MiX Telematics Reports Preliminary Unaudited Fourth Quarter and Full Fiscal Year 2023 U.S. GAAP Financial Results

Highlights:

Fourth Quarter Fiscal Year 2023:

• Net subscriber additions of 42,700, bringing the total base to over one million subscribers
• Total revenue of $36.9 million, up 12% year-over-year (constant currency)
• Subscription revenue of $32.5 million, up 14% year-over-year (constant currency)
• Annual recurring revenue (“ARR”) of $129.0 million, up 15% year-over-year (constant currency)
• Net income of $2.3 million
• Adjusted EBITDA of $9.2 million, at an Adjusted EBITDA margin of 25.0% (up 280 basis points from the prior quarter)
• Net cash from operating activities of $9.2 million
• Free cash flow of $3.4 million
• Board increases quarterly dividend by 12.5%

Fiscal Year 2023:

• Total revenue of $145.0 million, up 10% year-over-year (constant currency)
• Subscription revenue of $126.7 million, up 12% year-over-year (constant currency)
• Net income of $4.5 million
• Adjusted EBITDA of $29.6 million, at an Adjusted EBITDA margin of 20.4%

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 preliminary unaudited financial results, in accordance with accounting principles generally accepted in the United States (“GAAP”), for the fourth quarter and full fiscal year 2023, which ended March 31, 2023.

Management Commentary

“Closing out the fiscal year, we are proud to have surpassed the one million subscriber milestone,” said CEO Stefan Joselowitz. “In addition, we expanded our adjusted EBITDA to 25% and continued to generate strong, positive free cash flow. Throughout the quarter, we executed well against our plan and finished the year in-line with our expectations.

“As we move into fiscal year 2024, despite general uncertainties in the macro-economic environment, we remain confident that we have the necessary levers within our operational structure to maintain our balanced approach to growth, while delivering strong free cash flow and profitability. Our team continues to work towards delivering consistent ‘rule of 40’ performance in the medium-term. M&A still remains a key component of our long-term objectives, and our corporate development team is actively evaluating a range of potential prospects.”

Financial Results for the Three Months Ended March 31, 2023

Subscription Revenue: Subscription revenue increased to $32.5 million, compared to $31.3 million for the fourth quarter of fiscal year 2022. The Field Service Management (“FSM”) business acquired on September 2, 2022 contributed $2.4 million to the subscription revenue for the fourth quarter of fiscal year 2023. Subscription revenue increased by 14.2% on a constant currency basis, year over year, of which 6.7% is attributable to the FSM business acquisition. During the fourth quarter of fiscal year 2023, the Company’s subscriber base increased by a net 42,700 subscribers, mainly due to the Africa segment, with strong contributions across the asset tracking and light fleet solution categories. Subscription revenue represented 88.2% of total revenue during the fourth quarter of fiscal year 2023.

The majority of the Company’s total revenue and subscription revenue 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), has negatively impacted the Company’s revenue and subscription revenue reported in U.S. Dollars. Compared to the fourth 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 R17.75 in the fourth quarter of fiscal year 2023 compared to an average of R15.25 during the fourth quarter of fiscal year 2022. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during the fourth quarter of fiscal year 2023 led to a 10.2% decrease in reported U.S. Dollar subscription revenue.

Total Revenue: Total revenue increased to $36.9 million, compared to $36.1 million for the fourth quarter of fiscal year 2022. During the fourth quarter of fiscal year 2023, total revenue increased by 11.6% on a constant currency basis, year over year. Hardware and other revenue was $4.3 million, a decrease of 10.2%, compared to $4.8 million for the fourth quarter of fiscal year 2022. During the fourth quarter of fiscal year 2023, hardware and other revenue decreased by 5.2% 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 fourth quarter of fiscal year 2023 led to a 9.5% decrease in reported U.S. Dollar total revenue.

Gross Margin: Gross profit was $22.7 million, compared to $23.2 million for the fourth quarter of fiscal year 2022. Gross profit margin decreased 260 basis points to 61.5%, compared to 64.1% for the fourth quarter of fiscal year 2022. The subscription revenue margin during the fourth quarter of fiscal year 2023 was 68.3%, compared to 69.7% for the fourth quarter of fiscal year 2022.

