Powerfleet, Inc. Q2 FY2026 Earnings Call

Greetings. Welcome to PowerFleet's second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Carolyn Capaccio, of Alliance Advisors. You may begin.

Thanks, Holly. Good morning, everyone. This presentation contains forward-looking statements within the meaning of federal securities law. Forward-looking statements include statements with respect to PowerFleet's beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions, and future performance and involve known and unknown risks, uncertainties, and other factors, which may be beyond PowerFleet's control and could cause its actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. All statements other than those of historical facts are statements that could be considered forward-looking. For example, forward-looking statements include projections regarding prospects for additional customers, potential contract values, market forecasts, projections of earnings, revenues, synergies, accretion or other financial information, emerging new products, plans, strategies and objectives of management for future operations, including growing revenue, controlling operating costs, increasing production volumes, and expanding business with core customers. The risks and uncertainties referred to above are not limited to those detailed from time to time in PowerFleet's filings with the Securities Exchange Commission, including PowerFleet's annual report on Form 10-K for the year ended December 31, 2025. These risks could cause actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of PowerFleet unless otherwise required by applicable law, PowerFleet assumes no obligation to update the information contained in this presentation and expressly disclaims any obligation to do so, whether as a result of new information, future events, or otherwise. Now I'll turn the call over to PowerFleet CEO, Steve Towe. Steve?

Good morning, everyone. It's great to be here this morning with key members of the leadership group to walk you through what has been a significant quarter for PowerFleet. This set of results marks a transition point for the company. It signals the end of an integration period following the two major acquisitions we completed and the start of a new chapter focused squarely on accelerating sustainable growth. Just six months into aligning into one global enterprise at an operational level, we're clicking into gear. Starting to deliver expanding revenue growth and healthy business momentum in our key operating metrics. In Q2, our top growth metric, annual services recurring revenue, reached the double-digit growth milestone originally targeted for year-end ahead of schedule. The true strength of growth is how you get there. For us, that means responsibly and efficiently. The extensive synergy programs we aggressively executed are already moving the dial meaningfully. And we're delighted to also post meaningful adjusted EBITDA expansion this quarter both sequentially and year over year. This quarter clearly demonstrates the shape of the future of PowerFleet: integrated, efficient, and built for profitable growth. Next slide, please. When you step back and look at the quarter, you can see a clear pattern of balanced execution. Services and ARR are growing strongly. Margins are expanding both at the total gross margin level and particularly encouragingly within the services line. This consistent improvement speaks to the strength of our SaaS-led model and our operating discipline. What's also particularly pleasing for this quarter is the return to growth in product revenue inclusive of expanding margins, underscoring the durability of our business and the effectiveness of the actions we took to offset tariff pressures and broader macroeconomic challenges. Together, these results demonstrate a company that's accelerating profitable growth, scaling efficiently while maintaining quality and control. Next slide, please. We felt it was the right time in our evolution to add a high-quality executive as chief revenue officer with a proven track record in driving SaaS growth at scale – someone who has led multiple A-player teams and brings deep SaaS enterprise go-to-market experience. It's a crucial role with major accelerated growth opportunities directly in front of us. It brings executive bandwidth and further high revenue expansion experience to the global team. I'm delighted to welcome Jeff Lautenbach. Jeff, over to you.

