CalAmp Connects With a Quarterly Beat on SaaS Strength

CalAmp Corp. (NASDAQ: CAMP) released better-than-expected fiscal first-quarter 2019 results on Wednesday after the market closed, detailing solid growth from its core telematics business, as well as particularly strong showings from its software-as-a-service offerings and LoJack Italia subsidiary. CalAmp also offered color on its recent sales team reorganization and forward guidance indicating continued modest top-line growth.

Let's take a closer look at what CalAmp accomplished over the past few months and what investors can expect as the machine-to-machine communications specialist moves forward.

CalAmp headquarters building

IMAGE SOURCE: CALAMP CORP.

CalAmp results: The raw numbers

Metric	Fiscal Q1 2019*	Fiscal Q1 2018	Year-Over-Year Growth
Revenue	$94.9 million	$88.1 million	7.7%
GAAP net income (loss)	$8.5 million	($2.7 million)	N/A
GAAP earnings (loss) per diluted share	$0.23	($0.08)	N/A

DATA SOURCE: CALAMP CORP. *FOR THE QUARTER ENDED MAY 31, 2018.

What happened with CalAmp this quarter?

• On an adjusted (non-GAAP) basis -- which excludes items like stock-based compensation -- net income climbed slightly from the same year-ago period to $10.5 million, or $0.29 per share.

• Revenue was at the high end of guidance provided last quarter for $91 million to $95 million. Adjusted earnings per share arrived right at the midpoint of CalAmp's expected $0.26 to $0.32 range.

• Adjusted EBITDA declined 7.6% year over year to $12.2 million, near the low end of guidance for $12 million to $14 million.

• Telematics Systems revenue grew 6.1% to $76.4 million, helped by 24% growth in MRM Telematics product revenue.

• Software and subscription services revenue grew 15.2% year over year to $18.5 million, driven by LoJack Italia and freight transport subscriber additions.

• CalAmp announced a CrashBox "land and expand" program for all compatible CalAmp devices, allowing most customers the ability to receive automated crash notifications and CrashBoxx Portal access for purchases of accident reconstruction reports.

• CalAmp accelerated the realignment of both its global operations and sales organization, incurring $3.4 million in expenses related to its cost-savings plan this quarter. Going forward, CalAmp expects the moves to drive lasting synergies and lay a more solid foundation for future growth.

• Subsequent to the end of the quarter, CalAmp announced that over 10 million devices have now been managed by its PULS device management platform. Over 5 million of those devices were added within the past three years alone.

What management had to say

CalAmp CEO Michael Burdiek stated:

We are pleased to be off to a solid start in the new fiscal year. We experienced strong momentum in our Software and Subscription Services (SaaS) business, which helped drive our revenue to a new quarterly record. Our SaaS contract backlog along with continued strength in our LoJack Italia operations, have set the stage for strong growth in subscription revenue through this fiscal year. Further, we continue to experience consistent revenue growth in our Telematics Systems business, due to persistent demand for MRM Telematics and Network and OEM products.

Looking forward

For the current second quarter of fiscal 2019, CalAmp expects revenue in the range of $93 million to $98 million -- up from $89.8 million in last year's fiscal Q2 -- adjusted EBITDA of $11 million to $15 million, and adjusted earnings per diluted share of $0.25 to $0.31. For perspective, though we don't usually pay close attention to Wall Street's demands, consensus estimates called for quarterly earnings near the high end of CalAmp's range on revenue of $95.6 million.

While it remains to be seen how the market reacts to this light (at least relative to expectations) earnings outlook, we should note that CalAmp has made a habit of underpromising and overdelivering in recent quarters. Still, I think this quarter offered plenty to like for patient shareholders as CalAmp delivers on its vision while continuing to set itself up for long-term growth.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends CalAmp. The Motley Fool has a disclosure policy.