Income From Operations: Income from operations was $3.6 million, compared to $3.8 million for the fourth quarter of fiscal year 2022. Operating income margin decreased 70 basis points to 9.9%, compared to 10.5% for the fourth quarter of fiscal year 2022. In the fourth quarter of fiscal year 2023, Administration and other costs included restructuring costs of $0.9 million as a result of restructuring plans implemented, which accounted for a 250 basis point decline in the operating income margin. The Company expects the related cost savings and resultant operating income margin improvement to take effect during fiscal year 2024. Operating expenses of $19.1 million decreased by $0.3 million, or 1.6%, compared to the fourth quarter of fiscal year 2022. It should be noted that the FSM business contributed $1.5 million of the total operating expenses for the fourth quarter of fiscal year 2023.

Net Income and Earnings Per Share: Net income was $2.3 million, compared to net income of $3.5 million in the fourth quarter of fiscal year 2022. During the fourth quarter of fiscal year 2023, net income included a net foreign exchange gain of $0.4 million before tax and a $0.7 million charge from the income tax effect of net foreign exchange gains (which includes a $1.0 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, offset by a $0.3 million deferred tax credit on other foreign exchange gains). During the fourth quarter of fiscal year 2022, net income included a net foreign exchange loss of $0.8 million before tax and a $2.0 million credit from the income tax effect of net foreign exchange losses (which includes a $1.7 million deferred tax credit on a U.S. Dollar intercompany loan between MiX Telematics and MiX Investments and a $0.3 million deferred tax credit on other foreign exchange losses).

Earnings per diluted ordinary share was 0.4 U.S. cents, compared to 0.6 U.S. cents in the fourth quarter of fiscal year 2022. For the fourth quarter of fiscal year 2023, the calculation was based on diluted weighted average ordinary shares in issue of 556.1 million compared to 560.6 million diluted weighted average ordinary shares in issue during the fourth quarter of fiscal year 2022. On a ratio of 25 ordinary shares to one American Depositary Share (“ADS”), earnings per diluted ADS were 10 U.S. cents compared to 16 U.S. cents in the fourth quarter of fiscal year 2022.

Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, increased to $9.2 million, compared to $8.2 million for the fourth quarter of fiscal year 2022. Adjusted EBITDA margin, a non-GAAP measure, for the fourth quarter of fiscal year 2023 increased 220 basis points to 25.0%, compared to 22.8% for the fourth quarter of fiscal year 2022.

Adjusted Net Income and Adjusted Net Income Per Share: Adjusted net income was $3.0 million, compared to $2.3 million for the fourth quarter of fiscal year 2022. Adjusted net income per diluted ordinary share was 0.5 U.S. cents, compared to 0.4 U.S. cents in the fourth quarter of fiscal year 2022. At a ratio of 25 ordinary shares to one ADS, the adjusted net income per diluted ADS was 13 U.S. cents compared to 10 U.S. cents in the fourth quarter of fiscal year 2022.

Adjusted Effective Tax Rate: The Company’s effective tax rate was 45.9%, compared to negative 23.1% in the fourth quarter of fiscal year 2022. Adjusted effective tax rate, a non-GAAP measure which excludes the impact of net foreign exchange losses and gains, restructuring costs, acquisition-related costs and contingent consideration remeasurement, net of tax, is the tax rate used in determining adjusted net income. Adjusted effective tax rate was 29.3% compared to 37.0% in the fourth quarter of fiscal year 2022.

Cash and Cash Equivalents and Cash Flow: At March 31, 2023, the Company had $29.9 million of cash and cash equivalents, compared to $33.7 million at March 31, 2022.

Net cash provided by operating activities for the fourth quarter of fiscal year 2023 increased to $9.2 million compared to $4.7 million net cash provided by operating activities for the fourth quarter of fiscal year 2022. The Company invested $5.7 million in capital expenditures (including investments in in-vehicle devices of $4.3 million), leading to free cash flow, a non-GAAP measure, of $3.4 million in the quarter. The Company incurred negative free cash flow of $2.5 million for the fourth quarter of fiscal year 2022 when the Company invested $7.3 million in capital expenditures (including investments in in-vehicle devices of $4.9 million).

