Karooooo, the vehicle technology platform that has been focusing much of its money and energy on growth in Asia, still sees its home market as a big driver for business, despite a stagnant economy and poor sentiment.
The group’s biggest earner is vehicle tracking platform Cartrack, but has set its sights on becoming the top global mobility software-as-a-service platform providing real-time data analytics to the transport and logistics sectors.
In its earnings statement for the first quarter published on Thursday the company highlighted that the SA economy remains under pressure”. Still, CEO and founder Zak Calisto told Business Day that Karooooo has kept growing and believes more will come given SA's unique dynamics when compared with other regions in which its operates.
“Our Asia strategy is certainly paying off. We are getting nice momentum there. That’s the one part,” Calisto said. “We continue to see strong growth coming from SA, even in this very difficult macroeconomic environment. I think SA is really tough at the moment and the fact that we’re growing at 13%, 14% in SA, is really good,” he said.
In the three months to end-May, Cartrack reported a 13% increase in SA subscribers to 1,339,905, with subscription revenue growth of 10%.
Karooooo has traditionally competed locally with firms such as Mix Telematics and Altron’s Netstar and is looking to extend its mobility business using data analytics and artificial intelligence.
The group, which aims to become a one-stop logistics and fleet management platform, says “maintaining our strong unit economics”, is key. “Given that we continuously pass on additional benefits to our customers and have a rich data pool, we believe we will continue to see strong customer demand in this region.”
Karooooo said customers are struggling to move goods and services as a result of load-shedding, which adds to travel and commute times,m especially when traffic lights aren’t operating.
In response the group has adjusted its systems to better predict the best times and routes for its logistics network.
Locally, Karooooo customers are evenly split between enterprise or business customers and private individuals. In Europe and Asia the group deals mainly with commercial clients.
“We’ve got a huge diversification of customers from those with 10 vehicles up to those with 37,000 vehicles. Our customers outside SA are predominantly commercial. Here in SA, it’s about a 50:50 split,” Calisto said.
“We don’t do consumers in Europe and in Asia. It’s deliberate — they don’t have the same challenges that we’ve got in SA. If you come to Asia, for example, the ambulance services work. There’s very little vehicle theft or crime. It’s the same thing in Europe. It’s a very different need,” he added.
The group, founded by Calisto back in 2004 and listed on the JSE and Nasdaq, is giving extra attention to its Asia business, where prospects were stifled by lengthy Covid lockdowns that finally ended in May 2022.
Subscribers in Asia-Pacific, the Middle East and the US increased 24% in the review period to 193,557, translating to 53% growth in subscription revenue. Karooooo is confident of reaching 2-million customers for the first time over the course of the financial year, thanks to further healthy growth.
Overall, the number of subscribers increased 24% year on year to 1.76-million translating into revenue of R997m for the quarter. The segment now accounts for 85% of all sales, while net cash and cash equivalents increased 33% to R1.137bn.
Karooooo’s stock was 2.62% firmer at R450.49 a share shortly before Thursday’s close, valuing the company at R13.5bn. The shares are up 31% over the past 12 months.
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