MiX Telematics sees global reach as a huge asset
South African- based f l eet management Software-as-aService (SaaS) provider, MiX Telematics, continues to rely on its globa l reac h t o r e mai n competitive in a tough market.
The company – which in August 2013 l isted on the New York Stock Exchange – delivered solid revenue growth, strong profitability and cash f low in the 2015 f inancial year.
MiX Telematics grew its subscription revenue by 17% to R998m in the year to end March, with the number of vehicles covered up 14% to 512 000. The company also ended the fiscal year with a bigger cash pile of R945m, up from R876m the previous year.
MiX Telematics develops its f leet management solutions using a SaaS model in South Africa, where it takes advantage of savings on costs of hiring software engineers. In Europe and the US these professionals cost more.
MiX Telematics has off ices i n Australia, Brazil, SA, Uganda, the United Arab Emirates, the UK and the US. Thousands of South African customers rely on its stolen vehicle recovery service, Matrix Vehicle Tracking.
“We were delighted to break t hrough t he level of half a million subscribers as few telematics solutions providers have achieved this t ype of critical mass,” says president and CEO Stefan Joselowitz. “We are winning i mportant new business, as well as signing meaningful expansions with key customers. The penetration of telematics solutions overall remains at a paltry 10% of the global commercial vehicle f leet.
“Market research indicates that this penetration will likely double in the next four to five years. It’s for this reason we believe our scale, our broad-based product portfolio and our global reach is a tremendous asset.” Mi X Te l e mat i c s ser v ices customers in 120 countries and has an advantage of operating across six continents. It also has a network of more than 130 f leet partners globally.
“While this does expose us to somewhat more volatile e c onomies, mult i - national clients are i ncreasingly preferring to contract with a single vendor versus a dozen regional players,” says Joselowitz.
It hasn’t all been smooth sailing, however. MiX Telematics says it is in the process of negotiating an “amicable exit” from its “disappointing” joint venture in Brazil with Sascar, which was l aunched i n September 2013. At t he t i me t he company i ndicated t hat t he move signif ied its focus on i ncreasing its market penetration and growth in Brazil and the greater Latin American region.
However, MiX Telematics is not giving up on Brazil. Joselowitz says the move to exit the joint venture could “open up an opportunity to either go it alone or with a new partner”.
MiX Telematics management says it sees more growth opportunities in the Americas and has renewed big contracts with its global clients there. As a result, the company predicts that revenue will grow by up to 12.1% in the 2016 f inancial year.
Could it be t he c ompany is being dressed up by management in anticipation of a global suitor?
MiX Telematics is currently trading under cautionar y stating t hat t he company’s board is investigating strategic alternatives for the global firm.