MiX Telematics saw interim headline earnings plummet despite subscriber numbers growing for the six months to 30 September.
The JSE- and NYSE-listed company saw first half subscription revenue grow by 9% year-on-year to R608 million. This as it grew subscriber numbers by 8% year-on-year, adding 43 600 subscribers and bringing the total to 585 000 subscribers at the end of September.
However, the global provider of fleet management software and services saw first half profit more than halve to R55.1 million, compared to R110.8 million in the first half of last year. Basic headline earnings per share (HEPS) were 8c, compared to 14c a year before, showing an almost 43% drop. Headline earnings also dropped 50% to almost R55.3 million.
MiX Telematics CEO Stefan Joselowitz remains positive about the performance in the second half of the year.
"Looking forward, we remain confident in our ability to manage our business to deliver sustained profitable growth despite current macro headwinds in some of the geographies," he says.
"We believe the combination of a growing subscriber base, expanding ARPU [average revenue per user] from premium customers, and a continued investment in the business, positions MiX to re-accelerate performance in the second half of the year and beyond."
Profit for the period included a net foreign exchange gain of R11.5 million before tax, compared to a net foreign exchange gain of R103.1 million in the previous corresponding period.
Total revenue for the first half of the 2017 fiscal year was 6.4% higher year-on-year at R747.3 million.
Hardware and other revenue, however, dropped 4% to R139.7 million during the period ? primarily due to a shift towards bundled deals.
Interim operating profit was R49 million ? representing a 7% margin. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) were R127 million ? representing a 17% adjusted EBITDA margin.
On a regional basis, MiX Telematics' African subscriber base has grown by 10.8% compared to the interim period last year, which resulted in subscription revenue growth of 6.6% year-on-year. This compared to subscriber declines out of the Americas (-14.5%) and the Middle East and Australasia (-2.7%). The company's European subscriber base, however, grew by 8% year-on-year and by 41% in Brazil during the period.
"Our second quarter results were highlighted by improved activity from energy sector customers late in the quarter, as well as ongoing momentum in some of our other vertical markets. We also continued to see more of our customers opt for fully-bundled contracts, increasing the long-term value of these relationships," adds Joselowitz.
Costs and investments
MiX says infrastructure costs increased due to the company commencing its transition from legacy data centres, where it owned certain equipment, towards cloud-based infrastructure and services.
"We have also made additional investments to support the rollout of our new back-end platform, MiX Lightning, and new products such as Journey Management, Hours of Service and MiX Go, which will drive increased ARPU as well as subscriber growth over time."
Costs were also impacted by the weaker rand, which was particularly weak against the US dollar at the start of the financial year when annual licences were renewed.
The company generated R97.2 million in net cash from operating activities for the period and invested R147.2 million in capital expenditures during the period, leading to negative free cash flow of R50 million, compared with free cash flow of R7.6 million in the previous corresponding period.
Capital expenditure was R48 million higher than in the first six months of the previous fiscal year as a result of increased investments in in-vehicle devices due to the continued increase in the number of bundled deals.
MiX Telematics is a global provider of fleet and mobile asset management solutions delivered as software-as-a-service. It was founded in SA in 1996 and now operates in over 120 countries worldwide.
Share