Karooooo, the holding company for vehicle recovery and fleet management group Cartrack, says it has begun work on integrating the services of its first acquisition since listing in New York, as the company looks to build its business beyond vehicle telematics.
The group, headquartered in Singapore, is positioning itself as a leading global mobility software-as-a-service (SaaS) platform that provides real-time data analytics to the transportation and logistics sectors.
Having traditionally competed locally with firms like Mix Telematics and Altron’s Netstar, Karooooo — now valued at $1.1bn (R16.88bn) — is looking to extend its mobility business using data analytics and artificial intelligence.
The group is using its capabilities — learned over a decade of being in the telematics business — to create an all-in-one logistics and mobility solution, group CEO Zak Calisto told Business Day on Wednesday.
In addition to its experience, the company recently acquired local logistics start-up Picup Technologies in September. Its capabilities in areas like warehouse, delivery and warehouse management, together with field services are being integrated into Karooooo’s platform.
“In January we started the whole integration,” said Calisto. “Part of it was already integrated because they’d been working with us for three years. Now we’re bringing that whole platform onto our platform. We’re making it one big platform.”
Karooooo bought a 70.1% in the cloud-based logistics platform for R70m, as a way to beef up its software offering. In essence, Picup uses a network of drivers and delivery partners — similar to Uber or Mr D Food — to offer courier and other delivery services to businesses.
Karooooo says Picup simplifies transport operations and helps mitigate the risks associated with logistics, specifically in relation to meeting tight delivery time frames.
Through its network, the group is also leveraging data on drivers, bringing vehicle buyers and sellers together through its Carzuka marketplace, while also helping clients to find deals on insurance products, as additional revenue streams.
But as the work to build more services into the platform continues, Calisto is confident that Karooooo does not need to rely on acquisitions for growth.
“This is the first acquisition that we’ve done. Traditionally we’re a vertically integrated business. Even if you look at our internal systems, the way we run the business, that’s all been proprietary software.”
Calisto said the acquisition came about after working with the company for years, understanding what Picup was working on and realising the value of combining their efforts onto a single digital platform.
“That’s what made us buy the asset and integrate it ... I don’t believe we are wired to grow by acquisition,” Calisto said.
“We’re not against it, but we’re certainly not on the trail for acquisitions to grow ... we’ve got enough tailwinds to get the growth that we want organically,” he said.
This comes as Karooooo says it maintained its subscriber growth streak in its third quarter to end-November, though its profits were under pressure as it ramped up its sales and marketing spend.
Total revenue increased 22% to R720m in the three months to end-November, the group said on Wednesday, with subscribers growing 18% to 1.47-million.
The group said it felt the effects of a stronger rand during the period, while operating expenses increased 21% to R250m quarter on quarter, amid a recruitment drive focused on sales, customer experience and research & development.
Operating profit rose 3% to R205m, but the group ended its third quarter with R799m in cash, from R67m in the previous comparative period.
It kept its full-year guidance unchanged, expecting to end the year with 1.6-million subscribers, which would represent growth of 23%.
“Strong financial discipline in our approach to capital allocation and cash management has allowed for a robust unleveraged balance sheet and strong cash position with ample capacity to fund growth,” said Calisto
Karooooo’s stock was 2.52% higher on Wednesday at R574. The share is up 14.8% since listing in April.
With Karl Gernetzky
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.