MIX Telematics Ltd (MIXT) 2019 Q3 法說會逐字稿

Greetings, and welcome to the MiX Telematics' Third Quarter Fiscal 2019 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce Paul Dell, CFO. Please go ahead, sir.

Good day, and welcome to MiX Telematics' earnings results call for the third quarter of fiscal year 2019, which ended on December 31, 2018. Today, we will be discussing the 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 is Stefan Joselowitz, or as many of you know him, Joss. He is 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 a 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.

We will also be referring to certain non-IFRS financial measures. There is 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.

Finally, when discussing our subscription and total revenue growth, we will be referring to constant currency growth rates. All U.S. dollar amounts referred to on the call have been translated at an exchange rate of ZAR 14.40 to the U.S. dollars, which was the rand-dollar exchange rate reported by Oanda.com as at December 31, 2018.

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

Thanks, Paul. I would like to thank you all for joining the call today. MiX delivered another very strong quarter, exceeding expectations across all key operating metrics. I am particularly pleased with the continued strength of our subscription business, up 16% year-over-year, and that's our top record growth.

Additionally, our adjusted EBITDA margins exceeded 30% for the second straight quarter, expanding more than 440 basis points compared to the prior year's comparative. We have now exceeded the rule of 40% benchmark of combined revenue growth and adjusted EBITDA margin for the fourth consecutive quarter. This is a track record few software companies can match and demonstrates a compelling value proposition of MiX Telematics.

We are confident the strength of our diversified portfolio of subscribers will enable us to maintain our market momentum for the balance of fiscal 2019 and beyond.

MiX' attractive combination of strong growth and a highly scalable business model was evidenced by another strong quarter of solid cash generation. During the quarter, we generated ZAR 60 million in free cash flow after investing ZAR 48 million in in-vehicle devices for bundled contracts. Due to the ongoing layering of higher ARPU-bundled contracts, combined with expansion in our adjusted EBITDA margin, we are confident in our ability to continue generating significant free cash flow in future quarters, even as we, in parallel, invest in bundled deals.

Now turning to a summary of our third quarter performance. Our subscription revenue of ZAR 439 million or USD 30.5 million was above our guidance and grew 16% year-on-year. Our results were driven by ongoing robust demand globally for our services from customers across all verticals. We continued to be pleased with the broad regional performance as all of our geographies contributed positively to both our top and bottom line.

We added more than 22,000 net new subscribers during the quarter, increasing our base to over 736,000. This is a year-on-year increase of 11% and our third consecutive quarter of double-digit net subscriber growth. Given the strong pipeline of committed orders and sales opportunities globally, we remain confident in our ability to maintain the momentum.

At our recent investor day last month in New York, we outlined the substantial market opportunity MiX is targeting and the multiple levels we have to deliver consistent, significant and profitable growth. Over a number of years, we have developed a suite of purposeful fleet and mobile asset management solutions that are delivering great value to customers around the globe. We believe we have a long runway for growth as we execute on our key initiatives. Number one, acquire new customers and subscribers. We will continue to add new customers and subscribers around the globe. While MiX is today one of the world's largest fleet and mobile asset management solution providers, the industry is only fractionally penetrated with 200 million commercial vehicles in our total addressable market. We are gazing down a very long runway of opportunity.

Number two, expand ARPU by increasing sales to existing customers. ARPU accretion has been a consistent gross driver for MiX in recent years, as we increased the number of add-on solutions to our premium and light fleet customers and continue to drive the uptake of bundled deals. We have a great success with our strategy, and we'll continue on its execution.

And number three, scale our regional presence and broaden our customer segment focus. At our recent Investor Day, we also spoke at length about the opportunity we see in the United States, and specifically, in the smaller fleet segment. We were very excited to launch MiX Now at the event. This is our new simple plug-and-play fleet management offering for smaller fleet operations. With this new solution, customers will have all the essential features needed to manage both drivers and vehicles at their fingertips.

MiX now opens up significant new growth opportunities and will allow us to further diversify our U.S. business beyond our historical strength in the oil and gas industry. In fact, I'm pleased to report that we have already signed up several customers. As a reminder, there are 12 million service fleet vehicles in the United States alone that are addressable with Mix Now, and this represents an incremental annual market opportunity of around $5 billion. Don't forget that MiX Now also provides us with the opportunity to target similar verticals in other geographies.

