Powerfleet reports Q2 FY26 financial results with 7% quarterly sequential Iincrease in total revenue

"Q2 was a defining quarter for Powerfleet, marked by record revenue and strong performance across key financial and operational metrics," said Steve Towe, Chief Executive Officer of Powerfleet. "A quarterly sequential increase in total revenue of more than 7%, driven by expanding momentum in our AI-powered SaaS solutions and solid growth across our core global markets, is extremely encouraging."

"We achieved a key milestone – double-digit year-over-year organic annual recurring revenue growth – ahead of schedule, fueled by strong global traction across both direct and indirect channels, centered on our differentiated safety and compliance solutions," Towe continued. "Strong product revenue with a sequential revenue improvement of 27%, as well as solid sequential margin expansion, highlight continued momentum and resilience amid evolving macroeconomic conditions. We also delivered clear leverage across the P&L, with the rapid realization of our synergy programs driving meaningful bottom-line strength."

"These results underscore the significant value creation opportunity ahead and establish a strong platform for sustained growth and future performance."

Powerfleet's second quarter results underscore the strength of its execution, with accelerating services revenue and strong momentum toward its adjusted EBITDA expansion targets.

Second Quarter Fiscal 2026 Key GAAP Measures.

• Total revenue reached a record $111.7 million, an increase of 45% year-over-year and 7.3% sequentially, driven by expanding adoption of Powerfleet's AIoT platform.
• Gross profit increased 51% year-over-year to $62.6 million with a gross margin of 56%, compared to a gross profit of $41.3 million with a gross margin of 54% in Q2 FY25. The current period includes an incremental $4.6 million non-cash amortization charge for intangible assets, tempering gross margin expansion by approximately 4%.
• Sales, general and administrative expenses were 48% of revenue in both the current and prior year period, with a 5% planned increase in sales and marketing expenses, to support the Company's growth, offset by a corresponding decrease in general and administrative expenses.
• Research and development expenses, net of capitalized software, represented 4% of revenue, in both the current and prior year period.
• Net loss attributable to common stockholders was $4.3 million, or $0.03 per share, reflecting higher interest expenses and non-cash amortization of intangible assets, compared to a net loss attributable to common stockholders of $1.9 million, or $0.02 per share, in the prior year.

Second Quarter Fiscal 2026 key non-GAAP measures.

• Adjusted EBITDA increased 23% sequentially and 71% year-over-year to $24.8 million, reflecting strong operating leverage, disciplined cost management, and improved gross margins. In addition, the Company invoiced $1.3 million of in-vehicle device recoveries related to legacy Fleet Complete customers. These amounts generate operating cash flow and have historically been treated as an EBITDA add-back. (See the "Full Year 2026 Financial Outlook" section of this release for additional context.)
• Adjusted EBITDA margin increased to 22%, up from 19% in the prior quarter and 19% in the prior year.
• Adjusted EBITDA gross margin increased to 68%, a 400-basis-point improvement year-over-year, supported by a higher mix of recurring services revenue and stronger services gross margins (77% vs. 75% last year).
• Adjusted net income per share was $0.02, compared to $0.00 in the prior-year quarter, after adjusting for restructuring and integration-related expenses and amortization of intangible assets.
• Adjusted net debt to adjusted EBITDA improved to 2.9x, compared to 3.4x at fiscal year-end 2025. Quarter-end net debt was $242.6 million, consisting of $275.1 million in total debt and $32.5 million in cash.

FULL-YEAR 2026 FINANCIAL OUTLOOK:

The Company is increasing its financial guidance for revenue, with revenue now expected to be in the range of $435 million to $445 million versus the prior guidance of approximately $430 million to $440 million.

Following a detailed review of relevant SEC guidance on disclosure of non-GAAP financial measures, the Company concluded that its presentation of adjusted EBITDA will no longer include an EBITDA adjustment for "Recognition of pre-October 1, 2024, contract assets (Fleet Complete)." These amounts relate to limited hardware delivered by Fleet Complete prior to the acquisition but only invoiced and collected thereafter. The EBITDA adjustment was applied during a finite accounting transition period and was intended to align reported results more closely with operating cash flows.

As a result of this change, the Company is amending its prior FY26 annual guidance for:

• Annual adjusted EBITDA growth of 45-55% on FY25 adjusted EBITDA of $67.1 million, versus the prior guidance of growth of 45-55% on FY25 adjusted EBITDA of $71.1 million. The $4.0 million FY25 adjusted EBITDA variance relates solely to invoiced recoveries, which remain in operating cash flows but are no longer added back to adjusted EBITDA. (See Annex A).
• Adjusted net debt to adjusted EBITDA leverage ratio, which is expected to improve from 3.4x as of March 31, 2025, to approximately 2.25x by March 31, 2026, versus the prior guidance of improving from 3.2x to below 2.25x by March 31, 2026.

Powerfleet provides guidance for adjusted EBITDA and adjusted net debt to adjusted EBITDA leverage ratio, which are non-GAAP financial measures. Powerfleet does not provide guidance for the most directly comparable GAAP financial measures or a reconciliation of each of these forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure because it is unable to predict, without unreasonable effort, the timing or amount of certain items that are included in the applicable GAAP financial measure but excluded from adjusted EBITDA and/or adjusted net debt to adjusted EBITDA leverage ratio. These items may include, among others, stock-based compensation, acquisition-related expenses, fair-value adjustments, restructuring charges and other non-recurring items. The variability of these items could have a significant impact on Powerfleet's future GAAP financial results, and therefore, Powerfleet is unable to provide a reconciliation at this time.