Thanks, Steve. Great to be here. Having spent time with the teams and customers, I've been able to see for myself the momentum building across the business. One key element of our future success is North America, and it's been encouraging to walk into a double-digit year-over-year revenue performance in that region, a clear sign of traction and developing brand strength. One of the proof points of our scale strategy was that as PowerFleet grew, we'd see more invitations for large deals and greater visibility in the enterprise market. That's now happening with a 26% increase in new logo wins as more customers recognize us as a top-tier provider. Our core value proposition—safety, compliance, sustainability, and efficiency—continues to resonate strongly. We've seen a sharp rise in demand within our on-site and in-warehouse safety segment; we're delivering real impact. To give you a sense of the traction, one of our largest new deals this quarter came from a major engagement with a global industrial manufacturer. A multibillion-dollar enterprise recognized as one of the world's leading producers of heavy machinery and power systems serving construction, mining, and energy markets worldwide. They're deploying Unity to modernize asset visibility, optimize equipment utilization, and reinforce compliance standards across their international operations. We also notably secured a major North American logistics and fleet management company, one of the world's largest providers of third-party logistics and supply chain services, operating thousands of vehicles in hundreds of distribution facilities across the region. They've selected Unity to enhance operator safety, strengthen compliance, and deliver deeper operational visibility across their nationwide logistics network. Both are multi-year strategic programs with significant expansion runway, indicators of the scale of opportunity ahead and the value our platform is delivering. Next slide. Looking forward, we're seeing strong progress in our strategic partner channels, another key pillar of our growth plan. Global channel bookings increased meaningfully in Q2 from Q1, particularly with partners like AT&T and TELUS, where momentum in the North America channel continues to grow at a 32% sequential increase in quarterly pipeline build. More generally, our global cross-sell pipeline activity grew substantially. Notably, we are seeing solid traction with AI video, upselling into our base, and that's showing up with a healthy 23% expansion in the video pipeline this quarter. These are encouraging proof points—evidence that our commercial engine is working as designed and that we're building a flywheel capable of sustaining double-digit growth into FY '27. With that, I'll hand it over to David to walk through the financials.

Thanks, Jeff. Before running through our regular financial reviews, I'll begin with the headline. Service revenue, excluding the legacy Fleet Complete book of business, grew 12% organically year-over-year. Even as we continue deliberately exiting non-core revenue streams in the quarters following our combination with MiX in April 2024. High margin recurring SaaS revenue is the cornerstone of our future, and that progress is clearly visible in our sales mix, with service revenue now representing 80% of total revenue, up from 74% last year. Next slide. Now on to our regular financial review. Starting with a quick recap of the key pro forma adjustments as well as a change in our prior methodology for calculating adjusted EBITDA. One-time expenses this quarter include $2,100,000 in one-time charges for restructuring, integrations, and transaction costs. Excluded from adjusted EBITDA and EPS for ongoing run rates. Amortization impact: Results include $5,800,000 in noncash amortization related to the MiX and Fleet Complete acquisitions, impacting services gross margins by over 5%. Change the calculation of adjusted EBITDA: Following consultation with the SEC, including a detailed review of question 100.04, of the compliance and disclosure interpretations on non-GAAP financial measures, we concluded that our presentation of adjusted EBITDA will no longer include an EBITDA adjustment for recognition of pre-10/01/2024 contract assets Fleet Complete. These amounts reflect certain in-vehicle devices delivered by Fleet Complete prior to the acquisition but invoiced and collected thereafter. This treatment was applicable for a finite transition period and reflects cash received for hardware that will never be recognized as revenue by PowerFleet. The adjustment was intended to align reporting results more with operating cash flows, and the change has no impact on underlying economics or cash generation. Now on to Q2, which was a banner period delivering record top and bottom line performance. Total revenue increased 45% year-over-year, $111,700,000, including strong organic growth of 9% overall and 12% in strategically important services. Turning to adjusted EBITDA, which rose more than 70% to $24,800,000. Alongside this strong performance, we also invoiced $1,300,000 in Fleet Complete IVD recoveries which historically were included in adjusted EBITDA and will continue to flow through operating cash as collected. These results validate the strategic rationale for our M&A program and highlight the powerful market opportunities emerging through our Unity product strategy. Next slide. Turning to margins, we continue to deliver strong year-over-year improvement. A stronger mix and 77% service gross margins drove a 400 basis point increase in EBITDA gross margins to 68%. Product margins also improved by 640 basis points sequentially to 31.5%, supported by a rebound in higher-margin on-site demand following Q1 tariff headwinds. On operating expenses, we are driving G&A efficiencies, investing in go-to-market and maintaining gross R&D at 8% of revenue. G&A declined to 25% of revenue, three points lower than last year, reflecting synergy capture and operating leverage. We expect G&A as a percentage of revenue to continue stepping down by roughly one point per quarter in the second half. Sales and marketing represented 18% of revenue as we continue to invest in enablement and capacity to support momentum. R&D remained steady at 8% of revenue, or 4% net of capitalized software, as we advance innovation in AI, safety, and compliance. Overall, we're very pleased with our continued P&L progression—expanding margins, disciplined reinvestment, and strong execution across the organization. Next slide, please. Closing on leverage, where previously reported leverage ratios have been amended to exclude the previously discussed Fleet Complete EBITDA add-back. We exited Q2 with a net debt to EBITDA ratio of 2.9 times, an improvement of half a turn from 3.4 times at the end of FY 2025. Looking ahead, we now expect to close the year at approximately two and a quarter times compared to our prior guidance of below 2.25 times. Net debt at quarter end was $243,000,000 compared to an adjusted net debt of $229,000,000 at the end of fiscal 2025. This represents a $14,000,000 increase or $6,000,000 better than initial guidance of a $20,000,000 increase in the first half. For the year, we are maintaining expectations to exit the year with net debt of approximately $220,000,000 representing a reduction of $20,000,000 in the second half. Finally, and as discussed in last week's 8-Ks, we extended the maturity date of our initial term loan A with RMB by one year to 03/31/2028. With that, I'll hand over to Melissa Ingram to walk through our adjusted EBITDA optimization progress.