Some of our customer wins during the quarter highlight the success of our strategy. We won a contract with Bpost, the leading Belgian postal service, to deploy our premium-fleet telematics solution on more than 1,000 vehicles. Bpost chose MiX over competitors due to product flexibility and interoperability with existing systems. Other deciding factors included the power of MiX' business intelligence tools and the potential of our MiX Tabs solution for their future applications.

A leading diversified agribusiness in South Africa chose MiX and our light fleet solution as its preferred telematics provider across 600 vehicles. MiX has established global track record and ability to monitor its at-risk vehicles in remote locations with key selling points for this customer.

One of the largest dairy companies in Brazil is deploying our premium fleet solution to its 450 vehicles. Our comprehensive reporting capabilities will enable robust communication that will help reduce the risk of accidents.

And finally, LineStar Integrity Services, a U.S.-based energy solutions company, chose MiX' ELD solution to help improve the safety, compliance and efficiency of its fleet.

Based on the momentum we are seeing in the market and our continued strong execution, we are once again increasing our fiscal 2019 total and subscription revenue guidance. In addition, we are raising our adjusted EBITDA margin guidance to 29.5% versus the previous midpoint of 28.8%. We are delivering strong margin expansion even as we make incremental investments in building out our global sales organization, which speaks to the inherent scalability of our business model. Also note that we recently raised our long-term adjusted EBITDA target to 35% plus.

To summarize, we delivered another strong financial and operational performance in the third quarter. Our solid subscription revenue growth and continued margin accretion reflects the success of our strategy. We remain well positioned to maintain that momentum in the fourth quarter and beyond.

With that, let me turn it over to Paul to review the details on the quarter. Paul?

Thanks, Joss. I will now review our third quarter fiscal year 2019 performance. Recall that our reporting currency is the South African rand. For convenience, we have translated our results into U.S. dollars, both for the 2019 and 2018 periods, using the December 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 third quarter, total revenue came in at ZAR 514 million. Of this total, subscription revenues were ZAR 439 million, up 15.6% on a constant currency basis and above our guidance range. This strong performance was driven by the ongoing positive traction from our broad subscriber portfolio, including our premium fleet customers across all geographies and vertical markets.

We added 22,100 subscribers in the quarter and ended with a total subscriber base of over 736,000, an increase of 11% year-over-year.

Hardware and other revenue was ZAR 75 million, an increase of 13.6% year-over-year. Over time, we continue to expect the ongoing shift toward bundled deals to increase our subscription revenue as a percentage of total revenue, which will provide us both improved visibility and higher margins. That said, if a customer wants to own the hardware, we will continuously support our customers in whichever purchasing decision they make.

Our gross profit margin in the third quarter was 65.7%, up 40 basis points from the third quarter last year. As a reminder, gross profit increased depreciation charges related to in-vehicle devices and high-value peripherals used in certain of our bundled fleet contracts. These contracts generate higher ARPUs, and as they go through contract renewal cycles, should drive an increase in gross profit margins, which we expect to trend towards 70% in the longer term.

Operating expenses were 49% of total revenue compared to 53% of revenue in the third quarter last year. This highlights our improved economies of scale and ongoing cost-management initiatives. Recall that our general and administration costs include research and development costs not capitalized. For those of you interested to see our historical capitalization and development cost expense, we've provided a 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 earnings for the period, which are non-IFRS measures. So we have provided full reconciliation tables in our press release.

Third quarter adjusted EBITDA increased 36% to ZAR 156 million or 30.3% of revenue compared to ZAR 114 million or 25.9% of revenue in the third quarter last year. This represented a 440 basis points year-over-year improvement in the adjusted EBITDA margin. We are pleased with the continued improvement in our adjusted EBITDA margin, which demonstrates our ability to invest for growth while successfully leveraging a return on our historical investments.

Adjusted earnings for the quarter were ZAR 64 million or ZAR 0.11 per diluted ordinary share, which was up from the ZAR 40 million or ZAR 0.07 per share we posted a year ago.

From a cash flow perspective, we generated ZAR 133 million in net cash from operating activities and invested ZAR 73 million in capital expenditure, including investments of ZAR 48 million in in-vehicle devices. This led to a positive free cash flow of ZAR 60 million for the third quarter compared with free cash flow of ZAR 17 million during the same period last year.

