Good afternoon. And welcome to the I.D. Systems First Quarter 2018 Conference Call. My name is Daniel, and I will be your operator for today’s call. Joining us for today’s presentation are the company’s CEO, Chris Wolfe; and CFO, Ned Mavrommatis. Following their remarks we will open the call up for your questions. Before we begin the call, I would like to provide I.D. Systems’ Safe Harbor statements 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 I.D. Systems’ 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 2018 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 economics 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 event or circumstances. Finally, I would like to remind everyone that this call will be made available for replay at the Investor Relations section of the company’s website at www.id-systems.com. Now I’d like to turn the call over to I.D. Systems CEO, Mr. Chris Wolfe. Sir, please proceed.

Thank you, Daniel. Good afternoon, everyone, and thank you for joining us today. First let me apologize for my voice as I've fighting a cold. So please bear with me. After the market close, we issued our financial results for the first quarter of 2018 and a press release, a copy of which is available in the Investor section of our website. Following the foundation building year in 2017, the first quarter of 2018 marked a strong start to the New Year, both operationally and financially. From a financial standpoint, the quarter was highlighted by a solid top line growth of 20% sequentially and 67% year-over-year. This achievement was driven by solid contributions across our business, particularly are Connected Vehicle Solutions business, which we've historically referred to as rental fleet. During Q1, we shipped over 13,000 universal telematics platform or devices to Avis Budget Group. This milestone demonstrates our ability to rapidly certify new vehicles and scale production. Today we have over 27 unique make models and years being shipped out to Avis as we speak. In addition to our success in our Connected Vehicle Solutions business during the quarter, we also realized strong U.S. sales in our core industrial truck management business. On top of this, we continued large-scale roll outs of PowerFleet solution several of the world's largest automotive manufacturers. Also during the quarter, we re-labeled our trailer and asset management business to Logistics Visibility Solutions or LBS. We believe this name better represents the value and enhanced capabilities we provide and will be providing to our customers in the near future. This business continues to be a stable and profitable contributor and I will talk about our plans to accelerate growth in this segment, in this business and other operational highlight shortly, but first I would like to turn the call over to our CFO, Ned Mavrommatis, who will provide more details and insights into our financials for the quarter. Afterwards, I'll return to talk more about our operational progress and outlook, Ned?

Thank you, Chris and good afternoon, everyone. Turning to our financial results for the first quarter ended March 31, 2018, as Chris mentioned, our revenue for the first quarter increased 67% to $13.4 million from $8 million in Q1 of last year. The year-over-year increase was primarily due to higher Connected Vehicle Solutions revenue and industrial truck management revenue. Breaking down revenue by source industrial truck management revenue was $7.6 million an 86% increase compared to $4.1 million in Q1 2017. Logistics Visibility Solutions revenue was $3.5 million compared to $3.7 million in Q1 2017 and lastly, Connected Vehicle Solutions revenue increased to $2.3 million compared to $178,000 in Q1 2017. Our gross margin decreased to 48.3% from 51.9% in the same period a year ago. The decrease in gross margin was primarily due to the delivery of Connected Vehicle Solutions hardware to Avis, which has a lower margin. However, the service revenue for those units has higher margins, which will lead to higher recurring revenue and higher margins in future periods. Selling, general and administrative expenses for the first quarter of 2018 were $5.7 million compared to $4.7 million in Q1 of last year. The increase was primarily due to the inclusion of expenses from Keytroller, which were absent in the same period a year ago as well as higher marketing expenses. Research and development expenses for the first quarter of 2018 were $1.7 million up from $1.4 million in the same period a year ago. The increase in R&D expenses was due to investments in new product development. GAAP net loss for Q1 2018 totaled $990,000 or $0.06 per basic and diluted share. This was an improvement from a net loss of $1.9 million or $0.14 per basic and diluted share in Q1 of last year. Excluding stock-based compensation, depreciation and amortization, foreign currency translation losses and acquisition-related expenses, our non-GAAP net loss for the first quarter of 2018 total $105,000 or $0.01 per basic and diluted share. This was an improvement from non-GAAP net loss of $1.1 million or $0.08 per basic and diluted share in Q1 of last year. We ended the quarter with $14.3 million in cash, cash equivalents and marketable securities and no debt. Prior to turning the call back to Chris, I want to mention that we will be presenting at the Oppenheimer Third Annual Emerging Growth Conference in New York on May 15, the B Riley Investor Conference in Santa Monica on May 24 and the 2018 Ladenburg Technology Expo in New York on May 31. We look forward to seeing you guys there. That concludes my prepared remarks. Chris?

