Karooooo Ltd. Q4 2023 Earnings Call
Good morning. This is Richard the Chief operating officer will be starting in a couple of minutes, we just waiting for a couple of more people to join.
Hi, everyone. Thank you for your patience, we will begin shortly.
Welcome and thank you for joining <unk> Q4, and full years FY2023 results, Lebanon, I'm, calling the group Chief strategy, and marketing officer, and together with <unk>, Our group Chief Financial Officer will be <unk>.
The key is through outperforming codes and future plans.
Team led by our CEO and founder Zack is committed to delivering on our strategic goals and creating long term value for all of our stakeholders.
All shareholders and investors are advised to read this disclaimer.
We will be reviewing all three of <unk> business units in today's webinar, namely contract called Zika and career logistics.
There is not just embracing the future of operations, we are helping to finance, we understand that mobility is core to all operations and see the large value and not just connected vehicles and equipment bidding connected teams and data driven decision, making by leading the way with an emphasis solutions and bold new practices. We are on a miss.
<unk> to be the leading operations cloud, we envision a world where operational frictions are eliminated and businesses can operate in a seamless efficient and safe way that enables them to achieve more with less.
But achieving this is becoming significantly more difficult for operators, they're running 24 hour operations. The customers' expectations are increasingly leading to more complicated jobs to advance multiple teams and departments. Their employee expectations are also increasing everything needs to be in real time new regulations.
Keep pumping up costs are skyrocketing, there's new technology imaging data teams are using more tools than they can remember there's an overwhelming amount of data available little love, which is leading to actionable real tangible insights things have become complex and they are unmanageable without a simple, but not simplistic solution like ours.
Browser 17 years in the industry, we have a strong track record of identifying trends early in understanding how we can build a solution that will benefit customers. We saw the large amounts of independent as well an interconnected challenges for customers from fleet and equipment management and maintenance to delivery operations in <unk>.
<unk> management from risk management, and compliance to resource scheduling and vehicle procurement.
Digitally transforming operations and offering tools that help guide our customers and navigating the challenges we had strong value to their daily operations.
Korea plays in massive interconnected and largely untapped global markets. According to analysts' estimates operations account for over 40% of global GDP. We have a huge runway ahead of us businesses are becoming more away that Iot data is critical to improving their operations and opera.
Patients are increasingly more cross functional meaning the interdependencies between the problems, we solve our expanding along with the opportunity ahead of US we are only at the start of a large long term growth opportunity.
Globally Currie saw a 19% increase in the number of commercial customers using its cloud platform as of Q4 FY2023 we helped over 105000 small to large businesses across diverse industries optimize their operations and we continue to see no customer or industry.
<unk> risk.
Customers have adopted our solution in varying ways, but all rely on our platform for their operations.
Vast diversity in geographies customers and applications of our platform speak to our strong ability to create a sticky solution and localized to market needs in a scalable manner.
Our strong track record of profitably growing in scale is based explained through an understanding of our fundamental business culture and principles. The exact took to market in 2004.
Firstly, we are fully vertically integrated from sales of technical installations R&D to customer K, we do it all ourselves. This is given US index tangible knowledge of the day to day operational challenges our customers face.
This means that we have been building operational software that links different business units and solve complex problems. Since we were founded we also know that not all data is useful and it's the ability to link data from different sources and managing to communicate that in a simple to understand and execute way that makes the difference.
Most importantly, we ensure all technologies setting of businesses.
Most importantly, we ensure all technology is setting our business up for success today and Tomorrow and all days ahead I'll technology does not just focus on detecting problems and remedying the damages.
It also focuses on tackling the root cause of challenges to prevent them from occurring in the first place.
Secondly, we build scalable solutions, we went to market with a solution that sold 80% of all customers problems and did not focus on developing a niche product for a specific industry or customer.
This has helped us because building for scale, rather than customizing forced us to learn how to distribute successfully at scale across different regions and through different macroeconomic environments.
We've also learned that customers need to have everything in one place and understand better learned we are unlikely to provide all the data needed to fully contextualize a business.
So we've been shut off platform has open Apis and have built an ecosystem that truly addresses the needs of our business. This increases our platform stickiness and future proof solution as customers' needs evolve.
And finally, we focus on delivering a world class customer experience when.
When we launched off heat management solution, we went straight to cloud and we were the first to market, allowing customers the convenience of choosing a location and time for their Iot installations. This customer Centricity has helped build strong foundations for our business.
Today, we consistently invest in and improve on our proprietary internal systems and tools that empower us to exceed our customers' expectations. We see many companies beginning to struggle in theory, just say it in scale as they cannot efficiently manage so many moving parts our proprietary internal systems allow us to remain extremely streamlined.
In servicing our customers as we grow and scale, ensuring we maintain our strong customer centricity and efficiencies.
Constant innovation is our status quo, we always ask is there a better way to do this we do not believe that because it was the right way to do things two years ago. It is still the right way of doing things today.
