-- 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.
WOODCLIFF LAKE, N.J., Aug. 10, 2026 /PRNewswire/ -- 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 Highlights
-- In 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 2026
-- Revenue 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 Additions
-- President 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 Results
Revenue 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 Resources
As 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 Outlook
The 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 UPDATE
Powerfleet 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, 2026
Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)
Toll Free: 888-506-0062
International: 973-528-0011
Participant Access Code: 417796
The 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 MEASURES
Management 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.
ABOUT POWERFLEET
Powerfleet (Nasdaq: AIOT; JSE: PWR) is a global leader in the artificial intelligence of things (AIoT) software-as-a-service (SaaS) mobile asset industry. With extensive experience, Powerfleet unifies business operations through the ingestion, harmonization, and integration of data, irrespective of source, and delivers actionable insights to help companies save lives, time, and money. Powerfleet's ethos transcends our data ecosystem and commitment to innovation; our people-centric approach empowers our customers to realize impactful and sustained business improvement. The Company is headquartered in New Jersey, United States, with offices around the globe. Explore more at www.powerfleet.com. Powerfleet has a primary listing on The Nasdaq Global Market and a secondary listing on the Main Board of the Johannesburg Stock Exchange (JSE).
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of federal securities laws. Powerfleet's actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements may be identified by words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions.
These forward-looking statements include, without limitation, our expectations with respect to our beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions and future performance, as well as including our revised financial outlook and guidance for fiscal 2027 and the anticipated financial impacts of recent business combinations and acquisitions. Forward-looking statements involve significant known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. Most of these factors are outside our control and are difficult to predict. The risks and uncertainties referred to above include, but are not limited to, risks related to: (i) the possibility that we may not fully realize the anticipated benefits of our acquisitions and ongoing business transformation initiatives; (ii) significant losses, accumulated deficits and an inability to achieve or sustain profitability; (iii) future global economic, political and business conditions, including inflation, interest rate increases, foreign exchange instability, geopolitical conflicts, sanctions, export controls and the potential imposition of tariffs; (iv) the commercial, financial, reputational and regulatory risks to our business associated with operating across multiple geographies, including exposure to foreign exchange fluctuations and economic instability in certain emerging markets; (v) disruptions in our global supply chain, performance issues or failures by subcontractors, and reliance on a limited number of suppliers for critical components and services; (vi) the loss of any of our key customers, reductions in customer demand or purchasing levels, and reliance on third-party channel partner relationships, including telecommunication companies and regional distributors; (vii) changes in technology, products and customer expectations, which may be more rapid, costly or difficult to address, or less effective, than anticipated; (viii) risks associated with the deployment and use of artificial intelligence and machine learning technologies, including operational, legal, regulatory and reputational risks arising from their development, use or outputs; (ix) potential breaches, disruptions or failures of our information technology systems, including risks that could impair operations, customer access to services, or vendor and customer relationships; (x) our inability to adequately protect our intellectual property rights or defend against third-party intellectual property claims; (xi) our ability to obtain additional capital to fund our operations; and (xii) such other factors as are set forth in the periodic reports filed by us with the Securities and Exchange Commission (SEC), including but not limited to those described under the heading "Risk Factors" in our annual reports on Form 10-K, quarterly reports on Form 10-Q and any other filings made with the SEC from time to time, which are available via the SEC's website at http://www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by these forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.
The forward-looking statements included in this press release are made only as of the date of this press release, and except as otherwise required by applicable securities law, we assume no obligation, nor do we intend to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances.