As Joss mentioned, we are very pleased with our ability to generate cash, given the ongoing investments in in-vehicle devices, driven by the demand for our bundled offering.

As we indicated at our Investor Day, we expect to generate increasing levels of free cash flow as capital expenditures stabilize as we move into renewal cycles for existing bundled contracts and operating cash flow increases with the growing scale of the business.

Now turning to our financial outlook. Due to our strong third quarter results as well as our expectation for the momentum of subscription revenue growth to continue, we are increasing our guidance for fiscal 2019. At the midpoint of our total revenue guidance, we expect fiscal 2019 revenue of ZAR 1,960,000,000, which represents constant currency growth of 12.6%, an increase from our previous guidance of 11.85%. At the midpoint, we expect subscription revenue to be ZAR 1,697,000,000, which represents constant currency year-on-year growth of 16.3%, an increase from our previous guidance of 15.75%.

We remain confident in our ability to achieve this, given the performance in the first 3 quarters as well as our strong pipeline of firm orders and sales opportunities.

At the midpoint of our guidance range, we are now targeting adjusted EBITDA of ZAR 578 million, which represents an adjusted EBITDA margin of 29.5%. Adjusted EBITDA margin guidance at the midpoint represents an increase of 70 basis points from our previous guidance of 28.8% and is up approximately 370 basis points compared to last year. Our increased margin guidance demonstrates our ability to continue expanding margins year-over-year while investing in the business to drive future growth.

In regards to adjusted diluted earnings per share for fiscal 2019, we are increasing our expectations to ZAR 0.375 from our previous guidance of ZAR 0.365 at the midpoint of the guidance range. Our new guidance is based on 583 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 on suboptimal terms in order to achieve quarterly objectives. This is most relevant as it relates to the hardware and other revenue 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 fourth quarter of 2019, we are targeting subscription revenues in the range of ZAR 443 million to ZAR 451 million, which would represents year-over-year growth of 12.3% to 14.4% on a constant currency basis.

In summary, MiX reported another strong quarter as we continue to benefit from our current market momentum and our margin-accretion strategy. As a result, the company remains well positioned to maintain the momentum for the fourth quarter of fiscal 2019 and beyond.

I will now hand it back over to Joss for some closing remarks.

In closing, MiX is executing its strategy of achieving double-digit subscription revenue growth and strong margin accretion, which is evidenced by the Q3 performance of 16% constant currency subscription revenue growth and adjusted EBITDA margin that expanded by 440 basis points. We are delivering a combination of growth, profitability and cash that is rare in the software industry, and that we believe will generate significant value for our shareholders.

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

(Operator Instructions) Our first question today is coming from Brian Peterson from Raymond James.

So just wanted to start out on MiX Now. It sounds like you're really hitting the ground running there. How should we think about the expectations for that product offering over the next few years? And I think you mentioned 12 million service fleet vehicles in the U.S. Any sense for what the penetration of those service fleet vehicles looks like maybe versus some of your other end markets that you historically served?

Thanks, Brian. The -- yes, it's certainly going according to expectations, and I think as I outlined at the Investor Day, for this fiscal year, we've certainly baked on a -- pretty much baked in all of the costs, but not much. In fact, no revenue or no real top or bottom line upside from this particular product. And you'll remember, these are small fleets. So we have signed deals, and we are happy with that. And -- but collectively, they're not large deals. You need to do lots of them to be malleable. So we certainly, in our minds, see this product being a contributor in the next fiscal year, in our fiscal 2020, and we see it being potentially one of our rocket engines in 2021. So that's how we think about the product. In terms of the other part of your question, penetration rates, there's a -- in terms of the small service fleet kind of vehicles in the U.S., there's an estimate of about 12 million vehicles. The estimate goes on further that about 2 million of them have been penetrated. So there's still a very healthy balance of opportunity. And we certainly believe it's, as I said, around about of $4 billion to $5 billion annual market ARPU opportunity. So we're very excited about it.

Great, Joss. And maybe just one follow-up for me, and I'll hop back in the queue. But just on some of your M&A ambitions, anything that you can share or any updates? And we've seen volatility in your market and so it's going to make M&A activity in the space as well. So just wanted to get an update there.