Thanks, David. I want to pause to recognize what we've achieved as a company. After eighteen months of complex work, the integration is complete, with more than $30,000,000 in annualized synergies realized, and that's a real milestone worth noting. To have maintained the level of top-line performance we have while executing a multi-business integration is no small task. Now with integration behind us, we will move decisively into the next phase: optimization and efficiency. We'll evolve our organizational model to ensure we're structured for long-term efficiency with clear accountability across functions and regions. And we'll continue to optimize our resource mix ensuring the right capabilities are in the right places, balancing internal expertise with flexible external partnerships to stay agile. For embedding automation and AI more deeply, we will simplify how we work and enhance our customer experience. Across support, service, and operations, advancing further the tools that reduce manual effort, improve response time, and free our people to focus on higher value activities. We will refine how we serve subscale segments to improve strategic fit and margin contribution, ensuring every part of the business is aligned to sustainable, profitable growth. In parallel, we'll centralize core operating functions, further strengthening our organizational centers of gravity and embedding best practices globally. Another area of focus is vendor and partner consolidation. We've made real progress here, capturing economies of scale and ensuring we're working with strategic partners who can grow with us. On the technology front, we'll complete our core systems rollout and streamline our technical architecture and hosting to enhance speed, reliability, and cost efficiency. All of these initiatives share one goal: to further expand adjusted EBITDA margins and create capacity for reinvestment in sustainable growth. Next slide, please. Looking ahead, I'm very excited about our upcoming AIoT innovation showcase later this week. It's a great opportunity to highlight why PowerFleet is being recognized as a leader in our space. We'll be exploring three lenses: One, the product and solution innovation behind Unity; Two, the customer outcomes we're enabling; the measurable impact on safety, performance, and transformation; and Three, the people driving it all—an integrated team delivering at scale. It's a chance for investors and partners to see the strength and momentum of the PowerFleet platform up close. Back to you, Steve.

Finally, I'm also pleased to share that PowerFleet has received another covered industry recognition: we've been awarded the Frost and Sullivan's 2025 North America Product Leadership Award. For context, Frost and Sullivan is a highly respected global research and consulting firm, and this award is their highest recognition, based on rigorous independent evaluation of innovation, market impact, and customer satisfaction. It's an objective endorsement of the differentiation we've built through Unity and the consistency of our customer experience. We're honored to receive it and proud of the team whose work made it possible. Before we open for questions, I want to close by reflecting a little further on what this set of results signals to investors for the future. It marks a fundamental shift. The moment where the power of the combinations we have undertaken, the dramatic eighteen-month integration we undertook, and the operational discipline we've bravely driven into the organization is clearly visible in our results. This quarter gives clear evidence that our unique solution strategy and market thesis is resonating strongly, delivering growth that's sustainable, margins that are expanding, and execution that's consistent across the board. My thanks to all our employees, our customers, and our investors for their continued partnership and confidence. Operator, let's open the line for questions.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, while we poll for questions. Your first question for today is from Scott Searle with ROTH Capital.

