Powerfleet Reports Results for First Quarter Fiscal 2027

Services revenue increased 9.1% to $94.3 million, representing 85% of total revenue of $110.8 million. Cash flow from operating activities increased 79% to $8.4 million. More than $27 million ARR for near term activation with the South African National Treasury contract. New President & Chief Financial Officer and Chief AI Officer, enhancing leadership team capability and experience for next phase of the business.Powerfleet, Inc. ("Powerfleet" or the "Company") (Nasdaq: AIOT), a global leader in the artificial intelligence of things (AIoT) software-as-a-service (SaaS) mobile asset industry, today reported its financial results for the first quarter ended June 30, 2026."Our results demonstrate continued momentum across growth, profitability, and cash generation. High-value services revenue increased 9.1%, representing 85% of total revenue. Gross margin increased to 55.2%, operating cash flow nearly doubled to $8.4 million, and free cash flow improved by $6.6 million year-over-year," said Powerfleet CEO Steve Towe."Near-term demand under our South African National Treasury contract has accelerated significantly faster than anticipated, with vehicles ready for near-term installation now approximately seven times our original expectation. To support this rollout, we are reallocating resources and forgoing portions of projected non-strategic South African revenue. Our revised 2027 guidance reflects the timing mismatch between the non-strategic revenue we're forgoing and the larger, higher-quality revenue we're expecting from the contract. We expect the revenue CAGR from fiscal 2026 through fiscal 2028 to remain consistent with our prior expectations, with stronger growth in fiscal 2028 fueled by the ramp of the South Africa project. We anticipate annualized Q4'27 revenue of approximately $495 million, with adjusted EBITDA margins of approximately 27%," Towe concluded.Business HighlightsIn excess of $27 million of ARR is expected for near term activation under the South African National Treasury contract, against original expectations of $20–30 million in ARR ramping over 18 to 24 months. Vehicles mandated for immediate deployment increased to over 70,000 — a 7x increase over the original expectation of approximately 10,000 at this stage of the program — and are expected to reach 80,000 to 90,000 over the next two quarters, against a total addressable fleet of 150,000 vehicles. Selected as vendor of choice by a European-headquartered global construction leader to expand its existing on-road deployment into premium AI video solutions, both on-the-road and in-the-yard, across 26 countries. Signed three $1 million+ revenue multi-product contracts with manufacturing, logistics, and automotive leaders, reinforcing the quality of Unity's platform and portfolio. Increased AI video bookings 20% sequentially, driven by strong customer demand for Unity's differentiated safety intelligence SaaS solutions. Strong cross-sell expansion quarter-over-quarter; 12 Fortune 500 customers expanded their on-site footprint and 10 broadened their AI video adoption in the quarter.Results for First Quarter Fiscal 2027 Compared to First Quarter Fiscal 2026Revenue increased 6.4% to $110.8 million. Services revenue increased 9.1% to $94.3 million. Gross margin increased to 55.2% from 54.2%. Net loss attributable to common stockholders improved 17.5% to $8.4 million; loss per share improved to $(0.06) from $(0.08). Adjusted EBITDA increased 6.9% to $21.5 million. Operating cash flow increased to $8.4 million from $4.7 million in the prior-year quarter, while continuing to invest in growth through capitalized software development costs of $4.1 million and capital expenditures of $4.9 million. Free cash flow improved $6.6 million year-over-year, to a net use of cash of $0.5 million from a net use of cash of $7.1 million in the prior-year quarter.Leadership AdditionsPresident and Chief Financial Officer. Paul Lalljie joins Powerfleet this week as President & Chief Financial Officer following a role as a strategic finance advisor to the Company in recent months. Mr. Lalljie brings 25 years of finance and technology leadership, including as both CFO and CEO of 2U and as CFO of Neustar. David Wilson will remain with the Company in a consulting capacity for several months to support a smooth transition. The Company thanks Mr. Wilson for his significant contribution and partnership through a period of extensive transformation. As President and CFO, Mr. Lalljie will combine financial leadership with a broader mandate around operating execution, capital allocation and the Company's next phase of profitable growth. Chief AI Officer. Vishal Vallabha joins Powerfleet this week as Chief AI Officer following a role as a strategic AI advisor to the Company in recent months. Mr. Vallabha brings more than 20 years of experience as a senior technology and AI executive, including CTO and Chief Data/AI Officer roles at Freeman Company and Lumen Technologies, and most recently as Founding Partner and CTO at NexGen.ai, where he led AI-enabled transformation engagements for clients including Microsoft and Bain Capital.Discussion of First Quarter ResultsRevenue for the quarter totaled $110.8 million, a 6.4% increase from $104.1 million in the first quarter of fiscal 2026, driven by 9.1% growth in services revenue, which represented approximately 85% of total revenue.South African revenue was approximately $1.6 million lower in the quarter, reflecting the early impact of the reprioritization in the South African business. In addition, $3.2 million of product revenue was delayed by a production constraint late in the quarter, affecting a single product line related to a compatibility issue with a new component. The Company identified the problem and the solution, and production is being restored. Importantly, underlying customer demand and orders remain intact, and the issue does not impact