Vontier Corporation (VNT) Earnings Call Transcript & Summary

All right. We're going to get started again. We are really excited to have Vontier Corporation with us. With us today, we've got Mark Morelli, who is the CEO of Vontier and Anshooman Aga, who is the SVP and CFO. Mark joined Vontier in 2020 and Anshooman about 18 months ago. And so Mark, I'm going to turn it over to you for -- I know you have a couple of prepared remarks, and then we'll get into Q&A. Thanks for being here.

Well, thank you for having us. We're excited to be here. Perhaps you saw our earnings release last Thursday, we had the opportunity to highlight 2023 and give our first guidance for 2024. A very strong year for operational execution as well as -- it really, I think, demonstrated the portfolio transformation that's underfoot. It really highlights the power of the Vontier Business System or VBS, which is our operating system and our culture of continuous improvement that I think is clearly at work. And I think VBS fundamentally untaps the underlying growth potential as well as the margin expansion opportunities. I couldn't be more excited to talk to you about the end of the EMV cycle, which was 3 full years of headwind for our business. And so we will no longer be adjusting our baseline organic growth as we are now into 2024, we're going to only be talking about organic growth, and we're super thrilled about it. Our guidance for 2024 has clean organic growth, expanding margins as well as $450 million of cash flow for this year. A couple of comments about Vontier if you're not familiar with it. Vontier is a leading industrial technology company, serving about a $30 billion market. We call it mobility ecosystem that's growing at mid-single digits. The mobility ecosystem is the critical infrastructure of moving people, goods, data and energy, essentially, we enable mobility. And I think what's pretty interesting about this mobility ecosystem is that it's very growthy. There's a lot of investment that's going into it. At the same time, this ecosystem, I think, is unique to us because there's no company that has the depth and the breadth with our product lines and our offerings. So we're very uniquely positioned in this. And if you think about this -- the 3 segments that we have that we've disclosed and report along, there are 3 secular drivers that are underlying all of our businesses. So the first one is about the complexity of the mobility ecosystem. With that investment means that regulatory changes, consolidation, all those assets that need to be managed, we have the highest share with the leading players in that industry that are consolidating the space. And a major driver is how do they manage that complexity. Another major driver is about labor challenges. If you think about convenience stores, you think about fleet operators, think about repair technicians, labor challenges are pretty significant. And so the ability to manage that through the infrastructure. And then the third one is the energy transition, which is really a trilemma. That driver means that people are looking at sustainability, of course, but at the same time, they have to manage the cost of that energy transition and accessibility or access to security of energy. And so that means that's a multifuel future. So those 3 drivers are at work across all of our segments. And I'll say that we're making great progress on what we call the connected mobility strategy. That is our strategy to untap value, and it's around enhancing productivity for the folks that are in that mobility ecosystem. So with that, thank you.

It's very helpful, Mark, for that sort of overview because I was going to ask you about sort of connected mobility and the strategy. And maybe you can talk about how it is -- give us a little more color about how it's playing out here in '24. It seems like you've already come a long way since you separated from Fortive and sort of what's next in the road map as we go forward? And how does it support the sort of long-term growth of 4% to 6% that you're talking about?

So I think our connected mobility strategy, we've got great examples at work today. When you look at across our business, Teletrac Navman has TN360, DRB has Patheon or Invenco by GVR business has iNFX. We have an environmental business. We've launched a new TLS-450 automatic connected tank gauge, which leads the industry in vapor recovery. So we've got great examples on how we can connect, manage and scale the mobility ecosystem through these integrated systems. And I think -- let's just take an example with iNFX. If you think of the opportunity with -- in a convenience store environment where you have to manage payment of refueling that -- and also the connection with what goes on inside the store, the way that all of this is stitched together in a convenience store environment is there are dozens and dozens of workflows that have to occur with very low labor on site. And iNFX is a modular application-based way of micro services software where you can start not only facilitating payment, you can start adding, let's say, a fresh food service onto that and do a delivery to your curbside when you stop and either do a charge or stop and pick up gas and have that all accrue to the same loyalty program and occur on the same receipt and be integrated. So this is a real draw from not only a productivity perspective, but also from a consumer experience perspective. So we have lots of examples like this where we play in this mobility ecosystem with that depth and breadth, and we can start combining our offerings in a way that adds value to our customers.