Thanks Ned. When I joined I.D. Systems as Chief Product Officer in July of 2016, my priorities were to ensure our product line up and roadmap remain best in class and then ensure a successful delivery and implementation of our technology to take the company to the next level. Our steadily improving financial and operational success is a result of our innovative and expanding product portfolio as well as our heightened focus on delivering high-quality products. As some of you might recall, a key product launch last year was our release of our next-generation fleet management software called Vision Pro and analytics platform PowerFleet IQ. The new SaaS-based product was well regarded by the industry generating strong demand and interest by customers. In fact we now support more than 150 customers and 5,000 vehicles on Vision Pro. Also during the first quarter of 2018, we bolstered our FleetView IQ capabilities and functionality by completing integrations with SAP in Kronos. These enhancements evolve the platform to offer end-users a more complete view of safety, vehicle use operator productivity and it solidifies our platform's position as an industry leader. Also during the first quarter, our Keytroller division introduced a new class of industrial truck telematics platform and we currently call that the 106. We introduced that at LogiMAT in Stuttgart Germany. This is specifically designed for small and midsized fleets for use in manufacturing, distribution, logistics and retail centers. The 106 offers a perfect blend of size, ease of installation, ease-of-use and value. Most importantly, the system does not require complicated IT support as it operates over Bluetooth directly to any iOS device. The 106 gives site managers a piece of mind knowing that only certified operators are using their equipment and make sure they did use a required safety checklist and…

Thank you. [Operator Instructions] Now our first question will come from Jaeson Schmidt with Lake Street Capital. Please proceed.

Hey guys, thanks for taking my questions. Just going up your comment on the Postal Service Chris, just curious if you're seeing any pricing pressure overall within the VMS segment?

No, we're not. To be honest, we do. We are surprised by the loss especially to this competitor because we typically don't see this competitor and play at any enterprise class deal and more than that we usually are taking, replacing their units in the field.

Okay. That's helpful and then wondering if you're willing to give out how much Keytroller contributed in the quarter and if not, just directionally, how that business has been tracking ever since you've taken it on?

We don't break that out, but what's great about that business and I can let Ned add into this more specifically, but the two teams and the way we've set up our insight sales is really to as we go in blanket and market our products, we actually funnel the deals to where it makes sense. And what's great about that is we've seen an uptick in Keytroller sales, simultaneous with our VMS sales because again I think the overall market awareness of our two companies being together and also the credibility now that Keytroller has being part of a larger corporation, but we're phenomenally excited and happy with the progress today.

Okay. And then, Ned, just looking at operating expenses, I know with these new product and platform launches, you guys expected them to be relatively elevated here in the first half. How should we think about OpEx trending in the back half of this year?

Yes Jason. The SG&A expenses should remain flat at the Q1 level. R&D was much higher in Q1 as we were finishing a lot of the development. We should see our R&D starting in Q2 and beyond to go down to the $1.3 million, $1.4 million per quarter.

Okay. Perfect. And last one for me and I'll pass it along. What was recurring revenue from the VMS segment in Q1?

$1.2 million.

All right. Thanks a lot guys.

Thanks Jason.

Thank you. And our next question comes from Josh Nichols with B Riley FBR. You line is now open.

Yeah, I was just wondering, good to see a lot of Avis UTP and it's going out the door. One question I did have though was do you know approximately how many of those units have been installed at this point?

Yes, it's like it changes daily because they're basically installing it over 60 locations. We actually have a nightly call, but I think it's well over 10,000 been installed or close to 10,000.

Oh, that's a very high percent and good to hear. I was going to ask also, so with the release of the 106 and now the company expanding to target some of these mid in and smaller tier opportunities, any progress and updates you could give us regarding the company's -- regarding the expansion of the company's distribution network to really leverage some of these smaller players.

Oh, what's great about the Keytroller acquisition was the fact that they had 500 dealer relationships already. So that's the primary channel for the 106 platform, but in Europe what's even better about the 106 and the reason we launched it in Stuttgart, we think there is a lot more opportunity in Europe because that way we can go through visual distributors there who speak the local language and it's a cultural sales process specifically in the construction equipment or in the material handling equipment space. So what we're going to do in Europe and specifically distributors in every country as well as territory that makes sense.

