Q4 2024 Karooooo Ltd Earnings Call
Operator: This meeting is being recorded.
This meeting is being recorded.
Sure.
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Carmen: Hello and welcome to Carew's Financial Year 2024 Q4 and Full Year Earnings Call. On behalf of Carew, we would like to thank you for joining us today. I'm Carmen, the Group's Chief Strategy and Marketing Officer, and together with Hu Xin, our Group's Chief Financial Officer, we'll be taking you through our key business updates and robust financial performance. All investors are advised to read through the disclaimer.
common: And welcome to <unk> financial year, 2020 for Q4 and full year earnings call on behalf of Korean wed like to thank you for joining us today I'm common the group's chief strategy, and marketing officer, and together with fusion, our group's Chief Financial Officer, who will be taking you through our key business updates.
common: And robust financial performance.
Speaker Change: All investors advised to read through the disclaimer, we will be reviewing all three of cruise business units in today's webinar, namely contract Kazuko and career logistics. Please note. This is the last earnings call and which we will report on Zika as a standalone segment as its remaining operations are into.
Carmen: We will be reviewing all three of Karoo's business units in today's webinar, namely Kartrack, Karzuka, and Karoo Logistics. Please note, this is the last earnings call in which we will report on Karzuka as a standalone segment as its remaining operations are integrated in supporting the Kartrack operation. Carew remains committed to its mission of being the leading operations cloud. Our focus is to simplify the lives of operators and maximize the scale and efficiency of their operations.
Speaker Change: Created in supporting the contract operations.
Speaker Change: <unk> remains committed to our mission of being the leading operations cloud our focus is to simplify the lives of operators and maximizes scale and efficiency of their operation our innovative platform goes far beyond connected vehicles and equipment to centralize and unify and anti operation into one single place.
Carmen: Our innovative platform goes far beyond connected vehicles and equipment to centralize and unify an entire operation into one single place. We continue to help customers conquer complex challenges around safety, compliance, productivity, service delivery, cost management, fuel, maintenance, routing, resource allocation, driver and worker retention, and more. Our platform leverages our large data scale, AI, and data analytics to offer customers pragmatic insights that simplify problem solving to ensure successful implementation. We are helping to pave the benchmark and future of efficiency, safety, and impact for operational businesses and continue to believe we have a large runway for growth.
Speaker Change: We continue to help customers conquer complex challenges around safety compliance productivity service delivery cost management few maintenance routing resource allocation driver and worker attention and more our platform Leverages, our large data scale AI and data analytics to <unk>.
Speaker Change: Offer customers pragmatic insights that simplify problem solving to ensure successful implementation.
Speaker Change: We are helping to pave the benchmark and future of efficiency safety and impact for operational businesses and continue to believe we have a large runway for growth.
Carmen: We have comfortably met our financial year outlook targets in all categories and continue with our over 10 year track record of strong growth and financial performance. We ended the financial year with over 1,972,000 subscribers, car track subscription revenue of 3,523,000,000 ZAR, and an operating profit margin of 30%.
Speaker Change: We have comfortably manto financial year outlook targets in all categories and continue on our over 10 year track record of strong growth and financial performance.
Speaker Change: We ended the financial year with over 1.972 million subscribers contract subscription revenue of 3000 523 million Saar and an operating profit margin of 30%. We continue to focus on proving our ability to execute as we show strong growth whilst maintaining strong.
Carmen: We continue to focus on proving our ability to execute as we show strong growth whilst maintaining strong discipline in our capital allocation. We continue to see that our hard-to-replicate culture stands as a true game-changer for our ability to execute. Guided by our founder-led ethos, our management team embodies an entrepreneurial spirit and fosters an owner-oriented mindset throughout the teams in our entire business. At the core of our culture lies transparency, a principle we uphold unapologetically. This is not for everyone, but it is how we continue to build loyal teams that achieve. We reject the idea of closed-door meetings and instead choose open floor plans and candid communication.
Speaker Change: Long discipline in our capital allocation.
Speaker Change: We continue to see that all hard to replicate culture stands as a true game changer for our ability to execute guided by our founder led ethos, our management team embodies an entrepreneurial spirit and fosters an owner orientated mindset throughout teams in our entire business.