That's great, Mark. And then you mentioned on your earnings call that you're relatively optimistic that your book-to-bill would be pretty close to 1 or at least could get over 1 at some point in '24. And it also seems like you kind of have a more normal organic guide [ 4% to 6% ]. You talked about it, I don't have to ask you EMV questions anymore. So -- but there are some cross currents, right? There's destocking still on a cover of your business, it's election year, interest rate is all over the place. So would you say your visibility is kind of average? Above normal? Below normal for '24?

So our book-to-bill in '23 kind of hovered right below 1 which should kind of hung in there even though lead times came down pretty significantly. And we think that bodes well because as we enter into 2024, I think we've got a lot of momentum with our secular drivers that are at work as well as our new product offerings, and we do a lot of channel checks around that. I'll let Anshooman chime in here as well. . But I think the fact that we've been able to manage through this and we're expecting an inflection above 1 on our book-to-bill sometime during the year is indicative of that. But I think more importantly, we accept orders on a relatively short cycle basis. But many of our customers have longer-term visibility into the space. I'll give an example like a Wawa or a Sheetz, they're clearly building their footprint out well ahead of where they actually order product. And these are the businesses we have majority share with, and they've been not as impinged in this interest rate environment because there's strong balance sheet, with an awful lot of cash and with very successful footprints. And so these are the folks that we have good share with or the majority share with, I would say excellent share. And these are the folks that are offering us that visibility.

Yes. And as Mark mentioned, we're having channel checks and customer conversation, he gave an example of the large customers continuing to build out on the multiyear plans. When we look at our channel checks, a lot of them do not only sell our products, but they also do construction around the convenience store. And a lot of them are sold out for the next months, they're booking in the back half of the year. So the pipeline is pretty robust for a lot of the products. Also, we look at leading indicators across our business. When you look at fuel margins, fuel margins remain very healthy. When you look at completed transactions inside the convenience store, we can access a lot of that data, those remain very healthy. When you look at the technician for our Matco business, the health of the technician remains very strong. They're at record employment, record wages. So there is strong momentum with our leading indicators with our discussions with the customers, with our distributors and channel partners. So overall, the market environment remains constructive for us. You did mention destocking, let me just clarify a little bit about the destocking. We had always said destocking was limited to less than 15% of our portfolio revenue. Part of it was the aftermarket business for a fuel side of the business, that's worked its way through. In Q4, we actually grew 10% in aftermarkets. What's left in destocking is in our environmental business, which is about $300 million globally, a little higher. And about 55%, 60% of that is North America, rest is International. There was no destocking issue in rest of the world. And in the U.S., it's really now limited to the West Coast of the U.S. channel inventories in the Midwest and the Eastern part of the country have worked themselves back to normal. So we're just talking about a subset of environmental, which will work its way through in the middle of the year. So not a significant headwind.

Anshooman probably to follow-up than is to ask you about your guidance for environmental and fueling solutions in '24. You got mid-single-digit growth, organic growth guided. I think that's higher than your longer-term algorithm of low single-digit growth in that segment. That's despite absorbing destocking. So what's going on there that's driving that strength? Is it international, innovation like, what's going on there?

There's good strength across the portfolio. So when you think about the U.S. dispensers or the North America dispenser business, that's very healthy. Mark talked about the large national and regional chains continuing to expand, and we have a very good market share with those customers. So as they continue to build out, we continue to do well in that business. Also, there's a lot of investment going in and refresh and rebuilds. So we're seeing the benefit of that. . Our aftermarket business that's continuing to grow well. We've seen double-digit growth in that business. Environmental, we've launched new products. TLS-450, it's the leading product from a vapor recovery perspective. It's the only product of its kind with CARB, California Air Resource Board approval. So good strength in that business. And then the international business, while it can be lumpy, we also see growth out there. So good fundamentals in that business for this year to come.

