PowerFleet (NASDAQ:AIOT) reported record revenue for its fiscal second quarter and reaffirmed its full-year outlook, as the company recovered from a manufacturing disruption and accelerated orders under a South African government contract.
Revenue for the quarter ended September 30, 2026, rose 4% year over year to $115.7 million. Services revenue increased 7% to $95.2 million, accounting for 82% of the total, while product revenue rebounded 25% sequentially to $20.5 million.
Adjusted EBITDA rose 16% from the prior quarter to $24.9 million, with the adjusted margin improving to 21.5% from 19.4%. The company reported a net loss of $6.9 million, or 5 cents per share, compared with a loss of 6 cents per share in the preceding quarter.
President and Chief Financial Officer Paul Lalljie said PowerFleet resolved a component compatibility issue that had delayed product shipments in the first quarter. The company shipped a substantial majority of deferred orders during the second quarter and expects to complete the remaining recovery in the third quarter.
South African Deployment and Financing
Chief Executive Officer Steve Towe said PowerFleet had received more than 94,000 installation mandates under its South African National Treasury program, surpassing its earlier target of 80,000 to 90,000 by the end of the fiscal fourth quarter. The mandates represent orders rather than completed installations.
As of the call, 18,250 installations had been completed, Towe said. The orders include 40,000 units being deployed with the South African Police Service. Towe cautioned that the pace of installations depends in part on when government agencies make vehicles available.
PowerFleet has agreed terms for a proposed device financing facility of up to 560 million South African rand, or approximately $34 million, with Rand Merchant Bank. Lalljie said the facility would fund device costs as units are deployed, while PowerFleet would retain the customer relationship, billing and ownership of the hardware.
The arrangement is intended to support a hardware-as-a-service model, under which customers pay monthly for devices and services. Management expects the proposed facility to improve working capital efficiency and help fund future deployments, although the financing was still being finalized.
Outlook and Margins
PowerFleet reaffirmed its fiscal 2027 guidance for revenue of $468 million to $473 million and adjusted EBITDA of $111 million to $114 million. It also expects to exit the fourth quarter at a $495 million annualized revenue run rate and a 27% adjusted EBITDA margin.
Lalljie said the margin target depends on continued activation of South African mandates, a shift toward higher-margin services and cost discipline. He expects strong product revenue in the third quarter to weigh temporarily on margins before associated services revenue begins to flow through in the fourth quarter and beyond.
Total gross margin fell to 53% from 56% a year earlier. Services gross margin declined to 59% from 62%, which Lalljie attributed primarily to higher amortization of capitalized software and acquired intangible assets rather than pricing pressure. Product gross margin improved to 28% from 21.3% in the first quarter as deferred orders shipped.
For the first half of fiscal 2027, operating cash flow was $4.8 million, down from $10.2 million a year earlier. The company ended the quarter with $26.8 million in cash and cash equivalents, excluding $3 million of restricted cash, and $19.1 million of available borrowing capacity.
Growth Areas and New Products
Management highlighted three areas of investment: On-Site solutions, AI Video, and internet-of-things and connected services. Towe said they account for 75% of PowerFleet’s future pipeline.
Chief Revenue Officer Jeff Lautenbach said trailing 12-month industrial revenue grew 23%, while industrial services revenue increased 29%. In AI Video, bookings annual recurring revenue grew 32% over the trailing 12 months, and the North American video subscriber base expanded 30%, he said. IoT and connected services revenue grew 23% over the same period.
PowerFleet also announced Unity Foresight, an AI-powered operational intelligence offering, and Unity Asset Intelligence, which is designed to connect and monitor assets beyond vehicles. Chief Marketing Officer Jonathan Bates estimated that the latter could address more than 100 million additional assets globally, representing over $30 billion in potential market opportunity.
Towe said most revenue from the new offerings is expected to be recurring, but the company has not quantified their expected contribution to fiscal 2028. Lalljie said it was premature to give a conclusive forecast for total recurring revenue growth that year, although management expects continued growth in the services areas where it is investing.
About PowerFleet (NASDAQ:AIOT)
Powerfleet, Inc provides connected-vehicle and asset-management solutions designed to help organizations monitor, manage and optimize mobile assets. Its platform combines Internet of Things (IoT) connectivity, telematics, location tracking and analytics to deliver visibility into vehicles, equipment, cargo and other assets.
The company’s products and services support fleet management, driver safety, vehicle and equipment utilization, maintenance, logistics and supply-chain operations. Powerfleet serves a range of industries, including transportation, logistics, commercial fleets, rental and leasing, construction, manufacturing and other organizations that rely on mobile assets.
Powerfleet has expanded its capabilities through acquisitions and business combinations, including its 2019 acquisition of Pointer Telocation and its 2024 combination with MiX Telematics.
