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Good morning. Welcome to PowerFleet's Second Quarter 2023 Conference Call. Joining us for today's presentation is the company's CEO, Steve Towe, and CFO, David Wilson. Following their remarks, we will open up the call for questions. Before we begin the call, I would like to provide PowerFleet's safe harbor statement that includes cautions regarding forward-looking statements made during this call. During the call, there will be forward-looking statements made regarding future events, including PowerFleet's future financial performance. All statements other than present and historical facts, which include any statements regarding the company's plans for future operations, anticipated future financial position, anticipated results of operation, business strategy, competitive position, company's expectations regarding opportunities for growth, demand for the company's product offering and other industry trends are considered forward-looking statements. Such statements include, but are not limited to, the company's financial expectations for 2023 and beyond. All such forward-looking statements imply the presence of risks, uncertainties and contingencies, many of which are beyond the company's control. The company's actual results, performance or achievements may differ materially from those projected or assumed in any forward-looking statements. Factors that could cause actual results to differ materially could include, amongst others, SEC filings, overall economic and business conditions, demand for the company's products and services, competitive factors, emergence of new technologies and the company's cash position. The company does not intend to undertake any duty to update any forward-looking statements to reflect future events or circumstances. Finally, I would like to remind everyone that this call will be made available for replay in the Investor Relations section of the company's website at www.powerfleet.com. Now, I would like to turn the call over to PowerFleet's CEO, Mr. Steve Towe. Sir, please proceed.

Good morning, and thank you for joining us today. It's a pleasure to share our second quarter performance with you. We've executed extremely well in Q2 and the first half of 2023 with dramatic transformation across the business, and we remain ahead of schedule in our strategic plan. The first half of 2023 has been focused on aggressively implementing the changes required to give the company the foundations for high-scale, profitable SaaS growth. Our overriding priority is clear, to build a superior value business centered on high-quality, sticky, recurring SaaS revenue. And while we are still relatively early in our journey, strong proof points are now evident in the shape of our P&L, our mix of revenue, and associated service growth rates of 12% for the quarter and 15% for the half on a constant currency basis. Our core go-forward business is currently focused in North America and Israel, which generates 83% of total services revenue, with Europe identified as the key additive market for geographical expansion in 2024. Double-clicking into these markets, service revenue in our North America business grew by an impressive 16% in the first half of 2023, while our Israeli business grew by 10% on a constant currency basis. The recurring services gross margin in our core go-forward business in Q2 was an impressive 71%. These metrics, in combination with a strong pipeline, coupled with early strategic customer wins since the commercial release of our Unity data intelligent platform strategy, are highly encouraging. Switching gear to macro trends, we continue to see a slowdown in the logistics market segment as some customers continue to recalibrate their post-pandemic asset needs, while Israel continues to be buffeted by geopolitical events resulting in tempered new product demand and foreign currency headwinds. Despite the macro headwinds, we're confident in our growth prospects, particularly with our Unity data platform, our safety-led industrial solutions and connected car offerings. We've extensively cleaned low-margin hardware-centric sales pipeline and reduced hardware-only business revenue significantly compared to the prior year. Our strategy is to focus on high-quality and high-margin recurring software sales deals, a brave and challenging exercise we're undertaking to prioritize mission-critical SaaS opportunities. While transitioning to SaaS sales, especially with new logo customers, revenue realization may take slightly longer. However, we have largely achieved our goal of shifting towards higher quality revenue, leading us to anticipate sequential top line growth in the second half. Recent sales wins with esteemed companies like Pride Group Enterprises, DB Schenker, Moderna, United National Foods, Wurth Industries North America and Bridgetown Mexico have boosted our confidence for the second half of this year and 2024. Our total gross margin is showing good progress on both a quarterly and half yearly basis versus last year, particularly supported by the impressive 71% gross margin of service revenues in our core go-forward territories that I mentioned earlier. We delivered a $2 million improvement in gross profit for the half year, despite the impact of our controlled pivot strategy from hardware-centric revenues to SaaS revenues. This is a highly encouraging vector for our future value creation thesis. In terms of transformation, the vast majority of the tough decisioning and highly challenging activities are now complete, and we look forward in the second half of 2023 to tuning the growth engine and putting our foot on the accelerator as we move towards 2024. The integration of Movingdots is running ahead of schedule on both the cost and operations side. From a cost standpoint, we have transitioned out to senior leadership and have ruthlessly executed on the necessary cost reduction initiatives across our broader business to meet our commitment to ensuring the Movingdots acquisition is adjusted EBITDA neutral on a run rate basis exiting the third quarter. Outside of our core business, we have good traction with our initiative to find the right home for our low margin, low growth in subscale business units in Argentina, Brazil and South Africa. We expect to share a favorable resolution of this initiative on our third quarter call. Before I dive deeper into our operational progress and outlook, I'll turn the call over to David to walk through our numbers in more detail. David?