And I wanted to follow up. You guys have alluded to sort of new products a couple of times now. Like so maybe you talk about increased new product vitality, driving your growth relative to some of your competition. I think you mentioned in the earnings report, particularly at Matco that you've got a bunch of new tools out and you were watching sort of the balancing act between -- everybody is employed, but these are pretty expensive tools and there is inflation out there. So how do you think about new products? Can you keep up that Matco competitors that you have?

So the backdrop post spin has been how we also enhance our growth profile. So we spent a significant amount of time thinking about how one, we spend in the right areas for growth. I think you've seen that in a chart we showed in the earnings call last Thursday, and we doubled our new product development spend. We haven't doubled our total R&D spend, but focused on growth. And we, of course, have had a commensurate uplift with launching new products, some of which we've been talking about here today. And I think that, that is still work to do on that growth engine. We're not claiming complete victory. I think we can do also a lot better on improving the productivity of some of that spend and some of the drop through. But I think it's indicative where we spend a lot of time and we spend a lot of energy. If you're going to enhance your growth profile to get your spend up and more effective is going to certainly help there. I think to your question on Matco, that's really a function, I think, of our product vitality and our lineup for the year. What we do in Matco is every year -- so a 1-year product vitality is about 25%, which means that 1/4 of what we're bringing to market every year is new that year. And what we see is the auto technician has full employment, wage rates, which are easy to track are at an all-time high. Miles driven are also high. So the technician environment is pretty strong. The issue, though, is you've got to offer them something that's compelling for them to buy. And the complexity of repair is also very high. So if you can make it more productive for that service technician, then they will spend money and buy. And I think our lineup in '23 was a really strong lineup. We had a great power tool offering. We had -- our toolbox factory has been on the mend almost all year through the year, and that's high-priced items. And then we launched new Max 5 or diagnostics, which is also a high-priced item that sold pretty well. So I think it's really a function of having a good lineup. We're having our Matco Expo, starting this Sunday night and into early next week. So we're going to be talking about the garage of the future opportunities for more productivity, new lineups for 2024, excited about that. Of course, we're a little -- we're watching how does the consumer spend. Of course, the technician is also a consumer in the United States. They're living with higher costs at home. They are living with higher interest rates. So we're sure that's having some effect on their ability to spend, but the key is to how do we make life more productive for them. And if we're successful doing that, we'll continue a good growth path.

That's helpful, Mark. So this might be for Anshooman. Like at your Investor Day, you talked about consistently generating 30% to 35% incrementals. I know you told us you're guiding a 30% underlying incrementals in '24, ex the 50 basis points coming from your portfolio actions, again, some higher R&D. But you also talked at the Investor Day about continuing product line simplification, for rationalization. You are -- how do I say this, you're a Danaher Cub. So I always think of like you having DBS now VBS, like -- so why can't you do better than 30% underlying incrementals?

Yes, Andy, thanks for the question. We continuously focus on continuous improvement. It's part of our culture part of our DNA, and we're really focused around that. If you look at our Investor Day guidance of 30% to 35%, we're at the lower end at 30% despite increasing R&D spend 40 to 50 basis points as a percentage of sales. So if you were to strip that out, we'd actually be around 40% incrementals, but we also see this as an opportunity to leverage and build upon our industry-leading positions when you think of iNFX. We launched the product in 2023. We already have 15% of the market share with 2 very large wins with Shell and Chevron. We have a few pilots going on. But keep in mind, those initial wins are for the first set of micro services around payment, how do we expand that to other micro services? How do we continue to expand our share out there. When you think of our drive software for EV charging, we've been on a path to near doubling every year. We've significantly expanded. We have close to 55,000 ports under management. So how do we continue to expand share and continue to win our customers. DRB, we just launched our Patheon, which is a cloud-based offering. So we are the innovation leader. We are the market leader. So we are using this opportunity to expand. So strong margin improvement despite increasing R&D, which is the power of the VBS operating system, and we continue to do the best we can and hope to have another good year.