No, thank you. We're certainly still ambitious. We continue to look for a suitable acquisition, and that process is ongoing. I guess, the big news for the quarter was the announced disposal of the TomTom fleet telematics business, not significantly different size-wise to our business that traded for around $1 billion. So another interesting data point, if nothing else, but we're certainly actively looking at opportunities in the market, and we will continue to do so.

Our next question is coming from Matt Pfau from William Blair.

I wanted to ask you about MiX Now and actually relative to the -- to TomTom selling off its telematics business. So I guess, it would seem to me that the Tom-tom telematics business was kind of targeting the same type of service fleets that MiX Now would be targeting. So with the selling off of that asset, does that rethink maybe moving MiX Now into Europe and expanding quicker than expected out of the U.S.? And so maybe there's some opportunities created there.

Thanks, Matt. We certainly recognize, and I can't understate this that MiX Now is a global opportunity. We've -- we're big time (expletive), I guess, for this year. So we're not going to make any rush news. United States is a big focus for us right now for this product. We want to -- we've invested in it, we want to iron out any wrinkles in terms of getting the distribution plan correct, and then start rolling it out into other territories. So we will definitely be in Europe. There's no question about it. It won't be this fiscal year. It will likely be next fiscal year, and that won't be our only other geography. Once we've got our act together, in terms of making sure -- as I said, the product is ripe, we're happy with that. It's getting the distribution model correct, making sure that we've got it well mapped out, and then we'll be rolling out in -- probably in multiple geographies in parallel. But our focus for now, certainly -- and what does for now means? For the next few months. So it's not a long period of time. Certainly, the focus for the next quarter is to get our process right in the United States.

Got it. And last one for me, just a follow-up on MiX Now as well. So I guess, you've some initial customers in the door and one of the -- or I guess, the way that MiX Now is supposed to operate and it is supposed to be clearly self-service offering in terms of customers coming online, signing up themselves and then installing the devices themselves. So I guess, in terms of that self-service nature of the product, is that what you're seeing initially? And are those customers who are taking that self-installed approach to Mix Now?

Yes. What we have to get right is the process of signing up customers without much feet on the street. So we don't want to invest in an expensive mobile sales force. So the concept of sales force is located internally. Lots of phone calls, appointment setups, online demos, et cetera, et cetera. So much lower cost of acquisition when compared to what it costs to acquire a large fleet. And of course, acquiring large fleets is something that we know more about than pretty much any other organization on the planet. So we need to acquire some more customers, we can't spend that kind of money. We have to get the process much more efficient. And hence, the product has been designed to achieve that. The software suites have been designed to achieve that. And we've brought on board sales specialists who have built out this kind of internal sales process before. So we're not trying to reinvent the wheel. We've got expertise on board who have done it and are showing us how to do it.

Our next question is coming from Mike Walkley from Canaccord Genuity.

It's Anthony on for Mike. Just in terms of the Americas sales and investments, obviously, you've been talking about tripling the sales force. I think on the Analyst Day, you mentioned significantly increasing sales and marketing spend into the back half of this year, but the Q3 levels seem kind of comparable. I was wondering if you could elaborate on where you are in terms of completing the investments here, in terms of hiring and some of the cadence on the sales and marketing increases to come.

Yes. Thank you, Anthony. Appreciate it. And the -- we've made pretty much, we've built out the U.S. plan for this fiscal. Some of our other geographies have got some open positions and are a little bit behind plan in terms of build-outs. And hence, we're seeing the lower-than-expected number in Q3. So the guidance that we provided still provides for a more complete build-out. So we still expect our sales and marketing costs to increase in the balance of this year, and that's part of -- that's baked into our guidance. And Paul, if you want to elaborate on any more of it?

Yes. I think it's probably going to be about ZAR 3 million or ZAR 4 million up, that's our estimate now.

Great. And then just on the gross profit margin coming a little bit down this quarter, I know you mentioned contract-related depreciation. But in terms of, like, reverting back to more 1H levels and towards the 70% target, can you elaborate kind of on the cadence of when we might see that this, like, Q4 or 1H '20 -- 1H '19, excuse me, type of cadence? Or...