Thanks, Steve, and good morning, everyone. To begin with, I will provide an update on the key strategic priorities that I called out on our prior call, which will provide helpful context to digest our second quarter financial performance. Priority number one is to accelerate our strategic transformation while staying within the limits of our current balance sheet. The acquisition and integration of Movingdots is the primary project that's consuming a significant portion of execution bandwidth in the second and third quarters of 2023. As a reminder, the acquisition provided multiple benefits, including $8.7 million in liquidity, a talented engineering team for Unity, complementary high-performance technology and an expanded presence in the EMEA region. On our last call, we committed to mitigating the impact of Movingdots business by driving down the EBITDA impact to breakeven before the end of Q3. We have successfully executed our $3 million OpEx challenge, complemented by an extra $1 million in cost reductions. I am pleased to announce that we have taken all necessary steps to achieve the upsized target of $4 million in savings with these costs scheduled to be eliminated from run-rate expense by mid-September. As expected, the acquisition was the source of significant headwinds in Q2 with an EBITDA burn of $1.2 million, plus an additional $450,000 in transaction and restructuring costs. Priority number two is to improve the underlying operating leverage of our business by implementing a common and scalable ERP platform across all geographies. As I noted on the Q1 call, rolling out NetSuite across our core businesses is a cornerstone in meeting the expectation that we expect an additional $10 million in run rate cost savings through the course of 2024. I am pleased to report the ERP project is proceeding according to plan with the rollout in Mexico scheduled for this month and the US expected to follow swiftly. Success in this project relies on creating tools for repeatable migration processes with the successful US rollout serving as a precursor for migrating Israel to NetSuite by year-end. More details will be shared on our third quarter call. Now on to our financial performance for the quarter, which reflects the aggressive steps we are proactively taking to transform the business and the EBITDA investments necessary to integrate Movingdots. Total revenue for the quarter ended June 30, '23 was $32.1 million compared to $34.6 million last year, with robust growth in service revenue from our strategically important core markets, offset by a planned decline in the hardware product revenue. Our high-value services revenues totaled $21 million, up 6% and 12% on an absolute and constant currency basis, respectively. Revenue mix continues to improve with service revenue standing at 66% of total revenue, up from 57% in the prior year. The decline in product revenue reflects our strategic shift towards becoming a SaaS software business, focusing on higher margin and strategic advantages. This transition contributed to a gross margin expansion of 50% in Q2 '23 from 47% in the prior year, driven by increased high-margin service revenue. Our operating expenses increased by $1.3 million to $19.2 million compared to $17.8 million in the same year ago period, with the increase solely attributable to the acquisition of Movingdots. Net loss attributable to common stockholders totaled $4.3 million or $0.12 per basic share. Adjusted EBITDA was $647,000. Pro forma for EBITDA loss from Movingdots of $1.2 million, adjusted EBITDA was $1.8 million, up $400,000 or 31% sequentially. Now turning to our results for the first six months of 2023. Total revenue was $64.9 million compared to $67.8 million last year, with continued robust growth in service revenue from our strategically important core market, again, offset by a planned decline in hardware product revenue. Our high-value services revenue totaled $41.5 million, up 8% and 15% on an absolute and constant currency basis, respectively, with continued improvement in mix with service revenue accounting for 64% of total revenues, up from 57% in the prior year. Gross profit margin expanded to 50.3% from 45.2% in the prior year period, driven by an improved mix of high-margin services revenue versus product revenue. Our operating expenses increased slightly to $37.7 million compared to $36 million in the same year-ago period, with the increase attributable to the acquisition of Movingdots, which added $2 million of incremental OpEx for the first half of 2023. Net loss attributable to common stockholders, inclusive of a $7.5 million gain on bargain purchase for Movingdots, totaled $780,000 or $0.04 per basic and diluted share compared to net loss attributable to common stockholders of $5.5 million or $0.15 per basic and diluted share in the same year-ago period. Adjusted EBITDA was $2 million compared to $2.7 million in the same period last year. Cash flow from operations for the half year was a positive $1.3 million, a $4 million improvement from the same period last year. During the quarter, we recommenced paying the ABRY preferred dividend in cash versus PIK and our balance sheet remains strong at quarter end with $22 million of cash and cash equivalents and a working capital position of $38.3 million. One final item to cover, we understand the impact the ABRY preferred instrument has on our current trading performance. We are focused on proactively addressing this issue and are making good progress on finding options to successfully resolve it by year-end. That concludes my remarks. Steve?

