IOT F1Q27 - Ain't No Lie, Baby Buy, Buy, Buy

Research evidence excerpt

IOT F1Q27 - Ain't No Lie, Baby Buy, Buy, Buy

$1M deals at the

magnitude of First Student, with strength being broad based, with a healthy contribution from the software only Hertz

win, and international strength including a large UK deal.

Operations AI Opportunity. Management framed Visual AI less as a standalone video-based safety product and more

as a broader data monetization opportunity with use cases in road safety and supporting new models being made

from data collected outside vehicles. The software only Hertz win supports the opportunity, as customers with existing

sensors and cameras can layer additional software on top. Still, IOT expects software only deals to remain a minority

of new deals, maybe single digits.

Cost Bottleneck vs. Growth. F1Q saw gross margin headwinds from cost components, including AI/API costs from

agentic product adoption and higher component costs that will be amortized into COGS. Management was clear that it

doesn't want gross margins to fall into the low 70s and intends to keep margins at its current range. More importantly,

management doesn't want to slow revenue momentum because of supply constraints or near-term cost pressures, with

securing supply to meet customer demand being the top priority to support high levels of growth.

New Product Momentum. Emerging products contributed more than 20% of NNACV for a second straight quarter, and

management suggested around 20% or slightly higher is a reasonable goal they are aiming for going forward. While

growth contribution can be lumpy on a quarterly basis (e.g., if a large telematics deal was signed in a quarter, NNACV

from new mix could be impacted negatively). Based on pipeline today, IOT is confident in driving growth from emerging

products.

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