Sure. I'll answer that one. I think in the current quarter, we had a lot of hardware revenue. And a lot of that hardware revenue went through our partner network, which was at slightly lower margins than our direct sales, obviously. But I think the important thing is that the subscription revenue margins remained about 70%. And in the long term, as we go through those renewal -- renewals on the big bundled deals in 18 to 24 months' time, that trend towards 70% should kick in.

Our next question is coming from David Gearhart from First Analysis.

My first question is in regard to the guidance. If you look at full year guidance and back up subscription for Q4, it implies hardware significantly down from fiscal Q3 and year-over-year and haven't been at levels implied by guidance in some time. So I'm just curious if some hardware revenue was pulled forward into Q3 or things are pushing out to next year or it's just conservative? If you can give some color on that, that will be helpful.

Thanks, David. We certainly -- I'll hand over to Paul shortly. But we did see some orders -- hardware orders that we were expecting in Q4 come into like Q3. So that's certainly part of the issue. My view still remains that we will continue to be conservative on hardware that does have the potential to be lumpy, number one. And number two, my personal expectation is that hardware revenue will continue to show an annual decline as a percentage of total. So that's certainly part of it. Paul, do you want to add anything more?

No, I don't think so. I think that was covered. I think there was a little bit of Q4 in Q3, but hardware is lumpy and difficult to predict. So yes, so I think Joss covered it.

Okay. And then my last question. In terms of your largest vertical, energy, oil and gas, obviously, with the decline in oil, it's something that everybody is watching. But you recently announced a nice expansion within existing customer. So just hoping you can give us a little color on activity in oil and gas with the decline in oil prices over the last few months or so. Are you seeing any change in activity, any pushouts in deployments? Or is everything steady as you've been seeing in the past several quarters?

Yes. As -- and certainly in terms of the quarter that we're reporting and even up until this call, we haven't seen a significant change. We -- I was pleased that in the quarter, we won -- we signed a new customer business, and we expanded existing customer fleet. And those are the signs that are important for us in any verticals. So as things currently stand, it's coming on nicely. And clearly, if we keep an eye on what's happening with the commodity price, nothing we can do about it, but we keep an eye on it. And certainly, at current levels, that doesn't appear to have been -- to have changed any customer behavior.

(Operator Instructions) Our next question today is coming from Brian Schwartz from Oppenheimer.

Joss, I just wanted to ask if you could dive in a little bit in the step-up of the new subscribers that the business has been signing up this year. Clearly, there's been a big step-up here over the last 12 months. Is there anything to point out in terms of verticals or geographies or possibly just having more referenceability now here in the U.S? We would love to hear from you what do you think has been the big driver of the step-up in the new subscribers over the last year.

Thanks, Brian. We -- we are executing well, so I've got to really start at that point. And thanks to our teams, really, all over the globe for the hard work and effort that they've put in. We've got great product suites and certainly makes it easier to sell, but selling, nonetheless, is tough, and they are out there on the streets and with customers and executing well. And I'm very pleased about that. It's also a factor of we haven't had the contraction that we had. If you recall 18, 24 months ago, we went through a tough period, not -- we were executing well, but we had large customers that were compressing their fleet sizes, and that impacted on our net numbers. We report -- we don't -- we call it -- We don't -- it's not from assets, we differentiate between churn and contraction. We report net numbers, and we had the impact -- sometimes the impact of churn, we lose a customer. Thankfully we don't lose too many of them, particularly in our premium fleet business where our customer retention rates is extremely high. But there have been periods in our history where we've been impacted by contraction. In other words, we haven't lost the customer, but we've seen the revenues from a customer go down because the fleet size has compressed because the challenge is in a particular vertical. And right now, our major verticals are performing well, and we're identifying new verticals that we're starting to build out, and that'll provide even more of that balance in our business. And I think it's a combination of those factors, great execution and not a big impact of contraction that -- and we've seen what is effectively a step-up.

And one follow-up just on MiX Now. I think you gave us good color here in terms of the distribution plan to go to market, and you talked about having a lower CAC for that product. Can you maybe help us fill in the other part of the equation on the economics? Just thinking about lifetime values. And just curious, just comparing a MiX Now subscriber versus one of your core subscribers, is there a big difference in the -- when you look at your CAC ratios or you look at the long-term lifetime values, is there any big difference in potential value of the 2 different type of customers?