Very nice. And then maybe if I could dig in a little bit more into the segments. I think you suggested on the earnings call that you would only see flat to slightly up margin in mobility and flash margin and repair, that's despite each business growing mid- to high single digits and mid-single digits. I know you mentioned the increased R&D. Is there some sort of mix shift as well or something missing that's holding down each segment's margins?

No, there isn't. And maybe I should clarify it slightly because I guess it's different interpretations to different people. So when we talk about mobility technologies, flat to slightly up, it's flat to up 50 basis points.

5-0, you said or...

5-0. And our environmental and fueling business when I say margins are slightly up, that's around 50-ish basis points up year-on-year from an underlying perspective. So good margin improvement. Matco I said flat, it could be flat to up a little bit to 20 basis points. They're really the thing that could drive the margins higher as the mix we assume the toolbox and the diagnostics continue to sell well. And what happens is when you have these high ticket price -- high ticket items, we also have a financing receivable that we get over 5 years, but we book a reserve on the receivables on day 1. So it's dilutive from a margin perspective day 1. But then over the next 5 years, we get 3 to 3.5x the reserve in interest income. So over the 5 years, it's a very profitable business. But tier 1, it's a little bit of a mix issue because you've taken the reserves. So we just assume that. So overall, the businesses are all doing well, and we're proud of the progress each one of the businesses is making.

Anshooman, you got a spoon feed us. It's very helpful to give us some more color. So I want to open up to the audience in a second, but maybe give us a little more color into how you're viewing the global supply chain at this point, your ability to price versus cost. I think you mentioned that last year, you got 3 points of price. What's baked into your 110 basis points of margin improvement expected in terms of price risk costs for 2024.

Yes. So the supply chains have normalized a lot, lead times are back to normal and also the inflation environment has come down a lot. So good progress generally on the supply chain side. From a price perspective, obviously, as inflation has come down, pricing is coming down. We've assumed about 150 basis point price increase for next year, down from about a little over 3% in 2023. And one of the things we're proud of is we've been price/cost positive every quarter since spin, so we remain very focused on that price cost equation. So while we factored in 150 basis points of price increase, it's a dynamic number in the sense that we continuously monitor cost and adjust price accordingly.

Any questions from the audience? Anybody have a question? Right there.

You talked about some opportunities to improve some aspects of commercial productivity. Could you just unpack that topic with a little more specificity?

Yes. Let me add a little color there. So part of our connected mobility strategy internally, we refer to this as a 3-pillar strategy. So the first one is on optimizing the core. The second is expanding the core. The third is expanding into adjacent markets. But that optimizing the core, there is a whole bunch of work that each of the businesses are doing on productivity. Let me just give you a couple of examples. We have product line simplification efforts that are ongoing. A very visible example of that is we've had 32 retail fueling dispensers worldwide. We're cutting that number in half, and we're getting that to high single digits. We have had in our retail solutions business, more than 30 software platforms, and we're going down to high single digits. And so there's lots of work there on consolidating the electronics platform, getting that supply chain consolidated with a more concerted effort and taking a lot of cost out, a lot of SKUs out. We're taking about 1 million square feet out of our factory space as a consequence of doing a lot of these product line simplification. So it's probably one of our biggest EBITDA drivers. When you think about 2024, and where we're picking up a lot of EBITDA, we still are early innings on these programs, and they fare prominently on how we prosecute our Vontier Business System.

Any other questions? So maybe just going back to mobility for a second guys. Like so -- I think Anshooman, you mentioned [indiscernible], but it's been -- from what I can tell, a really good acquisition, the iNFX rollout has been productive. But you hinted up more to come with your pilot programs on the call and said that right now the 2 orders represent approximately 15% of the U.S. convenience store base. So would you say that there's a good possibility of more orders such as the Shell and Chevron owners in '24. And maybe if you think about the overall penetration, what do you think is a realistic percentage of U.S. convenience stores that can move toward your type of platform and over what time frame?

