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SA operations boost Cartrack owner Karooooo in Q1

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Karooooo CEO Zak Calisto.
Karooooo CEO Zak Calisto.

South African operations lifted global software company Karooooo in the first quarter of the group’s 2022 financial year, contributing the lion’s share of subscription revenue.

The Singapore-headquartered firm, which owns fleet telematics firm Cartrack, says SA remains the main contributor to the group’s total subscription revenue, accounting for more than 70% in the first quarter of 2022.

Karooooo offers real-time mobility data analytics solutions for smart transportation and serves customers in 23 countries across five continents, supporting millions of subscribers.

The firm debuted on the Johannesburg Stock Exchange in April, becoming the third company on the bourse’s software sub-sector.

“This result is encouraging and corroborates management’s strategic decision to invest for future growth. At the end of the first quarter of 2022, SA had 1 064 005 subscribers, up 23% compared to the first quarter of 2021,” it says.

In the period, Karooooo notes, it focused and leveraged its position and well-established national distribution network locally, which enabled solid growth in the quarter, contributing to the robust financial performance.

Revenue and subscription revenue in its South African operations increased 28% and 25%, respectively, in the period under review, compared to the first quarter of 2021.

Zak Calisto, Karooooo CEO and founder, says: “We are delighted to report strong subscriber and subscription revenue growth for our first quarter, despite the ongoing operating restrictions imposed due to the pandemic.

“Despite the pandemic, our 2022 financial year commenced on a solid note as the strong growth in net subscriber additions continued.”

Overall, Karooooo achieved revenue growth of 17% in the first quarter of 2022, buoyed by the SA rand, which the company says significantly strengthened against the basket of currencies in which it operates.

“Subscription revenue growth was driven by Karooooo’s robust business model that delivered 21% growth in the number of subscribers to 1 366 470. On a constant currency basis, revenue grew 22% and subscription revenue by 20%.”

Karooooo delivered operating profit of R168 million for the period, 8% lower than the first quarter of 2021. In the comparable period, profit was pegged at R182 million.

Similarly, adjusted earnings per share, a non-IFRS (International Financial Reporting Standards) measure, decreased 10% to R3.90 in the first quarter of 2022, compared to R4.32 in the first quarter of 2021.

New customer additions contributed significantly to the first quarter 2022 net increase of 60 470 in subscribers (vehicles or other mobile assets on its platform), which it says is meaningfully higher than the first quarter of 2021, when subscribers increased by 7 032.

Looking ahead, Karooooo says, as a result of the numerous uncertainties associated with the ongoing impact of COVID-19, it is difficult to provide guidance with certainty.

However, management expects the number of subscribers to be between 1.5 million and 1.6 million at the end of the 2022 financial year, with subscription revenue of between R2.5 billion and R2.7 billion.

As for adjusted earnings before interest, taxes, depreciation and amortisation, Karooooo expects a margin of between 45% and 50%.

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