Powerfleet, Inc.

Previous wording

The following discussion and analysis of the consolidated financial condition and results of operations of Powerfleet, Inc. and its subsidiaries (“Powerfleet,” the “Company,” “we,” “our” or “us”) should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing in Part I, Item 1 of this report and Part II, Item 7 of our Form 10-KT. In the following discussions, most percentages and dollar amounts have been rounded to aid presentation, and, accordingly, all amounts are approximations.

Current wording

The following discussion and analysis of the consolidated financial condition and results of operations of Powerfleet, Inc. and its subsidiaries (“Powerfleet,” the “Company,” “we,” “our” or “us”) should be read in conjunction with the condensed consolidated financial statements and related notes thereto appearing in Part I, Item 1 of this report and Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the “Form 10-K”). Many of the amounts and percentages in this section have been rounded for convenience of presentation, but actual recorded amounts have been used in computations. Accordingly, some information may appear not to be computed accurately.

Previous wording

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Important factors that could cause our actual results to differ materially from those expressed as forward-looking statements herein include, but are not limited, to: the ability to recognize the anticipated benefit of the MiX Combination and the FC Acquisition; the possibility that we may not be able to integrate successfully the businesses, operations and employees of MiX Telematics and Fleet Complete; the ability of our supply chain to deliver certain key components; changes in technology or products, which may be more difficult or costly, or less effective, than anticipated; our ability to secure our information technology systems against breaches; the effects of competition from a wide variety of local, regional, national and other providers of wireless solutions; our ability to navigate the international political, economic and geographic landscape; future economic and business conditions, including the conflict between Israel and Hamas; the failure of the markets for our products to continue to develop; our inability to adequately protect our intellectual property; changes in laws and regulations or changes in generally accepted accounting policies, rules and practices; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), including our Transition Report on Form 10-KT for the period ended March 31, 2024 (the “Form 10-KT”).

Current wording

There are risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Important factors that could cause our actual results to differ materially from those expressed as forward-looking statements herein include, but are not limited, to: the ability to realize all of the anticipated benefits of the MiX Combination and the FC Acquisition, and the potential challenges associated with the ongoing integration of the businesses; global economic conditions as well as exposure to political, trade and geographic risks, including tariffs and the conflict in the Middle East; disruptions or limitations in our supply chain, particularly with respect to key components; technological changes or product developments that may be more complex, costly, or less effective than expected; cybersecurity risks and our ability to protect our information technology systems from breaches; competitive pressures from a broad range of local, regional, national and other providers of wireless solutions; our ability to effectively navigate the international political, economic and geographic landscape; risks related to the protection and enforcement of our intellectual property rights; changes in applicable laws and regulations or changes in generally accepted accounting policies, rules and practices; and other risks and uncertainties disclosed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), including our Form 10-K.

Previous wording

We are a global leader of Artificial Intelligence-of-Things (“AIoT”) solutions providing valuable business intelligence for managing high-value enterprise and mid-market assets that improve operational efficiencies.

Current wording

Powerfleet is a global provider of Internet-of-Things (“IoT”) solutions providing valuable business intelligence for managing high-value enterprise assets that improve operational efficiencies.

Previous wording

Higher interest rates and inflation, fluctuations in currency values, supply chain disruptions and the conflicts between Russia and Ukraine, and between Israel and Hamas, have resulted in significant economic disruption and adversely impacted the broader global economy, including our customers and suppliers. Given the dynamic and uncertain nature of the current macroeconomic environment, we cannot reasonably estimate the impact of such developments on our financial condition, results of operations or cash flows into the foreseeable future. The ultimate extent of the effects of these developments remain highly uncertain, and such effects could exist for an extended period of time.

Current wording

Higher interest rates, fluctuations in currency values, continued supply chain disruptions, changes in tariff policies and import and export restrictions, and the conflict in the Middle East have resulted in significant economic disruption and adversely impacted the broader global economy, including our customers and suppliers. Given the dynamic and uncertain nature of the current macroeconomic environment, we cannot reasonably estimate the impact of such developments on our financial condition, results of operations or cash flows into the foreseeable future. While we do not currently believe that inflation and recently pronounced tariffs have had a material impact on our condensed consolidated financial statements, the ultimate extent of the effects of these developments remain highly uncertain, and such effects could exist for an extended period of time.

