MIX Telematics Ltd (MIXT) 2018 Q4 法說會逐字稿

Good day, and welcome to the MiX Telematics Fiscal Fourth Quarter and Full Year 2018 Earnings Results Conference Call. Please note that today's call is being recorded.

At this time, I'd like to turn the call over to Paul Dell, Interim Chief Financial Officer. Please go ahead, sir.

Good day, and welcome to MiX Telematics's earnings results call for the fourth quarter and fiscal year, which ended on March 31, 2018. Today, we will be discussing results announced in our press release issued a few hours ago. I'm Paul Dell, Interim Chief Financial Officer, and joining me on the call today, Stefan Joselowitz, or as many of you know him, Joss. He's President and Chief Executive Officer of MiX Telematics.

During the call, we will make statements relating to our business that may be considered forward-looking pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For discussion of the material risks and other important factors that could affect our results, please refer to those contained in our Form 20-F and other filings with the Securities and Exchange Commission available on our website at www.mixtelematics.com under the Investor Relations tab.

Also during the course of today's call, we will use -- we will refer to certain non-IFRS financial measures. There's a reconciliation schedule detailing these results currently available in our press release, which is located on our website and filed with the Securities and Exchange Commission.

With that, let me turn the call over to Joss.

Thanks, Paul. I would like to thank you all for joining the call this morning. We're, in fact, reporting live from the Johannesburg Stock Exchange, where we have just celebrated the 10th anniversary of our listing here. We were very pleased with our fourth quarter results, which capped off another strong year for MiX. During fiscal 2018, we made significant progress towards achieving our long-term adjusted EBITDA margin target of 30% plus. We expanded our margin by over 600 basis points to 25.8%, which was driven by 19% subscription revenue growth on a constant currency basis. This performance was due to ongoing strength across the portfolio globally, where we continue to benefit from growth in our premium fleet subscriptions. Looking forward, we remain well positioned to maintain the momentum and enhance our market position globally, which is reflected in our strong initial fiscal 2019 guidance that Paul will walk through shortly.

But let me first provide a high-level summary of our fourth quarter performance. Our subscription revenue of ZAR 374 million was up 19% year-over-year and 4.1% higher when compared to the third quarter fiscal '18, both on a constant currency basis. We added over 12,000 net new subscribers, increasing our total base to 677,000. Our higher ARPU premium fleet portfolio was the dominant contributor to this growth. In addition, adjusted EBITDA margin reached 28.7% in Q4, up over 600 basis points from 22.3% last year.

Our results were supported by good execution from most of our geographies, with the highlight being the performance from the United States operation. This broad-based momentum is bolstered by the following customer activity during Q4, which included a contract with (inaudible) a leading oil services provider in the [Europe safeway-tended] vehicles, a majority of which will receive our ELD solution with the balance going to light-duty vehicles. We expect the implementation to start in the coming weeks.

In Europe, we signed Wincanton, a leading transport and logistics provider. And this represents our largest single win in the United Kingdom outside of the bus and coach vertical. Wincanton will be installing our premium fleet solution, including MiX Vision, on close to 1,800 trucks.

In Australia, we signed a deal with a major multinational transport and logistics company to implement our premium fleet solution on a fleet of over 10,000 vehicles and assets in multiple countries to be done over the next 3 years.

In South Africa, we expanded with a current premium customer, UnionTrans, to share our enhanced truck from the service for over 1,000 of their vehicles. Additionally, Bakers transport, another long-standing MiX customer, will be adopting our expanded MiX Vision technology for several hundred of their vehicles.

Our strength in Brazil continues with several new customers tracking over 1,000 subscribers in multiple industries, including transportation, field services and public transport. Additionally, in Latin America, we continue to expand or add new distribution partners in Argentina, Chile and Peru.

Finally, I'm delighted to announce that from LafargeHolcim Group, one of the world's leading suppliers of cement as well as downstream activities such as ready-mix concrete and asphalt, has selected us as their preferred global telematics partner. This is part of a strong focus on road safety and vision of zero harm. Together, we will be working to improve driver safety and operating efficiency across one of the largest fleets in the world with an immediate target of 20,000 vehicles in 25 countries. Implementation has already begun on more than 2,000 vehicles across 8 countries with more to come during the quarter of financial year.

