Karooooo has more than R1bn burning a hole in its pocket, and would rather use it to grow its business in Southeast Asia than make acquisitions.
The group, valued at R12.4bn on the JSE, is positioning itself as a leading global mobility software-as-a-service (SaaS) platform providing real-time data analytics to the transport and logistics sectors.
Having traditionally competed locally with companies such as MiX Telematics and Altron’s Netstar, Karooooo is looking to extend its mobility business using data analytics and artificial intelligence. It recently bought a 70.1% stake in a cloud-based logistics platform for R70m to help beef up its software offering.
The group closed off the second quarter with net cash and cash equivalents at a record high of more than R1bn, compared with R854m in the previous second quarter.
“We’ve got over R1bn in cash at this time, but we’ve got no acquisitions in mind,” CEO Zak Calisto told Business Day on Thursday.
The group is focusing its resources on growing its business in Asia, the prospects of which were stifled by the long lockdown that ended in May.
“Everything takes time to get real traction because you’ve got to build up the staff. It’s only been four months, and we’re already seeing good traction,” he said. They were looking to gain on that. “We’ve got 400 vacancies open in Asia.”
This comes as Karooooo said in its latest results it expects to expand the number of Cartrack subscribers by nearly a fifth in its 2023 financial year.
Cartrack subscribers rose 13.6% to 1.6-million in the six months to end-August, while net subscribers rose more than a third (35.9%) to 57,251 in the second quarter.
Subscribers are made up of vehicles or other mobile assets on its cloud computing platform.
For the Asia Pacific, Middle East and US regions, the number of subscribers has grown 25% to 164,791.
“Our investment in marketing and sales, coupled with the realisation of economies of scale across our business segments, is expected to generate robust results in the future,” the company said.
These additions were also driven by demand from small to large enterprises wanting to digitally transform their businesses to grow, become more efficient and remain competitive.
The number of subscribers is expected to rise to 1.7-million-1.9-million in the rest of the financial year, said the company which headquartered in Singapore.
During the reporting period, revenue leapt 30.4% to R859.3m, with subscriptions generating more than four-fifths (85.5%), followed by vehicle sales (7.6%) and delivery service (4.7%).
In terms of business segments, Cartrack brought in the most revenue at 87.6%, followed by Carzuka (7.6%) while the rest was from Karooooo logistics. Interim profit jumped just more than a third to R311.8m.
Subscriptions in SA were affected by the downturn in macroeconomic conditions in part because of high inflation, rising interest rates, the Ukraine war and floods in KwaZulu-Natal in April.
But Karooooo says the effects of further economic headwinds will be offset by customer demand “for our value proposition, which enables them to save costs and boost operational productivity in increasingly stressed markets”.
Update: October 13 2022
This story has been updated with additional information.
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