PI
Powerfleet, Inc. (AIOT)·Q1 2026 Earnings Summary
Executive Summary
- Q1 FY2026 delivered profitable growth: revenue rose 38% year over year to $104.1M, services grew 53% YoY and 6% QoQ to $86.5M (83% of total), adjusted EBITDA rose 58% YoY to $21.6M with adjusted gross margin expanding to 67% .
- Versus S&P Global consensus, AIOT posted a modest beat on revenue ($104.1M vs $103.2M*) and a notable beat on Primary EPS ($0.01 vs -$0.01*); management also cited adjusted EBITDA above consensus, driven by SaaS mix and cost actions .
- FY2026 guidance raised at the low end: revenue now $430–$440M (from ~$420–$440M); EBITDA growth outlook (45–55%) and leverage target (<2.25x by Mar-31-26) maintained .
- Catalysts: accelerating AI Video bookings (+52% QoQ), new MTN white-label partnership to scale Unity across 16 markets, and ongoing EBITDA expansion program ($11M annualized savings realized exiting Q1) .
What Went Well and What Went Wrong
What Went Well
- Services mix and margin expansion: Services reached a record 83% of revenue; adjusted total gross margin rose to 67% on a 6% QoQ services increase and 75% services adjusted EBITDA gross margins .
- Commercial momentum: AI Video ARR bookings +52% QoQ; 14% QoQ increase in new logo wins; 11 sectors with six‑figure ARR wins; CEO: “Q1 marked a strong start… anchored by a standout 6% sequential increase in services revenue” .
- Strategic partnerships: MTN to white‑label Unity across its footprint, broadening TAM and channel leverage .
What Went Wrong
- Product margin pressure and capex sensitivity: Product gross margin fell to 25.1% amid tariff headwinds; management expects product margins to remain mid‑20s near term .
- Product revenue softness: Mix shift plus GAAP accounting reduced product revenue sequentially by ~$2M; services strength offset the impact .
- Elevated interest expense and one‑time costs continue to weigh on GAAP EPS (−$0.08), despite non‑GAAP EPS of $0.01 .
Financial Results
Estimates vs Actuals (S&P Global)
- Q1 FY2026 Revenue: Actual $104.1M vs Consensus $103.2M* (Beat) .
- Q1 FY2026 Primary EPS: Actual $0.01 vs Consensus −$0.01* (Beat).
- Q1 FY2026 EBITDA: S&P “actual” $18.2M* vs Consensus $20.5M*; note company-reported adjusted EBITDA was $21.6M (methodological differences) .
Values marked with * retrieved from S&P Global.
Segment and Margin Detail
Key Performance Indicators
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- CEO on Q1 strength and mix: “Q1 marked a strong start to FY26 as we delivered profitable growth ahead of expectations, anchored by a standout 6% sequential increase in services revenue… highlighting our shift to higher‑quality SaaS revenue” .
- CEO on AI Video and channels: “AI Video ARR bookings grew 52% QoQ… strong momentum through major indirect channel partners” .
- CFO on beats and margin drivers: Revenue ~+$1M vs consensus and adjusted EBITDA “exceeding consensus by over $1M,” with adjusted gross margins up 300 bps YoY to 67% and services gross margins ~76% .
- CEO on tariffs and products: Product margins to remain mid‑20s near term due to tariff impacts; strategy emphasizes SaaS-led bundles and device‑agnostic approach .
- CEO on long-term mix: Targeting 85%+ SaaS revenue mix; services margins 80%+; true SaaS margins 90–95% .
Q&A Highlights
- Channel/MTN ramp: MTN is “ready to hit the road” in 2H; white‑labeling the full Unity stack across multiple countries; additional NA and EU partners expected to ramp from late Q4 into FY2027 .
- Product vs Services: Capex caution and tariff updates pressuring product; company pivoted to SaaS‑led applications; GAAP accounting reduced product revenue by ~$2M sequentially .
- ARPU/Subs: Services growth primarily ARPU‑driven; baseline services ARPU around $15; higher‑value modules (in‑warehouse/AI video) carry $30–$125 ARPU ranges .
- Cost actions/leverage: $11M annualized savings realized in Q1; G&A E2R to decline as synergies flow; still reinvesting into GTM; net leverage targeted <2.25x by year‑end .
- Investment pacing: Selective incremental investments into indirect channels now; potential to accelerate front‑line investments at half‑year given momentum .
Estimates Context
- Management framed a revenue and adjusted EBITDA beat vs consensus, consistent with the reported mix shift and cost actions .
- Street models likely need to reflect a structurally higher services mix (83%) and mid‑20s product margins near term due to tariffs .
Values marked with * retrieved from S&P Global.
Key Takeaways for Investors
- Structural mix shift is durable: services at 83% with expanding adjusted gross margins (67%) positions the model for resilient cash generation and multiple expansion as recurring revenue compounds .
- Near‑term headwinds are manageable: tariff and capex pressure on products likely keeps product margins mid‑20s, but SaaS growth, pricing/attach, and supply chain actions mitigate impact .
- Channel flywheel is accelerating: MTN white‑label plus strengthening NA/EU telco partners should expand TAM and pipeline through FY2026–FY2027 .
- Cost program traction: $11M annualized savings realized, tracking to $18M target; G&A efficiencies fund GTM reinvestment without sacrificing margin progress .
- Guidance bias: Raised revenue floor to $430M with EBITDA growth and leverage targets intact; setup favors 2H acceleration as channels ramp .
- Trading setup: Evidence of beats on revenue and EPS, improved mix, and expanding partnerships provide positive catalysts; watch for product margin stabilization and partner activation milestones in 2H .
- Medium‑term thesis: Platform leverage (Unity), AI feature velocity, and device‑agnostic strategy support ARPU expansion and cross‑sell across a scaled base (48k customers, 2.8M subs exiting FY2025) .