Previous wording

Additional risks and uncertainties to which we are subject are described under the heading “Risk Factors” in Part II, Item 1A of this report and in the Form 10-KT.

Current wording

Additional risks and uncertainties to which we are subject are described under the heading “Risk Factors” in our Form 10-K.

Previous wording

For the three- and nine-month periods ended December 31, 2024, there were no significant changes to our critical accounting policies as identified in the Form 10-KT.

Current wording

For the three-month period ended June 30, 2025, there were no significant changes to our critical accounting policies as identified in the Form 10-K.

Previous wording

Revenues from products increased by $26.5 million, or 71.1%, to $63.7 million in the nine months ended December 31, 2024, from $37.2 million in the same period in 2023. The increase in product revenues was primarily due to the MiX Telematics business acquired which contributed $25.6 million, and the Fleet Complete business acquired which contributed$4.9 million in product revenues for the nine months ended December 31, 2024, offset by lower demand from logistics customers in North America.

Current wording

Revenues from products decreased by $1.1 million, or 5.8%, to $17.7 million in the three months ended June 30, 2025, from $18.7 million in the same period in 2024. The decrease in product revenues was primarily due to lower product revenue of $2.5 million in North America and $1.1 million in Europe, partially offset by the Fleet Complete business acquired which contributed $3.2 million in product revenues for the three months ended June 30, 2025.

Previous wording

Revenues from services increased by $60.1 million, or 277.8%, to $81.7 million in the three months ended December 31, 2024 from $21.6 million in the same period in 2023. The increase in services revenues was principally due to the MiX Telematics business acquired which contributed $35.0 million, and the Fleet Complete business acquired which contributed$24.8 million in service revenues for the three months ended December 31, 2024.

Current wording

Revenues from services increased by $29.8 million, or 52.5%, to $86.5 million in the three months ended June 30, 2025, from $56.7 million in the same period in 2024. The increase in services revenues was principally due to underlying growth initiatives, offset in part by proactive measures to de-emphasize non-core lines of business, and the acquisition of Fleet Complete which contributed $26.2 million in services revenues.

Previous wording

COST OF REVENUES. Cost of revenues increased by $68.7 million, or 136.4%, to $119.1 million in the nine months ended December 31, 2024, from $50.4 million for the same period in 2023. The MiX Telematics acquired business contributed $54.2 million, and the Fleet Complete business acquired contributed$9.2 million to cost of revenues for the nine months ended December 31, 2024. Gross profit was $139.8 million in the nine months ended December 31, 2024, compared to $50.5 million for the same period in 2023. As a percentage of revenues, gross profit increased to 54.0% in the nine months ended December 31, 2024 from 50.1% in the same period in 2023.

Current wording

COST OF REVENUES. Cost of revenues increased by $11.9 million, or 33.1%, to $47.6 million in the three months ended June 30, 2025, from $35.8 million for the same period in 2024. The Fleet Complete business acquired contributed $12.1 million to cost of revenues for the three months ended June 30, 2025. Gross profit was $56.5 million in the three months ended June 30, 2025, compared to $39.6 million for the same period in 2024. As a percentage of revenues, gross profit increased to 54.2% in the three months ended June 30, 2025 from 52.6% in the same period in 2024.

Previous wording

Cost of products increased by $7.1 million, or 71.1%, to $17.1 million in the three months ended December 31, 2024, from $10.0 million in the same period in 2023. Gross profit for products was $7.6 million in the three months ended December 31, 2024, compared to $2.9 million in the same period in 2023. As a percentage of product revenues, gross profit increased to 30.6% in the three months ended December 31, 2024 from 22.5% in the same period in 2023. The increase in gross profit as a percentage of product revenues was principally due to a larger proportion of sales being driven by higher margin product lines including in-warehouse solutions.