Hey. Good morning. Thanks for taking the questions, and congrats on the quarter. Great job seeing the organic SaaS growth break through that 10% barrier to 12%. Hey, maybe to dive in on that front, Steve and Dave, looking at the guidance for this year, I'm wondering if you could provide a little bit of color about how you're thinking about services and organic SaaS growth into the third and fourth quarter of this year. Also as part of that, it sounds like Fleet Complete has some revenue recognition transition issues going on. So how you're thinking about that, particularly as we start to go into '27? And I think Jeff indicated sustainable double-digit growth as we get into fiscal 2027. I'm wondering if you could give us early thoughts on that front. And then I had a follow-up.

So, Scott, let me just start with the guidance. So we were pretty clear from the get-go that we expect to be growing sort of 10% organically for Q4. So no change in terms of expectations there. Obviously, we've done a nice job increasing the midpoint of the range over time. So you can see that coming through, but again, things have gone well. We're building up momentum. But, you know, this is not a steady state business. So the trajectory is very clear—up into the right—but it's not as if it's just a smooth road all the way. But we feel good about where we are. Obviously, it's very clear in the numbers in terms of what we're posting. And, again, you'll see that 10% organic growth in Q4 as expected.

Dave, maybe just a follow-up. Yeah. Oh, sorry. My apologies. Yeah.

No. Got you.

No. Just gonna say on the outlook then in terms of how you're thinking about Fleet Complete kind of being blended into that organic number, and early thoughts on '27, particularly given the build of the opportunity pipeline, it sounds like across the board, you know, both from a carrier partner standpoint, AI video standpoint, and warehouse seems like everything is on the upswing.

Yeah. No. It's it’s yeah. But I'll take that one, David. So, look, Scott. I think, you know, we are ahead of schedule. Which is great. Momentum is building. If you look at our internal dashboard from our growth perspective, you know, we're ahead of where we wanted to be. And now it's about, you know, that consistency, that rhythm, and driving opportunity that's ahead of us. We've got stellar momentum. We've brought Jeff in and the team to help, you know, with that execution. So, you know, the flywheel will continue to turn. So, you know, we're very optimistic about what we've put out in terms of 2027 previously. You'll hear at the end of the week some more granularity around that. But in general, you know, from a market perspective, from a solution set resonating perspective, from an ARPU expansion perspective, from a wallet share perspective, then, you know, we're in a very, very good spot. I think you can hear the pride that the team has in terms of the numbers. In terms of Fleet Complete, there are no revenue recognition challenges. I'll ask David to kind of walk through his note on Fleet Complete again. But, you know, Fleet Complete has brought those channels with us. You know, the likes of AT&T and Telus. So, you know, we don't, as we get into 2027, think about, you know, Fleet Complete's parts of the business. It's all one, and the message remains the same: strong, durable, profitable, double-digit both SaaS growth and top-line growth generally.

Yeah, Scott, in terms of the Fleet Complete, that's an EBITDA adjustment. So this is basically invoicing that happens—cash that's collected post the close of the pre-Complete transaction. It's not stuff we recognize historically as revenue. We will never recognize it as revenue. But it does generate significant cash. So the thought was to include that as part of the EBITDA adjustments, just to mirror operating cash flow. Obviously, it's a huge economic positive. But that was the EBITDA adjustment for Fleet Complete, which based on consultation with the SEC, we will no longer include.

Great. And as a quick follow-up, just I'm wondering if you could provide some more high-level thoughts in terms of North America. Obviously, it's a pretty dynamic environment from a supply chain perspective. I'm wondering how you're seeing sales cycles, the ability to close deals. It certainly seems like the pipeline is building on that front. And Dave, also just kind of in this current environment, how you guys are thinking about hedging policy for some of the international markets? Thanks.

So I'll take the first one. So look, I mean, as Jeff alluded to, he's walked into a double-digit growth rate for North America. We believe everything being equal now that, you know, customers are buying again. So where we saw some of that product softness with the tariff decisions, the strong rebound both in top line growth and margin, is a testament to the work that we've done. What we are seeing is a strong demand and need for efficiency and for safety and compliance. So, where customers are needing more optimization, they require more efficiency in what they do, and they need stronger visibility because of these changing times. Our solutions are resonating. So, I think the couple of large wins that Jeff alluded to are strategic wins that because of the power of the combination, we are now winning that business at a larger enterprise scale. So we feel really good about the future there.