Powerfleet Investor Contacts
AIOTIRTeam@allianceadvisors.com
Powerfleet Media Contact
jonathan.bates@powerfleet.com
POWERFLEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended June 30,
2025 2026
--------------- ------------
Revenues:
Products $17,657 $16,480
Services 86,464 94,313
--------------- ------------
Total revenues 104,121 110,793
--------------- ------------
Cost of revenues:
Cost of products 13,228 12,970
Cost of services 34,412 36,662
--------------- ------------
Total cost of revenues 47,640 49,632
--------------- ------------
Gross profit 56,481 61,161
--------------- ------------
Operating expenses:
Selling, general and administrative expenses 53,663 56,531
Research and development expenses 4,857 4,360
--------------- ------------
Total operating expenses 58,520 60,891
--------------- ------------
(Loss) profit from operations (2,039) 270
Interest income 196 234
Interest expense (6,786) (6,983)
Other expense (1,243) (405)
--------------- ------------
Net loss before income taxes (9,872) (6,884)
Income tax expense (362) (1,373)
--------------- ------------
Net loss (10,234) (8,257)
Non-controlling interest -- (183)
--------------- ------------
Net loss attributable to common stockholders $(10,234) $(8,440)
=============== ============
Net loss per share attributable to common
stockholders - basic and diluted $(0.08) $(0.06)
=============== ============
Weighted average common shares outstanding -
basic and diluted 133,313 134,169
=============== ============
POWERFLEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
March 31, 2026 June 30, 2026
-------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $36,496 $32,824
Restricted cash 4,322 3,895
Accounts receivables, net 93,820 91,399
Inventory, net 22,448 21,645
Prepaid expenses and other current assets 22,094 23,743
-------------- -------------
Total current assets 179,180 173,506
Fixed assets, net 62,398 63,800
Goodwill 411,995 421,062
Intangible assets, net 255,518 253,933
Right-of-use asset 15,893 16,189
Severance payable fund 4,445 4,863
Deferred tax asset 4,537 5,066
Other assets 21,599 24,143
-------------- -------------
Total assets $955,565 $962,562
============== =============
LIABILITIES
Current liabilities:
Short-term bank debt and current
maturities of long-term debt $50,355 $49,092
Accounts payable 46,353 44,455
Accrued expenses and other current
liabilities 37,699 39,970
Deferred revenue - current 20,159 20,857
Lease liability - current 3,386 3,646
-------------- -------------
Total current liabilities 157,952 158,020
Long-term debt - less current maturities 229,669 229,300
Deferred revenue - less current portion 4,005 3,503
Lease liability - less current portion 13,505 13,576
Accrued severance payable 5,666 6,100
Deferred tax liability 60,063 60,840
Other long-term liabilities 3,090 2,331
-------------- -------------
Total liabilities 473,950 473,670
-------------- -------------
REDEEMABLE NON-CONTROLLING INTERESTS
Redeemable non-controlling interests 6,009 6,192
STOCKHOLDERS' EQUITY
Preferred stock -- --
Common stock 1,343 1,343
Additional paid-in capital 682,344 685,451
Accumulated deficit (226,335) (234,775)
Accumulated other comprehensive income 29,660 42,087
Treasury stock (11,518) (11,518)
-------------- -------------
Total stockholders' equity 475,494 482,588
Non-controlling interest 112 112
-------------- -------------
Total equity 475,606 482,700
-------------- -------------
Total liabilities, redeemable
non-controlling interests and
stockholders' equity $955,565 $962,562
============== =============
POWERFLEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended June 30,
-----------------------------
2025 2026
--------------- ------------
Cash flows from operating activities
Net loss $(10,234) $(8,440)
Adjustments to reconcile net loss to cash
provided by operating activities:
Non-controlling interest -- 183
Inventory reserve 193 558
Stock-based compensation expense 1,853 3,107
Depreciation and amortization 16,031 16,207
Right-of-use assets, non-cash lease
expense 974 1,205
Derivative mark-to-market adjustment 104 (919)
Bad debts expense 1,856 2,958
Deferred income taxes (3,157) (1,538)
Lease termination and modification losses 59 --
Other non-cash items (513) (1,168)
Changes in operating assets and
liabilities:
Accounts receivable (2,391) 893
Inventories (4,733) 725
Prepaid expenses and other current
assets (1,284) (2,144)
Deferred costs (2,730) (2,960)
Deferred revenue (420) 71
Accounts payable, accrued expenses and
other current liabilities 9,637 722
Lease liabilities (881) (1,033)
Accrued severance payable 357 16
--------------- ------------
Net cash provided by operating activities 4,721 8,443
--------------- ------------
Cash flows from investing activities
Proceeds from sale of fixed assets 16 1
Capitalized software development costs (3,724) (4,100)
Capital expenditures (8,114) (4,873)
--------------- ------------
Net cash used in investing activities (11,822) (8,972)
--------------- ------------
Cash flows from financing activities
Repayment of long-term debt (1,341) (1,679)
Short-term bank debt, net (5,428) (2,457)
--------------- ------------
Net cash used in financing activities (6,769) (4,136)
--------------- ------------
Effect of foreign exchange rate changes on