Current wording

Cost of products increased by $0.5 million, or 3.7%, to $13.2 million in the three months ended June 30, 2025, from $12.8 million in the same period in 2024. Gross profit for products was $4.4 million in the three months ended June 30, 2025, compared to $6.0 million in the same period in 2024. As a percentage of product revenues, gross profit decreased to 25.1% in the three months ended June 30, 2025 from 32.0% in the same period in 2024. Gross profit as a percentage of product revenues was negatively impacted by tariffs in the US which increased underlying costs and delayed demand for high margin in-warehouse solutions.

Previous wording

Cost of services increased by $52.3 million, or 227.7%, to $75.3 million in the nine months ended December 31, 2024, from $23.0 million in the same period in 2023. The MiX Telematics acquired business contributed $36.6 million, the Fleet Complete business acquired contributed$5.6 million, and the amortization of MiX Telematics and Fleet Complete acquisition-related intangibles contributed $9.6 million to cost of services for the nine months ended December 31, 2024. Gross profit for services was $119.9 million in the nine months ended December 31, 2024, compared to $40.7 million in the same period in 2023. As a percentage of service revenues, gross profit decreased to 61.4% in the nine months ended December 31, 2024 from 63.9% in the same period in 2023. The decrease in gross profit as a percentage of revenues was mainly due to the commencement of amortization of MiX Telematics and Fleet Complete acquisition-related intangibles.

Current wording

Cost of services increased by $11.4 million, or 49.4%, to $34.4 million in the three months ended June 30, 2025, from $23.0 million in the same period in 2024. The acquisition of Fleet Complete and the amortization of acquisition intangibles for the MiX Telematics and Fleet Complete transactions contributed $6.6 million and $2.8 million, respectively, to cost of services for the three months ended June 30, 2025. Gross profit for services was $52.1 million in the three months ended June 30, 2025, compared to $33.7 million in the same period in 2024. As a percentage of services revenues, gross profit increased to 60.2% in the three months ended June 30, 2025 from 59.4% in the same period in 2024.

Previous wording

RESEARCH AND DEVELOPMENT EXPENSES. Research and development (“R&D”) expenses increased by $2.6 million, or 129.9%, to $4.6 million in the three months ended December 31, 2024, compared to $2.0 million in the same period in 2023, principally due to $1.4 million incurred by the MiX Telematics business post-transaction, and $1.2 million incurred by the Fleet Complete business post-transaction. As a percentage of revenues, R&D expenses decreased to 4.3% in the three months ended December 31, 2024, from 5.8% in the same period in 2023.

Current wording

RESEARCH AND DEVELOPMENT (“R&D”) EXPENSES. R&D expenses increased by $1.8 million, or 56.6%, to $4.9 million in the three months ended June 30, 2025, compared to $3.1 million in the same period in 2024, principally due to $1.4 million incurred by Fleet Complete. As a percentage of revenues, R&D expenses increased to 4.7% in the three months ended June 30, 2025, from 4.1% in the same period in 2024.

Previous wording

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS. Net loss attributable to common stockholders was $14.3 million, or $(0.11) per basic and diluted share, for the three months ended December 31, 2024, as compared to net loss of $6.5 million, or $(0.18) per basic and diluted share, for the same period in 2023. The net loss was primarily the result of$5.3 million in acquisition-related expenses,$0.5 million in integration-related costs,$0.8 million in restructuring costs,$5.4 million from the commencement of amortization of MiX Telematics and Fleet Complete acquisition-related intangibles, and $1.7 million loss from the derivative mark-to-market adjustment.

Current wording

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS. Net loss attributable to common stockholders was $10.2 million, or $(0.08) per basic and diluted share, for the three months ended June 30, 2025, as compared to net loss of $22.3 million, or $(0.21) per basic and diluted share, for the same period in 2024. The net loss was primarily the result of $5.8 million from the amortization of MiX Telematics and Fleet Complete acquisition-related intangibles; and $4.2 million in acquisition, integration and restructuring related expenses.

