AIOT Stock Forecast & Price Target

PowerFleet Inc. reported a significant increase in consolidated gross margin, rising 168 basis points year-over-year to 54.25%, which reflects strong operational efficiency and improved profitability. The company experienced a 58.8% increase in gross profit, reaching $55.5 million, driven by robust services revenue growth that now constitutes 80% of total revenue, indicating a shift towards higher-margin, recurring revenue streams. Additionally, PowerFleet achieved an adjusted EBITDA of $21.6 million, marking a 58% year-over-year increase with an improved adjusted EBITDA margin of 20.78%, underscoring the positive financial trajectory and operational effectiveness within the organization.

PowerFleet's financial outlook may be impacted negatively as the company anticipates a decline in adjusted EBITDA growth guidance for FY/25, projecting a range of $97.3-104.0 million, which is lower than the previous range of $103-110 million. Additionally, while PowerFleet plans to reduce its net debt to adjusted EBITDA ratio to approximately 1.5x by FY/27, net debt has remained stable at $232 million as of the quarter-end, marginally up from $229 million at the end of Q4/25. This financial stability, coupled with a net leverage ratio that is still elevated at 2.97x, raises concerns about the company's ability to efficiently manage its debt in the face of operational challenges related to data visibility and risk management.