CalAmp Corp. (NASDAQ:CAMP) reported mixed results in its second quarter of fiscal year 2024, with weaker demand from telematics service provider (TSP) customers, but stronger performance in areas such as international connected car and industrial OEM. The company's consolidated Q2 revenue was $61.7 million, falling below the guidance range, while adjusted EBITDA reached $5.9 million. Despite challenges with TSP customers, CalAmp is optimistic about its growth potential, particularly with the launch of new products and customer wins.
Key takeaways from the earnings call include:
- CalAmp saw lower demand from TSP customers due to inventory rebalancing following a backlog of orders caused by supply chain constraints.
- The company launched an electronic logging device (ELD) and a new Dash Cam Solution during the quarter, which are expected to contribute to future growth.
- CalAmp secured new customer wins, including Transportes Castores in Mexico, and saw strong performance in its international connected car business.
- The company's search for a new CEO and exploration of strategic alternatives are ongoing.
- Cash flow from operations was $7.1 million, and the company aims to optimize options for refinancing its convertible notes through high-quality EBITDA performance.
- CalAmp anticipates slightly lower revenues and adjusted EBITDA in Q3 FY '24 due to ongoing challenges with TSP customers.
CalAmp also discussed its plans to stabilize and grow in a specific market segment. The company is set to introduce a new solution called Vision 2.0, which it expects to drive significant growth in average revenue per user (ARPU) with new and existing customers. The company also highlighted improvements in gross margin and cost management, as well as the need to focus on cash flow and cash generation.
Despite missing revenue guidance with a midpoint of $70 million, resulting in $8 million lower revenues, CalAmp aims to increase revenues and EBITDA levels to have more options on refinancing convertible debt. The company reported a remaining performance obligation (RPO) of $194 million and a hardware backlog of $14 million at the end of the quarter. In order to pay off the 2% convertible note at maturity and explore other financial instruments like term loans, the company plans to generate higher EBITDA and revenue growth. The importance of operational performance and revenue growth was emphasized for these goals.
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