And from a hedging strategy, Scott, from an FX standpoint, we do have a portion of our debt in shekels, which has been traditionally a powerful cash generator for us, so we have just south of $30,000,000 of shekel-denominated debt. And then for South Africa, we have about $20,000,000 of ZAR-denominated revolver debt. So we do have the balance sheet sort of hedging from an FX standpoint.

Good morning, Steve and crew, and my congrats on strong execution. A couple of questions. The up 67% in your warehouse solutions, Steve, do you attribute that to or what do you attribute that to? Is it mainly one big customer? Is it across the board? And then also perhaps an update on all your channel partners, AT&T, Telus, and the European giant—where they stand training and launch-wise? Thanks.

Yeah. So it's across the board. So I think we are doing a better job in terms of sales execution, number one. I think, you know, the combination of solutions now where customers can get true visibility of what's going on on their sites or in their warehouse but also combine that with what's going on over the road, which is our unique proposition. That's a real game changer for our customers, and I think that's resonating. The evolution of the more advanced video technology to save lives in the warehouse is also important. I would encourage everyone to tune in on Friday; you'll hear from our customers talking about what those solutions are doing for them and how it's changing the world. So, you know, that's a really positive trend generally. We've done a lot that in the US, but we're now getting real traction in other markets as well and through those channel partners. So, we talked about the pipeline growth in terms of the channel partners. We talked about the bookings improvement globally. That's all from those partnerships that we've talked about—whether that's AT&T, TELUS, MTN. We're still gearing up with a couple of other partners that we talked about earlier in the year for 2027. So, you know, that just brings real strength and diversity to our opportunity base. We have some exciting future conversations going on with those channel partners about how we get more integrated into their solution set, how they can take the best of Unity and offer broader new solutions and more innovation to their customers as well. Again, you'll hear some of that if you tune in on Friday.

Very good. Congrats again, guys. Thanks.

Hi. Good morning, everyone. Hey, Steve. In terms of great new business awards and all that, could you maybe tell us how this is starting to shake out in terms of are the majority of the new business awards coming from Unity, or is it products with services attached?

So everything that we sell is within the Unity ecosystem and platform. So there isn't anything that's separate. I think the differentiators really are, adding in the single pane of glass—the ability for customers to look at multiple different devices or sensors or data streams coming into the platform, being able to integrate our data into their other third-party systems. Again, we've got good visibility for investors and partners at the event later this week and you'll see some demos of that. It's really about us expanding from being a point supplier to a mission-critical partner. So people are looking for connected intelligence. The days of telematics—boxes and hardware and software—are moving toward being a high-grade partner in providing connected intelligence that allows real-time decision-making. You provide visibility. With your AI capabilities, you're able to shortcut where we need to go to make the changes we need. And that is done in a seamless integrated way. I think all of that together is what's ultimately, you know, we're now being seen as a different level in terms of the opportunity we provide to medium and large customers. We're seeing a real shift in both who we talk to within organizations and what people are willing to pay for our solutions due to the level of benefit we provide. Ultimately, we're now seen as an integrated partner and, because of the increased scale of our credibility, our offerings have gone exponentially in terms of what we're seeing with medium to large enterprises. So it's not one single thing, Gary. It's a play out of the thesis and the strategy, which is resonating well. What's exciting is we're only scratching the surface at the moment. If you think about the solutions coming together from the three companies, we're only six months into that and you're already seeing strength in results, and the durability is of those results coming through. So, again, we've got a lot to do. There's a lot we can do better. We are still a work in progress. But ultimately, we're very, very confident about the future.

Yeah. I guess what I was just trying to get at, Steve, is your Unity is device agnostic. So I guess is the traction pretty good with entities that are not using your products?