Thanks, David. As we articulated on our last call, our 2023 operating plan focuses on four key strategic objectives we are laser-focused on delivering. Objective number one is optimizing our OpEx base and operating structure to enhance profitability. As discussed through rigorous cost reduction management, we successfully reduced operating expenses by an additional $4 million annually in the last five months, allowing us to onboard Movingdots engineering capacity. While it may be easy to say, executing this brave change is a challenging task. I'm immensely proud of the team's exceptional skills and unwavering commitment, which enabled us to swiftly bring on board the Movingdots' industry-leading capabilities for the insurance, safety and sustainability solution markets. Additionally, we have rapidly expanded our talent pool in critical areas such as data science, AI, cloud architecture and data integration services. This initiative has also positively impacted our underlying EBITDA performance in Q2, and we expect it to support further EBITDA expansion as we drive growth in the second half of the year. Additionally, our midterm seismic shift projects, which include hardware rationalization and integrated global supply chain, a common ERP and shared service centers are progressing well and on schedule. These strategic initiatives are expected to result in an incremental $10 million of annualized EBITDA with tangible results beginning in early 2024. Objective number two is centered around driving robust organic growth in key regions, fueling high-quality recurring revenue expansion. As compelling proof of our efforts, we've achieved strong SaaS sales momentum in the US and Mexico. Our SaaS recurring revenue for North America grew by an impressive 16% in the first half of 2023 compared to the same period last year. Our industrial vertical remains very strong, and we have some great news to share in terms of new logo wins in the vertical in Q2, driven by our collision avoidance advanced pedestrian safety solution. PowerFleet has secured the following significant partnerships in Q2. DB Schenker, a global transportation and logistics provider, charged PowerFleet safety solutions replacing a key competitor. United National Foods, a leading health and specialty food distributor, selected PowerFleet for safety and compliance solutions. Wurth Industries North America, a leader in industrial distribution, opted for PowerFleet’s applications to address access control and compliance needs. Owens Corning, a material and products manufacturer, chose PowerFleet's pedestrian proximity detection for safety improvement. Moderna, a prominent pharmaceutical company, selected PowerFleet for its strong IT security and comprehensive capabilities to address access control and compliance challenges. In Q2, we also secured notable Unity platform-focused sales deals in the US and Mexico. These deals not only validate our strategy and mission-critical technology platform, but highlight our improved SaaS sales execution. Pride Group Enterprises, PGE, is a prime example of the holistic value Unity delivers. PGE operates across various industries with 35,000 vehicles and trailers. Initially signing up for 5,000 Unity subscriptions in June, PGE showcases Unity's power and value through four key points. First, land and expand. PGE has already utilized Unity to manage risk in their leasing and rental division with plans to expand the capability to other parts of their fleet. Secondly, device-agnostic ingestion, Unity's capability allows integration with third-party devices and OEMs, enabling complete visibility and harmonized data across all vehicles. Thirdly, integrated data hub, Unity serves as an intelligent enterprise SaaS solution, integrating PGE's operations into maintenance and analytics platforms through a single pane of glass. And finally, white label fleet management. PGE is collaborating with PowerFleet to offer a white-label enterprise application suite for their customers, built on PowerFleet Unity. While this is a detailed example, I thought it was extremely important to clearly demonstrate the power of the software platform that we've built and the unique value proposition it provides to the market. Other examples of new Unity partnerships include Ring Power, a leading Caterpillar dealer in the US, which expanded their relationship with PowerFleet to improve equipment maintenance and customer service, and Bridgetown Mexico, a subsidiary of the world's largest tire and rubber manufacturer, which also expanded their relationship with PowerFleet to monitor all of their third-party transportation suppliers utilizing the Unity