And finally.
We work with our customers to guarantee our solution fits into their business and it's easy to implement across all stakeholders. This ensures strong uptake and long term stickiness as customers very quickly feel the strong ROI of our solution.
Fundamentally all foundations have allowed us to successfully differentiate ourselves with strong execution and we consistently build for the future. We are forward looking and are building a sustainable business that will benefit stakeholders for the generations to come in summary, we win for the following reasons, we have unique go to market.
Strategies, we challenge the status quo and focus on solving problems, we place full focus on providing a great customer experience customers know they can rely on our solution is the backbone of their operations. Our culture is entrepreneurial teams take ownership by innovative and remain agile to adapt to different market conditions.
<unk>.
We have a user friendly end to end operations cloud, it's easy for customers to derive huge value from our platform.
We have strong distribution channels, we can reach small to large customers across a varying industries and geographies, regardless of where they are and and digitalization journey.
We have proprietary internal management systems, our teams and business units speak to each other to ensure we can continue to successfully scale at large.
Our business is also vertically integrated all components of our operation are aligned towards the same goal fund.
Fundamentally we deliver a high ROI for customers and customers rely on our platform to run their month to month day to today, Alex our operations. So many the uptime of our platform is more important than the uptime of any other software their businesses using.
Plus there is a lot of noise in the world. There are three key trends that are gained strong sustained momentum and are driving huge need and adoption for our platform. Firstly in digitalization companies of all sizes and across all industries are looking for ways in which they can reinvent their business with technology they understand.
And that's remain competitive they need full visibility of their operations. They know that they need to leverage data and contextualized insights to meet the speed of quick decision, making required in today's world.
Then ESG companies and consumers are looking to do better and companies are looking to go far beyond just reducing their carbon emissions, they're looking at increasing vehicle lifespans switching to electric vehicles, increasing their community impact with better service delivery customers are asking us to show them how to use our.
Our solution to bridge the historical divide between drivers teams and manages to boost morale and safety within their business.
And lastly, compliance businesses and regulators are looking for increased transparency and compliance is spreading across all operations teams and industries Gov.
Governments are implementing and enforcing more laws around where times and other safety of wellbeing mentoring and penalties for noncompliance for legislation are increasing we.
We have seen these shifts intensify over the years globally and now we see that companies are embracing change and determined to be graded them.
Asia is full of rapidly growing emerging markets, making the opportunity for crew huge.
Each market remains largely underpenetrated and fragmented with no single large no comprehensive provider populations.
Populations in these markets are digitally savvy and technology is widespread even in small remote towns.
The opportunity is large it is important to note that Asia is full of strong cultures that vary dramatically between markets. It's a place where it is critical to have hands on the ground to understand all local nuances and localized effectively we believe by positioning our global headquarters in Singapore, we are positioned well for success.
Companies also looking for partners. They can rely on for their business and they are learning quickly and to think about her 10, rather than just focusing on costs.
We see many large and small businesses come to us for a reliable easy to use platform as well as our strong customer Centricity and supports our advanced cloud platform and robust service delivery sets us up well to compete favorably in Asia.
Whilst there is a portion of the market that is only beginning the digitalization journey. There is also a large portion of the market paving the way with sophisticated needs companies understand the value our platform provides and rely on our analytics to deliver on the emissions. These companies are doing much more than just looking at G. P. S.
Yes.
Companies care about their service delivery of Tourism company uses our solution to ensure their passengers are transported safely on time and also received the full trip they were sold.
Sophisticated reporting alerts manages when drivers deviate from their prescribed routes leave tourism side too quickly or make any unexpected stops without platform. They've brought down these feeding event significantly and ensured old trips running according to schedule and they understand that our solution is a cold product to their reputation risk man.
<unk> and brand.
Businesses are also forward thinking short term rentals company has fully adopted easy and uses our solution to optimize their charging schedules. Our advanced engine diagnostics. Another telemetric data to establish effective maintenance schedules that NEVA overshoot or undershoot services leader.
To a huge reduction in overall maintenance costs, while extending vehicle lifespans.
With vehicle productivity metrics, they know way to house, each vehicle and are better able to predict demand for their business planning and vehicle purchasing.
They were able to effectively launch a vehicle delivery solution with our infield service tools, giving them a game changing differentiate us and they have redefined what customers expect from rental companies.
Businesses are also data driven a F. M C. G business doing over 10000 daily deliveries understands the value of data and contextualize ing it across different business units using our platform. All teams now have food and unified visibility of the entire business process real time analytics and.
<unk> has enabled them to slash the number of steps in the delivery process saving them thousands of hours across safely daily with sophisticated API into their ERP and other tools. They have connected their entire operation. The queuing downtime of a vehicle as a result of inefficient warehousing strategies have been minimized driver wages are now.