Yes. So there's definitely lots of potential with that business. We have pilots and discussions ongoing with a bunch of customers for iNFX. So hopefully, more announcements to come later this year. We've started the go-to-market with the large national accounts, and we're talking to both U.S. and non-U.S. customers. So that's really where the focus is, try and get significant market share with the large players. But ultimately, there's an opportunity because the pain points we're solving for the customers, the high-value problems we're solving go across the whole mobility ecosystem, whether you're a large national chain or a smaller regional local chain. So I think we have a very unique solution, and we have significant opportunity to drive growth out there.

And then also within mobility, like just focusing on DRB for a second. Growth has obviously been really strong since you bought it, maybe slowed a little bit in Q4 to mid-single digits. I think, Mark, you mentioned good traction on Patheon. I would assume, since DRB is more software than hardware, it's always going to be a little less cyclical. But could you give more color to how DRB is faring? And then stepping back, should we read anything into your guide of mid- to high single digits for mobility versus the longer-term high single digits? Is it DRB you're being a little more cautious for '24.

Well, I think what's happened in the car wash space is it's been impacted by rising interest rates. It was a little bit over the moon with sort of this fear missing out for car wash operators. Shortly after we acquired DRB, it had an outstanding run as a leader in connected smart hardware, application software and scaling on the cloud opportunities, it really took lion's share of those opportunities and which was outstanding. I think it's been a great acquisition for us. But quite honestly, it outperformed our investment case for it. And now I think we're more normalizing to that investment case. And we're seeing not as many tunnel build-outs. But there's still a lot of productivity benefits. We launched Patheon last year, which is a cloud-based software for control and operation of a car wash system, and it benefits folks with not only single-site operations, but also helps a lot when you have multiple operations. It helps with the labor challenges, it helps with the training, it helps with the management of that infrastructure for car wash. And they attract more consumers, they get more throughput through the car wash through that system. And so we think customers are going to get good returns with that. So we can actually go out resell our existing sites that we have with Site Watch, which is the name of that product line as well as we are going to experience some refresh and rebuild in the market as well. So we think that's a responsible guidance for DRB this year. It's been an outstanding acquisition. It's a great business. We think there is also a lot of opportunities across fertilize. We launched something called [ Flexpage 6 ], which is the connected payment system. It is going into the fueling infrastructure. We're going to cross-fertilize that into the car wash space. I think that represents a really unique opportunity for us. So I think there's a lot of opportunities where we're pretty bullish about it for the long run, but I think we're offering responsible guidance.

Mark, just a quick follow-up on that, like Site Watch, like how much of the business can be like replacement, if you may, as you go do that?

Yes. It depends on the operator's footprint, but the benefits around saving on labor and training, it might -- we have a leading offering with Site Watch, but it could take a good amount of time to train those operators on that system where it could take an afternoon with Patheon. And they experienced a very high turnover. So that's a big issue. You can do a lot of over-the-air update and management to have that system more agilely reflect what you want to have a promotion with a car wash offering as well as how you can manage the throughput through the car washes. So it's a cloud-based contemporary system that has a lot of the features and capabilities that somebody who's really concerned about the cost and the throughput of their car wash. So it really enables them to sweat their assets better. And so this kind of offering, even in this backdrop is attractive for folks that are trying to manage their assets. And so we're excited about Patheon. We launched it last year. We had pretty good uptake on it. This year, is more of a rollout year based on that initial offerings that were offered last year.

Got it. And then you guided to 9% to 100% free cash conversion in '24, which is good, but still slightly [ light ] of your longer-term 100%. I know you mentioned higher CapEx, which maybe you could elaborate on. But how would you characterize your working capital opportunity this year in terms of whether there's upside to get that to the high end of the range?

Yes. In 2023, we had a 97% free cash flow conversion. We've guided to 90% to 100%. We do have opportunities around working capital management. We're very focused around both inventory management and accounts receivable management and obviously, looking at payables. So we'll continue to drive that. CapEx, a little bit higher, really around growth CapEx in the Teletrac Navman business as that business turned around and started growing last year and the growth will accelerate a little bit this year. There's some initial CapEx that goes into that business as it grows, but also some productivity CapEx and just growth CapEx across our factories. So again, the hallmark of our businesses, good cash conversion. We've generated good cash flow over the past and we'll continue to drive significant free cash flow generation.