The fourth quarter marks a strong end to fiscal 2018, and some of the full year highlights included: total subscription revenue growth of 19% on a constant currency basis, which exceeded expectations, which we added approximately 55,000 net new subscribers during the year, over 2/3 of which were added in the second half. In addition, our adjusted EBITDA margin increased to 25.8%, up from 19.6% last year and was driven by our ability to continue leveraging investments made in the business. In addition, we were pleased to generate positive free cash flow of ZAR 15 million after ZAR 230 million was invested into bundled in-vehicle devices.

From a regional perspective during fiscal 2018, we were pleased with the performance of our team in Africa, evidenced by the subscription revenue growth of 13% and adjusted EBITDA margins of 46% despite the challenging economy. As our largest business unit, Africa continues to demonstrate the economies of scale that we believe should be achievable in all of our regional operations of the growth towards critical mass.

The continued strong execution by our Americas team is highlighted by our 78% year-over-year growth in subscription revenue as well as an adjusted EBITDA margin of 34.8%, significantly higher than the 16.7% reported last year.

In Brazil, subscription revenue increased approximately 64% year-over-year as adjusted EBITDA margins grew to 30.8%, up from 24.8%.

At the top line, our European business performed behind plan, with subscription revenues up 6% year-over-year on a reported and constant currency basis. That said, achieved it well to adjusted cost basis accordingly, and adjusted EBITDA margins are up 430 basis points from the prior year. We are confident in the ability of the European operation to perform to plan going forward based on existing pipeline including committed deals like Wincanton.

In the EMEA, our business performed according to plan with subscription revenue up 6.9% year-on-year on a constant currency basis. It's worth noting that the rebound in the energy sector in this region has lagged that which we have seen in the United States. Prior year restructuring helped the team deliver healthy adjusted EBITDA margins at 38.3%, up from 29.9% in the prior year.

After years of investment, in fiscal 2018, we continue to enjoy return on large investments and pressured meaningful acceleration in margins across our geographic regions. To summarize, we are well positioned to maintain our momentum in fiscal 2019 and beyond as MiX continues to leverage its global reputation and benefit from strong subscription revenue growth and ongoing margin accretion.

With that, let me turn it back over to Paul to run through the detail of the quarter and the full year.

Thanks, Joss. Now let me walk through our fourth quarter and full year fiscal 2018 performance, and recall that our reporting currency is the South African rand. For convenience, we have translated our results into U.S. dollars, both for the 2018 and 2017 periods, using the March 31, 2018, spot rate. You can find these conversions in our press release. In addition, please note that our results are presented on an IFRS basis unless otherwise noted.

In the fourth quarter, total revenue came in at ZAR 454 million, ahead of guidance on an as-reported and constant currency basis. Of this total, subscription revenues were ZAR 374 million and at the high end of our guidance on an as-reported basis. Constant currency subscription revenues increased by 19.4%, which exceeded our constant currency guidance range. The strong performance was due to the continued growth in our premium fleet customer base across all geographies and vertical markets as well as expansion in average revenue per user.

Reported subscription revenue was lower than the third quarter of fiscal 2018 due to the appreciation of the South African rand in the fourth quarter of fiscal 2018 versus third quarter. If the same exchange rates used in the third quarter of fiscal 2018 were used in the fourth quarter, subscription revenue would have been ZAR 391.6 million, representing a constant currency increase of 4.1%.

We ended the fourth quarter with 677,000 subscribers, an increase of 9% year-over-year as we added over 12,000 net new subscribers in the quarter. Our gross profit margin in the fourth quarter was 65.3% compared to 57.7% in the prior year. The company's gross profit margin in fiscal 2018 includes higher depreciation charges related to in-vehicle devices and hardwired peripherals used in some bundled fleet contracts. These contracts generate higher ARPUs and, in the long term, are expected to result in an increase in gross profit margin as they go through contract renewal cycles.

