PowerFleet lifts outlook as South African orders accelerate

By Amara Osei

PowerFleet reported $115.7 million in fiscal second-quarter revenue for the quarter ended September 30, 2026, up 4% year over year, and reaffirmed its fiscal 2027 outlook.

Revenue set a company record. Services revenue rose 7% to $95.2 million and supplied 82% of total sales, while product revenue rebounded 25% sequentially to $20.5 million as deferred orders shipped.

Adjusted EBITDA rose 16% from the preceding quarter to $24.9 million, and adjusted margin improved to 21.5% from 19.4%. PowerFleet still posted a net loss of $6.9 million, or 5 cents per share, against a 6-cent loss in the prior quarter.

What drove the operating recovery?

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.

Deferred shipments cleared in the quarter, but PowerFleet remained loss-making.

How large is the South African deployment pipeline?

Chief Executive Officer Steve Towe said PowerFleet had received more than 94,000 installation mandates under its South African National Treasury program, above the earlier target of 80,000 to 90,000 by the end of fiscal fourth quarter.

Towe cautioned that the mandates “represent orders rather than completed installations.” As of the call, 18,250 installations had been completed. The orders include 40,000 units being deployed with the South African Police Service, and installation pace depends partly 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, approximately $34 million, with Rand Merchant Bank. Lalljie said it would fund device costs as units deploy; PowerFleet would retain the customer relationship, billing and hardware ownership.

The arrangement is designed to support hardware-as-a-service, under which customers pay monthly for devices and services. Management expects it to improve working-capital efficiency and help fund future deployments, although the financing was still being finalized.

Mandates now exceed completed installations, and the funding structure was not yet final.

What did the fiscal 2027 guidance require?

PowerFleet reaffirmed revenue guidance of $468 million to $473 million and adjusted EBITDA guidance of $111 million to $114 million. It 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 related 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%, primarily because of 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. PowerFleet 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.

Annual guidance held, while gross margin and operating cash flow moved lower.

Where is management putting its investment?

Management highlighted On-Site solutions, AI Video, and internet-of-things and connected services as three investment areas. Towe said they account for 75% of PowerFleet’s future pipeline.

Chief Revenue Officer Jeff Lautenbach reported the following trailing-12-month performance:

• Industrial revenue grew 23%, while industrial services revenue increased 29%.
• In AI Video, bookings annual recurring revenue grew 32%, and the North American video subscriber base expanded 30%.
• IoT and connected services revenue grew 23% over the same period.

PowerFleet announced Unity Foresight, an AI-powered operational intelligence offering, and Unity Asset Intelligence, designed to connect and monitor assets beyond vehicles. Chief Marketing Officer Jonathan Bates estimated 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 should be recurring, but PowerFleet has not quantified their fiscal 2028 contribution. 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 receiving investment.

The new products expand the sales opportunity, but their fiscal 2028 contribution remains unquantified.

What does PowerFleet sell?

PowerFleet provides connected-vehicle and asset-management solutions for monitoring, managing and optimizing mobile assets. Its platform combines IoT connectivity, telematics, location tracking and analytics to deliver visibility into vehicles, equipment, cargo and other assets.

The products and services support fleet management, driver safety, vehicle and equipment utilization, maintenance, logistics and supply-chain operations. Customers include transportation, logistics, commercial fleet, rental and leasing, construction and manufacturing organizations.

PowerFleet expanded through acquisitions and business combinations, including its 2019 Pointer Telocation acquisition and its 2024 combination with MiX Telematics. The company now combines connected-vehicle data with a broader asset-management platform.