Net cash used in investing activities for the fourth quarter of fiscal year 2023 was $5.7 million, compared to $7.3 million net cash used in investing activities for the fourth quarter of fiscal year 2022.

Net cash from financing activities amounted to $1.5 million for the fourth quarter of fiscal year 2023, compared to $0.4 million used during the fourth quarter of fiscal year 2022. The cash from financing activities during the fourth quarter of fiscal year 2023 mainly consisted of short-term debt facilities utilized of $3.0 million, offset by dividends paid of $1.2 million and ordinary shares repurchased of $0.3 million. The cash used in financing activities during the fourth quarter of fiscal year 2022 mainly consisted of ordinary shares repurchased of $2.2 million and dividends paid of $1.4 million, offset by facilities utilized of $3.2 million.

Financial Results for the Fiscal Year Ended March 31, 2023

Subscription Revenue: Subscription revenue increased to $126.7 million, compared to $123.6 million for fiscal year 2022. The FSM business acquired on September 2, 2022 contributed $5.6 million to the subscription revenue during fiscal year 2023. Subscription revenue increased by 11.9% on a constant currency basis, of which 4.5% is attributable to the FSM business acquisition. During fiscal year 2023, the Company’s subscriber base increased by a net 186,700 subscribers. Subscription revenue represented 87.4% of total revenue during fiscal year 2023.

The majority of the Company’s total revenue and subscription revenue 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 currency volatility, has negatively impacted the Company’s revenue and subscription revenue reported in U.S. Dollars. Compared to fiscal year 2022, the South African Rand weakened by 14% against the U.S. Dollar. The Rand/U.S. Dollar exchange rate averaged R16.99 during fiscal year 2023 compared to an average of R14.86 for fiscal year 2022. The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during fiscal year 2023 led to a 9.4% decrease in reported U.S. Dollar subscription revenue.

Total Revenue: Total revenue for fiscal year 2023 increased to $145.0 million, compared to $143.3 million for fiscal year 2022. Total revenue increased by 10.3% on a constant currency basis. Hardware and other revenue was $18.3 million, a decrease of 7.0%, compared to $19.7 million for fiscal year 2022. Hardware and other revenue increased by 0.3% on a constant currency basis.

The impact of translating foreign currencies to U.S. Dollars at the average exchange rates during fiscal year 2023 led to a 9.1% decrease in reported U.S. Dollar revenue.

Gross Margin: Gross profit was $90.9 million, compared to $91.4 million for fiscal year 2022. Gross profit margin decreased 110 basis points to 62.7%, compared to 63.8% for fiscal year 2022. The subscription revenue margin during fiscal year 2023 was 68.4%, compared to 70.3% for fiscal year 2022.

Income From Operations: Income from operations was $11.6 million, compared to $14.4 million in fiscal year 2022. The operating income margin decreased 210 basis points to 8.0%, compared to 10.1% in fiscal year 2022. Operating expenses of $79.3 million increased by $2.3 million, or 3.0%, compared to fiscal year 2022. The increase in operating expenses was mainly due to a $0.8 million and $0.9 million increase in acquisition-related costs and restructuring costs, respectively.

Net Income and Earnings Per Share: Net income was $4.5 million, compared to net income of $8.9 million in fiscal year 2022. During fiscal year 2023, net income included a net foreign exchange gain of $1.1 million before tax and a $3.5 million deferred tax charge on a U.S. Dollar intercompany loan between MiX Telematics and MiX Investments, a wholly-owned subsidiary of the Company. During fiscal year 2022, net income included a net foreign exchange loss of $0.6 million before tax and a $0.6 million credit from the income tax effect of net foreign exchange losses (which includes a $0.4 million deferred tax credit on a U.S. Dollar intercompany loan between MiX Telematics and MiX Investments, as well as a $0.2 million deferred tax credit on other foreign exchange losses).

Earnings per diluted ordinary share was 0.8 U.S. cents, compared to 1.6 U.S. cents in fiscal year 2022. For fiscal year 2023, the calculation was based on diluted weighted average ordinary shares in issue of 556.1 million compared to 564.0 million diluted weighted average ordinary shares in issue during fiscal year 2022. On a ratio of 25 ordinary shares to one ADS, earnings per diluted ADS was 20 U.S. cents compared to 40 U.S. cents in fiscal year 2022.

