MiX Telematics reported a solid fourth quarter, with subscription revenue increasing 25%, above our expectation of 19% growth and guidance of 18% to 20% growth. The result was driven by a 25% year-over-year increase in vehicles under subscription, to 450,502. During the quarter, the company continued to see a shift to bundled services (i.e., hardware and subscription) versus buying hardware up front.
We believe this shift is a long-term positive for MiX since bundled services have higher average selling prices and margins than stand-alone deals. In addition, it should shorten sales cycles and lower revenue volatility created by hardware sales. However, in the near term this shift results in lower total revenue because stand-alone hardware sales are recognized up front, and bundled hardware sales are recognized as revenue in the form of higher subscription fees over the life of the contract.
Therefore, total revenue for the quarter as well as fiscal 2015 total revenue guidance came in below our estimates. We focus on subscription revenue and vehicles under subscription (as opposed to total revenue) since we believe these are better indicators of the health of the business. Management guided to subscription revenue growth of 20%-21%, which was ahead of our expectation of 19% growth. In addition, we estimate that subscription revenue will account for 74% of total revenue at the end of fiscal 2015, up significantly from 59% in fiscal 2013. We are quite pleased with the initial subscription revenue guidance range and believe it reflects strength in both the business and the pipeline. We also believe that management is executing on the initiatives it laid out during its IPO road show and is well on track to meet its long-term goal of 20%-plus subscription revenue growth.
During the quarter, the company hired Skip Kinford as president and CEO of MiX Americas, in addition to a number of other key sales hires. We believe the investments that the company is making in its Americas division should begin to be reflected in results in the second half of fiscal 2015. Although the company has already hired additional sales resources in these geographies, many of these employees have been with the company for only three months, and it typically takes six to nine months before sales reps become productive. Despite not having the benefit of its increased investments, the Americas division still increased its subscription revenue by 18%. We believe that as the Americas division accounts for a larger portion of revenue (it currently accounts for 11% of revenue), investors should become more comfortable with investing in MiX.
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