Fleetmatics Announces Record Second Quarter 2013 Financial Results

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Fleetmatics Announces Record Second Quarter 2013 Financial Results

  • Over 388,000 total subscribed vehicles attained
  • Total revenue of $42.5 million, up 39% year-over-year
  • GAAP EPS of $0.16; non-GAAP adjusted EPS of $0.23, up 360% year-over-year
  • Adjusted EBITDA of $14.2 million, up 142% year-over-year
  • Generated free cash flow of $2.1 million

DUBLIN, Ireland & BOSTON, MA--(BUSINESS WIRE)-- Fleetmatics Group PLC (NYS: FLTX) , a leading global provider of fleet management solutions for commercial fleet vehicles delivered as Software-as-a-Service (SaaS), today announced financial results for its second quarter ended June 30, 2013.

"We are very pleased with our strong execution during the second quarter, which was highlighted by the ongoing robust demand for our comprehensive fleet management solution," stated Jim Travers, Chief Executive Officer of Fleetmatics. "Our ability to transform vehicle and driver behavioral data into actionable intelligence for our SMB customers resulted in subscription growth, revenue and profitability that were above our expectations. Looking forward, we have entered the second half of the year with strong momentum and remain in position to grow market share worldwide by acquiring new customers, increasing sales to existing customers, entering new geographies and introducing new features."


Second Quarter 2013 Financial Highlights

  • Revenue: Total revenue for the second quarter was $42.5 million, an increase of 39.1% compared to $30.6 million for the second quarter of 2012.
  • Gross Profit: GAAP gross profit for the second quarter was $31.7 million, compared to $21.7 million for the second quarter of 2012. GAAP gross margin was 74.5% compared to 70.9% for the same period in 2012. Non-GAAP gross profit, which excludes share-based compensation and amortization of intangible assets was $31.8 million for the quarter compared to $21.8 million in the year ago period. Non-GAAP gross margin was 74.9% for the second quarter of 2013, compared to 71.3% during the same period last year.
  • Operating Income: GAAP operating income for the second quarter was $8.6 million, compared to $1.1 million for the second quarter of 2012. Non-GAAP operating income, which excludes share-based compensation, amortization of intangible assets and other items as defined in "Non-GAAP Financial Measures", was $10.9 million, compared to $3.4 million for the second quarter of 2012.
  • Net Income/loss: GAAP net income for the second quarter was $5.7 million, compared to a loss of $1.4 million for the same period last year. GAAP net income per share attributable to ordinary shareholders for the second quarter was $0.16, based on 36.4 million weighted-average diluted shares outstanding, compared to a loss of $0.99, based on 1.5 million weighted-average diluted shares outstanding, for the same period last year.

    Non-GAAP adjusted earnings, which excludes share-based compensation, amortization of intangible assets and other items as defined in "Non-GAAP Financial Measures", was $8.3 million for the second quarter, compared to $1.4 million for the second quarter of 2012. Non-GAAP adjusted earnings per share for the second quarter was $0.23 based on 36.4 million weighted-average diluted shares outstanding compared to $0.05 per share based on 28.2 million pro forma weighted-average diluted shares outstanding for the same period last year.
  • Adjusted EBITDA: Adjusted EBITDA for the second quarter was $14.2 million, an increase of 141.7% compared to $5.9 million for the second quarter of 2012. Adjusted EBITDA margin was 33.5% for the second quarter of 2013, compared to a 19.3% margin for the same period last year. Adjusted EBITDA is defined as net income (loss) plus provision for income taxes; interest (income) expense, net; foreign currency transaction (gain) loss, net; depreciation and amortization of property and equipment; amortization of capitalized in-vehicle devices owned by customers; amortization of intangible assets; share-based compensation; and other items as defined in "Non-GAAP Financial Measures."

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

  • Balance Sheet: As of June 30, 2013, Fleetmatics had cash of $105.2 million, an increase of $3.2 million since March 31, 2013. Subsequent to the end of the quarter, Fleetmatics completed a follow on offering on July 30, 2013, which generated net proceeds of approximately $31.6 million for the Company.

    During the second quarter of 2013, the Company generated $11.1 million in net cash from operations and invested $9.0 million in capital expenditures, resulting in free cash flow of $2.1 million. During the second quarter of 2012, the Company generated $2.1 million in net cash from operations and invested $7.3 million in capital expenditures, resulting in free cash flow of negative $5.2 million.

