PowerFleet NASDAQ: AIOT said fiscal 2026 marked a major step in its post-combination strategy, with management pointing to stronger recurring revenue growth, higher profitability, improved cash flow and a reduced leverage profile during the company’s fourth-quarter and full-year earnings call.
Chief Executive Officer Steve Towe said the company has delivered on a two-year plan built around consolidation, technology differentiation and financial discipline. He said PowerFleet restructured its global operating model, unified its product roadmap under Unity, centralized core functions and achieved more than $34 million in annualized cost synergies.
“We did it while simultaneously accelerating organic revenue performance, expanding margins, and winning at a level in the enterprise market that the heritage PowerFleet could simply never have achieved,” Towe said.
Recurring Services Drive Revenue Growth
For fiscal 2026, PowerFleet generated total revenue of $443.8 million, up 22% from the prior year, according to Chief Financial Officer David Wilson. Services revenue grew to $360 million and accounted for 81% of total revenue, up from 76% in fiscal 2025.
In the fourth quarter, total revenue was $114.5 million, up 11% year over year and 1% sequentially. Services revenue was $92.9 million, up 14% from the prior-year period, while product revenue was $21.5 million and was described by Wilson as “broadly stable” year over year.
Management emphasized that product revenue is increasingly being used as a deployment mechanism for recurring services. Wilson said the shift toward recurring services is central to the company’s profitability outlook because the services business carries higher margins and converts more efficiently into adjusted EBITDA.
Towe said PowerFleet secured multimillion-dollar contracts during the year with two large global companies: a top-three global food and beverage company and a major global manufacturer, both using the company’s On-Site solutions. He also highlighted the South African National Treasury contract, which PowerFleet expects to have a five-year total contract value of $100 million to $120 million once fully implemented.
Profitability Improves as Synergies Flow Through
Adjusted EBITDA for fiscal 2026 rose 44% to $97 million, with adjusted EBITDA margin expanding 330 basis points to 21.9%, Towe said. In the fourth quarter, adjusted EBITDA increased 42% year over year to $26.4 million, with margin reaching 23.1%.
Wilson said fourth-quarter gross profit was $64.7 million, representing a GAAP gross margin of 57%, up roughly four percentage points from a year earlier. GAAP income from operations was $11 million in the quarter, compared with an operating loss in the prior-year quarter.
For the full year, Wilson said GAAP operating income was $19.6 million, compared with an operating loss of $25.9 million in fiscal 2025. The company’s full-year GAAP net loss improved by 60% to $20.6 million. Wilson said the remaining gap between positive operating income and net loss was “almost entirely interest expense on our debt.”
Cash Flow and Leverage Show Improvement
PowerFleet’s free cash flow, defined as operating cash flow less net capital expenditures and capitalized software development, was negative $9.5 million for fiscal 2026, an improvement from negative $37.1 million in fiscal 2025.
Management said the company exited the year with improving cash generation. Free cash flow was negative $13.7 million in the first half of fiscal 2026, then swung to positive $4.1 million in the second half. Wilson said both the third and fourth quarters were free cash flow positive.
The company also reduced net leverage to 2.47 times from 3.39 times during the year. Wilson said the improvement was driven by adjusted EBITDA growth and disciplined cash management.
Fiscal 2027 Outlook Calls for Growth and Positive Free Cash Flow
PowerFleet guided fiscal 2027 revenue to a range of $485 million to $490 million, representing approximately 10% growth at the midpoint. The company expects services revenue to exceed $400 million.
Adjusted EBITDA is expected to range from $122 million to $125 million, implying about 27% growth at the midpoint and an adjusted EBITDA margin of roughly 25%. PowerFleet also forecast positive free cash flow of $30 million to $35 million.
Wilson said fiscal 2027 results are expected to build through the year. Revenue is expected to follow a first-half/second-half split broadly similar to fiscal 2026’s 48%/52% pattern, while adjusted EBITDA is expected to be more second-half weighted because of early-year investments and cost actions.
Wilson said first-quarter adjusted EBITDA margin is expected to be about one percentage point lower than the fourth quarter of fiscal 2026, reflecting incremental go-to-market investment and spending tied to productivity initiatives. He said savings from the company’s next wave of cost optimization are expected to begin flowing through from the start of the third quarter.
South Africa, Accenture and On-Site Solutions Highlighted as Growth Drivers
Management repeatedly pointed to the South African National Treasury contract as a major growth driver. Towe said 60,000 assets are now moving into deployment planning, with revenue expected to contribute in late fiscal 2027 and more fully in fiscal 2028. In response to analyst questions, he said the broader estate could include up to 200,000 vehicles and described the opportunity as a recurring revenue base with potential for additional one-time and incremental services.
Towe also highlighted a new partnership with Accenture, which he said selected PowerFleet as a strategic safety solutions innovation partner and is recommending the company’s Unity portfolio. He said the relationship launched in the prior four to six weeks and is more likely to become a back-end fiscal 2027 and fiscal 2028 opportunity.
PowerFleet also said AI Video bookings grew more than 50% in fiscal 2026, while On-Site revenue increased 39%. Towe said On-Site and AI Video now represent 65% of the company’s pipeline, up from 50% entering fiscal 2026.
During the Q&A, Towe said the company expects sequential revenue growth through fiscal 2027, supported by productivity improvements from sales investments, partnerships and the South Africa ramp. Wilson added that PowerFleet expects to exit fiscal 2027 “comfortably under 2 times levered,” with a longer-term leverage range of roughly 1.5 to 1.75 times.
Before the call concluded, Wilson said PowerFleet expected to file its Form 10-K that day and said all material weaknesses had been cleared based on the company’s status at the time of the call.
About PowerFleet NASDAQ: AIOT
PowerFleet, Inc NASDAQ: AIOT develops and delivers Internet of Things (IoT)–based telematics and asset-tracking solutions designed to help businesses monitor, manage and optimize fleets of vehicles and industrial equipment. Its core offerings include wireless sensors, GPS tracking devices and cloud-hosted software platforms that provide real-time visibility into vehicle whereabouts, usage patterns, fuel consumption and maintenance needs. The company's systems also support regulatory compliance and safety monitoring, enabling customers to reduce operational costs, minimize theft and improve overall asset utilization.
The company's hardware portfolio features RFID readers, active and passive tags, onboard diagnostics (OBD) adapters and temperature or motion sensors that can be deployed on trucks, trailers, forklifts, containers and other high-value assets.
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