Accurately calculated safety has skyrocketed in through game of five safe driving plans idling and unproductive fuel usage has been conquered the business has seen dramatic savings from the increased productivity across safety, then warehouses as well as peace of mind, knowing their drivers are representing the company and a strong professional lines.
Peru has a large untapped network effect opportunity generated from its platform with over 125 billion valuable data points generated monthly in South Africa alone, we have around 10% of all vehicles on the road, giving us a huge runway for adding increased benefits for our customers.
<unk> are benefiting as we are personalizing their experiences and providing them with tools to improve decision, making and increase their efficiencies. For example, a company can now benchmark their operations against others in their industries.
Predictive analytics of historical data on not only leading to improved customer loyalty, but allow us to develop new products and services to expand on our platform.
To summarize we believe our strong management entrepreneurial culture and vertically integrated business model have led to our proven track record of growth and profitability in varying macroeconomic headwinds across regions.
We innovate through an entrepreneurial approach that prioritizes customer needs utilizing our hands on experience and skills and being adaptable in both planning and execution. We offer a strong value proposition that is easy to prove to customers. Our customer churn remained low as customers see we are consistently delivering on new value enhance.
<unk> solutions, while maintaining a stable our pud. They trust us we are able to pass on the benefits of economies of scale to our customers as we successfully execute whilst maintaining prudent capital allocation.
Peru has a strong financial foundation, the ability to control prices and maintain high operating profit margins solid unit economics, and our history of sustained growth at scale has resulted in a robust balance sheet and resilient business model, we have ample runway for growth.
I will now pass over to <unk>, who will take us through our financial performance. Thank you.
I'll now talk to coast financial performance for quarter, four FY 'twenty treat please note that all comparisons are against quota for FY 'twenty, two unless otherwise stated.
The performance of quarter four has been strong and our cash generation continued to both sell from our profitable SaaS business model.
As expected after substantial investments for future growth in all segments operating profit and earnings per share for the quarter rose by 60% and 51% respectively.
To date operating profit increased by 26% to 882 million win and earnings per share increased by 27% to 19 point 2019.
This is the result of our prudent and strategic investment growth strategy be.
<unk> cash flow up by 54% in this quarter and 44% on a year to date basis. This result was achieved despite the group's strategic investment in expansion when building and customer acquisition for long term growth.
Considering the strong earnings and free cash flow clean an unleveraged balance sheet. We are pleased to declare a record dividend of U S 85 cents per share the dividend will be paid to the shareholders in July 'twenty 'twenty treat we are confident that this will not impact our growth.
We view, our business and we bought outperformance into cheese segments, namely contract cause Hooper and career logistics. Our total revenue increased by 24% to 960 million win at the end of Q4, and 3000 507 million win on a year to date basis.
Try it goes east revenue by 16% to 796 million win at the end of Q4, and 17% to Chi thousand 76 million van on a year to date basis.
Trading profit for the year increased by 28% to 915 million van and operating profit margin stood at 30%.
Year to date EBITDA margin at 47% is in line with total planned investment for future growth and management guidance range Parker and Eaton heat treat.
Kazuko steady expansion continuing to justify our belief in the sustainably D. Obviously chow data enhance and highly scalable business model. It is also a testament of coast customer centric innovation in solving unique mobility needs cause who can deliver 64 million win in revenue.
At the end of Q4, and 251 million when year to date.
While it is an operating loss has to be continue to invest in the infrastructure and brand building. We will also focus in refining our internal processes to improve the efficacy and being pragmatic in our spending once the revenue is more than she has 8 million per quarter be policed that business both in profit.
Bo.
Peru logistics delivers significant growth generating 56 million van in revenue at the end of Q4, and having 80 million win on a year to date basis.
Peru logistics Shaw and encouraging operating profit of 5 million win and an operating profit margin of 2% for the year is focus on delivery as the service has gained momentum while you continue to integrate into contract that phone to expand its customer base.
All segments are seeing strong traction with the benefit of our strategic investments beginning to show.
Our coffee type of SaaS business model continue to bolster our cash flow generation of <unk> D. These net cash on hand up by 35% at the end of the year at Niobrara and 66 million win.
During the year 72 million when I invest in the development of South Africa, and Central office, and 50 million when I invest in the working capital of Casaca.
In Q T cash dividend of $18 6 million dollar was paid to the shareholders.
That's the northeast continue to show improvement to 31 days alongside with prudent provisioning to weather of strong economic hate beans in some of the markets we are operating.
We have strong unit economics robust operating margins, a strong balance sheet and cash position and have consistently beaten the rule of 40.
We remain confident that our track record of success, especially our ability to generate healthy cash flow is sustainable.
Our earnings per share increased by 51% or four in 70 cents in Q4, and 26% to 19 when entering the ninth sense on a year to date basis. The increase is the result of positive revenue growth and improved profitability during the year. Despite the impact from the dividend withholding tax of 27 million.
And when.