Previous wording

An explanation of the relevance of the non-GAAP measure, a reconciliation of the non-GAAP measure to the most directly comparable measure calculated and presented in accordance with GAAP and a discussion of its limitations is set out below. We do not regard this non-GAAP measures as a substitute for, or superior to, the equivalent measure calculated and presented in accordance with GAAP or that calculated using financial measure that is calculated in accordance with GAAP.

Current wording

An explanation of the relevance of the non-GAAP measure, a reconciliation of the non-GAAP measure to the most directly comparable measure calculated and presented in accordance with GAAP and a discussion of its limitations is set out below. We do not regard this non-GAAP measure as a substitute for, or superior to, the equivalent measure calculated and presented in accordance with GAAP or that calculated using financial measure that is calculated in accordance with GAAP.

Previous wording

We define adjusted EBITDA as net loss attributable to common stockholders before non-controlling interest, preferred stock dividend and accretion, interest expense (net), income tax benefit/expense, depreciation and amortization, stock-based compensation, foreign currency losses/gains, restructuring-related expenses, gain on bargain purchase (Movingdots), derivative mark-to market adjustment, recognition of pre-October 1, 2024 contract assets (Fleet Complete), acquisition-related expenses and integration-related expenses.

Current wording

We define adjusted EBITDA as net loss attributable to common stockholders before non-controlling interest, preferred stock dividend, interest expense (net), other expense (net), income tax expense, depreciation and amortization, stock-based compensation, foreign currency losses, restructuring-related expenses, derivative mark-to market adjustment, recognition of pre-October 1, 2024 contract assets (Fleet Complete), acquisition-related expenses and integration-related expenses.

Previous wording

•certain of the adjustments (such as restructuring costs) made in calculating adjusted EBITDA are those that management believes are not representative of our underlying operations and, therefore, are subjective in nature.

Current wording

•certain of the adjustments (such as restructuring-related expenses and integration-related expenses) made in calculating adjusted EBITDA are those that management believes are not representative of our underlying operations and, therefore, are subjective in nature.

Previous wording

On March 18, 2024, Powerfleet Israel drew down $30 million in cash under the Hapoalim Term Facilities and used the proceeds to prepay approximately $11.2 million, representing the remaining outstanding balance, of the term loans extended to Powerfleet Israel under the Prior Credit Agreement and distributed the remaining proceeds to us. The proceeds of the Hapoalim Revolving Facilities may be used by Pointer for general corporate purposes, including working capital and capital expenditures. As of December 31, 2024, Powerfleet Israel had utilized approximately$14.2 million under the Hapoalim Revolving Facilities.

Current wording

On March 18, 2024, Powerfleet Israel drew down $30 million in cash under the Hapoalim Term Facilities and used the proceeds to prepay approximately $11.2 million, representing the remaining outstanding balance, of the term loans extended to Powerfleet Israel under the Prior Credit Agreement and distributed the remaining proceeds to us. The proceeds of the Hapoalim Revolving Facilities may be used by Pointer for general corporate purposes, including working capital and capital expenditures.

Previous wording

The interest rate for borrowings under Hapoalim Facility C is, with respect to NIS-denominated loans, Hapoalim’s prime rate + 2.5%, and with respect to U.S. dollar-denominated loans, SOFR + 2.15%. Borrowings under Hapoalim Facility D will bear interest at the applicable interest rate set forth in the standard form documents entered into in connection with each utilization of Hapoalim Facility D. In addition, Pointer is required to pay a credit allocation fee in NIS, with respect to Hapoalim Facility C, and a non-utilization fee in U.S. dollars, with respect to Hapoalim Facility D, in each case, equal to 0.5% per annum on undrawn and uncancelled amounts of the revolving facilities during the period commencing on March 18, 2024 and ending on the last day of the applicable availability period of such revolving facilities. The