Adjusted EBITDA: Adjusted EBITDA, a non-GAAP measure, was $29.6 million, compared to $31.6 million for fiscal year 2022. Adjusted EBITDA margin, a non-GAAP measure, for fiscal year 2023 decreased 160 basis points to 20.4%, compared to 22.0% in fiscal year 2022.

Adjusted Net Income and Adjusted Net Income Per Share: Adjusted net income was $8.0 million, compared to $9.2 million in fiscal year 2022. Adjusted net income per diluted ordinary share was 1.4 U.S. cents, compared to 1.6 U.S. cents for fiscal year 2022. At a ratio of 25 ordinary shares to one ADS, the adjusted net income per diluted ADS was 36 U.S. cents compared to 41 U.S. cents in fiscal year 2022.

Adjusted Effective Tax Rate: The Company’s effective tax rate was 65.1%, compared to 33.1% for fiscal year 2022. Adjusted effective tax rate, a non-GAAP measure which excludes the impact of net foreign exchange losses and gains, restructuring costs, acquisition-related costs and contingent consideration remeasurement, net of tax, is the tax rate used in determining adjusted net income. Adjusted effective tax rate was 39.4% compared to 35.3% in fiscal year 2022.

Cash and Cash Equivalents and Cash Flow: Net cash provided by operating activities for fiscal year 2023 increased to $21.9 million compared to $19.4 million net cash provided by operating activities for fiscal year 2022. The Company invested $25.1 million in capital expenditures (including investments in in-vehicle devices of $18.9 million), leading to negative free cash flow, a non-GAAP measure, of $3.2 million for the year. The Company incurred negative free cash flow of $6.8 million in fiscal year 2022 when the Company invested $26.2 million in capital expenditures (including investments in in-vehicle devices of $18.3 million).

Net cash used in investing activities for fiscal year 2023 was $28.8 million, which includes $3.7 million paid by MiX Telematics North America for the acquisition of Trimble’s FSM business, compared to $26.2 million net cash used in investing activities for fiscal year 2022.

Net cash from financing activities amounted to $5.0 million for fiscal year 2023, compared to $5.1 million used during fiscal year 2022. The cash from financing activities during fiscal year 2023 mainly consisted of short-term debt facilities utilized of $10.5 million, offset by dividends paid of $5.2 million and ordinary shares repurchased of $0.4 million. The cash used in financing activities during fiscal year 2022 mainly consisted of dividends paid of $5.9 million and ordinary shares repurchased of $3.0 million, offset by facilities utilized of $3.9 million.

During the year, the South African Rand weakened against the U.S. Dollar from R14.49 at March 31, 2022 to R17.98 at March 31, 2023 and as a result, cash decreased by $2.2 million due to foreign exchange losses.

Preliminary Financial Information

The unaudited financial information set forth in this release is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been finalized for the year-end audit, which could result in potential differences from this preliminary unaudited condensed financial information. Actual results could differ materially. The Company expects to finalize its financial results and file its Annual Report on Form 10-K no later than June 14, 2023.

Quarterly Dividend

The last recent dividend payment of 4 South African cents (0.2 U.S. cents) per ordinary share and 1 South African Rand (5 U.S. cents) per ADS was paid on March 2, 2023 to ADS holders on record on February 17, 2023. A dividend of 4.50000 South African cents per ordinary share and 1.12500 South African Rand per ADS will be paid on June 29, 2023 to ADS holders on record as of the close of business on June 16, 2023.

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

Share Repurchases

In the fourth quarter of fiscal year 2023, the Company repurchased 838,431 ordinary shares on the open market at prevailing market prices, for a total consideration of $0.3 million. For the full fiscal year 2023, the Company repurchased 1,166,659 ordinary shares on the open market at prevailing market prices, for a cumulative consideration of $0.4 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, May 25, 2023 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 13738806.
• 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 13738806.
• 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 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 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:

• 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

Contacts

Matt Glover and Cody Cree

Gateway Group, Inc.

[email protected]
+1-949-574-3860

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