References in this announcement to R are to South African rand and references to U.S. dollars and $ are to United States dollars. Unless otherwise stated MiX Telematics has translated U.S. dollar amounts from South African rand at the exchange rate of R10.4675 per $1.00, which was the R/$ exchange rate reported by the South African Reserve Bank as of December 31, 2013.
Third Quarter Highlights:
- Total subscription revenue of R220 million ($21.0 million), grew 25% year over year
- Total vehicles under subscription increased by 26% year over year, bringing the total to over 428,500 subscribers at December 31, 2013
- Adjusted EBITDA of R66 million ($6.3 million), representing a 21% Adjusted EBITDA margin
- Company raises guidance for subscription revenue and reiterates guidance for total revenue, Adjusted EBITDA and earnings per share, for the full 2014 fiscal year.
MIDRAND, South Africa — (BUSINESS WIRE) — February 6, 2014 — MiX Telematics Limited (NYSE: MIXT, JSE: MIX), a leading global provider of fleet and mobile asset management solutions delivered as Software-as-a-Service (SaaS), today announced financial results for its third quarter of fiscal year 2014, which ended December 31, 2013.
We are pleased to report strong third quarter results, which were highlighted by 25% year over year growth in subscription revenue. Our focus on selling fully-bundled deals is paying off as we had an increased number of enterprise customers opt for the pure subscription structure rather than pay for the hardware up front, said Stefan Joselowitz, Chief Executive Officer of MiX Telematics. Our enterprise fleet segment landed substantial deals in the quarter, while our passenger vehicle segment continued to demonstrate strong growth. Of note, adoption of our solutions in the bus and coach industry continues to expand. Our dominance in oil and gas was also in evidence again this quarter as we added vehicles to existing customers fleets and secured several new deals, including a significant deal with Lind Gas in Brazil. We continue to believe MiX Telematics is well positioned to be a prime beneficiary of telematics market growth as we have already achieved meaningful scale, built a global distribution network, and offer state-of-the-art solutions that yield a powerful return on investment for our customers.
Financial Performance for the three months ended December 2013
Revenue: Total revenue was R309.8 million ($29.6 million), an increase of 3.8% compared to R298.6 million ($28.5 million) for the third quarter of fiscal year 2013. Subscription revenue was R219.8 million ($21.0 million), an increase of 24.9% compared with R176.0 million ($16.8 million) for the third quarter of fiscal year 2013. This was driven primarily by an increase of over 88,000 vehicles under subscription, an increase of 25.9% from December 2012 to December 2013. Hardware and other revenue was R90.0 million ($8.6 million), a decrease of 26.6% compared to R122.6 million ($11.7 million) for the third quarter of fiscal year 2013. The decrease in hardware and other revenue was due to a significant increase in the number of fully-bundled subscriptions in the third quarter of fiscal 2014 as compared to the prior year period, as well as the ongoing decline of hardware prices.
Gross Margin: Gross profit was R206.3 million ($19.7 million), as compared to R186.6 million ($17.8 million) for the third quarter of fiscal year 2013. Gross profit margin was 66.6%, compared to 62.5% for the third quarter of fiscal year 2013. In the third quarter of fiscal 2014, subscription revenue, which generates a higher gross profit margin than hardware and other revenue, amounted to 71.0% of total revenue compared to 59.0% in the third quarter of fiscal 2013.
Operating Margin: Operating profit was R38.4 million ($3.7 million), as compared to R42.9 million ($4.1 million) for the third quarter of fiscal year 2013. Operating margin was 12.4%, compared to 14.4% for the third quarter of fiscal year 2013. The third quarter of fiscal year 2014 included expected losses incurred by the start-up operation in Brazil and additional investments in headcount. Furthermore, in line with the Groups strategy to invest in future growth, sales and marketing costs for the third quarter of fiscal 2014 increased by R3.8 million ($0.4 million) from the third quarter of fiscal 2013.
Adjusted EBITDA: Adjusted EBITDA, a non-IFRS measure, was R65.5
million ($6.3 million) compared to R69.2 million ($6.6 million) for the
third quarter of fiscal year 2013. The Adjusted EBITDA margin for the
third quarter of fiscal year 2014 was 21.1%, compared to the 23.2%
Adjusted EBITDA margin in the third quarter of fiscal year 2013 due
primarily to the impact of the expected losses incurred by the start-up
operation in Brazil, as well as increased operating costs as a result of
headcount and investments in sales and marketing activities.