Speaker Change: At the core of our culture lies transparency at principal we uphold unapologetically. This is not for everyone. But it is how we continue to build loyal teams that achieve we reject the idea of closed all meetings and instead choose open floor plans and candid communication, we are open about individual and team weaknesses.
Carmen: We are open about individual and team weaknesses so that we know what to expect from each other and how to work together to empower each other through our strengths in order to maximize. Pragmatism defines our approach, emphasizing implementation and execution. We prioritize ease of use and practicality in everything we do to ensure a seamless integration into our customers' workflows. Our focus remains on tangible outcomes. We are impact-oriented, not fanciful and idea-oriented.
Speaker Change: So that we know what to expect from each other and how to work together to empower each others are all strengths in order to maximize our collective impact.
Speaker Change: Pragmatism defines our approach emphasizing implementation and execution, we prioritize ease of use and practicality and everything we do to ensure a seamless integration into our customers' workflows. Our focus remains on tangible outcomes, we are impact orientated not fanciful and idea ori.
Speaker Change: Hated.
Carmen: We also remain agile. We adapt, innovate, and refine our processes with a sense of urgency. This mindset empowers us to break barriers, drive innovation, and continuously enhance our platform and value proposition for customers. By embracing these principles, we continue to grow at scale with strong efficiencies. We continue to operate in different markets under varying macroeconomic environments.
Speaker Change: We also remain agile, we adapt innovate under final processes with a sense of urgency. This mindset empowers us to break barriers drive innovation and continuously enhance our platform and value proposition for customers.
Speaker Change: In embracing these principles, we continue to grow at scale with strong efficiencies, we continue to execute in different markets under varying macroeconomic environment, we continue to innovate and evolve our platform embracing new technologies in practical ways.
Carmen: We continue to innovate and evolve our platform, embracing new technologies in practical ways, and we continue to do so whilst remaining disciplined with our capital allocation. Our commitment to product innovation and development remains, and we continue to invest in our AI capabilities. We have witnessed the profound impact that our data-enabled AI platform has on operational efficiency by empowering operators to address complex challenges head-on. The key to our success with AI has been our unique ability to devise simple-to-use tools that harness AI to deliver tangible insights and practical applications for customers.
Speaker Change: And we continue to do so whilst remaining disciplined with our capital allocation.
Our commitment to product innovation and development remains and we continue to invest in our AI capabilities. We have witnessed the profound impact that our data enabled AI platform has on operational efficiency by empowering operators to address complex challenges head on.
Speaker Change: The key to our success with AI is vino unique ability to derive simple to use tools that harness AI to deliver tangible insights and practical applications for customers.
Carmen: Through the combination of our AI-enabled cameras and easy-to-use and fully digitalized driver coaching tools, we have delivered an end-to-end solution to customers that ensures they conduct effective coaching that focuses on the right things and ensures change happens. A prime example of our solution's efficacy is showcased by a leading mine in South Africa, which has flipped their standing on safety. Within just one month, they have achieved dramatic improvement in critical high-risk driver behavior that often leads to accidents and fatalities. Fatigue driving incidents have decreased by 32%, mobile phone usage by 13%, seat belt non-compliance by 35%, and camera coverage, which is indicative of non-compliance with safety or other protocols, has plummeted by 40%.
Speaker Change: Through the combination of our AI enabled cameras and easy to use and fully digitalized driver coaching tools. We have delivered an end to end solution to customers that ensures they conduct effective coaching that focuses on the right things and ensures change happens a prime example of our solutions efficacy is.
Speaker Change: Miss by a leading mining South Africa, who is flipped their standing on safety.
Speaker Change: In just one month, they've achieved dramatic improvement in critical high risk driver behavior that often leads to accidents and fatalities.
Speaker Change: Fatigue, driving incidents have it decreased by 32% mobile phone usage by 13% seatbelt noncompliance by 35% and camera coverage, which is indicative of noncompliance with safety or other protocols has plummeted by 40%. These transformative outcomes proves that.
