audio webcast at 8:00 a.m. (Eastern Daylight Time) and 2:00 p.m. (South African Time) on Thursday, October 27, 2022 to discuss the Company’s financial results and current business outlook.

• The live webcast of the call will be available at the “Investor Information” page of the Company’s website, http://investor.mixtelematics.com.
• 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 13733661.
• 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 13733661.
• A replay of the webcast will also be available for a limited time at http://investor.mixtelematics.com.

About MiX Telematics Limited

MiX Telematics is a leading global provider of connected fleet and mobile asset solutions delivered as SaaS to over 914,000 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 value-added resellers 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, the 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 ongoing effects and economic impact of COVID-19 or any other pandemic on our business, results of operations and financial conditions as well as the impact on our customer’s ability to meet their financial obligations, are highly uncertain and difficult to predict;
• 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 and the use of artificial intelligence;
• competition from industry consolidation and new entrants into the industry;
• 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;
• the impact of the global component shortage and supply chain disruptions;
• our dependence on key suppliers and vendors to manufacture our hardware;
• our dependence on our network of dealers and distributors to sell our solutions;
• our ability to navigate and adapt in adverse global economic and market conditions;
• 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 ensure compliance with export laws, customs and import regulations, economic sanctions and Export Administration Regulations;
• 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, adjusted net income and adjusted net income per share, adjusted effective tax rate, 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 and Key Business Metrics”. 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, 2022				September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents		$	33,738			$	19,668
Restricted cash			981				745
Accounts receivables, net			25,092				25,468
Inventory, net			3,356				4,338
Prepaid expenses and other current assets			11,463				12,601
Total current assets			74,630				62,820
Property, plant and equipment, net			32,274				33,639
Goodwill			44,434				38,327
Intangible assets, net			20,460				22,955
Deferred tax assets			3,768				2,472
Other assets			4,988				5,569
Total assets		$	180,554			$	165,782
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt		$	5,597			$	11,989
Accounts payables			8,052				5,143
Accrued expenses and other liabilities			19,610				19,161
Contingent consideration			—				3,108
Deferred revenue			6,692				5,878
Income taxes payable			590				319
Total current liabilities			40,541				45,598
Deferred tax liabilities			8,972				11,071
Contingent consideration			—				965
Long-term accrued expenses and other liabilities			4,344				3,356
Total liabilities			53,857				60,990
Stockholders’ equity:
MiX Telematics Limited stockholders’ equity
Preference shares: 100 million shares authorized but not issued			—				—
Ordinary shares: 605.2 million and 605.9 million no-par value shares issued and outstanding as of March 31, 2022 and September 30, 2022, respectively			64,390				64,283
Less treasury stock at cost: 53.8 million shares as of March 31, 2022 and September 30, 2022			(17,315	)			(17,315	)
Retained earnings			79,709				76,469
Accumulated other comprehensive income			3,909				(14,700	)
Additional paid-in capital			(4,001	)			(3,950	)
Total MiX Telematics Limited stockholders’ equity			126,692				104,787
Non-controlling interest			5				5
Total stockholders’ equity			126,697				104,792
Total liabilities and stockholders’ equity		$	180,554			$	165,782

MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
	Three Months Ended September 30,								Six Months Ended September 30,
		2021				2022				2021				2022
Revenue
Subscription	$	30,885			$	30,700			$	61,975			$	61,663
Hardware and other		5,189				4,562				8,997				8,658
Total revenue		36,074				35,262				70,972				70,321
Cost of revenue
Subscription		9,219				9,852				18,346				19,905
Hardware and other		3,887				3,308				6,803				6,581
Total cost of revenue		13,106				13,160				25,149				26,486
Gross profit		22,968				22,102				45,823				43,835
Operating expenses
Sales and marketing		3,872				4,053				7,384				8,385
Administration and other		15,366				16,572				30,373				31,547
Total operating expenses		19,238				20,625				37,757				39,932
Income from operations		3,730				1,477				8,066				3,903
Other income		199				708				64				1,607
Net interest (expense)/income		(141	)			(223	)			(219	)			264
Income before income tax expense		3,788				1,962				7,911				5,774
Income tax expense		2,489				3,168				3,081				6,302
Net income/(loss)		1,299				(1,206	)			4,830				(528	)
Less: Net income attributable to non-controlling interest		—				—				—				—
Net income/(loss) attributable to MiX Telematics Limited	$	1,299			$	(1,206	)		$	4,830			$	(528	)
Net income/(loss) per ordinary share:
Basic	$	0.002			$	(0.002	)		$	0.009			$	(0.001	)
Diluted	$	0.002			$	(0.002	)		$	0.009			$	(0.001	)
Net income/(loss) per American Depositary Share:
Basic	$	0.06			$	(0.05	)		$	0.22			$	(0.02	)
Diluted	$	0.06			$	(0.05	)		$	0.21			$	(0.02	)
Ordinary shares:
Weighted average		552,386				552,210				552,124				551,792
Diluted weighted average		565,622				555,661				565,322				556,206
American Depositary Shares:
Weighted average		22,095				22,088				22,085				22,072
Diluted weighted average		22,625				22,226				22,613				22,248

MIX TELEMATICS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Six Months Ended September 30,
			2021				2022
Cash flows from operating activities:
Cash generated from operations		$	14,223			$	2,005
Interest received			221				471
Interest paid			(197	)			(355	)
Income tax paid			(3,582	)			(539	)
Net cash provided by operating activities			10,665				1,582
Cash flows from investing activities:
Acquisition of property, plant and equipment – in-vehicle devices			(9,740	)			(10,642	)
Acquisition of property, plant and equipment – other			(851	)			(554	)
Proceeds from the sale of property, plant and equipment			54				73
Acquisition of intangible assets			(2,833	)			(2,864	)
Cash paid for business combination			—				(3,739	)
Net cash used in investing activities			(13,370	)			(17,726	)
Cash flows from financing activities:
Cash paid for ordinary shares repurchased			—				(107	)
Cash paid on dividends to MiX Telematics Limited stockholders			(3,058	)			(2,708	)
Movement in short-term debt			474				7,380
Net cash (used in)/from financing activities			(2,584	)			4,565
Net decrease in cash and cash equivalents, and restricted cash			(5,289	)			(11,579	)
Cash and cash equivalents, and restricted cash at beginning of the period			46,343				34,719
Effect of exchange rate changes on cash and cash equivalents, and restricted cash			(340	)			(2,727	)
Cash and cash equivalents, and restricted cash at end of the period		$	40,714			$	20,413

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.

Contacts

Investor Relations Contact
Matt Glover and Cody Cree

Gateway Group, Inc.

[email protected]
+1-949-574-3860

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