platform to enhance visibility and productivity capabilities. We're experiencing a notable increase in in-brand interest in the US, in fact, doubling over the past six months for our safety solutions, contributing to a stronger pipeline for H2 2023. For instance, a strategic contract with a leading US soda bottler is close to finalization with an impressive total contract value of nearly $5 million. Advanced negotiations are underway with a major US manufacturer of agricultural machinery, aiming to introduce our second-generation pedestrian proximity detection solution, valued at a TCV of $2 million. As I alluded to on the last call, we have now secured a geographical expansion deal in the connected car space with a leading customer, deploying PowerFleet solution across 7,500 vehicles in Q4, amounting to a substantial $6 million TCV contract. In the FMCG market in Mexico, we continue to make significant progress also, expecting three major wins in half two 2023 for our Unity platform and related products. Our first strategic objective this year is delivering highly advanced enterprise software models to the market, all built on the Unity platform. We launched our second advanced enterprise application, sustainability, at the end of June. This module empowers businesses worldwide to drive green initiatives by modernizing and aligning their fleets with corporate, environmental, social and governance goals. As an integral part of our Unity Fleet Intelligence platform, the sustainability model offers a range of capabilities designed to minimize carbon footprint, enhance maintenance and fuel efficiency, comply with government mandates and reduce operational costs while accelerating growth. Key capabilities of the sustainability data powered application include visibility into the tons of CO2 emissions produced and saved by our customers' fleet, real-time identification of high and low emissions vehicles, enabling customers to reduce CO2 through timely maintenance or transition to electric vehicles. Ecoscoring and tracking emission-increasing behaviors such as idling per each driver, providing insights to improve driving efficiency and incentivize positive behaviors. Budgeting and planning, leveraging historical data on vehicle efficiency and ecoscoring to predict fuel and energy usage. In response to government initiatives, rising fuel costs and consumer expectations, more companies are prioritizing ESG and transitioning to EVs. We see this trend reflected in our existing customer base as well as our prospects. With sustainability, we continue to support our customers in their journey towards a greener and more efficient future. Objective number four is expanding our channels and routes to market to drive new growth opportunities. Following our acquisition of Movingdots, we are building up center of gravity in Europe and have recently appointed Heinz-Hermann Tiben as our SVP, Sales for Europe. Heinz has a wealth of experience and an impressive track record of SaaS sales growth delivery, which I personally witnessed across two businesses we worked in together in the European telemetry space. Our initial emphasis for the European market will be on leveraging our global accounts and our unique capabilities in industrial vertical. Secondly, building on the success of our industrial business in the US, we are expanding our distribution channel for industrial solutions in Mexico, both directly and indirectly through a dealer channel. We anticipate a robust performance in the second half in Mexico from this new channel. Furthermore, we are looking forward to announcing a major white label agreement in Q3 with one of North America's largest material handling equipment and solution providers. This agreement will enable us to offer our safety, productivity and optimization technologies to their extensive customer base. In summary, our core SaaS and profitability indicators for our go-forward business are increasingly positive, providing confidence in achieving our long-term strategic value creation objectives. Q2 marked a significant milestone as we completed the heavy lift on several transformation activities, allowing us to focus on tuning our SaaS growth engine in the upcoming quarters. We believe that all the heavy-lifting items we have now completed are the foundation for greater earnings potential, a more compelling business model and a lower cost of capital for our shareholders. In addition, we are confident that these trends will continue to drive greater investor interest in PowerFleet and support financing initiatives. That concludes our prepared remarks. Now I'll turn it back over to the operator for Q&A. Operator?