We will now focus on contracts the underlying assets to cover success.
Patrick continuing to prove its ability to scale in varying macro economic conditions overall subscriber grew at scale by the in person two 1 million 717077 and in this quarter subscription revenue grew to 792 million Vin and operating.
It goes to 248 million van.
Our track records are strong and not compounding growth and financial discipline can be seen in our performance on a year to date basis contract subscription revenue grew 17% to 3004 million win and our operating profit grew 28% to a record and I have it in 50 million range.
Our operating profit and operating profit margin were negatively impacted this financial year S. B expense upfront a bigger portion of our cost of acquiring a subscriber in our clubs than in previous year beef.
We've mentioning our assess a are all for the year grew by 19%.
As contract continue these strong SaaS revenue will grow contracts total revenue grew 17% to 2070 7 million van.
Contracts total subscription revenue represented 98% of total revenue in line with our SaaS business model.
The strong performance of contract law Slashy supported by demand of small to large enterprise to improve compliance functions and to digitally transform their business to become more efficient and competitive.
As contract continues to have great visibility of future revenue, our realization of economies of scale continue to demonstrate our ability to expand our margin.
Gross profit for Q4 up by 27% to five her it and 68 million vein and gross profit margin improved from 65, 4% to 71, 4% compared to Q4 of last year.
On a year to date basis gross profit up by 22% to 2000 222 million invent and gross profit margin improved from 68, 4% to 71, 6% compared to last year.
Operating profit for Q4 up by 61% due to her and 48 million vein and operating profit margin improved from 22, 5% to 31, 1% compared to the same quarter last year.
On a year to date basis operating profit up by 28% to nine or a M 50 million rent and operating profit margin improved from 37, 1% or 99, 7% compared to last year.
Adjusted EBITDA up by any cheaper center, chairman and 71 million van and adjusted EBITA margin improved from 44, 2% to 46, 6% compared to Q4 last year.
On a year to date basis, adjusted EBITDA up by 19% to 1004 high rent and 56 million vein and adjusted EBITA margin improved from 46.6% to 47 point cheaper sand.
Contract low cost of acquiring a customer high customer lifetime value and retention rate is about as strong benefits from economy of scale results in our leading unit economics, our LTV to CAC is overnight, we have strong profit margins with our gross profit margin on subscription.
Revenue is 72% and our operating profit margin is 30%.
While we will remain prudent with our capital location be out of that decision to continue to scale our business.
Oh, whether yes contract has maintained a steady off who an average cost of acquiring a subscriber a.
For the year was threatened and 55 in Patrick.
Contracts average lifetime revenue per subscriber increased to 9000, she her rent and then each event this year.
Average cost of adding a subscriber to our cloud in this year was 2264 rent and in Q4. It was 2000 148 billion.
Taking 9000, she had rent and then achieving and subtracted 2264 in gives us a headroom of 7059 van per subscriber.
From the 7050 in Iran. We incurred the cost to service our subscribers over 60 months, which allow us to do via a very strong operating profit matching the headroom has remained steady.
Contract continued to expand in onshore coffee in South Africa, despite challenging trading conditions due to a national power outage.
Cable grew by 11% S be seen strong customer demand for our value proposition.
In Asia, the Middle East and U S. E subscribers grew by 28% as the pace of contract expansion into southeast Asia move the Haynesville feedstock gogo fees on.
Considering that southeast Asian economies only began to open up towards the end of Q1, we are pleased speed detection gain in this region.
As the second largest contributor to the group revenue Southeast Asia presents the group's most compelling growth opportunity in medium to long term.
Europe saw healthy goof up 13% and remain of you shouldn't be able to allocate more resources in order to drive more rapid growth.
Africa, others maintained its momentum with 8% increase in subscribers.
On a year to date basis, our <unk> increased 19% to cheat thousand 235 million van which is at a good trending as we continue to grow our subscriber base and E. R. R.
Contracts continue to have robust operating margins and our trends are in line with the long term financial goals set up on our listing in 2021.
Research and development as a percentage of subscription revenue up 6% in line with our long term started a 4% to 6%.
We will be increasing capital location into sales and marketing to drive cool, whereby we expect sales and marketing as a percentage of subscription revenue to increase from the current in person to be within our long term target of 17% to 19%.
We also expect general and that means as a percentage of subscription revenue to drop from 22% SPX Fluence increase economy of scale, whereby either fall in line with stock itself chaff to 16%.
Our adjusted EBITDA as a percentage of subscription revenue at 48%, we will continue to improve to be in line with our targets of 50% to 55% as we remain pragmatic in our operating expense.
We have met our 20th NTT outlook with number of subscribers stood at 1.7 billion contract subscription revenue recorded at 3004 million van and adjusted EBITDA margin of 47%.
We're happy with the progress we have made for the year.