General and administrative expenses were 41.2% of total revenue, a significant decline from last year's 48.2%, and highlights our ongoing commitment to cost controls and scale in the business. Our operating profit margin expanded by 580 basis points year-over-year to 16.3%. Recall that our general and administration costs include research and development costs not capitalized. For those of you interested to see how historical capitalization and development costs have been, we have provided the table in our earnings press release. To provide investors with additional information regarding our financial results, we disclosed adjusted EBITDA and adjusted EBITDA margin as well as adjusted profit for the period, which are non-IFRS measures. And then we have provided a full reconciliation table in our press release.

Fourth quarter adjusted EBITDA increased 49% to ZAR 130 million compared to ZAR 87 million last year or a record 28.7% of revenue, up over 600 basis points from 22.3% of revenue last year. The quarter's adjusted EBITDA margin of 28.7% expanded by 2.8% from the 25.9% reported in the third quarter of fiscal 2018. Invested hardware revenues and related gross profit benefits contributed 1.3% to the quarter-over-quarter margin expansion.

Operating profit for the period, which includes a net foreign exchange loss of ZAR 1.2 million, was ZAR 64.3 million, up from a profit of ZAR 31.2 million in the same quarter a year ago. The comparative quarter exceeded the net foreign exchange loss of ZAR 5.1 million.

Adjusted earnings for the quarter were approximately ZAR 55 million or ZAR 0.10 per diluted ordinary share, which is up from the ZAR 30 million or ZAR 0.05 per share we posted a year ago.

Turning to the balance sheet. We ended the quarter with cash and cash equivalents of ZAR 308 million, up from ZAR 257 million at the end of last quarter. From a cash growth perspective, we generated ZAR 121 million, the net cash from operating activities, and made a ZAR 64 million investment to capital expenditures, leading to positive free cash flow of ZAR 58 million for the fourth quarter compared to positive free cash flow of ZAR 54 million during the same period last year.

Turning to a quick summary of financial results for fiscal year 2018. Total revenue was ZAR 1,713,000,000. Subscription revenue was ZAR 1,435,000,000 and now represents 84% of our total revenue. Subscription revenue growth of 19% on a constant currency basis was driven by the addition of over 54,800 subscribers in the year as well as the expansion of average revenue per user. Other revenue was ZAR 278 million, down 7% compared to the previous period primarily due to the ongoing transition to bundled contracts, which is a positive for our business long term.

In terms of our sales and marketing costs, we continue to aim towards a long-term target range of between 11% and 12% of revenue. Through fiscal 2018, our sales and marketing costs represented 10.8% of revenue compared to 11.8% of revenue at fiscal 2017. Fiscal 2018 administration and other costs were 42.6% of revenue compared to 46.9% in fiscal 2017.

During fiscal 2018, adjusted EBITDA was ZAR 442 million or 25.8% of total revenue and above our expectations. This is up from ZAR 302 million or 19.6% last year. As Joss mentioned in his remarks, we are very pleased at the steady improvement in our adjusted EBITDA margins during fiscal 2018 and expect the momentum to continue as we focus on scaling the business globally and maintain a focus on cost controls.

Profit for the fiscal year was ZAR 181 million compared to ZAR 121 million last year. Earnings per diluted ordinary share were ZAR 0.32 compared to ZAR 0.19 last year. In U.S. dollar terms, profit for the period was $15.3 million or USD 0.67 per diluted American depository share compared to $10.3 million or USD 0.41 per diluted American depository share in fiscal 2017.

Adjusted profit for the year was ZAR 157 million compared to ZAR 105 million. Adjusted earnings per diluted ordinary share were ZAR 0.27 and above our expectations compared to ZAR 0.17 last year. In U.S. dollar terms, the adjusted profit for the year was $13.3 million or USD 0.58 per diluted American depository share compared to $8.9 million or USD 0.35 per diluted American depository share in fiscal 2017.

From a free cash flow perspective, we generated ZAR 353 million in net cash from operating activities and added ZAR 338 million investment in capital expenditures, which included ZAR 230 million of in-vehicle device investments, up ZAR 61 million from last year. Free cash flow was ZAR 15 million for the full year compared to ZAR 28 million in fiscal 2017. We were very pleased with our ability to generate meaningful free cash flow in fiscal 2018 while increasing investments in in-vehicle devices due to increased demand to our bundled offerings.

