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Karooooo confident that it will meet all the targets of its restructuring plan

Karooooo, which owns 100 percent of Cartrack Holdings, will meet all its targets set out in its recent restructuring even though the challenges of the Covid-19 pandemic on the business had continued longer than expected, chief executive Zak Calisto said yesterday. Photo: Supplied

Karooooo, which owns 100 percent of Cartrack Holdings, will meet all its targets set out in its recent restructuring even though the challenges of the Covid-19 pandemic on the business had continued longer than expected, chief executive Zak Calisto said yesterday. Photo: Supplied

Published Jan 20, 2022

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KAROOOOO, which owns 100 percent of Cartrack Holdings, will meet all its targets set out in its recent restructuring even though the challenges of the Covid-19 pandemic on the business had continued longer than expected, chief executive Zak Calisto said yesterday.

Karooooo’s results for the third quarter to end-November 2021 showed total revenue up 22 percent to R720 million, following an increase of 37 percent to 164 385 net subscriber additions for the nine months to November 30.

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Cartrack is a leading global provider of an on-the-ground operations cloud that maximises the value of data by providing real-time data analytics and business intelligence reports.

It assists businesses in digitally transforming on-the-ground operations, including systems integrations, fleet administration, field worker management, video-based safety, risk mitigation, delivery management and environmental, social and governance compliance and reporting.

Calisto said in an interview that he was excited about the fast-evolving mobility sector, and he believed they were in an early stage of a large and long-term opportunity.

“Globally, we see a growing demand by small to large enterprises wanting to digitally transform their business to remain competitive,” he said.

He said due to the pandemic, they were constantly having to evaluate the trade-off between unit economics and accelerated investment for growth.

He said they saw a “few weeks” of good non-pandemic impacted growth in November, but the Omicron virus struck soon thereafter, bringing additional restrictions worldwide. He said pandemic-related restrictions were still negatively affecting business in Asia.

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The impact was slightly less in Europe, while South Africa was, at this point, the easiest market, despite the economic headwinds facing the country.

“We are well-positioned to materially increase our spend on sales and marketing to achieve even stronger growth given that our Lifetime Value of a Customer to CAC ratio (a non-IFRS measure) is greater than nine times,” he said.

Year-to-date, revenue increased 23 percent on a constant currency basis, “and our strong customer acquisition is encouraging given the ongoing uncertainty in policies dealing with the pandemic,” he said.

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“Our growth expectations for the year remain unchanged as set out in the outlook upon listing on the Nasdaq in April 2021.

“Financial discipline in capital allocation and cash management had allowed for a robust, unleveraged balance sheet and strong cash position, with ample capacity to fund growth, he said.

“Balancing our significant and continuing investment for growth whilst exercising caution in allocating capital during the pandemic has been top of mind in this financial year, and we believe we have positioned ourselves favourably for the long term,” he said.

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Calisto said the scale of data on their platform was vast and growing.

“We contextualise billions of data points on a daily basis enabling us to provide differentiated and innovative insights to customers which enriches their day-to-day operations,” he said.

“We believe that there is a significant economic upside to the large data pool that we have built and continue to build. Further, we believe that there is significant untapped network effect value for other much-needed related services given the size of our subscriber base,” said Calisto.

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BUSINESS REPORT ONLINE

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