It absolutely is. And, as we said before, you know, a lot of customers have multi-source demand for this stuff. It's not just about the sensors that you would traditionally think about with PowerFleet; these are other IoT sensors that they have in their state. There are data streams they have in their state. So people now say, look, when we go and talk to CIOs and CTOs and they say, look. We've just got this data mess. Can you simplify this for me? Can you allow us to see the wood for the trees? Then once you're able to do that, you know, can you make sure that it's usable, that it's simple, that we can action it? That's where I think the power of Unity's unique capabilities really creates swift business change. Sometimes, when we've deployed these solutions and our competitors deploy these solutions, it can take a decent amount of time to actually start to see the value back. I think, you know, we are now ahead of break-even within the first twelve months of deployment. We're making meaningful change and seeing it from customers who we expected to do second-phase rollouts over maybe a twelve-to-eighteen-month period. We are shortening that to six-to-twelve because they've got the rhythm and we've been able to simplify the complexity they had in their organization.

And then just one last quick question. In feedback from your customers, I think you had six modules for Unity as you initially rolled out. Are you developing any further? And what feedback have your clients provided on what you feel like you're missing in that Unity platform, if anything?

So it's more about enhancing the modules to the next level. It sounds like I'm plugging Friday; I'm not meaning to. But ultimately, you will see how we're doubling down on the granularity of what we're able to achieve. Safety is a very broad topic, and you'll see just how we're really focusing on enhancing our data analytics capabilities, the speed and accuracy of those. That's where we're spending the majority of our time at the moment.

Gentlemen, appreciate it. Really great job here. Maybe, Steve, starting with you, the 12% organic services is obviously ahead of plan, and it is quite impressive. I wonder if, given the pipeline strength you're seeing, it affords you the ability to kind of unlock some of that held-back spend around go-to-market initiatives. Or maybe if that shifts how you think about the model going forward—considering the vast opportunity here of reinvesting some of that incremental EBITDA growth or EBITDA upside that you would see traditionally back into go-to-market and product development initiatives to feel like the market's really resonating relative to the solutions you're able to provide at this point.

Yeah. So we talked about holding back on a $4,000,000 investment due to the tariff challenges here. We have pressed the button on that, and that's in the sales channels and customer/account engagement, plus adding more resources into the channel opportunity. Over time, we will be good stewards in terms of ensuring we feel confident about the growth and we can stand behind any more investment. We have the ability to flex the model, depending upon that growth rate and our confidence levels. We will flex the model through 2028 appropriately. As you said, as this flywheel starts to turn—opening up more opportunities, and we gain more exposure in the global markets that we're now attacking—then we will maintain flexibility and optionality to double down on go-to-market investment.

Perfect. Okay. Thank you. Very helpful. And maybe following up again with you here, Steve, or maybe this is for Jeff as well too. Encouraging to see some of the new logo momentum in the business. But if I look at it too, low single-digit millions for a Fortune 500 entity, it feels like you're just scratching the surface relative to that opportunity. So if you could help reconcile, obviously, getting more shots on goal, getting a foot in the door, but also how that breeds conviction in the opportunity to significantly expand within several of those accounts. Maybe you have better line of sight now that you have built and established that relationship—kind of the opportunity from a cross-selling perspective as well too? Thank you.

Okay. If I didn't take that one, I’ll follow-up. Yep. So there is great opportunity with new logos moving forward. As we talked about, we made a pivot from a selling perspective to on-site vision. The sales organization is resonating with this opportunity. You heard about the pipeline increases. We can do much better moving forward, and there's a lot of untapped opportunity in these markets. I feel like we're just getting our sea legs. Relative to the opportunity statement and enabling the field with the new value propositions as we move into different market segments while leveraging the installed base that we already have. The customers are there for us to expand. From a new logo perspective, it's important to attack the verticals too, and that opportunity is there as well. So I'm really optimistic about the opportunity around new logos, especially as we gain skills and progress in those areas.

Yeah, thanks, Jeff. Just to respond regarding, you know, we're scratching the surface on those accounts. You're absolutely right. There's a five to ten times opportunity in those accounts, both nationally and internationally. So we're strengthening our global account model. You'll hear from some of the customers we mentioned earlier in the year about large-scale deployments and how they feel about expansion opportunities with us too. What's exciting is it's multidimensional. If you look at the modularity of the solution, to Gary's point, people can grow within the solution. Whether that's doing more of the same with us on a global basis, expanding sites, increasing the volume of vehicles they have with us, or growing different divisions or territories. So we're really excited about the space we're creating for ourselves, particularly in the large enterprise market.