And then last question for me, with the Keytroller acquisition, it appears to have gone quite well, the company has some scale now and a much better position within the market. Just wanted to get your high-level thoughts about how you think about M&A from this point going forward and what are some of the key things you look for if you're interested in doing any potential acquisitions?

Yes, the answer to that is we do look for M&A continuously. So I think last year would prove to us that we could do it if we do it correctly. So we're looking at very similar type of things where they can either give us a channel, give us product. Keytroller gave us a lot of things, gave us talent, gave us great people, gave us a channel, gave us the product mix. Now if you look at connected car,, it's -- what can we do beyond the Avis program? We're definitely looking in that space and if you look at the what we call the logistics visibility group there's obviously many things that we can do in that area as well and that's my background being from where I've come before. So actively looking and actively entertaining options in all three segments and all three businesses.

Sounds good. Thanks Chris.

Thanks.

Thank you. And our next question comes from Glenn Mattson with Ladenburg Thalmann. Please proceed.

Hi, good afternoon. Curious about the relationship with Avis. As I recall, I think it was towards the end of June was when they perhaps would need another order before exclusivity run out. Is that still the case and I guess that's not too far off at this point. So have you begun discussions there on that level or anything like that?

Oh absolutely, yes. So discussions are ongoing and it's kind of interesting. Everyone is so focused on the deployment that trust me, it's not being forgotten and all I can say is it's actively being discussed as we speak. It's an ongoing process.

Yeah. How important to them to maintain that exclusivity? Is it a factor that's going to push them towards putting a deal together faster or is it on the backend of their concerns?

I in my conversations with Avis, it's always been a phenomenally important aspect of our relationship. That being said, it has that changed, I think that's a good question that you could broach to them. What I do say is that from our perspective, either way I think it's a win-win. Obviously we love Avis and the work we've done together I think we were working hand-in-hand right now. I think they're phenomenally happy with the rollout as far as it's going because we have these calls every night. They are operations people, that's where the rubber hits the road. It's not, once it's out of IT and out of the technology group hand, it goes operations and right now, their operations people are very happy with the product.

Okay Yeah. Good, it sounds like it's going well. That's it for me, thanks.

Thank you.

Thank you. And our next question comes from William Gibson with Roth Capital Partners. Please proceed.

Hi Chris. Regarding the three new LBS products, is that a fourth quarter introduction or setting the impacts revenue this year? What's the timing there?

Our target for that is actually the American Trucking Association in October. There's a huge industry conference and so all programs are trying to dovetail for that launch, which is in October. Hopefully by then, we'll definitely in field trials already with some of the products. We'll be in field trials with all the products by then and we have large-scale announcements at that time. It's too early to tell, but our goal is to have a major launch in October.

Okay. Thank you.

Thank you. [Operator Instructions] Our next question comes from Dan Weston with Westcap Management. Your line is now open.

Yeah hi. Good afternoon, guys. Congrats on a great quarter. First on the Avis shipments they were a lot stronger than I would've expected and correct me if I am wrong, but did you have some kind of a big push towards the end of the quarter where they were able to accept more units than they had previously anticipated?

No it's interesting, We actually have a backlog right now that we're working through to ship. We were surprised initially when we went with Avis, we thought they were going to ship to maybes 10 to 17 distribution centers and what I like about Avis's model now and the ease of the product, it says a lot about the ease of the product installation as they're shipping it now to 60 plus locations. So it's just a magnitude of the -- it's kind of a shotgun approach of getting the units out there I think is what's going on.

And you're hearing some of the field in terms of installation, you're not receiving a whole lot of technical support or specific issues to installation I am assuming.

It's a typical curve at the beginning we did. You people ramping up to learn. Things have calmed down. Now it's kind of moving and now it's just periodic questions and we do feel quality audits and help them out as much as we can, but there are more or less on their own, which is again, we're helping them every way we can, but the installs are going up and that's what you like to see. It's just the cost of progress.

Yes, it's phenomenal. Switching to the 106 product, I got on the call a little late, did you detail any of the customer feedback that you received from Stuttgart when we launched there and maybe you can give a little color in terms of what you're hearing from the field?

