Cartrack owner Karooooo sees massive subscriber growth despite 'difficult' Covid-19 period

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Karooooo CEO Zak Calisto.
Karooooo CEO Zak Calisto.
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  • Karooooo traces its beginnings back to 2001, when it launched its fleet telematics company Cartrack.
  • Karooooo - which also has operations in Europe, Africa, Asia, the Middle East and US - has increased its revenue by 17% to R626 million in the first quarter of 2022, up from the R535 million in the first quarter of 2021.
  • The Singapore-headquartered company listed on the US's Nasdaq in April this year, followed by an inward JSE listing after delisting Cartrack.

Cartrack owner Karooooo has seen a revenue increase of 17% in a tough first quarter, with South Africa accounting for most of its growth.

Like many businesses across the globe, the South Africa-founded software company has experienced challenges during Covid-19 pandemic, as more governments implement travel restrictions and lockdowns, while people spend less time on the road. 

Despite the tough Covid-19 period, Karooooo - which also has operations in Europe, Africa, Asia, the Middle East and US - has increased its revenue by 17% to R626 million in the first quarter of 2022, up from the R535 million in the first quarter of 2021.

The group traces its beginnings back to 2001, when it launched its fleet telematics company Cartrack. It has also managed to grow its number of subscribers by 21% to 1 366 470. The company’s new customers also increased significantly by 60 470 compared to the first quarter of 2021, which had an increase of 7 032. Most of the growth came from South Africa, accounting for more than 70% of the group's total subscription revenue of R606 million in the 2022 first quarter.

In his presentation of the quarter's results on Tuesday, Karooooo's CEO Zak Calisto pointed out that the first quarter of last year was the start of the pandemic and, as such a "very difficult time".

"[T]imes are still difficult for us ... But we've got a bit more used to trading in this current environment," he said. 

However, he said the last three first quarters have been good considering that the period is typically not Karoooo’s strongest because of holidays in different countries. Calisto added that as a result of the pandemic, customers are downsizing their fleets. But the group’s commercial customer retention is strong, at 95%.

"The car industry, which is considered to be quite risky, given Covid-19, is less than 1.1% of our base and our largest customer is less than 1.7% of our revenue," he said.

The Singapore-headquartered company listed on the US's Nasdaq in April this year, following that up with an inward JSE listing, after delisting Cartrack. And in just one month, it traded R1 billion on Nasdaq.

However, Calisto said the group has no short-term growth plans in the US.

"We are just … spread too thinly to go [and] tackle the US," he said.

This is different than in Europe, where the group is doing well and wins a lot of business over competitors, making it a market the group is looking to invest in for growth. 

"And I think that … probably the best solution for us, would be an acquisition or a merger in the US at a later time," he said. 

In the meantime, Karooooo will continue to expand in Asia.

Chris Logan, owner and CIO of Opportune Investments, said: "It was a commendable set of results against the background of the Covid-19 restrictions, which were far more intense than they [Karooooo] initially thought."

Logan said the group's subscriber growth would have been much stronger if there were no restrictions. And he attributed the company’s good results to its "heavy" investment on future growth.

He added that - as a shareholder in the company for the past six years - he was happy with its performance, but he would like to see its subscriber growth get to 30% once the conditions have normalised.

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