Great. Thank you. So Steve or David, I just wanted to follow-up on Dylan's question there on the enterprise momentum and just ask it a little differently. If you go back one to two years in time, can you help put some context behind how incremental these enterprise opportunities have become for PowerFleet in terms of pipeline mix today? With that and overall brand awareness, how much more room do you have to go on the brand awareness marketing side? Thanks.

Yeah. So I think it's night and day. Our exposure, our win rates, our abilities to be successful in those large enterprise arenas—it's unrecognizable from the opportunity and the credibility and the trust in being a mission-critical provider and partner to those enterprise markets. I think we're building brand momentum. We're getting recognized as a top-tier provider, one of the top three in the world that’s leading in terms of its innovation and profitability. Ensuring that we are being good stewards of the company's capital and making sure we're doing things responsibly is a very good sign in these times of needing a partner who can do that. I think that's always been our mantra, and we continue to excel there. There's always more work to do. There are markets we're attacking where we have less brand presence than others, but that offers a great opportunity for us. Overall, I think we're in a different paradigm and sphere compared to where we were two years ago, and the upside opportunity remains immense.

So, clearly, if you look at the acceleration in growth, a huge part of that is NRR in terms of selling more to our existing customers. And to everyone's point, we're early there in terms of the potential, both regarding customer demand and the solutions we’re bringing to market. It's moving positively. If you look back in the last couple of quarters, obviously, we were shedding revenue for MiX this time last year, actively getting rid of distractions from a product delivery standpoint and market focus. Now, looking at the second half of this year, from a Fleet Complete standpoint, there was a similar exercise in shedding revenue as well. When you look at just the traditional PowerFleet business, excluding Fleet Complete, which is the 12% organic growth from an ARR standpoint, a major part of that is positive net revenue retention. Everything you would expect to see happening in terms of firstly cleaning the book of business, secondly, the complementary nature of our products, and thirdly, the pent-up demand within customers is clearly coming through in the growth that we’re posting. What I would say is for the second half of this fiscal year, expect a bit of a headwind from Fleet Complete because we did the same thing: getting the right revenue base in place aligned with our future.

Great. Good morning, guys. Thanks for taking the questions, and congrats on results. Really nice to see that 23% increase in the cross-sell pipeline. Wondering if you could provide some color on where you're seeing success or solid traction with your cross-sell efforts?

Yeah. So it's in warehouse to over-the-road and vice versa. There is a lot of traction in video, based around safety and compliance. We're really expanding our reach in terms of the breadth of organizations, whether from an insurance perspective or compliance—getting true safety visibility or just operational efficiency for the end-to-end supply chain. That's where we've had strength in either the over-the-road or in-warehouse sectors. Our uniqueness is bringing us forward by talking to the right people in organizations who care about the objectives of both those different parts of the business. That's resonating super strong.

Great to hear. And if I could, can you characterize the demand environment and trends related to pauses on purchasing? Would you say that headwind has fully subsided at this point?

I think people are still cautious. There's still dynamics in the macroeconomic conditions that cause people to think carefully about how much capital they're going to spend and when. But obviously, if you look at the rebound we've had from a product perspective, we are still seeing people making those decisions. That's really positive, and beyond that, we've been able to improve price and margins as we go. There's always a watchtower on these conditions, and we continue to be cautious in our approach, but we've seen a real shift and a need for change in organizations—transformation, efficiency optimization, and visibility. That's where PowerFleet fits into decision-making as a mission-critical partner to businesses, and I think that trend is only improving.

Yeah, the number for this quarter was about $1,300,000. So it's probably a percentage point just over of the EBITDA margin. That would be the way to think about it, Greg.

Thanks, everyone, for joining us today and your continued support. I look forward to updating you on our progress next quarter. Have a great day, and we look forward to our innovation event on Friday. Thank you, bye-bye.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.