Our guidance for contracts outlook for yoga and eat any for a number of subscriber between $1 90 to $2 1 million the white range, it's because of the volatility and macro economy environment. As you maybe aware, we published our subscriber numbers on our website and S. At the end of April we have reported this.
Subscribers to be over 1.75 million subscription.
Obsession revenue outlook for 'twenty 'twenty four is between 3000 and fall I read through 2000, and 600 million van and operating profit margin between 28% to 31%.
Cause hygge and career logistics continue to scale and those still coast revenue growth.
Both segments Shaw group progress with strong year to date revenue growth of 270 cheaper cents and 154% respectively.
In combination with <unk> in D. D E Commerce platform cause Luca has made significant progress expanding its physical showroom, adding study Lee strategic tops across South Africa and building each spring.
Corinne I'll, just stick will continue to integrate into contracts platform, enabling patrick customer to manage and add in Huntsville, and logistic capacity D V E S.
I would like to thank everybody for joining us today, and we'll now open the floor to Q&A with our group CEO and founder Mr. Zack Callisto.
This meeting is being recorded.
Good evening or good morning, wherever you are.
Yeah.
God knows square read out the questions. So the first question of galleries call Kim from William J, Paul will discuss the work off of that.
So you have about remoxy.
And are they more in the pipeline and obviously the more occasional report back eventually.
They will not be telematics solution.
Okay.
Okay.
Those will be very much about.
About the diagnostic of the vehicle and the factor of a vehicle.
And our platform is really about helping customers with their operational and what things alcohol that diagnostics, but clearly we also carry the diagnostics and this is just one example, where we now get the data from that.
Boxes and that type of thing.
And to our platform.
Are there any other one we are talking to all of our European motor manufacturers we.
We are Parnell this thing with some and I believe by the end of Q2, we'll probably add there.
And another five are Ian brands onto the portfolio.
We do see if the go to market strategy.
I'm really happy with it.
Alright. Thank.
Thank you Bob.
As we told you during the integration.
M. A C D. But then we've also got to get the distribution rights and this obviously is a long term project and a long term partnerships.
Another question will go to Michael <unk>.
What are your expectations for Asia region.
Cool.
Yes.
<unk> you know we've got two months in.
Superregional, clearly a U shaped in March and April as before in the other.
Are there regions in terms of percentage growth and with nearly all employees.
Holding our distribution.
All right.
And that is our focus at this point, Amit just holding back.
Your parents and locked everything.
It's quite a ways easy to overcapacity. It takes a lot of it took a lot of energy a lot of trial and error and repay Betsy went back and required.
Let's see.
Our next question from multiple.
What these crude carloads talk complement and what's the thinking.
Okay.
As at the end of February Greene G are transitory.
Store was over four powerful salt and we probably premium for a year with about 4800 staff members.
Of course, we'll also from all spring, our jackalope ethical and installed.
Softbank will southwest doesn't work.
The reality is that will stop by bookings is never easy.
If you do part somebody that aren't that easy.
You know what I mean clinical coming through just what the recipes, but it's always difficult, especially if you wanted to do it and the way we have traditionally gotten up the hills, which is very much a financial discipline, making sure that the Salford trial that you pulled up the stores and it will be easy, but that's what we've been doing for many years now.
The next Christian for Akamai.
How are you thinking about the seasonality of mix, let's call that wholesale at the coming year.
When you.
When you consider the change that you've seen spot.
First quarter for Airport Group report.
So if we look at the first two months of Q1.
It's pretty much what our expectations are with the acreage.
About over 40000 net subscribers in two months, so I think grabbing a relatively good quarter Q1.
Over.
A decade lack of Oh. These street, what we normally find is Q1 is traditionally a typical quarter and Q4 is a difficult quarter and that's predominantly because of all the public holidays that you get at the end of the year and that you get in April .
You can argue either Christian all their bags with the Jewish holidays or winter monetize quickly is a tremendous amount of the holidays piece in Q.
Q1.
So from.
From there we of course, we've got Africa after Q2 that Q3 quarter.
Next question.
Mr Georgia.
Can you give us more details of the partnership for example got it.
Or what.
Tiger one.
On one side the propagation of spartech.
Good for both are you more given that they've got their partner Telematic service I think my questions were asked me.
We don't care on Adam's question.
I'll buy the proposition is really bad.
For instance in Europe as compliance now we every single vehicle sedan vehicle.
<unk> is owned by a company they can ask habitat Cobra.
Both metrics.
The purpose of that you've got a couple of months do not see any comparable vehicles being driven by more than four hours by one person.
And that's what's supposed to come into play.
In Q.
Q4 of last shapes up in Pittsburgh and Q2 of this year.
The only company in Europe , that's actually been approved and that's why that aspiring goods.
Cause that why not get more about compared to best drive.
Technology approved and see I mean, there will be turnkey.
So banks, which will require this technology because a lot of pieces you'd be loved the company and open about that these other services that we can supply that the Oems are not.
