KAROOOOO, the New York- and JSE-listed group that owns 100 percent of Cartrack Holdings, continued to report strong subscriber and subscription revenue growth in the three months to May 31, despite ongoing Covid-19 restrictions, chief executive Zak Calisto said yesterday.
“Our 2022 financial year commenced on a solid note. New customer additions across a broad base of industries are at historical highs, demonstrating our ability to innovate and to provide a differentiated fleet management platform,” he said.
The company operates in a growing and under-penetrated global automotive market, coupled with a growing vehicle parc (or vehicle population) and customers seek digitalised software solutions to address higher operating costs, unproductive use of resources and inefficient workflows.
“We believe Karooooo remains well positioned for growth,” Calisto said.
He warned, however, that the outcome and spread of the Covid-19 pandemic and vaccinations was unknown, particularly in Europe, a market the group wished to grow in this year.
Despite this, the group was still showing growth of more than 20 percent, even though it was more difficult to achieve this in the current environment, he said.
“Our fleet management platform and vertically integrated business model differentiates us from competitors. Our focus on product development and distribution has led to our growth with limited industry or customer concentration risk,” he said.
In the first two quarters of the 2021 financial year, the group curtailed investment when the pandemic emerged, but it had entered a new phase of investing from November 2020, and in the past three quarters, the group headcount was increased by 761 employees.
The recruitment was focused on customer acquisition in South Africa, expansion in Asia and research and development (R&D).
“The contraction in operating margins in the quarter is in line with our growth strategy,” the group said in a statement.
In the first quarter, the number of subscribers was up 21 percent to 1.36 million. Net subscriber additions increased 760 percent to 60 470.
Total revenue increased 17 percent to R626m. Subscription revenue increased 15 percent to R606m. Operating expenditure related to sales and marketing increased 71 percent in the first quarter of 2022 as the group continued to enhance its sales and marketing teams and drive customer acquisition.
R&D operating expenditure increased 44 percent compared with the first quarter of 2021. General and administration expenditure rose 21 percent compared with the first quarter of 2021.
Operating profit of R168m represented an 8 percent decrease from the first quarter of 2021, and adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) of R275m, a 3 percent increase compared with the first quarter of 2021. The total initial public offering costs amounted to R85m, of which R36m was expensed.
“Karooooo has a history of consistent organic growth, scalability, strong earnings and financial discipline. The company has been highly cash generative, with most of its revenues recurring in nature and has operated with high operating and Ebitda margins,” the group said.
Karooooo shares closed 4.42 percent lower at R547.40 on the JSE yesterday.
BUSINESS REPORT