Now turning to our financial outlook. We entered fiscal 2019 with very good momentum as our top line of audit and opportunities continues to grow globally. As Joss mentioned, we believe we can maintain the momentum and make further progress towards our longer-term target.

In regards to expectations for fiscal 2019, we are targeting total revenue of ZAR 1,844,000,000 at the midpoint of the guidance range and subscription revenue of ZAR 1,606,000,000, which is year-on-year growth of 14.25% at the midpoint of the guidance range on a constant currency basis. We believe we can continue our subscription revenue growth, driven by the combination of adding new customers, further penetrating existing customers and improving overall ARPU by increasing the percentage of bundled deals as well as add-on sales on top of our core solutions.

During fiscal 2019, we are targeting adjusted EBITDA of ZAR 525 million or a margin of 28.5% at the midpoint of the range on a constant currency basis, up approximately 300 basis points compared to last year. This highlights our ability to achieve ongoing margin accretion as we progress towards achieving our long-term adjusted EBITDA target of 30% plus.

In regards to adjusted diluted earnings per share for fiscal 2019, we expect it to be ZAR 0.507 at the midpoint of the guidance range based on 582 million diluted ordinary shares and an effective tax rate of between 28% to 31%.

As we have discussed previously, our intention is to focus on annual targets as this is how our management is focused, and we do not wish to close deals from suboptimal terms in order to achieve quarterly objectives. This is most relative -- relevant as it relates to the hardware and other revenues line items in our profit and loss. The area of revenue where we have the highest level of visibility and predictability is our subscription revenue, which as we have discussed, is the largest, fastest growing and highest-margin component of our business. For the first quarter of 2019, we are targeting subscription revenues in the range of ZAR 379 million to ZAR 383 million, which would represent year-over-year growth of 15.1% to 16.3% on a constant currency basis. We believe this is a strong initial outlook for fiscal year 2019, particularly against the strong performance in fiscal 2018.

With that, let me hand back to Joss.

Thanks, Paul. In closing, I'd like to reiterate some key points from our remarks. Firstly, I'm very pleased with our fourth quarter and fiscal 2018 results, and we have entered 2019 with strong momentum. We are well positioned to maintain our trajectory and subscription revenue growth as well as margin accretion given the great progress we have made during the year. We have an industry-leading integrated telematics platform, our best product portfolio, ongoing traction in key verticals and geographies and are committed to sustain profitable growth.

Given the ongoing strong pipeline of opportunities globally and my confidence in the team's ability to optimize the operating leverage on the businesses, I believe we are well placed to achieve our goals. On that topic, I would like to extend my thanks to the global team for delivering a great set of results.

With that, we will turn the call over to the operator to begin the Q&A session.

(Operator Instructions) We will go first to Mike Walkley of Canaccord.

So Joss, my first question is just kind of high level -- just on a high level. With your strong balance sheet and the improving share price, how are you and the board viewing longer-term growth strategies such as maybe M&A? Or maybe now that you're generating cash flow, increasing a dividend or even increase your buyback. Just wondering what you're thinking on a high-level strategy basis.

Thanks. Great question. We certainly continue to look for opportunities -- acquisition opportunities, and we've been reasonably active in recent quarters at evaluating some things. Conversely, I maintain and -- if I look at any key metric that we remain significantly undervalued in terms of the quality of asset that we bought. And really, the board and certainly, my decision-making process as to what I recommend to the board is guided by all the time on what opportunity I'm going to get the best intrinsic value per share enhancement. And we'll continue to looking -- we'll continue to look for an acquisition. We would still love to scale up our North American operation, for instance, through prudent acquisition. But at the same time, we still believe that our share presents compelling value. So until the right thing comes along, we're constantly evaluating these things, and we certainly not excluding a buyback.

Great. And then just with your strong guidance for the year, the ELD mandate in the U.S. certainly has helped us. Can you maybe just discuss which areas of your pipeline look strongest for this year in regions in the ELD mandate now that it's out of that floating momentum? Or is it just recovering oil market and other things still driving another strong year in U.S. And then maybe some regional outlook also would be great.