You guys have mentioned Teletrac Navman a couple of times. So maybe just update us like is '24 the year that's going to be firing on all cylinders? Or is that maybe a little much?

Well, I think Teletrac Navman has made tremendous progress in -- from 2020 when we took the business on, it was churning at 25%, and that shows how much technology debt was involved with that business. And so we're really pleased to say that it's post organic growth last year of low single digits. First time it had low single-digit growth in more than 5 years. And it's on the backs of high single-digit ARR. It's a SaaS business, a 95% SaaS business. So it's definitely on the mend. We've launched the TN360 platform, which is -- has launched electronic data logging or ELD in the U.S. market. It leads in Australia and New Zealand. It has a global footprint as well. So we've been pleased that we've made a lot of progress, tough to turn around our SaaS business. And I think we're demonstrating that turnaround. And hopefully, we can demonstrate some acceleration of that in 2024.

Awesome. And then, Mark, you mentioned very disciplined capital deployment strategy. We know you'll pay off the $100 million of debt. You'll be careful on bolt-ons. You talked about reaching the right hurdle rates. But give us more flavor on whether actually are deals out there that look reasonable versus the hurdle rates you're setting? And would you say your funnel of M&A opportunity is improving? Or is it kind of static or challenging right now? How might that impact the potential to buy back more stock?

So our M&A strategy is really led by strategy. We're -- I think this is a little bit of the maybe the Danaher, the Fortive process around it, absolutely strategy-led. We fall in love with markets. We don't fall in love with businesses. We're extremely disciplined as we think through those market segments. We take a look at a lot of things. We do cultivation, which is also a big part of that. And we pull the trigger occasionally. I will say that the DRB, Invenco drives, I think these are all great acquisitions. I think they show a significant amount of discipline around the deployment of capital. And I think they're showing a really strong return profile. DRB [ to our latest ] one, Invenco, will be a 20% return in 3 years. So we're highly return focused on our deployment of capital, generally speaking I'll let Anshooman chime in here as well. But I would say the backdrop to answer your question, last year, we took a shot of a couple of things, but they were not at the prices that we found to be really attractive to our return model turns out none of those businesses transacted in the market. And so we'll see what happens this year. We're doing work on this, like we always have. And as we find the right fits at the right return profiles, then we'll progress, and we'll see how this year goes.

Just as we've said in the past, our capital allocation remains dynamic, i.e., will always gravitate towards the highest return option. We don't allocate x percentage towards M&A, x percentage towards dividends, x percentage towards buyback. We look at where it's the highest return. We bought back 9% of the shares outstanding over the last 2 years in '22 and '23 at an average price of $25 a share. We did Invenco, which was a great acquisition with 20% return on invested capital in year 3. We paid down debt. So we'll continue to balance and have a balanced capital allocation, but again, it will be returns driven. And I wouldn't be surprised if there's a little more cash sitting on the balance sheet as we look to deploy. But we aren't going to rush and do anything or feel compelled to do a deal just because we have cash. We are disciplined. We are patient, and we have time on our side.

Anshooman, to your point, I mean, the stock is still pretty cheap at least my opinion, like so -- if you keep up that 4% or 5% buybacks, that's a pretty big deal, like so how do you sort of balance that?

Yes. We continuously look at that, right? And we just take the 10-K we just filed, there was a small subsequent event note where we bought back [ $19 million ] of shares in January. On a 10b5-1 plan, we also paid off $35 million of debt. So we took some of the Hennessy proceeds and redeployed those because we saw good returns on buybacks. So there will be some buybacks as part of the equation. We also believe our stocks are undervalued. When you look at industrials with our guidance from a growth and margin expansion, we're definitely approaching the higher end of the top quartile or the higher end of performance in terms of multi-industrials, but our valuation isn't anywhere near them, even the median of the multi-industrial. So we do think there's opportunity to continue to expand our multiple, but we also realize we have to continue to execute. The EMV is behind us. We're excited about clean growth. We're excited about clean margin expansion, converting that into a good EPS growth and generating significant amount of cash.