cash and cash equivalents 725 566
--------------- ------------
Net decrease in cash and cash equivalents,
and restricted cash (13,145) (4,099)
Cash and cash equivalents, and restricted
cash at beginning of the period 48,788 40,818
--------------- ------------
Cash and cash equivalents, and restricted
cash at end of the period $35,643 $36,719
=============== ============
Reconciliation of cash and cash
equivalents, and restricted cash, at
beginning of the period
Cash and cash equivalents 44,392 36,496
Restricted cash 4,396 4,322
--------------- ------------
Cash, cash equivalents, and restricted
cash, at beginning of the period $48,788 $40,818
=============== ============
Reconciliation of cash and cash
equivalents, and restricted cash, at end
of the period
Cash and cash equivalents 31,196 32,824
Restricted cash 4,447 3,895
--------------- ------------
Cash and cash equivalents, and restricted
cash, at end of the period $35,643 $36,719
=============== ============
Supplemental disclosure of cash flow
information:
Cash paid for:
Taxes $873 $1,721
Interest $5,994 $6,444
Annex A: Non-GAAP Financial Measures
In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present non-GAAP measures of organic revenue growth, adjusted EBITDA, adjusted EBITDA margin, adjusted net income/loss per share, adjusted EBITDA gross profit margin, adjusted EBITDA products gross profit margin, adjusted EBITDA services gross profit margin, non-GAAP selling, general and administrative expense ratios, adjusted operating expenses, free cash flow, net debt and adjusted net debt, and adjusted net debt to adjusted EBITDA ratio as supplemental measures of our operating performance. We believe they provide useful information to our investors as they eliminate the impact of certain items that we do not consider indicative of our cash operations and ongoing operating performance. In addition, we use them as an integral part of our internal reporting to measure the performance and operating strength of our business.
We believe organic revenue growth, adjusted EBITDA, adjusted EBITDA margin, adjusted net income/loss per share, adjusted EBITDA gross profit margin, adjusted EBITDA products gross profit margin, adjusted EBITDA services gross profit margin, non-GAAP selling, general and administrative expense ratios, adjusted operating expenses, free cash flow, net debt and adjusted net debt, and adjusted net debt to adjusted EBITDA ratio, are relevant and provide useful information frequently used by securities analysts, investors and other interested parties in their evaluation of the operating performance of companies similar to ours and are indicators of the operational strength of our business.
Organic revenue growth represents the year-over-year percentage change in revenue, excluding the impact of acquisitions. We believe organic revenue growth provides insight into the underlying performance of the Company's existing operations by removing the effects of changes in the scope of consolidation. Adjusted EBITDA is equal to net loss attributable to common stockholders, excluding non-controlling interest, preferred stock dividend, interest expense (net), other income (net), income tax expense, depreciation and amortization, stock-based compensation, foreign currency losses, restructuring-related expenses, derivative mark-to-market adjustment, acquisition-related expenses and integration-related expenses. Following a detailed review of relevant SEC guidance on disclosure of non-GAAP financial measures, we refined our definition of adjusted EBITDA by removing recognition of pre-October 1, 2024 contract assets (Fleet Complete). Comparative information has been adjusted to conform with the updated presentation. We believe adjusted EBITDA eliminates the uneven effect of considerable amounts of non-cash depreciation and amortization, stock-based compensation and other items that might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of revenue. Adjusted net income/loss is equal to net loss excluding incremental intangible assets amortization expense as a result of business combinations, stock-based compensation (non-recurring/accelerated cost), foreign currency losses, restructuring-related expenses, derivative mark-to-market adjustment, acquisition-related expenses, integration-related expenses and inventory rationalization and other, net of tax. We define adjusted net income/loss per share as adjusted net income/loss divided by the weighted-average number of shares outstanding during the period. We believe adjusted net income/loss provides additional means of evaluating period-over-period operating performance by eliminating certain non-cash expenses and other items that might otherwise make comparisons of our ongoing business with prior periods more difficult and obscure trends in ongoing operations. We define adjusted EBITDA gross profit as gross profit excluding inventory rationalization and other and depreciation and amortization, and adjusted EBITDA gross profit margin as adjusted EBITDA gross profit as a percentage of revenues. Our adjusted EBITDA gross profit is a measure used by management in evaluating the business's current operating performance by excluding the impact of prior historical costs of assets