Thanks, Mike. We've not and never -- we're never going to be the, let's call it the major recipient of ELD. We certainly -- we certainly enjoyed, I guess, some momentum out of it, and that's from existing and new customers. But we really don't play in lifting a small fleet space in the United States currently. And the larger fleets that have been -- we're early adopters of this kind of technology. That said, it is my view that ELD will continue to be a tailwind for some years to come still certainly for the next, I would guess, 18 to 24 months, so. And we'll be happy to take any tailwind that we can get. But we're also pleased that there's certainly -- generally, our top line business across multiple geographies is looking healthy, and it's really the basis and our foundation for the guidance that we've put out.

Right. And the last question for me and I'll pass the line. Just in your implied annual guidance, can you help us to think about the puts and takes for ARPU trends and then hardware kind of the run rate you just had this quarter? Should it continue to decline quarter-over-quarter? Or is it stable at these lower levels? Just how we should think about hardware revenue decline year-over-year versus the ARPU trends embedded in your annual guidance.

Thanks, Mike. Certainly, the hardware, we' don't expect to be a growth driver in our business going forward. So I would expect over the coming years that hardware as a percentage of our revenue will, on average, on a trend line, continue to decline. We did have, as you pointed out correctly, we did have a nice (inaudible) in Q4 with unexpectedly higher hardware sales. And the good news is that, that will convert to subscribers in future quarters. So that's the good news out of it, that particular component. What it did do, however, is it did pressure our adjusted EBITDA margin by about 1.3%. And I don't plan or expect that we're going to get the same trajectory every quarter. So even without this, our adjusted EBITDA margin continued its upward trend. And while I believe we can still see some up-and-down movement quarter-to-quarter, it should be our plan and our intention to continue driving that accretion to get to our initial milestone of 30% and then beyond. So we -- and as a team are ready, driven toward achieving that objective.

And we will now move to Bhavan Suri of William Blair.

Joss, let me just touch on the margins first. So as you look at the subscription growth there, I mean, it was really strong. I'd love to just understand, was that sort of the oil rebound in the oil segment that drove that -- obviously, that's the majority of the business in the U.S., but was there anything else sort of driving that really, really strong growth in the Americas?

Certainly, certainly. Oil was a component of it, so let's not forget that we have a 20 -- just got a 20% of our global revenues are out of that sector. So we're delighted. We saw the trend start happening probably 6 quarters ago, as you know. And where we've seen our global customers and certainly in the United States because I did mention that, that rebound has lagged in the Middle East. But certainly, in the United States, we've seen a rebound in customer spending and both with existing and new customers. And the good news is that our total supported oil and gas energy sector subscriber base now is larger than it was by individual subscriber numbers than before the crisis just a couple of years ago when the oil price tanked. The other piece of good news is that by individual customer, the fleet sizes is just significantly smaller. So although they've been growing, they're nowhere near their peak than they were before the crisis. So we see that as a great natural opportunity within existing customers to continue to see expansion. But having said that, we also have headwinds in other verticals. I've expressed that I don't believe we're near a stage yet where we've diversified in the United States away from our exposure to the energy sector. And it's sort of work in progress, but we have made progress.

Got it, Joss. That's helpful. I just want to touch on EMEA a little bit, the Middle East -- sorry, and Europe. So if you look at the Middle East and Europe, lagging, obviously. The U.S., nice margins. But when you think about investment there as a potential for a bounce back, do you think that you need to sort of add sales or restructure sales or changes those organizations to sort of capture some of the growth that you're seeing in the U.S.? Or do you think that you're set up and invested appropriately should that market bounce back?

Two different answers. It's not the same answer for both. In the Middle East, no, we think we've adapted our structure accordingly. And we do have an overweight exposure to energy, particularly in that sector. And we think it will -- we'll see it bounce back, and we think it will happen as a natural course of events. But I think our structure is appropriate. In Europe, it's a different story. But by the way, Middle East grew -- it grew according to plan. So we weren't expecting much different. Europe, I think I alluded to the fact that I was disappointed with our top line performance in Europe or [with added] depth. That kind of cropped a little bit early on in the year to a depth. Our bottom line was pleasing, but top line is a disappointment. And we have made sound investments in that region and, in fact, continue to do so. So we're quite pleased with the top line that we're looking at in that region. We think that they're well positioned to do better going forward. And we certainly, at a sales and marketing level, recognize that we need to make some investment.

