Fleet management and vehicle-tracking company MiX Telematics is pinning its hopes on a merger with US-based internet of things (IoT) specialist PowerFleet to take its business to a bigger market and larger pools of investor capital.
Last month, the Midrand-based company announced plans for a merger with PowerFleet that will see it delist from the JSE — joining the likes of tech rivals such as Jasco, Adapt IT, Alaris, Etion and Alviva over the past two years.
MiX, which on Wednesday reported growth in subscribers and revenue for the quarter to end-September, operates in 120 countries and competes locally with Altron’s Netstar and Karooooo’s Cartrack.
The company recently surpassed 1-million subscribers. The merger with PowerFleet will take that to a combined 1.7-million and the companies are confident the enlarged base will “provide immediate scale” for the new entity.
The deal is expected to close in the first quarter of 2024, upon which the combined business will be branded as PowerFleet, with its primary listing on the Nasdaq. PowerFleet intends to have a secondary inward listing on the JSE.
“Post close, we anticipate the direct Nasdaq listing will provide us with significantly increased market exposure and an expanded investor base,” Mix CEO Stefan Joselowitz said in a statement accompanying the quarterly financial statements.
The combination is expected to unlock further shareholder value through “its meaningfully increased scale, enhanced R&D activities, and leveraging our combined best-in-class SaaS [Software-as-a-Service] solutions to further capitalise on the significant global market opportunity”, Joselowitz added.
The combination is expected to create a business with total revenue of $279m (R5.3bn), $39m of adjusted earnings before interest, tax depreciation and amortisation (ebidta) and combined service gross margins of 67%.
Joselowitz, who has headed MiX for almost three decades, plans to retire once the deal is concluded. He will remain a shareholder of the combined entity, while PowerFleet’s head Steve Towe will be CEO of the group.
MiX reported that subscription revenue, which accounted for 86% of group takings, rose to $32.4m, an increase rise of 10% year on year. Group revenue was up 12% to $37.8m on a constant currency basis.
The group added 47,400 net subscribers, bringing the total base to 1,089,000.
MiX's derives the bulk of its revenue from helping companies and businesses manage vehicle fleets. They include Wincanton in the UK with more than 1,700 vehicles on the group’s platform, and Damman Transport Logistique et Organisations in Belgium with 60 vehicles.
Adjusted earnings before interest, tax, depreciation and amortisation (ebitda) were up 41% year on year to $8.5m, while net income was $200,000 compared with $1.2m loss previously.
The company generated $2.1m of free cash during the quarter, ending the period with net cash and cash equivalents of $29.5m.
MiX shares closed 6.5% lower at R4.19 o the JSE on Wednesday but are up almost 10% so far this year.
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