Second Quarter 2013 and Recent Operating Highlights

  • Acquired Australian-based, Connect2Field, a privately held developer of cloud-based field service management applications.
  • Fleetmatics ended the second quarter of 2013 with over 388,000 active vehicles under subscription, up 38.1% compared to over 281,000 during the second quarter of 2012.
  • Quarterly net churn during the second quarter of 2013 improved to 1.3% compared to 0.9% during the second quarter of 2012. We calculate our net churn for a period by dividing (i) the number of vehicles under subscription added from existing customers less vehicles under subscription lost from existing customers over that period by (ii) the total vehicles under subscription at the beginning of that period. A positive net churn in each period means we added more vehicles from existing customers than we lost from those customers during the particular period.

Financial Outlook

As of August 7, 2013, Fleetmatics is initiating guidance for the third quarter of 2013 and full year 2013 as follows:

Third Quarter 2013 Guidance: Total revenue is expected to be in the range of $44.3 million to $44.7 million. Adjusted EBITDA is expected to be in the range of $13.9 million to $14.3 million. Non-GAAP adjusted earnings per share is expected to be in the range of $0.20 to $0.22 based on approximately 37.6 million weighted-average diluted shares outstanding.

Full Year 2013 Guidance: Total revenue is expected to be in the range of $171.2 million to $172.7 million, which represents growth of 34.9% year-over-year at the midpoint. Adjusted EBITDA is expected to be in the range of $53.1 million to $54.1 million. Non-GAAP diluted adjusted earnings per share is expected to be in the range of $0.79 to $0.82 based on approximately 37.0 million weighted-average diluted shares outstanding.

Quarterly Conference Call

Fleetmatics will host a conference call today at 5:00 p.m. EST to discuss the Company's financial results for the second quarter 2013, its business outlook and other matters. To access this call, dial +1-877-419-6600 (United States), or +1-719-325-4831 (international), with conference ID #2006173. A live webcast of this conference call will also be available on the investor relations portion of the Company's website at ir.fleetmatics.com, and a replay will be archived on the website as well. A replay of this conference call will also be available through August 21, 2013, by dialing +1-877-870-5176 (United States), or +1-858-384-5517 (international). The recording access code is #2006173.

About Fleetmatics Group PLC

Fleetmatics Group PLC is a leading global provider of fleet management solutions for small and mid-sized businesses delivered as Software-as-a-Service (SaaS). Our solutions enable businesses to meet the challenges associated with managing local fleets, and improve the productivity of their mobile workforces, by extracting actionable business intelligence from real-time and historical vehicle and driver behavioral data.

Fleetmatics' intuitive, cost-effective Web-based solutions provide fleet operators with visibility into vehicle location, fuel usage, speed and mileage, and other insights into their mobile workforce, enabling them to reduce operating and capital costs, as well as increase revenue. Fleetmatics serves more than 19,000 customers, with over 388,000 subscribed vehicles worldwide.

Fleetmatics' solutions are marketed both under the Fleetmatics (www.fleetmatics.com) and SageQuest (www.sage-quest.com) brands.

Non-GAAP Financial Measures

In this release, Fleetmatics' non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP adjusted earnings, non-GAAP diluted adjusted earnings per share, Adjusted EBITDA and Adjusted EBITDA margin are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of results of operations. Non-GAAP gross profit and non-GAAP gross margin exclude share-based compensation and amortization of intangible assets. Non-GAAP operating income, Non-GAAP adjusted earnings and non-GAAP diluted adjusted earnings per share exclude share-based compensation; amortization of intangible assets; foreign currency transaction (gain) loss; loss on extinguishment of debt; certain non-recurring litigation and settlement costs; certain non-recurring secondary public offering costs; acquisition-related transaction costs; management services agreement expense; the tax effects related to these items, and the tax reserve component of the income tax provision.

Adjusted EBITDA is defined as net income (loss) plus provision for income taxes; interest (income) expense, net; foreign currency transaction (gain) loss, net; depreciation and amortization of property and equipment; amortization of capitalized in-vehicle devices owned by customers; amortization of intangible assets; share-based compensation; certain non-recurring litigation and settlement costs; certain non-recurring secondary public offering costs; acquisition-related transaction costs; management services agreement expense; and loss on extinguishment of debt.

Management presents these non-GAAP financial measures because it considers them to be important supplemental measures of performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. However, these non-GAAP financial measures have limitations as an analytical tool and are not intended to be an alternative to financial measures prepared in accordance with GAAP. We intend to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.

