- Subscribers: Over 1,972,000 subscribers.
- Cartrack Subscription Revenue: ZAR3,523 million.
- Operating Profit Margin: 30%.
- Q4 Subscription Revenue: Up 18% to ZAR935 million.
- Year-to-Date Subscription Revenue: Up 17% to ZAR3,536 million.
- Q4 Operating Profit: Up 25% to ZAR296 million.
- Year-to-Date Operating Profit: Up 18% to ZAR1,043 million.
- Q4 Earnings per Share: Up 45% to ZAR6.81.
- Year-to-Date Earnings per Share: Up 24% to ZAR23.85.
- Q4 Earnings: ZAR215 million.
- Q4 Free Cash Flow: ZAR161 million.
- Investment in New Office: ZAR263 million.
- Net Cash Position: ZAR922 million.
- Q4 Gross Profit: Up 21% to ZAR686 million.
- Year-to-Date Gross Profit: Up 18% to ZAR2,589 million.
- Gross Profit Margin: 72%.
- Adjusted EBITDA: Up 22% to ZAR454 million.
- Year-to-Date Adjusted EBITDA: Up 17% to ZAR1,710 million.
- Adjusted EBITDA Margin: 47%.
- Cartrack Total Revenue: Up 20% to ZAR958 million.
- Year-to-Date Total Revenue: Up 17% to ZAR3,614 million.
- Cartrack ARPU: ZAR160.
- Cartrack Average Lifetime Revenue per Subscriber: ZAR9,593.
- Cartrack Average Upfront Cost per Subscriber: ZAR2,281.
- Cartrack ARR: Up 16% to ZAR3,749 million.
- Karooooo Logistics Revenue: Up 65% to ZAR93 million.
- Karooooo Logistics Operating Profit: Up 201% to ZAR7 million.
Release Date: May 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Karooooo Ltd (JSE:KRO, Financial) achieved record subscription revenue and earnings, with subscription revenue up 18% to ZAR935 million for Q4 FY24.
- The company ended the financial year with over 1,972,000 subscribers and an operating profit margin of 30%.
- Karooooo Ltd (JSE:KRO) maintains a high commercial customer retention rate of 95% across various industries.
- The company has a strong cash position, with net cash on hand plus cash in bank fixed deposits reaching ZAR922 million.
- Karooooo Ltd (JSE:KRO) continues to invest in AI capabilities, leading to significant improvements in operational efficiency and safety for customers.
Negative Points
- Carzuka's operations are being integrated into Cartrack, leading to the discontinuation of Carzuka as a stand-alone segment.
- The company faces strict SEC rules limiting the ability to buy back shares on the open market, resulting in only 50,000 shares purchased this quarter.
- Karooooo Ltd (JSE:KRO) has seen challenging trading conditions in South Africa, impacting subscriber growth.
- The transport industry in South Africa is in disarray, affecting long-haul companies' growth.
- The company has a high upfront cost of acquiring a subscriber, with an average cost of ZAR2,281 per subscriber.
Q & A Highlights
Q: What underpinned the improved effective tax rate?
A: There's two aspects to that. The one aspect is as certain of our operations were loss-making and as they become profitable, that improves our tax rate; that is the one aspect. The other aspect is inter-company dividends, the amount of dividends we've flowed through all the way to Karooooo, that also impacts the taxes we’ve paid. (Zak Calisto, CEO)
Q: Are you planning to buy the 1 million shares as announced in February?
A: We continue to plan to buy shares, so we will definitely do that. The strict SEC rules to buy shares on the open market have limited us, but we rely heavily on being able to buy blocks and our broker has reached out to our investor base. (Zak Calisto, CEO)
Q: Can you comment if anything changed throughout fiscal Q4 in terms of linearity of subscriber additions and how have subscriber additions tracked thus far in fiscal first quarter?
A: We've seen a very good quarter one at this point in time. It's public knowledge that we have surpassed 2 million subscribers now and we are expecting to have a good quarter one in this quarter. (Zak Calisto, CEO)
Q: What gives you the confidence in the acceleration of subscriber additions from about 60,000 this year to 80,000 throughout fiscal year 2025?
A: We have allocated a lot of capital in growing and improving the way we guide and manage and educate internally our staff and our sales teams. We believe this will certainly give us yield in FY25 and beyond. (Zak Calisto, CEO)
Q: Why is the share repurchase program more appealing to you over dividends?
A: The share buyback is in itself a dividend to all the shareholders, and we believe that our share is undervalued. That’s why we have opted to also do share buybacks. (Zak Calisto, CEO)
Q: How big can Karoooo Logistics get in a three- to four-year timeframe? What margins can this segment generate?
A: The margins we’re currently generating are really optimized profit margins. They could certainly improve, but we don’t believe we must model our long-term growth at higher margins than we currently have. We believe in the next four years we will see growth of no less than 25% year on year. (Zak Calisto, CEO)
Q: What trends are Cartrack seeing in the South African competitive landscape?
A: We have been in the market for 10 years less than our competitors, and we continue to grow our business both in subscribers and subscription revenue. We don’t rely on OEM low subscription revenue models to grow our subscribers and we are not focused on white-labelling. (Zak Calisto, CEO)
Q: Could you please confirm whether the company will continue with the recently announced share buyback program?
A: Yes, we will. (Zak Calisto, CEO)
Q: Is Cartrack seeing the fleet sizes in South Africa growing given the failure of the rail network?
A: It’s still very early days, and the transport industry in South Africa is also in a bit of disarray. However, we are seeing courier companies getting larger. But in terms of long haul companies, we don’t really see anybody getting bigger. (Zak Calisto, CEO)
Q: How does the gradual adoption of EV's impact Cartrack's business?
A: Our platform is able to deal with EV vehicles. We’ve integrated with a lot of EV vehicles, and we have OEMs sending us their EV vehicles. We are well advanced with our EV technology. (Zak Calisto, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