Got it, got it. One last one for me here. You did call out a couple of specific cases of MiX Vision on the call, sort of more products being brought. Any trends you're starting to see that are different than what we've seen in the past from a product adoption perspective, meaning the add-on. So any uptick in MiX Vision or miX Tabs and sort of how they've been performing versus expectations.

Thanks, Mike. I appreciate it. The MiX Vision here continues to get the most traction, and I don't think we've seen any changes. It's just -- it's a nice add on to our products, and we're seeing healthy adoption both from existing customers and from new customers. For instance, on 1 Nine, we mentioned a very big win for us in the United Kingdom, Wincanton, there -- from the asset taking MiX Vision as an add-on. So that's one example, and so we are pleased with that. Tabs is -- a lot of conversation that are ongoing, and I still remain very confident in it and its ability in the future to be a nice ARPU driver with some existing customers. But nothing or meaningful traction yet.

We will now move to Brian Peterson of Raymond James.

So Joss, just one for you. It sounds like your large fleet momentum was really pretty progressive. And you had that large win, I think it was global with 20,000 vehicles overall. I'm curious, are your customer conversations moving to more of a global dynamic there where you have these 10,000, 20,000 fleet opportunities? Or are they still mostly regional today?

No. There should be, there should be a -- there is no doubt that there's a trend in the conversations, so even some of the ones that we'd mentioned. I mean, LafargeHolcim is a gigantic fleet. The initial target is 20,000, but their fleet is into the hundreds of thousands off the top of my head. So it is a massive fleet. And the conversation, the drivers, I think, at corporate level. And that's not the only one. I'm just mentioning one. I mentioned one that I couldn't name, the Australian one, which is a multicountry rollout. And there's been recognition in multinationals that there's a big advantage. They have centralized global data, and we're definitely seeing that trend. But off the top of my head, there's been a handful over the last year, I guess, of meaningful multinationals that have -- that we've won that have been driven, not from a regional perspective, but being driven from our headquarters.

Okay. Interesting. That's good to hear. And just as we think about the fiscal year '19 outlook that was above our expectations, I understand there's definitely some uncertainty as it relates to the bundled deals and the customers will kind of dictate there. But can you just remind us, what kind of revenue visibility do you typically have entering the year? And how should we think about that into fiscal year '19 versus prior years?

Yes. This is -- I've made this point before and I'm happy to make it again, Brian. The -- it's certainly not a slam dunk. So we have -- we have decent visibility and we know at this stage, we've got '19 behind us. We've got visibility into one of the Q1s. We put a bit more than just '19 visibility. We see our pipeline. We take a feel. But we've never guided in the bag guidance for a year going forward. It's based on our -- I hope one day, we get into the luxury of being in that position, but we're not. We take up this judgment. We signed some nice, big deals. We know some of them are quick, smooth rollouts. And that one, that large one that I mentioned, we're already rolling out 2,000 of them in the space of about really couple of months. There was another one we announced last year. We know that we're not up to that number yet 9 months later, I guess. And that's building up, but it's taking much more time. So we don't know. It's in the customers' control how the rollout actually happens fundamentally. We try and influence it, but so it's not a slam dunk. It's -- we've used our best judgment. And we know we're coming off a strong year, which we've got a driver for really strong growth and we understand it. But we're feeling good about our brand.

Got it. And maybe one for you, Paul. Just on the margin drivers, thinking about fiscal year '19. I was thinking about one of the biggest -- or 1 or 2 largest drivers qualitatively. Any help there?

Thank you, Brian.

So Brian, you're talking about adjusted EBITDA? Or...

Yes, just the adjusted EBITDA ramp. It's looking higher next year. Just trying to think through what the primary 1 or 2 drivers of that are.

Yes. I think, Brian, that is obviously the benefit of scale and the mid-teen subscription revenue growth, which is at a high margin. And keeping costs under control, I think, it's very important 4 tranches with (inaudible) future success for us -- successful for us in fiscal 2018.

And we'll now move to David Gearhart of First Analysis.

My first question, you mentioned that in terms of the net subscriber addition, there's a strong mix of premium fleet. And on prior calls, you had mentioned that the mix was starting to shift more towards a balance of premium fleet and lower ARPU consumer SVR offering. Just wondering where do we stand on that balance of 50-50? Do we overshoot it in fiscal Q4? And if so, is there a potential for it to stay above a 50-50 mix?