that are expensed systematically and allocated over the estimated useful lives of the assets, which may not be indicative of the current operating activity. We define non-GAAP selling, general and administrative expense ratios as selling, general and administrative expenses adjusted for restructuring-related expenses, acquisition-related expenses, integration-related expenses, depreciation and amortization, and stock-based compensation, and expressed as a percentage of total revenues. We define adjusted operating expenses as total operating expenses adjusted for acquisition-related expenses, integration-related expenses, stock-based compensation (non-recurring/accelerated cost) and restructuring-related expenses. We present non-GAAP selling, general and administrative expense ratios and adjusted operating expenses to provide a clearer view of our operating cost structure by excluding items that are not directly tied to ongoing business operations. Free cash flow is equal to net cash provided by operating activities, excluding proceeds from the sale of fixed assets, capitalized software development costs and capital expenditures. We present free cash flow because we believe it provides useful information to investors and others in understanding and evaluating the Company's cash flows by providing detail of the amount of cash the Company generates or utilizes after accounting for all capital expenditures as well as costs that do not relate to our core business operations. We define adjusted net debt as total debt less cash, cash equivalents, and restricted cash, resulting in net debt less unsettled transaction costs. Adjusted net debt to adjusted EBITDA ratio is calculated as adjusted net debt divided by adjusted EBITDA for the trailing 12-month period. We present adjusted net debt and adjusted net debt to adjusted EBITDA ratio to help investors and others better understand our true leverage position and financial flexibility. Unsettled transaction costs -- often related to acquisitions, integrations, or financing activities -- can temporarily inflate net debt figures and obscure comparability across periods.
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income/loss per share, adjusted EBITDA gross profit margin, adjusted EBITDA products gross profit margin, adjusted EBITDA services gross profit margin, non-GAAP selling, general and administrative expense ratios, adjusted operating expenses, free cash flow, net debt and adjusted net debt, and adjusted net debt to adjusted EBITDA ratio are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, financial measures presented in accordance with U.S. GAAP. The way we measure adjusted EBITDA, adjusted EBITDA margin, adjusted net income/loss per share, adjusted EBITDA gross profit margin, adjusted EBITDA products gross profit margin, adjusted EBITDA services gross profit margin, non-GAAP selling, general and administrative expense ratios, adjusted operating expenses, free cash flow, net debt and adjusted net debt, and adjusted net debt to adjusted EBITDA ratio, may not be comparable to similarly titled measures presented by other companies.
A reconciliation of net loss attributable to common stockholders (the most directly comparable financial measure presented in accordance with GAAP) to adjusted EBITDA for the periods shown is presented below (in thousands and unaudited):
Three Months Ended June 30,
-----------------------------
2025 (1) 2026
--------------- ------------
Net loss attributable to common stockholders $(10,234) $(8,440)
Non-controlling interest -- 183
Interest expense, net 6,590 6,749
Other expense, net 23 26
Income tax expense 362 1,373
Depreciation and amortization 16,031 16,207
Stock-based compensation 1,853 3,107
Foreign currency losses 1,161 1,336
Restructuring-related expenses 2,442 1,038
Derivative mark-to-market adjustment 104 (919)
Acquisition-related expenses 1,130 228
Integration-related expenses 675 640
--------------- ------------
Adjusted EBITDA $20,137 $21,528
=============== ============
Net loss margin (9.8) % (7.6) %
Adjusted EBITDA margin 19.3 % 19.4 %
Other cash items:
Recognition of pre-October 1, 2024 contract
assets (Fleet Complete) $1,503 $851
(1) Following the closing of our acquisition of Fleet Complete, we included
an EBITDA adjustment related to the recognition of pre-October 1, 2024,
contract assets. This adjustment represented recoveries, through customer
billings, of the contract asset recognized at acquisition for hardware
delivered by Fleet Complete prior to October 1, 2024. This adjustment was
intended to give investors a clearer view of underlying operating
performance and cash generation. The goal was to better align adjusted
EBITDA with operating cash flows. Following a detailed review of relevant
SEC guidance on disclosure of non-GAAP financial measures, we have stopped
including this adjustment in our presentation of adjusted EBITDA. For the
three months ended June 30, 2025 and 2026, we reported adjusted EBITDA of
$20.1 million and $21.5 million, respectively. During the same periods, we
also invoiced recoveries of $1.5 million and $0.9 million, respectively,
which are included in cash flows from operating activities in the condensed
consolidated statement of cash flows.
