MiX Telematics has dropped its revenue guidance for the full year, as net subscriber additions are falling below its internal plans.
In the first half of the year, to September, MiX grew its customer base 19%, taking total subscribers to more than 479 000, which earned it R478.4 million in subscription revenue, also a 19% gain.
CEO Stefan Joselowitz says, compared with the first quarter, MiX saw improved demand in the second three months, adding 29 000 new users in the first half. Despite this, he says, cumulative additions for the year remain well behind its internal plan, leading the company to lower its revenue and earnings targets for the full year.
The company, headquartered in Midrand but listed locally and on the New York Stock Exchange, provides fleet and mobile asset management solutions delivered as software-as-a-service.
MiX expects full-year revenue of between R1.325 billion and R1.35 billion, representing growth of 4% to 6% compared to last year, while total subscription income is expected to be between 15% and 16% higher, at between R980 million and R990 million. After the first quarter, revenue was anticipated to gain 8.9% to 10.9%, and subscription income was set to be between 19.5% and 20.6% higher.
However, these growth targets are contingent on market conditions and achieving hardware sales, it notes.
Decent profits
Despite the lowered forecast, Joselowitz says the business is growing and is "handsomely profitable" although it still faces headwinds in South Africa. He says the Americas and Europe grew subscribers at around 10%, with the balance of its operations growing at around 20% or better.
MiX's Americas operation grew its subscriber base 20%, with subscription revenue gaining 13% on a constant currency basis - which strips out exchange rate fluctuations. In the Middle East and Australasia, subscribers gained 12.5% and subscription revenue increased by 19.4% on a constant currency basis, but total revenue declined as a result of lower hardware revenue in the Middle East.
In Africa, MiX grew subscribers 20.9%, but revenue only gained a "modest" 5.2% due to lower hardware revenue. Europe reported flat revenue on a constant currency basis as lower hardware sales offset subscription revenue growth of about 8%.
MiX has also acquired a key reseller in South Africa, "which will be immediately accretive to both our top and bottom lines, and we are winning major contracts," adds Joselowitz. The group ended the year with free cash flow of R1.2 million, compared with R7.1 million a year ago, as its working capital increased and it spent R66.1 million in capital expenditure.
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