MiX Telematics expects a turnaround in its US business, with its third quarter numbers boding well for a stronger finish to the year, after disappointing interim results.
"We had a tough preceding five quarters, where we held our own and grew, but we had this anchor around our ankles caused primarily by the energy sector crisis where a lot of our customers were cutting back their fleets. What we have seen in this last quarter is that has reversed and we are starting to see growth even out of that sector," group CEO Stefan Joselowitz told ITWeb in an interview following the group's third quarter results announcement.
"The oil price has stabilised and the oil companies are starting to invest in exploration again and starting to once again expand their fleets. Because our service is viewed as a critical service in terms of managing their efficiencies and the safety of their staff, we get a natural boost when they start expanding again."
Joselowitz says the US market in particular has struggled over the past five quarters, because of a focus on energy, but the global provider of fleet management software and services saw a nice turnaround in the past quarter.
"We expect the US's contribution going forward will continue to accelerate and we are expecting good growth out of that region."
Total revenue for the quarter increased 6% year-on-year to R401.4 million, while hardware and other revenue was R90.7 million, an increase of 7.8% compared to last year.
Overall subscription revenue was R310.7 million for the three months ended 31 December 2016, an increase of 5.5% compared to last year's third quarter. Subscription revenue benefited from an increase of over 54 600 subscribers year-on-year, boosting the subscriber base by 9.9%.
However, profit for the period was R35.1 million, a 39% drop compared to R57.9 million recorded in the third quarter of the previous financial year. This included a net foreign exchange loss of R4.9 million before tax. This after first half profit for the financial year more than halved to R55.1 million, compared to R110.8 million in the first half of the previous year.
"We added over 20 000 net new subscribers during the quarter, resulting in our ability to exceed the 600 000 mark for the first time in the company's history," Joselowitz adds.
"This base growth, combined with strict cost management, allowed us to make progress in the quarter towards our stated long-term goal of delivering normalised adjusted EBITDA margins in excess of 30%."
Global business
The JSE- and NYSE-listed group is a global provider of fleet and mobile asset management solutions delivered as software-as-a-service. Founded in 1996, it now operates in 120 countries and has offices in SA, the UK, US, Uganda, Brazil, Australia, Romania, Thailand and the United Arab Emirates ? as well as a network of over 130 fleet partners worldwide.
Joselowitz says Africa is still the group's biggest business and in broad terms it represents about 50% of its revenue and profit. About 15% of the group revenue comes out of Europe; 15% out of the Middle East and Australia; the US is about 12% and the balance is the rest of the world.
He says the Middle East business "had a tough year-and-a-half, because of the oil crisis, but is starting to come out of it again and I think will be a decent contributor", while the Brazilian business is growing strongly and the African business continues to perform well, despite tough economic conditions.
"We got off to a disappointing start to our year triggered primarily by some projects that were put on hold by some big energy customers, which have since restarted in Q3. But it's looking like we are going to have a strong finish. On balance, I'm happy with that and our pipeline looks good going beyond this year," he adds.
Looking to the full 2017 fiscal year results, concluding on 31 March, Joselowitz says the company expects to finish the year with total revenue of about R1.5 billion, as well as reasonable subscription revenue growth.
Share