The following table (in thousands, except per share data, and unaudited) reconciles net loss to adjusted net income (loss) for the periods shown:
Three Months Ended June 30,
-----------------------------
2025 2026
--------------- ------------
Net loss attributable to common stockholders $(10,234) $(8,440)
Incremental intangible assets amortization
expense as a result of business
combinations 5,830 6,131
Foreign currency losses 1,161 1,336
Restructuring-related expenses 2,442 1,038
Derivative mark-to-market adjustment 104 (919)
Acquisition-related expenses 1,130 228
Integration-related expenses 675 640
Inventory rationalization and other 415 --
Income tax effect of adjustments (562) (1,704)
--------------- ------------
Adjusted net income (loss) $961 $(1,690)
=============== ============
Weighted average shares outstanding 133,313 134,169
Net loss per share - basic $(0.08) $(0.06)
Adjusted net income (loss) per share - basic $0.01 $(0.01)
The following table (in thousands and unaudited) reconciles gross profit margins to adjusted EBITDA gross profit margins for the periods shown:
Three Months Ended June 30,
2025 2026
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Products:
Product revenues $17,657 $16,480
Cost of products 13,228 12,970
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Products gross profit $4,429 $3,510
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Adjusted EBITDA products gross profit $4,429 $3,510
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Products gross profit margin 25.1 % 21.3 %
Adjusted EBITDA products gross profit margin 25.1 % 21.3 %
Services:
Services revenues $86,464 $94,313
Cost of services 34,412 36,662
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Services gross profit $52,052 $57,651
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Depreciation and amortization $13,241 $13,925
Adjusted EBITDA services gross profit $65,293 $71,576
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Services gross profit margin 60.2 % 61.1 %
Adjusted EBITDA services gross profit margin 75.5 % 75.9 %
Total:
Total revenues $104,121 $110,793
Total cost of revenues 47,640 49,632
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Total gross profit $56,481 $61,161
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Depreciation and amortization $13,241 $13,925
Adjusted EBITDA gross profit $69,722 $75,086
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Gross profit margin 54.2 % 55.2 %
Adjusted EBITDA gross profit margin 67.0 % 67.8 %
The following table (in thousands and unaudited) reconciles selling, general and administrative ("SG&A") expenses to non-GAAP SG&A expenses for the periods shown:
Three Months Ended June 30,
-----------------------------
2025 2026
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Total revenues $104,121 $110,793
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Selling, general and administrative expenses
Selling, general and administrative expenses 53,663 56,531
Restructuring-related expenses (2,442) (1,038)
Acquisition-related expenses (1,130) (228)
Integration-related expenses (675) (640)
Depreciation and amortization (2,790) (2,282)
Stock-based compensation (1,853) (3,107)
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Non-GAAP selling, general and administrative
expenses 44,773 49,236
Non-GAAP sales and marketing expenses 17,958 22,043
Non-GAAP general and administrative expenses 26,815 27,193
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Non-GAAP selling, general and administrative
expenses $44,773 $49,236
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Non-GAAP sales and marketing expenses as a
percentage of total revenue 17.2 % 19.9 %
Non-GAAP general and administrative expenses
as a percentage of total revenue 25.8 % 24.5 %
Research and development expenses
Research and development incurred $8,559 $9,283
Research and development capitalized (3,702) (4,923)
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Research and development expenses $4,857 $4,360
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Research and development incurred as a
percentage of total revenues 8.2 % 8.4 %
Research and development expenses as a
percentage of total revenues 4.7 % 3.9 %
The following table (in thousands and unaudited) reconciles total operating expenses to adjusted operating expenses for the periods shown:
Three Months Ended June 30,
-----------------------------
2025 2026
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Total operating expenses $58,520 $60,891
Adjusted for:
Acquisition-related expenses 1,130 228
Integration-related expenses 675 640
Restructuring-related expenses 2,442 1,038
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4,247 1,906
Adjusted operating expenses $54,273 $58,985
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