PowerFleet, Inc. (NASDAQ:AIOT) posted stronger-than-expected third-quarter results on Monday, delivering record revenue and a sharp improvement in profitability, but its shares still fell more than 4% in premarket trading as investors digested updated guidance.
The company reported third-quarter revenue of $113.5 million, beating analyst expectations of $111.78 million and rising 7% from $106.4 million a year earlier. Adjusted earnings per share came in at $0.02, ahead of the consensus forecast of breakeven results.
PowerFleet also delivered a notable turnaround at the operating level, generating an operating profit of $6.3 million compared with an operating loss of $1.2 million in the same quarter last year. Adjusted EBITDA rose 26% year over year to $25.7 million, with margins expanding to 23% from 19%.
Growth was driven largely by services revenue, which now accounts for about 80% of total sales. Services revenue increased 11% year over year to $91.1 million, underscoring the company’s shift toward more predictable, recurring revenue streams.
“This was the first quarter in which year-over-year results reflect the total combined businesses, and Powerfleet delivered another quarter of solid execution across the organization,” said Steve Towe, Chief Executive Officer of Powerfleet.
Despite the operational momentum, market sentiment appeared to turn on guidance. PowerFleet narrowed its full-year revenue outlook to $440 million to $445 million, compared with a prior range of $435 million to $445 million. At the same time, it reduced its adjusted EBITDA growth forecast to roughly 45% year over year, down from a previous range of 45% to 55%.
Management said the revision reflects additional investment required to support a major public-sector contract in South Africa covering more than 100,000 subscriber assets.
The company reiterated that it expects to improve its adjusted net debt to adjusted EBITDA leverage ratio by about one full turn by the end of the fiscal year, although the target was revised to 2.4x from the earlier 2.25x guidance.