[Operator Instructions] Your first question for today is coming from Jaeson Schmidt at Lake Street Capital Markets.

Hey, guys. This is Max on for Jaeson. I saw the subscriber count up 9% year-over-year. I was wondering if you guys could break that out between existing customers and new customers? Thank you.

Yeah. Obviously, there's significant growth from new more so than there has been historically. But in terms of providing that level of transparency, that's not something we'll be doing at this point.

Okay. And then, looking out at the North American segment in Israel, you guys gave first half growth rates of 16% and 10%. I was wondering if you could share that growth for Q2 and your expectations going into 2023.

Yeah. So, the 16% was for North America. The 10% was for Israel on a constant currency basis. We did see an acceleration in growth in Q2. So, in terms of actually breaking it out, we're not breaking it out, but to give you a sense in terms of just how that is trending, that should give you good insight in terms of the trend.

And I think our overall view is, we expect those trends to continue. It's very solid growth. And I think both from our customer base and internally, we've really made the shift now that transition to SaaS, and we have very strong growth prospects through Q3 into Q4 and then into 2024.

All right guys. That's it for me. Thank you.

Thank you.

Your next question is coming from Gary Prestopino at Barrington Research.

Good morning, Steve and David, a lot to unpack here. First of all, as I read your press release and what you talked about, Movingdots is still going to be a drag on EBITDA in Q3, but you should be EBITDA neutral for all of Q4. Is that correct?

That's correct, Gary.

Yeah. And just to put some color on that, as we said on the last call, we were taking substantial actions in our business cut to cover. Those actions have been completed. We actually went a little deeper from $3 million to $4 million annualized. And those savings will just take a little bit of time to flow through as we obviously take the costs out through Q2 and Q3. So -- but yes, you're right. From Q4 onwards, we'll be EBITDA neutral, September.

Okay. Thank you. So, in terms of the Unity platform, you have two modules out right now. Is that correct? One you discussed and then one wasn’t -- what was the one in Q1?

That was the safety module. Obviously, you're hearing a lot in terms of our wins in the safety space. They're dominating our wins in terms of customer drivers to do so. So safety in the first quarter and sustainability in the second quarter.

Okay. And then what's the cadence for the rest of the year? Can you make that public?

Yeah. So, first of all, we're getting a lot of traction with the device agnostic ingestion and also with the integration into third-party applications. So, we've pivoted some resource and expense into really kind of scaling those because of the level of demand on both. So that's our priority number one. And that will be followed later in the year with more modularity around advanced fuel and also compliance.

Okay. So, as I look at what you reported here, which is nice that you've been able to break out everything, in terms of this core markets number, you still have not -- you still have these countries that you're in. You have not sold them or jettisoned them yet, right? You're planning to do that in Q3, as I recall from your narrative.

That is correct. So, we expect to give an update on the next call, a substantive update on the next call. If you look at our core margin -- sorry, our core territories, which is obviously North America, which is Mexico and the US, plus Israel and then our 2024 kind of added segment is Europe, then we are currently in terms of SaaS revenues at 16% growth year-on-year for North America, 10% for Israel on a constant currency basis. Our services gross margin for that core business is at 71% and overall gross margins at 53%. So if you think about where we're going to center our efforts, investments and focus, then those are the kind of metrics that we should be looking at for the go-forward business.

Okay. So -- and then, in terms of integrating Movingdots, you said you've gotten the senior management out. What other things are you doing there on the cost side in terms of integration that's going to help you get to EBITDA breakeven?

