AIOT Stock Forecast & Price Target

PowerFleet Inc. demonstrated significant financial growth, reporting a 38% increase in total revenue for Q1/26, reaching $104.1 million, largely driven by a 53% year-over-year surge in services revenue to $86.5 million. The company's consolidated gross margin improved by 168 basis points year-over-year to 54.25%, and service gross margin rose by 51 basis points, signifying a successful transition toward higher-margin recurring services. Additionally, adjusted EBITDA soared by 58% year-over-year to $21.6 million, accompanied by an enhanced adjusted EBITDA margin of 20.78%, reflecting the company's effective management of operations and a robust demand for its IoT solutions.

PowerFleet's financial outlook reflects a concern over the company's declining adjusted EBITDA growth guidance, which has been revised from a range of $103-110 million to $97.3-104 million for FY/25. The company's net debt remains relatively high at $232 million, barely exceeding the $229 million recorded in the prior quarter, while the net leverage ratio shows only a marginal improvement from 3.25x to 2.97x. Furthermore, the long-term expectation of reducing net debt to adjusted EBITDA from 3.4x to approximately 1.5x by FY/27 may indicate ongoing struggles with operational efficiency and financial stability.