Year to supply certain services.
Next question from Greg If I may.
What creates challenges and opportunities does the shift to electric.
Vehicles postal contract.
We've been fortunate that we are at the moment.
We are Singapore, Singapore.
It is probably in the top five LIBOR countries with electric vehicles, and we are pretty close to the infrastructure of electric vehicles, and we are developing technology to deal with US. This will give us that arent expect once it takes speaking about mainframe and European specific woke up Africa.
We'll have to technology.
We agree with you're giving to the Singapore air customers will be able to call that technology and drive the regions.
Next question from Alex can you talk about the eclipse called regard Ingrid in March I forget if it's skewed Q4 either geographic.
Geographic basis, I think Alex are Christians Boston.
On a geographic basis really Asia continues to be our strongest region and growth, but what's encouraging is we saw a strong recovery in South Africa predominantly as we are.
Gearbox helps to operate in a more difficult environment are predominantly that's been caused by the Palo Alto just attracting block function actively lives and so it's encouraging what you were saying in Q.
Q1.
The next question from Matthew or a cultural impact from these can you comment on Oct and port Arthur by regions.
We've got a beanie babies, often if you take Europe South Africa.
The rest of Africa any savings Acos are Peru is significantly higher than in any other region.
But the reason for that is that we've got a huge base of customers.
We're doing business with airports are also much more expensive than in other regions so and.
Indonesia, Philippines, Thailand, Malaysia can they get better as our resort trends to be very similar to South Africa and about the.
The other regions we operate.
Uh huh.
The next question from Alex how are you thinking about sales and marketing.
Thank you for work in the context of you all took a clearly this is a focus area generally styling.
The training, it's very painful AIDS.
It's what we've been doing.
And it won't be an easy I I think what we saw in if quite thank you clean it was post COVID-19.
Dr Wallach being reshuffled in terms of talent.
With its R&D talent, whether it's.
<unk> stock with its administered that stuff. So that's all starting to sample quite likely and hopefully we'll be able to RMR, Inc, and be able to expedite the diving.
Diving in the training and get stronger year by year.
The next question is from here.
We license the unit costs were lower on revenue less cost of acquisition for <unk>.
Let me wrap with 7000 extra for that.
Does the current law from cost to service the customer as I've described with between Aetna Saiful core for us or a thousand marketing tour itself rolling over customers, what I'll call cost savings.
So.
I'm not going to read your question twice or three times out of Wisconsin, Sometimes you got to read these questions a few times to fully understand what you're asking.
Basically you know.
Griffith the unit economics of this are subscribe out what we've.
We got to our group we've got the average life cycle expect we'll get with you six months you multiply by two and you get the revenue got you.
Passage or estimates to get promote one vehicle on your backhaul problem gave you that your cost of getting back to the vehicle onto the cloud and that gives you the scope and powerful brands and we've got one.
We called it the average cost to service that customer, which is in the region of about extra red which gives you.
Zero turn fixed it's another 3600 range and that gives you an extra metrics numbers to give you in fact, what you're paying to your operating profit.
Obviously with that is also kind of pick where operating profit is the amount of money that you are investing in the expansion of your distribution partner.
The main cause batteries the unit economics, and that's one of.
The tools that we use year measuring.
In measuring our unit economics per subscriber per bjarne back onto the platform.
The next Christian from up to a king.
You have gone to pick the ones that you achieved there or cause you to quarterly revenue will it be able to achieve breakeven when do you expect to achieve this could you provide us a problem.
You are the reality is that we've developed a new technology.
But we all talk pricing quite a lot of people who have problems operational problems and just the normal problems that most business are startups, so while our blocker yoga you won't get to that 300 million.
Great up quickly in the big scheme of things over the next four to six or seven quarters.
It could be earlier, it's very difficult for me to give you a timeline at this stage.
Oh secretive who had dropped 11%.
In Q4, what are the reasons beyond that.
Beyond that is the normal all of them.
And interest rates, so what people are portability, but dropped but I think fundamentally our real issue there was just.
Slowing down the amount of stock.
Our mistakes.
And to get the rabies to rebuilding Q1, that's what talent into it so it's a little bit of grabbing fixing growing fixing it just a part and parcel of the Y rebuilt panic ordering spoke out businesses.
The next question from warmer.
What is the real impact from Palo Alto logistical presence.
Fundamentally I'm sorry.
You know we're not in the island. So we rely heavily on the telecom infra sector and as all of Africa.
Can be called in the quality of telecom.
Cost of the outages.
Lewis, becoming also a big part in our problems what are the prospects for our customers a.
We've got it just won't have Africa, we've got true.
Through telephone people on the roads between health viewpoint technical people and all of that really impact our operations and obviously, we've got the right.
Diesel.
We are.
So on a market basis, because we're not getting interest people ask them in a new ballroom that guidance be totally environment brings me a weekend, if you're running at Tyler and our guests and our workers are also going to be from balls. So for the we gotta be more self sufficient in the next pole.