Current wording

The interest rate for borrowings under Hapoalim Facility C is, with respect to NIS-denominated loans, Hapoalim’s prime rate + 2.5%, and with respect to U.S. dollar-denominated loans, SOFR + 2.15%. Borrowings under Hapoalim Facility D will bear interest at the applicable interest rate set forth in the standard form documents entered into in connection with each utilization of Hapoalim Facility D. In addition, Pointer is required to pay a credit allocation fee in NIS, with respect to Hapoalim Facility C, and a non-utilization fee in U.S. dollars, with respect to Hapoalim Facility D, in each case, equal to 0.5% per annum on undrawn and uncancelled amounts of the revolving facilities during the period commencing on March 18, 2024 and ending on the last day of the applicable availability period of such revolving facilities. The Borrowers have also paid certain upfront fees and other fees and expenses to Hapoalim in connection with the A&R Credit Agreement.

Previous wording

The RMB General Facility is repayable on demand and has a term of 365 days from the Available Date (as defined therein). Repayment of the RMB General Facility, including capitalized interest, is due by the earlier of (a) the Available Date or (b) April 2, 2025, unless extended by agreement between MiX Telematics and RMB. Interest rate for the RMB General Facility is calculated at South African prime rate minus 0.75% per annum and will be calculated on the daily outstanding balance, compounded monthly in arrears and repaid quarterly. As of December 31, 2024,$15,944 of the RMB General Facility was utilized.

Current wording

The RMB General Facility is repayable on demand and has a term of 365 days from the Available Date (as defined therein). Repayment of the RMB General Facility, including capitalized interest, is due by the earlier of (a) the Available Date or (b) April 2, 2025, unless extended by agreement between MiX Telematics and RMB. Interest rate for the RMB General Facility is calculated at South African prime rate minus 0.75% per annum and will be calculated on the daily outstanding balance, compounded monthly in arrears and repaid quarterly. As of June 30, 2025,$16,579 of the RMB General Facility was utilized.

Previous wording

As a result of global supply chain disruptions, the conflicts between Russia and Ukraine and between Israel and Hamas, rising interest rates, fluctuations in currency values, inflation and other cost increases, there remains uncertainty surrounding the potential impact of such events on our results of operations and cash flows. We are proactively taking steps to increase the available cash on hand including, but not limited to, targeted reductions in discretionary operating expenses and capital expenditures and borrowing under our revolving credit facility.

Current wording

As a result of global supply chain disruptions, the conflicts in the Middle East, fluctuations in currency values, inflation and other cost increases, there remains uncertainty surrounding the potential impact of such events on our results of operations and cash flows. We are proactively taking steps to increase the available cash on hand including, but not limited to, targeted reductions in discretionary operating expenses and capital expenditures and borrowing under our revolving credit facility.

Previous wording

As of December 31, 2024, we had cash and cash equivalents (including restricted cash) of $38.6 million and working capital of $30.5 million compared to cash and cash equivalents (including restricted cash) of $109.7 million and working capital of $126.2 million as of March 31, 2024. Our primary sources of cash are cash flows from sales of products and services, our holdings of cash, cash equivalents and proceeds from the sale of our capital stock and borrowings under our credit facilities. The FC Acquisition is a source of positive cash flow, together with the MiX Combination completed on April 2, 2024. To date, we have not generated sufficient cash flow solely from operating activities to fund our operations.

Current wording

As of June 30, 2025, we had cash and cash equivalents (including restricted cash) of $35.6 million and working capital of $11.2 million compared to cash and cash equivalents (including restricted cash) of $48.8 million and working capital of $18.1 million as of March 31, 2025. Our primary sources of cash are cash flows from sales of products and services, our holdings of cash, cash equivalents and proceeds from the sale of our capital stock and borrowings under our credit facilities. The FC Acquisition and MiX Combination are also expected to be a source of positive cash flow. To date, we have not generated sufficient cash flow solely from operating activities to fund our operations.

