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SaaS Strength Couldn't Save CalAmp This Time

By Steve Symington - Dec 21, 2018 at 9:00AM

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The M2M communications company delivered a quarter in line with its recently lowered guidance, but its tepid forward outlook left investors disappointed.

CalAmp (CAMP 3.44%) announced fiscal third-quarter 2019 results on Thursday after the market closed. The machine-to-machine communications leader detailed a difficult period in which -- just as management warned would be the case just over a week ago -- its performance was plagued by supply disruptions related to its ongoing transition away from manufacturers with facilities in China. CalAmp is making the move in response to recent trade and tarriff concerns between the U.S and the Middle Kingdom.

With shares down more than 14% in after-hours trading as of this writing however, it seems the bad news didn't end there. So let's have a closer look at what CalAmp had to say.

Stock market numbers with red and green arrows indicating direction

IMAGE SOURCE: GETTY IMAGES.

CalAmp results: The raw numbers

Metric

Fiscal Q3 2019*

Fiscal Q3 2018

Year-Over-Year Growth

Revenue

$88.5 million

$93.7 million

(5.5%)

GAAP net income (loss)

($522,000)

$11.8 million

N/A

GAAP earnings (loss) per diluted share

($0.02)

$0.33

N/A

DATA SOURCE: CALAMP. *FOR THE QUARTER ENDED OCT. 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 and restructuring expenses -- CalAmp generated net income of $8.9 million, or $0.25 per share, down from $0.31 per share in the same year-ago period.
  • Adjusted EBITDA declined 17.5% to $11.4 million.
  • These results were within the revised guidance ranges CalAmp offered only just last week, which called for revenue of $88 million to $89 million, adjusted EBITDA of $10.5 million to $11.5 million, and adjusted earnings per share of $0.23 to $0.25.
  • Telematics systems segment revenue fell 11.9% to $68.6 million, driven by lower legacy LoJack SVR product sales.
  • Software and subscription segment revenue grew 25.5% to $19.9 million, driven by new freight transport subscribers and LoJack subscription services.
  • CalAmp entered into a multimillion-dollar software-as-a-service (SaaS) contract with a public cloud service provider revolving around high-value asset tracking.
  • Struck a global supply agreement with Telefonica to provide smart telematics devices for fleet and asset management applications in Mexico, as well as other Latin American markets and Europe going forward.
  • After Splunk reduced its outlook last week, the company also announced a new $20 million share-repurchase authorization.

What management had to say

CalAmp CEO Michael Burdiek stated:

Our Software and Subscription Services business continued to perform well as our SaaS revenue increased 25% year-over-year. We continue to focus on accelerating our efforts toward a more comprehensive recurring revenue model. Although we were disappointed in the short-term execution around our supply chain diversification efforts as previously announced, we are taking steps to address our operational challenges. As we look to the future, we believe we can capitalize on our SaaS pipeline and achieve our long-term growth targets.

Looking forward

For the fiscal fourth quarter, CalAmp expects revenue in the range of $86 million to $92 million, adjusted EBITDA of $10 million to $14 million, and adjusted net income per share of $0.23 to $0.29. Here again, however, most analysts were modeling even higher earnings of $0.30 per share on revenue closer to $96 million.

In the end, CalAmp's current weakness should prove temporary as it resolves its supply chain disruptions. But given the negative impact these issues are having on its top and bottom lines in the meantime, it's no surprise to see CalAmp continuing to fall right now.

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Stocks Mentioned

CalAmp Corp. Stock Quote
CalAmp Corp.
CAMP
$6.31 (3.44%) $0.21

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