Karooooo expects its business in Asia to continue to be its fastest growing, an endorsement of the group’s long-held view that the region could be its main driver of growth.
The group, valued at R12.7bn 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.
It is focusing its resources on growing its business in Asia, the prospects of which were stifled by the long lockdowns during the Covid-19 pandemic that ended in May 2022. Opening up in the region has resulted in a boost for the group, which shows no signs of slowing down.
While the recent opening up of China after its Covid-zero policies was seen as a huge positive for the global economy, Karooooo CEO Zak Calisto told Business Day this did not have had a direct effect on his firm’s performance.
“However, Asia was our fastest-growing market. We grew 27% this quarter,” he said. “It’s as we build our brand and ability to distribute,” he said explaining what was driving the growth.
Despite increasing growth in Asia, most subscribers are in SA, with 1.29-million at the end of the reporting period, followed by 175,158 in Asia-Pacific, Middle East and the US.
“Southeast Asia presents the greatest opportunity in the medium to long term,” Karooooo said on Friday as it reported earnings for its third quarter to November 2022.
Rivals MiX Telematics and Altron’s Netstar have 914,600 and 1.24-million subscribers, respectively.
Strong demand
Karooooo reported its best quarter yet in terms of the net number of new subscribers to Cartrack, which provides fleet-management and stolen-vehicle recovery services.
The company said in its results for the quarter the number of subscribers to Cartrack, which generates more than four-fifths of its revenue, jumped 14% to 1.68-million, while it added 78,593 new subscribers due to strong demand from small and large enterprises.
“This reflects the need to improve compliance functions and digitally transform their businesses to become more efficient and competitive,” the company said.
The company generates 83% of its revenue from subscriptions, with the rest coming from vehicle sales, delivery services and other sources.
Its profit fell marginally to R147.1m year on year in the reporting period.
“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,” Karooooo said.
It aims to end its 2023 financial year with between 1.7-million and 1.9-million subscribers and subscription revenue of R2.95m-R3.1m for Cartrack.
Karooooo continues to scale and bolster Carzuka and Karooooo Logistics by investing in building the brands and infrastructure.
Business Day reported in October that having traditionally competed locally with companies such as MiX Telematics and Altron’s Netstar, Karooooo aims to extend its mobility business using data analytics and artificial intelligence.
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