Previous wording

During thenine months ended December 31, 2024, net cash used in operating activities was $16.9 million, compared to net cash provided by operating activities of $2.6 million for the same period in 2023. The net cash used in operating activities for thenine months ended December 31, 2024 primarily included non-cash charges of $8.4 million for stock-based compensation, $33.0 million for depreciation and amortization expense, $7.2 million for bad debts expense, $0.9 million for shares issued for transaction bonuses related to the MiX Combination, $1.6 million for inventory reserve, $0.7 million for other non-cash items,$4.3 million for ROU asset amortization, partially offset by $0.5 million for derivative mark-to-market adjustment. Changes in operating assets and liabilities included:

Current wording

During thethree months ended June 30, 2025, net cash provided by operating activities was $4.7 million, compared to net cash used in operating activities of $7.6 million for the same period in 2024. The net cash provided by operating activities for the three months ended June 30, 2025 primarily included $16.0 million for depreciation and amortization expense, $1.9 million for bad debts expense, non-cash charges of $1.9 million for stock-based compensation, $1.0 million for ROU asset amortization, $0.1 million for derivative mark-to-market adjustment partially offset by$0.5 million for other non-cash items. Changes in operating assets and liabilities included:

Previous wording

•a decrease in inventory, net of reserve of $2.6 million; and

Current wording

•an increase in inventory, net of reserve of $4.7 million inclusive of inventory build to negate the impact of tariffs;

Previous wording

•an increase in accounts receivables of $15.2 million;

Current wording

•an increase in accounts receivables of $2.4 million;

Previous wording

•an increase in deferred costs of $5.1 million;

Current wording

•a decrease in deferred costs of $2.7 million;

Previous wording

•a decrease in lease liabilities of $4.1 million;

Current wording

•a decrease in lease liabilities of $0.9 million;

Previous wording

•a decrease in prepaid expenses and other assets of $2.1 million;

Current wording

•an increase in prepaid expenses and other assets of $1.3 million;

Previous wording

•an increase in deferred revenue of $1.0 million.

Current wording

•a decrease in deferred revenue of $0.4 million; partially offset by

Previous wording

•a decrease in accounts payable of $15.7 million;

Current wording

•an increase in accounts payable of $9.6 million;

Previous wording

Net cash used in investing activities for thenine months ended December 31, 2024 was $160.5 million, compared to net cash used in investing activities of$5.3 million for the same period in 2023. The net cash used by investing activities was primarily due to $137.1 million in acquisitions, net of cash assumed from the MiX Combination and FC acquisition, $16.6 million for the purchase of fixed assets and $7.3 million for capitalized software development costs. The net cash used in investing activities of $5.3 million in the same period in 2023 was primarily for the purchase of fixed assets of $2.4 million and $2.9 million for capitalized software development costs.

Current wording

Net cash used in investing activities for thethree months ended June 30, 2025 was $11.8 million, compared to net cash provided by investing activities of$19.6 million for the same period in 2024. The net cash used by investing activities was primarily due to $8.1 million for the purchase of fixed assets and $3.7 million for capitalized software development costs. The net cash provided by investing activities of $19.6 million in the same period in 2024 was primarily due to $27.5 million in net cash assumed from the MiX Combination, partially offset by $5.6 million for the purchase of fixed assets and $2.3 million for capitalized software development costs.

Previous wording

During thenine months ended December 31, 2024, net cash provided by financing activities was $107.6 million, compared to $2.3 million net cash used in financing activities for the same period in 2023. The cash provided by financing activities was primarily due to proceeds from long-term debt of $125.0 million, less payment of debt costs of $1.4 million, $66.5 million received from the Private Placement related to the FC Acquisition, less costs, $11.9 million received from short-term bank debt, and$0.9 million proceeds from exercise of stock options, partially offset bythe repayment of Series A Preferred Stock of $90.3 million following the MiX Combination, purchase of treasury stock upon vesting of restricted stock of $2.8 million, and repayment of long-term debt of$2.1 million.

Current wording

During thethree months ended June 30, 2025, net cash used in financing activities was $6.8 million, compared to $89.5 million net cash used in financing activities for the same period in 2024. The cash used in financing activities was primarily due to the repayment of short-term bank debt of $5.4 million, and repayment of long-term debt of$1.3 million. The decrease in net cash used in financing activities was primarily due to the repayment of Series A Preferred Stock of $90.3 million during the three months ended June 30, 2024.