Yeah. So, all the actions are complete, and that was a realigning in terms of our development resources. We had a number of contractors around the globe, and we're kind of exiting those guys out and using the Movingdots resources for that. We've also put three Movingdots resources into senior leadership positions and made some transitions there. And ultimately then, we've driven other efficiencies across the business in terms of how we were running our European organization previously, where we've now got people in country, which has led us to the fact of now we've saved $4 million annualized. Those things are executed upon. The costs obviously have to flow out, and we need to realize that. But everything is being done in five months, which is where I reference I'm extremely proud of the efforts and the skill of our team to be able to do that in such a short space of time.

Okay. And then, just lastly, I mean, you had been reporting your total shares outstanding with the effect of the ABRY, I guess, convert. And this quarter, you haven't. Is there a reason for that? And what would be the shares outstanding with that convert exercise?

Yeah. Gary, let me get back to you on that. So I'm not so familiar with the history just given my tenure with the company, but happy to connect with you on that offline.

All I would say, Gary, there's nothing to read into it. So, nothing has happened, which has led to any change in our philosophy or in our reporting.

No, that’s fine.

Because we were paying the ABRY dividend in PIK versus cash, I know that does have an impact in terms of EPS count. So, I think we have been sort of [$0.04 if we were PIK and we're $0.01 with the PIK] (ph). So we're paying in cash. So that may be the issue. And again, I'm happy to connect with you offline.

Yeah, I think it's about 5 million shares or something like that. And then, lastly, is it possible? I mean, it was great that you gave subscriber counts for the quarter. Would it be possible to get what the subscriber counts were in Q1 and the year-over-year increase?

Yes, we can get that to you, Gary. The year-over-year increase is 9%. The sequential is [3%] (ph).

For Q1 on the subscriber accounts, that's what because you want to start doing like an ARPU number and stuff like that, and that's really helpful. So, the subscriber number for Q1, plus the year-over-year increase would be much appreciated.

Yeah. We will fix that for you.

Okay, thank you.

Thanks.

Your next question for today is coming from Scott Searle at ROTH MKM.

Hey, good morning. Thanks for taking my questions. Nice to see the growth on the services side of the equation. Maybe to quickly just jump in on the cost side, a couple of clarifications. David, are there any onetime charges that are in there, particularly on the cost of goods sold on the hardware front? It seems a little depressed this quarter. I know it's not an area of focus necessarily going forward, but just what should that look like if it starts to normalize, if in fact it does? And then, as it relates to Movingdots moving to breakeven in the fourth quarter, just one clarification. Is that really in reference to the cost-cutting efforts that you have ongoing? Or Steve, are you making a specific reference to the insurance vertical picking up?

So, I'll answer the last one first, and then David can take the financial ones. So this is around the cost exercise. So, ultimately, as you know, the couple of main drivers for us wasn't the revenue that came with Movingdots, it was the talent to bring in 30-plus highly skilled engineers to drive Unity and drive our insurance propositions, plus give us a beachhead in Europe. So, in order to accommodate that within our balance sheet, we've made those cut to cover, and that's the $4 million that we're referencing.

Yeah. And in terms of product margin, Scott, there's no one-time. So, one-time isn't really the major driver here. But what we are seeing is, we're seeing pressure in Israel. So, we're in the sort of position whereby our [indiscernible] costs are in US dollars. So, the bulk of the cost that go into products are in US dollars. Just given the political situation there, given the macro situation there, we're in a situation where to maintain market share, it is very challenging to pass those increased costs on to the end user. So, we think the most important thing to do for long-term value is to maintain share. So in essence, we're getting squeezed from a margin standpoint. And as I said, sequentially, the reduction in margins was concentrated in Israel.

Got you. Very helpful. And if I could follow up, the $10 million in incremental cost savings sounds like largely focused around some of the ERP integrations that you have ongoing. It sounds like that's a little bit ahead of schedule. I'm wondering if you could provide a little bit of color on that relative to your last comments.

Yeah. So, it is absolutely crucial. If you look at just the relative spend that we have, for example, on the G&A side of things, it is high, and that is reflective of, I would say, systems that work against us as opposed to for us. So, we're absolutely driving that. In terms of the time frame, I would say, it's not inconsistent with what we shared on the last call. That said, it is aggressive, but we want to pride ourselves on doing the hard things well and doing them on time. So we're driving towards that. So, the aim would be to finish across our key markets by the end of this year. That's consistent with last time. There's a lot of work to be done, but we have the right people doing that work and the right level of focus. In terms of the $10 million costs, the ERP specifically, we'll start seeing the benefits during 2024. So we'll be working towards that. But there's other sources of savings too, which I think Steve will walk you through.