Okay.
Next question from Sebastian.
Hum.
That's the business purpose tour X South Africa more cause for you tried to maintain the ARPA in U S. Dollar terms or would you be targeting where they saw undergo 50 price points.
I don't think we necessarily in discrete.
Great targets any price points.
The way, we really are at that policy is really about unit economics, so rather than 50 Rand that we talk about <unk> 23 is that any different kinds of them kept your range that you spoke about 2004 and so fundamentally.
It's all really is our own.
Okay great.
Operating profit margins with our ink to Green D and I think our current operating profit margin range, you've got video thing.
And if we can get that.
Does that continue to enter the cookie right then so be it so we run our business model really about operating profit given our unit economics, and even our LTV to CAC.
Through about on the meaningful tool that we use to measure our business.
Next question from <unk> Nikko regarding caused weaker in Q4 or anything like that other than in prior quarters was a deliberate I think that's all for <unk>.
Or shopping Oh. These are question and answer of all new beverage David overall.
Can you give us a sense of that.
Q4, 2023 patents simple basically cause the cuts are in.
Inventory P. B obligations, what do you expect this to go and get this cow so.
Kazuko, we putting getting the all financial data are we putting $50 million range.
Yeah, and it's in and it's predominantly working capital, which obviously includes our inventory we believe that once we get scale and you know even if we have increased but you can read.
Ran into it we've.
We've got two things, we can easily get farnell banks to finance us, which all banks are willing to do but we've decided to use cash.
And we believe that given that the ability for us to try to vehicles.
Can't say dragging that down that gross profit margins will have a greater return on investment or you know a core vishal. This.
So of course, if we're going to be.
So if we got the lease obligations.
Well, you, obviously will do that you know pretty prudent manner and as we scale and their lives each lease obligations, but I think fundamentally we've been mindful of all that investment and we're being mindful of our investment and the return on equity since last August .
The next Christmas promo bakery.
Is growth through acquisition for both electric and network effect possible and Samsung.
Hi.
Clearly, we are going to pay them anything that makes sense.
Sorry, if there was something of equivalent purchase or acquire a you know.
Bulldogs out because there's a ballpark out but yes, we would do it but we're also very conscious or that would be.
To grow through organic growth and we are also very cautious to you now.
A lot of opportunities to lighten up on our payable which returned burn because the effort.
Get the culture right oops aimed at a target publicly.
I mean do rail.
This focus for many months or even years to get things that Greg from right. So we have turned down quite a few opportunities.
The next question is from Dallas than pellets, our impactful work.
Yes, I can.
In Q1 please.
Camelback Airport.
From dividends rather than another acquisition.
Importantly that question got it.
And what we focus regarding dividends or a or acquisition I think fundamental.
At this point in time, if it was actually up to me we've exited a best practice.
Due to our shareholders is actually to do share buybacks, even though a lot of liquidity it doesn't make sense.
And given our balance sheet and and given that we are still able to grow with generating a substantial amount of free cash flow on a monthly basis. We thought it was just prudent to return to shareholders.
Processing your U S, especially.
Our next question from on high.
You see the impact of challenging economic conditions on your defense of subscribers. The number will be circa of African perfect quarter currencies only true Paul.
As part of our business going forward and would that be something south as they start to ramp up.
So as I've mentioned before we've had the big two months.
In the first few months.
On the OPEC additional 40 fell off but just in the first two months.
We've seen good growth also in South Africa, and Southeast Asia, and Europe and.
Clearly all these macroeconomic conditions do affect us and a lot of the time, it's really just about us adapt to the new challenges and while we are agile and required for Amazon bestbuy com, but longer than what we expected at the outset, given goggles for FY 'twenty four.
I feel very comfortable that even though these kind of macroeconomic conditions that we should be able to meet.
Those are big library subject given.
Next question from Chris <unk>.
Africa continued activity see golf cortex, Gaba by hour, you're managing a large ship or challenges I think I've addressed that.
Next Christian malls screen, what's why the rest of the Sky facility.
The reduced July to call a cyclical thing.
Well I think mark answer that.
We could drop our G&A.
Relatively quickly.
Let me complete the bold.
Bolt on it all back office to be able to deal with future growth.
It's blocking and tackling them, just yet, but as we get more and more work on penetration and opportunities will be.
Quickly bacterial drop from current levels down to call it.
And that can easily happen to other pay at a pool for our peers.
Happens relatively quickly.
We are more focusing on building the backbone to support infrastructure for growth.
And then I've got a question from corporate videos.
On your returns on capital have been declining over the past five years paired with paid upon what's management law firms eternal capital well it depends how you measure that I couldn't I guess, so we could take all the tests that we've got on our balance sheet and pay it all out there's evidence.
And then all of US tapping our return on equity will be extremely hard. So it really is we could easily.
That.