Thank you, Brian. So we would certainly -- our anticipation is that ARPUs for MiX Now will be lower than premium fleet ARPU for all of the obvious reasons. Having said that, the ARPUs that we are anticipating are attractive and will provide very good margins. In fact, equivalent margins to any of our other products by virtue of it's a lower -- the cost of servicing the base is lower. So a rule of thumb is that on a direct sale basis, we're anticipating somewhere between $30 and $35 for MiX Now as an ARPU on a direct sale versus in the United States, we're averaging $50 plus for a premium fleet direct. What we don't know yet is right now, we are catching our teeth on building a direct sales force in the U.S. We do plan to expand our distribution capability through some kind of partner arrangement, which will obviously -- so we'll be wholesaling to them. And we haven't spent a great deal of -- it's not part of this year's strategy. It's certainly part of the next year strategy on that ARPU differential, but it will be a lower ARPU. So lower than the direct sales ARPU. So on a blended basis, it's -- I guess, we could anticipate that between aging and partner sales and car sales, we could be blending in at something like $20 ARPUs, I guess, on a blended basis. And that's the way I'm thinking about it right now. And it may change going forward and may turn out to be a bit higher, depending on the deals that we did, maybe a bit lower, but we'll fill you in more once we're closer to that target. At the moment, we're focusing on direct sales.

And last question that I have for you is just -- maybe you can just provide some color on the evolution of entering the services in the SMB market with MiX Now. And could we -- just try to think it through here, Joss. Typically, with software, we see companies, especially disrupting companies. They typically start in the lower end of the market and then they tend to move up market over time, but this is a little bit different. Your business has started in the larger part of the market, and now you're moving down here with Mix Now. So can you just talk a little bit about the evolution of what's bringing you down into this market? Maybe you're getting pulled organically or you're just seeing the demand filling in? Or it's just a big new market. But if you can just help us maybe answer that question or just shed a little bit of the light on what attracted you to the market opportunity with MiX Now?

Thank you. We -- the evolution of our business, as you know, started 23, 24 years ago. And at that stage -- I started the business at that stage. In my mind, I wasn't really differentiating between a bigger or small fleet. We were a start-up, and we were taking whatever business you could get basically. And that was early days in the industry. And of course, as the technology evolved, we have the ability to add more and more features and build ARPU layers for our customers. Fast forwarding many years, probably 15 years into that evolution, we took a conscious decision, just by virtue of the kind of customers that were coming to us. They were complex users. And we took a conscious decision to focus on large fleets and built out a product platform that was designed around the power user. And we've built a great technology suite. But of course, over the last couple of years, we've looked at smaller fleet opportunities all over the world and recognized that we've got all of the building blocks to service that -- those sectors, but they are not sold as building blocks currently -- in their current form, when self-servicing that. So a couple of years back, we took a view that we were going to build a dedicated light fleet platform, using all of the knowledge that we'd built building our premium platform, but putting it into a compressed form but focused on a mobile-centric, light-fleet, self-service kind of offering with a view to go into that market when we were ready. And we're now ready. So that's the evolution. And I think you'll see with our business, it will become an interesting -- an important part of our business as the years evolve. Bear in mind, we have a light fleet business that is mainly in Africa at the moment. And why do we have a light fleet business there and nowhere else? Because the cost of labor is much lower, so it's enabled us to provide services to light fleets that are not -- they're not really self-service features. We do it internally, but cost of doing it is acceptable. It wouldn't be acceptable in Europe or in United States, for instance. So we've had to get self-service, and we've now brought that. And as I said, I think you'll look at our business in 2 years' time, and MiX Now will be a significant component. It will be a healthy piece of our business, and that's what we envisage.

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

So firstly, I'd like to -- I'm reporting out of South Africa at the moment, so I've been here for a couple of weeks and go back to the United States in a week's time. And I've got the AC running in the background here. So I apologize if I'm rubbing it into everybody in the U.S., I believe, is in a terrible freeze at the moment. So everybody, stay warm.

Really, we are very pleased with Q3. We are now focused on our -- delivering our full year and taking our strategy forward, and we will be presenting in the -- at the Raymond James conference in early March in Florida, and look forward to meeting many of you there. And until then, everybody, stay safe, and thanks for your time and attendance.

That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.