Telematics systems, software, and subscription services firm CalAmp (CAMP 23.73, +1.45) adds 6.5% on Friday after the company’s second quarter earnings beat market expectations.
Jumping right into it, second quarter earnings per share beat market views at $0.31 on revenue growth of 6.9% to $96.04 mln with gross margins benefiting from a favorable product mix, up 50 basis points, at 41.5%.
By segment, Telematics Systems revenue for the second quarter was up 37% year-over-year to $77.1 mln, driven by strong growth in Network and OEM products revenue. During the second quarter, revenue with Caterpillar (CAT) increased 43% year/year to $15.1 mln, exceeding management’s expectations. Software & Subscription Services revenue for the second quarter was $18.9 mln, or 20% of consolidated revenue. Revenue growth was driven by freight transport subscriber additions and the company’s LoJack Italia business.
Management commented it expects product demand from CAT to moderate in the second half of fiscal 2019 but remains excited about the longer-term prospects. Additionally, revenue with the company’s other global heavy equipment OEM increased 18% year/year to $2.2 mln in the quarter.
In the second quarter, the company also saw the largest increase in LotSmart and SureDrive subscribers since launch, and CalAmp expects that it will be approaching a $1 mln quarterly revenue run rate for domestic LoJack branded telematics services as it exits the fiscal year.
They believe that the telematics pivot occurring with LoJack will result in a more sustainable, predictable and profitable business model, while also deploying telematics services that enhance driver safety and help save lives.
Turning to guidance, CalAmp expects third quarter consolidated revenue in the range of $94-99 mln. The company also expects third quarter non-GAAP net income in the range of $0.29-0.35 per diluted share, and adjusted EBITDA in the range of $12-16 mln.
CAMP stock has recouped its moving averages after giving up those levels in mid-September. Up-and-down action this year has the stock up about 10.5%, slightly down from YTD highs which boasted gains of 18.8%, yet well off YTD lows of -9.9% in early May.