Cartrack, a global provider of vehicle telematics and recovery solutions, this week published a business update with solid performance for quarter three, despite the challenges of Covid-19.
The company’s founder and group chief executive officer, is Zak Calisto, who still retains more than a two thirds shareholding in a company with a market cap that exceeds R15 billion.
Cartrack has seen its share price double over the past year, and a lot more than that over a five year period, in which the company has increasingly targeted markets abroad. It employs over 2,500 people across 24 countries spanning five continents.
“Our robust and predictable subscription-based business model, combined with our strategic broad industry approach and low customer and industry concentration risk has resulted in Cartrack delivering consistently strong year-on-year subscriber, subscription revenue and earnings growth,” said Calisto in a statement on Wednesday (13 January).
He said that Cartrack experienced margin expansion as a result of lower than planned growth due to the pandemic-related constraints. “Though the business experienced strong free cash flows, management’s preference would have been to invest significantly into higher growth.”
The group, Calisto said, is well positioned to weather the Covid-19 storm with 98% of revenues being recurring in nature, industry leading margins, strong cash flows and an unleveraged balance sheet.
Cartrack delivered a strong performance across its key-growth-metrics, with subscription revenue growing by 18%, from R1.385 billion to R1.635 billion.
Subscription revenue now represents 98% (97%) of total revenue as the trend of customers choosing the bundled SaaS platform contracts with no up-front fees continues.
The number of total subscribers increased by 14% from 1,088,745 to 1,246,089 despite the distribution challenges that the Covid-19 pandemic posed.
South Africa reported subscription revenue growth of 17% from R1.013 billion to R1.182 billion and a subscriber growth of 14%.
Asia Pacific is the second largest revenue contributor and the fastest growing segment in the group, with subscription revenue up by 26% from R167 million to R211 million and a subscriber growth of 25%.
The European segment delivered subscription revenue growth of 32% from R124 million to R164 million with a subscriber growth of 13%.
Cartrack, Calisto said, continues to evaluate its strategy to expand into the rest of Europe. Cartrack’s investment in the US remains strategic in nature.
Last week, the company announced that it plans to delist from the JSE and file for an initial public offering on the Nasdaq in the US.
Cartrack said it had reached agreement with Karoooo, a company owned by Calisto, for Karoooo to acquire all Cartrack shares by way of a scheme of arrangement.
The US listing, the company said, would:
- Create a more efficient global corporate and operating structure which is reflective of the group’s international operations and global growth strategy;
- Accelerate its global growth strategy;
- Enable Cartrack to attract and retain international talent to Singapore – a country which attracts global talent;
- Provide the group with access to global technology infrastructure and research and development;
- Assist in attracting a substantially larger and more diverse international pool of investors who understand the long-term value dynamics of Software-as-a-Service (SaaS);
- Provide Cartrack with access to global capital markets; and
- Potentially yield a re-rated company valuation of Cartrack similar to global software peers.
“As we continue to experience an increase in demand for our Software-as-a-Service “SaaS” platform, our customers similarly continue to derive intelligent and materially valuable up-to-date solutions for their day-to-day challenges, giving them an edge on their competitors,” said Calisto.
“We proceed to enhance and optimise the Cartrack platform for the evolving future of mobility and we are excited about the uptake of our artificial intelligence video solution.”