Good evening.
They are much harder for them and get a better a third I think the R. E that we've got a current case is extremely healthy and we're very conscious of it in terms of having no cash on our balance sheet, which traditionally what we did back when we only under Jayyousi we.
He used to keep out all the cash.
Our returns would be pretty much in line with those values are.
Our next question from pressure I'll give you our ecosystem shifting with a Youtube Facebook.
You're going to I R. In the next years or the ecosystem become more fiber or less for us.
So at the moment AI is a big buzzword and <unk> will continue to grow in leaps and bounds.
We will be well, we have got quite a lot of machine learning.
In algorithms that we do with our data we have got I I as well clearly that I always see at the moment is really good and it's very impressive and obviously over time a lot of the AI will fall into companies like ourselves and we simply have a got a roadmap for it.
But we also have lots of Russell into it.
We want to understand a bit better. So that's the only investment in ion is done correctly. So I think we will we will see that Oh based berthing to ion we just group across the cycle and I think in the next 12 to 24 months, we'll be evaluating how.
We will use some.
Some of the AI back from the market in our own business.
Intelligence reports.
I'll discuss it and I don't believe it will be a difficult thing to incorporate our golf platform.
Uh huh.
The next question from Conor can you discuss more about the economics of logistics business pick up what's the market size or other competitors and what's the long term without profitability margin. So well at this point, Bob we saw profitability margin of about 3%, we believe that will come up to five 6%.
But I think the real play is exiting the trap.
The extra difficult logistics platform.
Platform entourage logistics back on to our platform, where our customers can do all day long and they lost malls.
For one single platform and that's what we're working on and that is what I believe is really scalable and really profitable of course backpack possible to assess with vitamin as opposed to a delivery as a service environment. So at the later stage of our catalyst one is necessarily pick up they can use it on.
Any of these health.
Fourth delivery platforms, we love any specifics that I use pickup we more about looking after our customers. So that they can leverage all these other technologies to help them grow their businesses.
The next question from David overall, what you're going to do with cash isn't the time to do buybacks I think I'll answer that.
Buybacks are really our core us at this point in time, given our low are you know you know.
We haven't got a high liquidity so it doesn't make sense next question coming from Patrick.
O'reilly what.
Is your opinion or South Africa, as a barbell investment destination, even the Minneapolis challenges the country is facing I'm, sorry, Patrick Mark you always get.
Get on South Africa, not always both talking about Africa.
Charles already seen April I've always seen South African turmoil I mean, nothing we see today is better fit to win all of the chart 14 years old I think the problems are different but they solve problems.
You know, we've got with other evenings I bet. It means but of course, we've got a a resilient economy.
So we recommend that anybody that understand part of Africa, and one student therefore part of Africa, its our biggest national to invest.
Clearly South Africa, they have got a lot of nuances and shoot that people love.
Nah Lockouts health South Africans to deal with these great brands, but certainly strong governance corporate governance, a strong economy. Despite all these challenges.
Our next question from some really training them in parallel the current payout ratio into 2024.
Well if we.
Our free cash flow conversion to earnings per share conversion is extremely.
So all of that is predominantly all phosphate drugs like the others. We've given for F. R. E sports was biased, but we are expecting that to economic agents and get that it's still very much a bottle back to a full grown at double digit numbers, which is very healthy and our people believe that.
The payout ratio could be maintained in 2024 poorly either make a decision that is a board decision, whether we pay president's or not but in my mind. We certainly believe we'll have the cash to do it.
The next question comes from Judy at which point penalty expected cyclical growth you'd see sandeep, you've given a large opportunity given all you know, it's really sometimes I get up in the morning.
You know, we really are just the thought that there's so much opportunity with so much to do I really cannot answer that question at this point.
Yeah, I think that's what the final question I want to thank everybody for joining us so its a catch all that just close the courtroom.
Uh huh.
Okay.
Uh Huh al Al. Thank you managed to keep capex relatively low raw grabbing assets rights.
So we've got quite a strong history of lifting.
Looking at our capital allocation disciplined Hawaii, and Oh, I think it's sometimes.
It's who we are participant that it could be growing much faster as we locked inside disciplined in how can we throw more money at a thousand marketing and just grown a bit more wall Street. So it's really is our disciplined organic.
Gary.
That's allowed US a you know that.
The capex <unk> to be quite blurred, having feedback what you also saw in FY 'twenty, Pete is that which obviously affected our operating profit negatively was back in the bundle sells a bigger portion than we had seen in prior years was actually expensed upfront.
And less well capitalized in other words.
The shareholders will get the benefits in over the next four years and they took a big punch in operating expenses this year.
<unk> still got 30% the operating profit and I suppose that the contract law under the Dominion event not Brad.
<unk> profits.
I think that's the last question I think.
Well I think the audience for their phone please.
Please feel free to contact Investor Relations should you have further questions. Okay.
Goodbye.