It does vary going forward and, obviously, from quarter -- month to month. And going forward, our preference, obviously, is to get a weighting on -- preferably a weighting on the higher ARPU side and generally along the road's slowest sales cycle. This quarter, Q4 was definitely overweight on premium fleet. The absolute subscriber number, I guess, I would've been happier with a larger number than 12,000. We did -- we still continue to see some contraction from some of the larger South African fleets. We retain the customer, but particularly car rental fleets, where in a challenging economy, they cut back the -- continue to cut back their fleets a little bit. So the financial subscription revenue impact on us is not huge. But in absolute subscriber count, it does have impact. But we are definitely seeing in the last -- I guess, in this year, certainly a better than 50% performance from our premium fleet business. And it's a ratio I'm very happy with. I would love to sustain that. So in fact, even grow it going forward.

And then just following up on the rental fee contraction. Was there a contraction in Q4? And if so, can you give us some sense of the magnitude of the contraction of subs for rental fleet?

There was contraction in Q4. There was very big contraction in Q1, if you recall. And I think we disclosed the number, the quadrant, I think we called it [5.5] thousand here. If so, remember, we reported net numbers. So the numbers we reported in Q1 and the numbers we report in Q4 are net of any term of contraction. We did have contraction again in Q4. We had no contraction in -- in fact, marginal growth in Q3, contraction in Q4. And it was nowhere near the Q1 numbers, but it was a couple of thousand.

Okay. And then you talked a little bit about the add-on capabilities in terms of MiX Vision, MiX Tabs. Just wondering if you can give us an update if there's meaningful growth in any of the other add-on products like MiX Go, My MiX, Journey Management, Insight Agility. Anything going on with those add-ons? Any color will be helpful.

Yes, thanks. I'm not sure there's much more I can give you. I mean, I'm certain that the most established one now -- or that the most established 2 let me rephrase that is MiX Vision and the Hours of Service which in the United States is basically known as ELD. But those are our 2 most established ones. And we have seen progress in some of the others, but it's really not enough to move the needle yet. And now some of them were, in fact, enhancing our efforts into driving, and we'll see how they pan out. I think we've got a nice, broad product portfolio, and the team still feel confident that all of their add-ons have got a decent home somewhere. So as they start getting traction, I'll try and give you a bit more color.

Sounds good. And then last question for me. You had mentioned in terms of the oil and gas vertical that the fleet sizes are not up to what they could be on an individual basis. And I think in past conversations, you had mentioned that new wins and deployments are what's driving the growth in oil and gas. So just wondering if you could give us a sense of reactivation activity for idle fleets. Is the trend -- is it starting to pick up? Are you seeing a start to reactivations? And if not, any color on conversations that you're having with these oil and gas fleets in terms of reactivating some of the idle vehicles?

Sure. We've definitely seen the activity coming from distinct (inaudible) this quarter pre-crisis customers where we're seeing reactivation. Reactivation, I guess, in your mind, you're referring to this is just a flick of a switch and a parked vehicle is reactivated. And I'm thinking some of that, but a lot of them, they disposed of the asset at a time. So we're also seeing reactivation in that they're acquiring new vehicles and installing solutions into those vehicles. So there's no doubt that we have seen expansion from existing customers. Their fleets have grown over the last 18 months, but a way off previous levels. And it'd be interesting to see how it plays out. But I mean, I was happy at $50 a barrel. I think where oil is currently trending, I think it will be interesting to see how that -- how the spring patterns change if it stays at these kind of levels. We'll have to see.

And with that, that does conclude today's question-and-answer session. I would now like to turn the call back to Joss for any closing comments.

Well, also thank you, guys. I appreciate the time and effort and making the time to listen to us. I look forward to any of you that are attending the William Blair conference in Chicago in mid-June. Look forward to seeing you there. And I guess, we'll -- for anybody who wants to follow up with us in coming weeks, we'll be happy to make a little bit of time available. So thanks again. All the best.

And with that, ladies and gentlemen, that does conclude today's call. We thank you again for your participation. You may now disconnect.