Mark, it seems like for your answer on my question on capital deployment that you're going to -- as you focus on M&A, you'll kind of keep to the same general areas that you've been sort of looking at and buying in, is that an accurate statement? And then would you say there's any clear white spaces still in, call it, the connected mobility strategy that you want to go after?

Well, I think the mobility ecosystem, $30 billion market is pretty fragmented. There's also -- I think there are white spaces within that, that are opening up where maybe we can cross-fertilize across so many of our operating companies. So when you say white space, it's not that we're going to go after a completely different business segment. I think you should maybe think about stuff maybe bolt-on-ish type things that could also be accretive from a number of angles. So I think we're excited about what we see. It's a good growth in fragmented space. I'm just looking for the right thing, picking through the right thing. I think we've shown we've been pretty selective. We had an option. Just to show you a little bit of the evidence there, we had an option to buy Tritium because we had a minority shareholding with an option to buy that. We forewent that. We could have bought that when that lease back. We obviously let that [ de-SPACed ]. We obviously led that de-SPAC. We sold out our shares, and you sort of see what's happened there. So I think we've been pretty discerning with what opportunities we've had in front of us. And we're excited about where we are. This space is a great space, great secular drivers. We got a lot of firepower with our balance sheet and our strong free cash flow. And really the depth and breadth that we have here is really impressive to us. And we're really excited about the customer pull we get, and we think there will be a lot of opportunities around that.

And could you update us on the evolution of the EV strategy, you mentioned Tritium. What's going on with Driivz? And how are you thinking about EVs moving forward?

Yes. So the EV journey has been really a great one for us. We have envisioned that folks are going to need a high reliable experience for electric charging and at the same time, they're going to need interoperability, which means you need mixed vehicles that are going in there with the use of different charters and different hardware. So we invested into the Driivz platform. And I'm really happy to say we've got about 55,000 plugs under management, which is one of the leading networks worldwide for high-speed charger management. And it's an asset-light model, meaning that we are doing the network software, and we provide software to charging operator. So a charging operator can be anybody that is a charge point operator like EVgo is a great example of that, and they need to make a decision they're going to write their network software themselves or whether they're going to leverage our software. So that's a great example. Other folks that are electing to be -- as you see the evolution, you see more people stepping forward and wanting to be a charge point operator. Circle K has elected to be their own, Shells elected to be their own. There's a number of folks here. There's folks in the U.K., a lot of folks in Nordics where we have leading share positions are saying, we sort of understand this, you want the consumer benefit to accrue to us. And as a consequence, we want to be our own network provider. It's charge point operator. And if so, they have to make a decision, are they going to write their own software or leverage our backbone to enable that. So that's how our models evolved. What's also evolved there is that we're backing into the energy management side because we find that the need for energy at these charging locations is pretty significant. And so we're backing into that microgrid around there with our Sparkion technology. And so we're doing some really exciting things on the energy management side as well. So clearly, an evolution there, fantastic growth, about doubling our reports under management every year. And then we're going to start cross-fertilizing that with other areas in the mobility ecosystem like payment and payment facilitation. So I think it's really taking shape. So we're really happy with the progress we're making.

I'll just ask you one more quick one, Mark. So this is a question I'm asking for every company. But what are the top 2 or 3 innovations and structural changes affecting your company over the next 5 years? And are there any emerging industry trends that are perhaps being overlooked in the current discourse?

I think the thing that maybe people overlook is when you look at the convenience store space and the investment that's going into it, it's happening with the folks that are consolidating the industry. These are the largest either regional or national or international players, they're making a lot of money. They're expanding their footprint and they're consolidating, and this is our customer base. We have majority share with these people. These are the folks that we offer the products and solutions that enhance productivity and automation based on these secular drivers, how they can manage their networks. And when you start thinking about that with fleet operators with that same trend, the mobility ecosystem is a very exciting place for something like us with that depth and breadth with that innovation bent to be able to provide these solutions to market.

Awesome. Mark, Anshooman, thank you very much for being here.

Thank you.

Yes. Thanks for having us.