MiX Telematics Company Profile:
MiX Telematics (NYSE:MIXT) is a $200M software provider focused on fleet solutions for information on drivers and vehicles. Its products can provide information for fuel savings, utilization, operating costs, real time driver safety feedback, driver scoring, compliance monitoring, vehicle tracking, theft recovery, and more.
MiX Telematics operates in a large market, ABI Research estimates 192M commercial vehicles with current penetration at 14%, and at $35/month subscription fee, a total TAM opportunity estimated at $81B.
Note that all charts are sourced to a June company presentation for investors.
MiX Telematics (MIXT): A Great Value/Growth Combo You’ve Never Heard Of
MIXT has over 600,000 subscribers with a 5 year CAGR of 14.7%. It operates in many verticals requiring vehicle fleets, including Oil & Gas, Transports & Logistics, Public Transport, Rentals, and Construction. MIXT is transitioning out of an investment cycle and seeing double digit subscription revenue growth, strong subscriber additions, and rising ARPU. MIXT is guiding FY18 at 13-15% subscription growth and a further increase to Adjusted EBITDA Margins.
MIXT is also very undervalued trading 1.3X EV/Revenues and 5.9X EV/EBITDA. It estimates more than 85% of total revenues will be subscription based in FY18, and has long term goals for > 30% EBITDA margins. In its latest quarter it posted 15% Y/Y subscription revenue growth and saw strength in higher RP premium fleet customers across all verticals, and 50% growth in its US business. The ELD Mandate is a very positive tailwind for MIXT. South Africa’s challenged economy was a drag on the quarter but management highlighted seasonality in the rental market as playing a major role.
In closing, MIXT is generating strong growth in a large, growing, and under-penetrated market while trading at a large discount to peers, a great looking small cap investment.
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