Cartrack's revenue shifts up a gear
Cartrack reported accelerating interim subscriber and revenue growth, with the South African operations showing a particularly good performance.
This as the company this morning published its financial results, for the six months ended 31 August, with headline earnings per share (HEPS) growing by 25% to 57.8cps and total revenue rising 22% to R766 million.
The telematics company, which operates in 24 countries and on five continents, is a provider of mobile asset management, asset recovery and workforce optimisation based on a software-as-a-service platform.
"Cartrack has delivered robust subscriber and annuity revenue growth. This is primarily driven by the surge in demand from business for our software-as-a-service platform and our ability to process data," says Cartrack global CEO Zak Calisto.
"Demand from consumers for our Stolen Vehicle and Recovery, as well as Emergency Ambulance services to assist in accidents, is now exceeding our expectations."
Cartrack grew its overall subscriber base by 28% to 849 772, an acceleration of the already robust compound growth rate in subscribers over the past six years of 21% per annum.
"The growth bodes well for future revenue generation; 73% of the subscriber base joined Cartrack in the past 36 months, whereas the average life cycle of customers is more than 64 months," the group says.
Annuity revenue increased by 27% to R710 million, in line with the strong subscriber growth, and now represents 93% of total revenue. Operating profit increased 31.6% to R263.4 million and the group declared an interim dividend of 18cps. Earnings before interest, tax, depreciation and amortisation increased by 29%, to R383.9 million.
The South African segment delivered particularly strong results, with annuity revenue increasing by 26% to R518.8 million and subscribers up 30%. The company says primary contributors to this organic growth were the realisation of a strong sales pipeline, investment in operating capacity and an effective distribution strategy.
Cartrack said the South African market remained underpenetrated, in both the corporate and consumer segments, despite SA having one of the highest telematic penetration rates in the world.
"We are also deploying a significantly upgraded proprietary customer-centric platform in SA and the new platform will allow us to improve operational efficiencies to manage the current growth. We therefore expect to deliver stronger bottom line results in the next 18 months," Calisto adds.
The subscriber base in Africa decreased by 2%, while annuity revenue increased by 7% to R50.5 million, primarily because of a stronger rand. Meanwhile, the European segment delivered subscriber growth of 23% and annuity revenue increased by 28% to R67.3 million.
"Europe presents lucrative growth opportunities to provide telematics offerings and related value-added services, and Cartrack is well-positioned to capitalise on these opportunities."
Cartrack says Asia Pacific has, in a short space of time, become the second largest segment in the group based on revenue contribution, with annuity revenue up 54% to R71.7 million and subscriber growth of 43%.
"The market in this segment remains considerably underpenetrated due to fragmented market participants delivering entry-level telematics offerings. This trend presents Cartrack with the opportunity to utilise its advanced and more sophisticated, reliable products and customer-centric services to gain market share."
The group says its investment in the US to date has largely been in research and development, and this is pivotal to Cartrack's rapid expansion in the telematics industry.
"Cartrack has been experiencing delays in this region, but the good news is that the company is now well-positioned to roll out further in the US and capitalise on the '3G sunset' that is expected to occur in 2020. The vast majority of competitors' existing subscribers are currently using 3G devices which will soon become obsolete and will require a replacement technology."
Calisto says companies, governments and consumers are increasingly relying on telematics data to optimise efficiencies and quality of life, and he is highly optimistic about Cartrack's future.
"In partnership with two of the world's leading companies, Cartrack has been experimenting in establishing smart-mobility as part of our business model by offering pay-as-a-service transportation. The success of this development has reconfirmed Cartrack's commitment to an eco-system platform for connected-vehicles that is vehicle brand agnostic, in the belief that it strengthens our ability to provide decision-useful information to customers whether they use original equipment manufacturer or third-party telematics devices," Calisto concludes.