Cartrack, a global provider of vehicle telematics and recovery solutions, released a business update this week with solid performance for the third quarter, despite challenges from Covid-19.
The founder of the company and CEO of the group is Zak Calisto, who still owns more than two-thirds of the shares in a company with a market capitalization of more than R15 billion.
Cartrack has seen its share price double over the past year, and more than that over a five-year period, during which the company has increasingly targeted overseas markets. It employs more than 2,500 people in 24 countries on five continents.
“Our robust and predictable subscription-based business model, combined with our holistic strategic approach to the industry and low risk of customer and industry concentration, has enabled Cartrack to generate consistent growth in subscribers, revenue from subscription and year-over-year benefits, ”Calisto said in a statement Wednesday (Jan. 13).
He said Cartrack had seen an expansion in its margins due to lower than expected growth due to the constraints of the pandemic. “Although the business experienced strong free cash flow, management would have preferred to invest significantly in higher growth.”
The group, Calisto said, is well positioned to weather the Covid-19 storm with 98% of its recurring revenue by nature, industry-leading margins, strong cash flow and a debt-free balance sheet.
Cartrack performed strongly on its key growth indicators, with subscription revenue growth of 18%, from R385 billion to R635 billion.
Subscription revenue now accounts for 98% (97%) of total revenue as the trend for customers to choose combined SaaS platform contracts with no upfront fees continues.
The total number of subscribers increased by 14%, from 1,088,745 to 1,246,089 despite the distribution problems that the Covid-19 pandemic posed.
South Africa reported subscription revenue growth of 17% from R1 1.013 billion to R1 182 billion and subscriber growth of 14%.
Asia-Pacific is the group’s second largest revenue contributor and fastest growing segment, with subscription revenues up 26% from Rand 167 million to Rand 11 million and growth in 25% subscribers.
The European segment saw subscription revenue growth of 32%, from Rand 124 million to Rand 164 million, with subscriber growth of 13%.
Cartrack, Calisto said, continues to assess its expansion strategy in the rest of Europe. Cartrack’s investment in the United States remains strategic in nature.
Last week, the company announced its intention to pull out of the JSE and file an initial public offering on Nasdaq in the United States.
Cartrack said it has reached an agreement with Karoooo, a company owned by Calisto, for Karoooo to acquire all of Cartrack’s shares as part of a deal.
The US listing, the company said, would:
- Create a more efficient global corporate and operational structure that reflects the group’s international operations and its global growth strategy;
- Accelerate its global growth strategy;
- Enable Cartrack to attract and retain international talent in Singapore – a country that attracts global talent;
- Provide the group with access to global technological infrastructure and research and development;
- Help attract a much 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 financial markets; and
- Potentially give the company a new Cartrack rating, similar to its global software peers.
“As we continue to experience an increase in demand for our Software-as-a-Service ‘SaaS’ platform, our customers likewise continue to derive updated smart and materially valuable solutions for their day-to-day challenges. they have an advantage over their competition, ”Calisto said.
“We are improving and optimizing the Cartrack platform for the future evolution of mobility and we are excited about the adoption of our artificial intelligence video solution.
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