It's again the initial feedback is phenomenally positive, especially from not just the end customer, but the dealer and the distributors. So the feedback from the distributors and dealers is like if you've ever implemented a Telematics product in a warehouse or in a manufacturing facility, it's always a complication of dealing with the IT group, getting it on the local area network, passing all the security requirements. And what this product does it's kind of like a crawl walk run approach. You can take our product, install it and they love -- the dealer's love this because now it's like I can install this product. I don't need to get IT involved. I can actually get an up and running application to get 80% of the benefit at the site level. Now if I want to go to the enterprise class level, then I just turn on the Wi-Fi and then I have to handle the IT and integration aspects, but so far the feedback has been phenomenal because they just think it's going to be a lot easier implementation and that's what's key in this. So that's usually where the hurdles are at the beginning of adoption is right up front.

That's great. Ned, would you mind going through the 10% customers for the quarter please?

Sure. Avis was the big customer in the quarter with 17% of revenue. Toyota significantly contributed to revenue in the first quarter. They were 16% of revenue and then Walmart was 12% of revenue.

Wow, that's really interesting to see Toyota at 16%. Are you able to detail, which segment of Toyota that represented?

It was all of the above. I would say we worked with the Toyota manufacturing, parts and distribution as well as the channel.

Got it. And then the USPS deal, sorry to hear about that, in terms of the units that you already had installed, were you receiving recurring service revenue on those units like today like the last quarter and will those go away?

No, we were not.

Okay. And then lastly Chris on the logistics visibility solutions and products, I know it's a little early, but it sounds like you may have a new target market in front of you that looks pretty big. Is there any color that you can give us in terms of what features you anticipate to have on these products, from those customers?

The only teaser I can give you because I literally can't go beyond that is there is a literal and figurative meeting in the visibility part.

Okay. All my other ones have gotten answered. Thanks very much and congrats again.

Thank you.

Thank you. [Operator Instructions] Our next question comes from Shawn Boyd with Next Mark Capital. Your line is now open.

Good afternoon. Thanks for taking the questions.

Hi Shawn.

Just real quick on Avis, if you get the cars here and we talk about getting a potential additional order for that exclusivity deadline end of June 30, how would that, how should we think about that in terms of timing on when initial shipments would start to roll out? Would that be have to kind of lead times with this first 50,000 had or it's something much smaller, I would assume it would be kind of additional business would be much smaller, but if you could just help us on that, it would be great.

The only thing I can give you on that is they have a major in fleeting every spring of brand-new vehicles. So although the in fleet throughout the year, so again that's what we're living through right now is this meter including cycle. So let's say we get this order in June, my only guess would be a lot, large part of those units would probably go in the next spring, but sure some could go in the fall in Q4, but we have not gotten a hold of their in fleeting schedule after this current tranche.

Got it. Okay. And then on the -- on Toyota, can you just help clarify the business with Toyota and where, how you anticipate the growth of that beyond the next couple quarters moving into 2019.

Well, the Toyota business again as I think Ned mentioned is comprised of like literally four different components and organizations within Toyota. There is additional plants within Toyota especially globally, that's potential, but we have to work. It's really a site by site, plant by plant sale. Then there's the Toyota channel, which is they're actually reselling our product is T-Matics and they are a phenomenal channel partner. So again we don’t really have visibility into all that currently, but again I think what we've seen last year has been great and then obvious our first quarter and so I just see the relationship there growing in the quarters ahead. So…

Got it. And the solution that they're selling, is it only your solution that they're white labeling or do they have any kind of competing proprietary solution?

I believe in Europe, they actually have their own lower end solution that they white labeled as well, but actually in the United States where they are only Telematics solution.

Got it. Okay. Last thing on the gross margin, with the mix shift here toward heavy product revenues especially the Avis rollout, I get the margins coming down. I'm guessing that we should think about those being down again in the June quarter given that you're shipping an even higher hopefully shipping at even higher number of units to Avis this quarter.

That is correctly. Gross margins will be impacted in the second quarter as well because of the Avis deliveries. Now what's great about that starting in Q3, those 50,000 units are going to start contributing to high margin recurring revenue. So we expect in the back half of the year, not only for the gross margins to increase, but our overall recurring revenue.

Got it. And at that point just to kind of put a point here, we're talking low 50s Ned?

That is correct.

Okay. Thanks and keep up the good work gentlemen.

Thank you.

Thank you.

Thank you. And at this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Chris Wolfe for his closing remarks.

Thank you for joining us in today's call. I especially want to thank our customers, employees, partners, investors for their continued support. We look forward to updating you on our next call, operator?

Thank you for joining us today for our presentation. You may now disconnect.