CalAmp Corp. (CAMP -1.19%) released strong fiscal second-quarter 2019 results on Thursday after the market closed, with healthy top- and bottom-line growth led by an acceleration in its software and subscription-services segment.
With shares up around 7% in after-hours trading as of this writing, let's dig deeper to see what drove CalAmp this quarter, and what investors should be watching in the coming months.
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CalAmp results: The raw numbers
| Metric |
Fiscal Q2 2019* |
Fiscal Q2 2018 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$96.0 million |
$89.8 million |
7% |
|
GAAP net income (loss) |
($854,000) |
$12.2 million |
N/A |
|
GAAP earnings (loss) per diluted share |
($0.02) |
$0.34 |
N/A |
DATA SOURCE: CALAMP CORP. *FOR THE QUARTER ENDED AUGUST 31, 2018. GAAP = generally accepted accounting principles.
What happened with CalAmp this quarter?
- On an adjusted (non-GAAP) basis -- which excludes items like stock-based compensation, restructuring, and expenses related to debt extinguishment -- net income was roughly $11 million, or $0.31 per share, up from $9.6 million, or $0.27 per share in the same year-ago period.
- These results arrived near the high end of CalAmp's guidance provided last quarter, which called for earnings per share in the range of $0.25 to $0.31 on revenue of $93 million to $98 million.
- Adjusted EBITDA increased 11.3% year over year, to $13.7 million, above the midpoint of CalAmp's expected $11 million to $15 million range.
- Telematics systems revenue climbed 4.1%, to $77.1 million, driven by 37% growth from network and OEM products revenue.
- Software and subscription services revenue jumped 21%, to $18.9 million, driven by freight transport subscriber additions and growth from LoJack Italia.
- CalAmp executed arrangements with large U.S. automotive dealership groups during the quarter, including Salinas Valley Ford, to leverage LoJack and deliver telematics solutions for driver safety features and connected-car services.
- The company partnered with Hello Tractor and Aeris to bring intelligent telematics and wireless connectivity to John Deere tractors, creating an "Uber for tractors" aimed at small farmers, with the goal of spurring economic growth in developing regions.
- CalAmp issued $230 million of convertible debt during the quarter, allocating $15 million toward share repurchases and another $54 million to repurchase outstanding convertible notes due in May 2020.
What management had to say
CalAmp CEO Michael Burdiek stated:
We experienced accelerating growth in our Software & Subscription Services (SaaS) business, while delivering record consolidated revenue, gross margin expansion and earnings at the upper end of our guidance range. We had stronger than expected growth in Network and OEM products revenue, driven by solid demand from our heavy equipment OEM customers. Our pipeline for SaaS solutions is robust and we are energized by the range of strategic opportunities to expand SaaS offerings to existing customers, as well as to deliver newer over-the-top services to our telematics device installed base.
Looking forward
For the current third quarter of fiscal 2019, CalAmp issued guidance for revenue in the range of $94 million to $99 million, up from $93.7 million in the same year-ago period. Trending toward the bottom line, that should translate to adjusted EBITDA of $12 million to $16 million and adjusted net income per share of $0.29 to $0.35, compared to earnings of $0.31 per share in last year's fiscal Q3.
All told, this was another encouraging quarter as CalAmp continues to seize growth opportunities, not only from its core telematics business but also through its smaller, higher-margin SaaS segment. As long as CalAmp can sustain this momentum in today's increasingly connected world, it should be no surprise to see its share price respond in kind.