deployment of the South African National Treasury contract.This is a discrete production and revenue-recognition timing issue, not a reflection of customer demand or a broader production constraint. Given the timing of the recovery, the Company anticipates that some associated Q2 revenue may shift into Q3, with the balance expected to be recaptured within the fiscal year.Gross profit was $61.2 million, and gross margin expanded to 55.2% from 54.2% in the prior-year quarter, reflecting the continued shift in mix toward higher-margin services revenue.Income from operations increased to $0.3 million, compared with an operating loss of $2.0 million in the prior-year quarter. GAAP net loss attributable to common stockholders improved to $8.4 million, or $(0.06) per basic and diluted share, from a net loss of $10.2 million, or $(0.08) per basic and diluted share, in the prior-year quarter.Adjusted EBITDA, a non-GAAP measure, was $21.5 million in the first quarter, a 7% increase from $20.1 million in the prior-year quarter. A reconciliation of adjusted EBITDA to GAAP net loss, the most directly comparable GAAP measure, is provided in the tables below.Balance Sheet and Capital ResourcesAs of June 30, 2026, the Company's total available liquidity was $62.7 million, comprising cash and cash equivalents of $32.8 million, and available borrowing capacity of $29.9 million under the Company's existing revolving credit facilities. Total outstanding debt was $278.4 million, and net debt (net of cash, cash equivalents, and restricted cash) was $241.7 million. Adjusted net debt-to-trailing 12-month adjusted EBITDA ratio remained stable at 2.5x compared with fiscal 2026 year-end.Financial OutlookThe Company is updating its full year fiscal 2027 guidance, reflecting the South African reprioritization:Revenue is expected to range from $468 million to $473 million, representing approximately 6% year-over-year growth at the midpoint. Net loss is expected to range from $6 million to $8 million, with weighted-average fully diluted shares outstanding of approximately 134 million. Adjusted EBITDA is expected to range from $111 million to $114 million, representing approximately 16% year-over-year growth and a margin of approximately 24% at the midpoint. Free cash flow is expected to range from $20 million to $23 million, consistent with the revised adjusted EBITDA guidance.Powerfleet provides guidance for adjusted EBITDA and free cash flow, which are non-GAAP financial measures. Powerfleet does not provide guidance for the most directly comparable GAAP financial measures or a reconciliation of each of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure because it is unable to predict, without unreasonable effort, the timing or amount of certain items that are included in the applicable GAAP financial measure but excluded from adjusted EBITDA and/or free cash flow. These items may include, among others, stock-based compensation, acquisition-related expenses, fair-value adjustments, restructuring charges and other non-recurring items. The variability of these items could have a significant impact on Powerfleet's future GAAP financial results, and therefore, Powerfleet is unable to provide a reconciliation at this time.INVESTOR CONFERENCE CALL AND BUSINESS UPDATEPowerfleet management will hold a conference call on Monday, August 10, 2026, at 8:30 a.m. Eastern time (5:30 a.m. Pacific time) to discuss results for the first quarter ended June 30, 2026, and provide a business update.Date: Monday, August 10, 2026Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)Toll Free: 888-506-0062International: 973-528-0011Participant Access Code: 417796The conference call will be broadcast simultaneously and available for replay here. Additionally, both the webcast and accompanying slide presentation will be available via the investor section of Powerfleet's website at ir.powerfleet.com.USE OF NON-GAAP FINANCIAL MEASURESManagement evaluates the financial performance of our business on a variety of key indicators, including non-GAAP measures of adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA gross margin, adjusted net income per share, adjusted EBITDA leverage ratio, free cash flow, net debt and adjusted net debt. Reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results. These non-GAAP measures are provided to enhance investors' overall understanding of Powerfleet's current financial performance. Specifically, Powerfleet believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses and fluctuations in currency rates that may not be indicative of its core operating results and business outlook. These non-GAAP measures are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as an alternative to total revenues, net income, net income margin, gross margin, net income per share, net cash provided by operating activities or total debt as an indicator of operating performance or liquidity. Because Powerfleet's method for calculating the non-GAAP measures may differ from other companies' methods, the non-GAAP measures may not be comparable to similarly titled measures reported by other companies. A reconciliation of all non-GAAP financial measures included in this press release to the most directly comparable GAAP financial measures is provided in Annex A titled "Non-GAAP Financial Measures," including a description of these non-GAAP financial measures and the reasons why management uses these measures.Powerfleet also presents an illustrative annualized revenue run-rate metric based on the ARR currently under contract and assuming full deployment of the South African National Treasury contract. This illustrative metric is not prepared in accordance with GAAP, is not intended to represent fiscal 2027 revenue guidance or a forecast of future revenue and should not be considered a substitute for GAAP revenue.

Powerfleet Reports Results for First Quarter Fiscal 2027

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