The Company's earnings press releases containing such non-GAAP reconciliations can be found on the Investors section of the Company's web site at http://ir.fleetmatics.com.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our growing our market share, acquiring new customers, increasing sales to existing customers, entering new geographies, introducing new features, and our expected financial results for the third quarter of 2013, the full year of 2013 and the financial results for the second quarter of 2013. These forward-looking statements include, but are not limited to: plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, risks associated with our ability to effectively and efficiently attract, sell to and retain SMB customers; our ability to attract customers on a cost-effective basis, our ability to retain and increase sales to our existing customers; our ability to successfully complete and integrate acquisitions; expectations regarding the widespread adoption of fleet management solutions; our ability to expand the sales of our products to customers located outside the U.S.; our ability to continue to compete in a highly fragmented market and the risk of future competitors by way of acquisition or otherwise; keeping up with the rapid technological change required to remain competitive in our industry; and the impact of adverse economic conditions on information technology spending by SMB business, and other risks set forth under the caption "Risk Factors" in the Company's annual report on Form 20-F filed with the Securities and Exchange Commission on March 29, 2013, as amended on Form 20-F/A filed with the Securities and Exchange Commission on July 22, 2013, as updated by our subsequently furnished or filed quarterly reports on Form 6-K, annual reports on Form 20-F and other filings that we make with the Securities and Exchange Commission. We assume no obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

FLEETMATICS GROUP PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

        
Three Months Ended
June 30,
Six Months Ended
June 30,
2013201220132012
Subscription revenue$42,529$30,566$80,948$58,405
Cost of subscription revenue 10,834  8,889  20,831  17,332 
 
Gross profit 31,695  21,677  60,117  41,073 
 
Operating expenses:
Sales and marketing13,60010,26526,20120,199
Research and development2,4611,7574,5553,374
General and administrative 7,080  8,533  15,020  14,229 
 
Total operating expenses 23,141  20,555  45,776  37,802 
 
Income from operations8,5541,12214,3413,271
Interest income (expense), net(372)(481)(738)(1,104)
Foreign currency transaction gain (loss), net(300)(358)(656)(142)
Loss on extinguishment of debt   (934)   (934)
 
Income (loss) before income taxes7,882(651)12,9471,091
Provision for income taxes 2,200  739  4,305  1,457 
 
Net income(loss)5,682(1,390)8,642(366)
Accretion of redeemable convertible preferred shares to redemption value   (112)   (222)
 
Net income (loss) attributable to ordinary shareholders$5,682 $(1,502)$8,642 $(588)
 
Net income (loss) per share attributable to ordinary shareholders:
Basic$0.16 $(0.99)$0.25 $(0.39)
 
Diluted$0.16 $(0.99)$0.24 $(0.39)
 
Weighted average ordinary shares outstanding:
Basic 34,990,936  1,515,490  34,802,543  1,510,047 
 
Diluted 36,441,602  1,515,490  36,353,988  1,510,047 
 

FLEETMATICS GROUP PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

    
June 30,
2013
December 31,
2012
(Unaudited)
Assets
Current assets:
Cash$105,209$100,087
Restricted cash6464
Accounts receivable, net of allowances of $1,169 and $887 at June 30, 2013 and December 31, 2012, respectively11,1858,871
Deferred tax assets8,3928,402
Prepaid expenses and other current assets 10,774 10,371
 
Total current assets135,624127,795
Property and equipment, net51,82141,132
Goodwill24,87924,879
Intangible assets, net6,0777,013
Deferred tax assets, net1,0101,084
Other assets 8,286 8,722
 
Total assets$227,697$210,625
 
 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable$8,319$9,115
Accrued expenses and other current liabilities12,19611,764
Deferred revenue21,92317,087
Current portion of long-term debt 1,250 1,250
 
Total current liabilities 43,688 39,216
 
Deferred revenue7,6148,931
Accrued income taxes15,22714,559
Long-term debt, net of discount of $485 and $556 at June 30, 2013 and December 31, 2012, respectively22,32822,881
Other liabilities 4,042 4,016
 
Total liabilities 92,899 89,603
 
Total shareholders' equity 134,798 121,022
 
Total liabilities and shareholders' equity$227,697$210,625
 
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FLEETMATICS GROUP PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

    
Six Months Ended
June 30,
20132012