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Fleetmatics Group PLC (FLTX)
Q4 2012 Earnings Call
February 20, 2013, 5:00 p.m. ET
Stephen Lifshatz – CFO
James M. Travers – CEO
Ramio Lenschow – Barclays
Tom Roderick (Chris) – Stifel Nicolaus
Jaimin Soni – Bank of America
Laura Lederman – William Blair
James Faucette – Pacific Crest
Robert Breza – RBC Capital Markets
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Thank you and good afternoon everybody and welcome to the Fleetmatics' preliminary fourth quarter and full year 2012 earnings call. Today, we'll be discussing the preliminary results announced in our press release issued after the market closed today. I'm Steve Lifshatz, Chief Financial Officer of Fleetmatics. And with me on the call is Jim Travers, Fleetmatics' Chief Executive Officer.
During the course of this call, we will make forward-looking statements regarding future events and the future financial performance of the company. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important risk factors that could cause actual results to differ materially from those in the forward-looking statements contained in the press release and this conference call. These risk factors are described in our press release and are more fully detailed under the caption Risk Factors in the prospectus file for Fleetmatics with the SEC on January 31st, 2013 and the company's other filings with the SEC.
During this call, we will present both GAAP and non-GAAP financial measures. These non-GAAP measures exclude both stock based compensation expenses as well as the amortization of intangibles related to acquisitions and certain non-recurring items. These non-GAAP measures are not intended to be considered an isolation from, a substitute for, or superior to our GAAP results. And we encourage you to consider all measures when analyzing Fleetmatics' performance. A reconciliation of GAAP to non-GAAP measures is included in today's press release regarding our preliminary fourth quarter and full-year 2012 results.
In addition, please note that the date of this conference call is February 20th, 2013. And any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.
And with that, I'll turn the call over to Jim. And I'll come back a bit later to provide some further details regarding our financials and our forward-looking outlook. Jim.
James M. Travers
Thanks, Steve. I would like to thank everyone for joining us on the call today. We are very pleased with our execution during the fourth quarter, which led revenue and profitability that were both ahead of our guidance.
It was a strong finish to a record year for Fleetmatics. During 2012, we saw considerable market demand for our highly differentiated software to service fleet solution for SMBs. Due to our ability to provide fleet owners with what we believe to be the industry's most powerful set of tools to help them optimize performance, reduce costs, increase productivity, and enhance revenues.
Looking ahead to 2013, we believe that Fleetmatics remains in good position to capitalize on the under-penetrated large market opportunity and fleet tracking for small and medium sized businesses. As Steve will detail in a moment, we have increased our revenue expectations for 2013 based on strong fourth quarter preliminary results and positive business momentum.
With that background, I will now review our summary level financial results for the fourth quarter.
Total vehicles under subscription increased 40% year-over-year to 231,000. And our total revenue of $35.8 million grew 38% year-over-year and was at the high end of our original guidance range. We continue to grow our subscription revenue at a much faster rate than the market, which further validates our position as the clear category leader in the SMB market.
From a profitability perspective, our preliminary adjusted EBITDA of $11.8 million increased 77% compared to the prior year period and exceeded the high end of our guidance range. The strength and breadth of our local fleet management solution combined with our efficient go-to-market strategy resulted in record subscription growth, continued low churn, and better than expected profitability.
Now I would like to provide some highlights from the quarter starting with our continued momentum with our core SMB customers. As a reminder, we believe we are the clear category leader in providing software to service fleet management solutions to SMBs. Our mobile software platform transforms our customer's fleet operations by providing unique real-time actionable business intelligence, which enables them to increase productivity and reduce costs. We do this through an intuitive graphical user interface, which is purpose built for the SMB fleet operator and provides visibility into vehicle and driver behavior.
We continue to focus on local fleets delivering a service within 100 mile radius of their headquarters location. Today, the majority of our target market businesses have no fleet management solution in place. And the owners have little to no visibility into how inefficiently their mobile assets are operating.
Our platform in solutions address the significant operational challenges of the SMB fleet operator such as inefficient routing and excessive idling, which results in wasted fuel, lack of visibility into hours worked and manual time keeping, which results in inflated payroll, and unproductive worker behavior resulting in a loss of billable hours leading to decreased revenue.