Yes. So just additive to that, one thing we didn't mention, we couldn't get everything packed into the chat was, we've just completed deals with IONIX and Flextronics to outsource our contract manufacturing to give us far more efficiency in the way we manufacture and distribute our goods around the world, and that is ahead of schedule. So, we will see some of that start to come a little earlier. Plus, in terms of some of our shared service center work in Mexico, we've started aggressively moving, particularly because we are getting some price pressure in certain geographies. And therefore, we've accelerated some of that as well.

Okay, very helpful. And then, maybe shifting to the pipeline of the opportunity. It sounds like there's a lot going on there in terms of building that TCV. I'm not sure if I heard a number, you gave a couple of examples, but was there a TCV number in the quarter? And maybe a TCV pipeline number. I think last quarter, you talked about it growing 47%. I wonder if there's an update on that front? And if you could kind of highlight for us as well some of the ARPUs where they're trending? Obviously, I think they're going up. But when you start talking about safety, sustainability, what does that do into the blended mix of the ARPUs of new business that you're winning? And as we think about 2024, services grew 16% so far year-to-date. You're talking about accelerating as we go into 2024. How should we be thinking about services growth in '24? Thanks.

So, in terms of the pipe, it was up $40 million during the quarter -- net $40 million during the quarter in terms of qualified pipe.

In terms of ARPUs, then we are seeing, as we're doing the Unity deals, that 15% to 20% uplift range that we've talked about before, Scott. And I think overall, once we get into -- we're totally focused on our core markets. Then for 2024, that 15% range plus for overall services growth is something that we feel is highly achievable. Plus, we'll be layering in more growth from the European territory as well, which, again, the way that we're attacking those markets is ultimately with higher value, higher-quality hardware to software revenues, not the commoditized revenues that we've had within the hardware channels previously, which obviously allows us to tick up on the service side rather than on the hardware side. Ultimately, you can see a real shift in our services mix, which is all part of that SaaS strategy. If we layer on top of that, we're winning significant new logo business. We are bringing on the Unity platform with incremental fees in the different elements that we talked about, whether that's the device agnostic OEM integration side, whether that's the third-party application integration side, plus the modularity, which gives us the ability to have more advanced versions of the standard software. This is all ARPU expansion within our customer base. So, we feel very, very confident about that. The proof points are coming in across that strategy. And that's why we feel really satisfied with having done the transformation stuff early and fast and hard. We're now coming out of the phase that we talked about. We came and said on the call, this six months would be a lot of ins and outs and a lot of transition and change. Now it's about tuning the engine. Now it's about really bringing to bear the overall value that we create for our customers, in our numbers and our shareholders.

Great. Thanks so much. I will get back in the queue.

Thanks, Scott.

Your next question is a follow-up question coming from Gary Prestopino.

Yes. I just want to get back to the sales pipeline. You said you added $40 million. Is that sequentially or year-over-year?

That is a sequential number. So, net pipe grew by $40 million in the quarter -- on the TCV.

You were at $125 million. So, year-to-date, it's about $165 million net pipe?

It will be more than that. Again, the number we referred to last time was the increase in pipe. That was an increase in pipe number versus the total pipe number.

Okay. Thank you.

We have reached the end of the question-and-answer session, and I will now turn the call over to Steve for closing remarks.

I'd just like to thank everybody for joining us today. I think we're making significant progress. We've very much tried to have a very transparent view over the last six to 12 months, and we know that, that is complex in trying to understand and unpack everything that we're doing. It's hard for you guys. It's even harder for us in terms of making sure we keep the business moving forward. And I'm very, very happy with the progress that we've made. So thank you for your attention. We look forward to speaking to you next time. Keep safe, keep well. Have a great day. Thanks.