Carmen: These transformative outcomes prove the power of our end-to-end solution in revolutionizing safety standards and operational efficiency. As we continue to innovate, we remain dedicated to driving positive change and fostering safer work environments globally. Carew's leading operations cloud now drives the digital transformation of over 121,000 commercial customers. We consistently demonstrate high implementation success and maintain a 95% commercial customer retention rate across businesses of various sizes in all industries, from logistics to construction and from emergency services to tourism. We continue to have low industry and customer concentration rates.
Speaker Change: <unk> of our <unk> solution, and revolutionizing safety standards and operational efficiency as we continue to innovate we remain dedicated to driving positive change and fostering safer work environments globally.
Speaker Change: Currency, leading operations cloud now drives the digital transformation of over 121000 commercial customers, we consistently demonstrate high implementation success and maintain a 95% commercial customer retention rate across businesses of various sizes and all industries.
Speaker Change: <unk> from logistics to construction and from emergency services to tourism, we continue to have low industry and customer concentration risk.
Carmen: We also continue to leverage our vast dataset to empower our customers with full visibility and control of their operations by offering them meaningful insights and practical tools for simplified decision making. Our platform offers customers an undeniable value proposition with a high ROI within weeks. Karooo is positioned for growth. We have continued to strategically invest in infrastructure for customer acquisition, high customer service delivery, and strong product innovation. We continue to believe that Southeast Asia will be our largest driver of growth in the medium to long term.
Speaker Change: We also continue to leverage our vast data set to empower our customers with full visibility and control of their operation by offering them meaningful insights and practical tools for simplify decision, making our platform offers customers an undeniable value proposition with a high ROI within weeks.
Speaker Change: Sure.
Speaker Change: <unk> positioned for growth, we have continued to strategically invest in infrastructure for customer acquisition high customer service delivery and strong product innovation.
Speaker Change: We continue to believe that southeast Asia will be our largest driver of growth in the medium to long term. We have added new members to our leadership team. We're all focused on execution and growth and have continued to build out our sales and support infrastructure and have successfully increased our presence in new provinces.
Carmen: We have added new members to our leadership team who are all focused on execution and growth, and we have continued to build out our sales and support infrastructure, and we have successfully increased our presence in new provinces. Our internal systems play a large role in our ability to deliver such strong customer service at scale, and we continue to improve on them to ensure we can adhere to our standards as we continue to grow.
Speaker Change: Our internal systems play a large role in our ability to deliver such strong customer service at scale and we continue to improve on them to ensure we can of DHL standards. As we continue to grow our team is excited to move into our new head office building in South Africa in Q2 of FY, 'twenty, five which will allow us to further.
Carmen: Our team is excited to move into our new head office building in South Africa in Q2 of FY25, which will allow us to further unlock the impact of our culture. We have established innovative partnerships to leverage our data scale and AI-enabled platform, which we will continue to nurture, and we have a strong cash position and strong cash generation to fuel our growth. I will now hand over to Hu Xin, who will take us through our financial performance.
Speaker Change: Unlock the impact of our culture.
Speaker Change: We have established innovative partnerships to leverage our data scale and AI enabled platform, which he will continue to nurture and we have a strong cash position and strong cash generation to fuel our growth.
Speaker Change: I will now hand, Nova tuition, who will take us through our financial performance.
Hu Xin: Thank you Carmen. I will now talk through Karoo's financial performance for Q4 FY24. Please note that all comparisons are against Q4 FY23 unless otherwise stated.
Speaker Change: Thank you Carman I'll now talk twos co, whose financial performance for quarter four FY 'twenty four. Please note that all comparisons are against quarter four FY2023 unless otherwise stated.
Hu Xin: Financial year 24 has been an exciting year for us. We delivered record subscription revenue and earnings while maintaining our momentum of growth and demonstrating our financial discipline. Our consistent strong results further extend our long-standing track record of scalable growth, providing us with multiple levels for continued expansion. In this quarter, our subscription revenue was up 18% to R935 million and, on a year-to-date basis, up by 17% to R3,536 million. Operating profit was up by 25% to R296 million and, on a year-to-date basis, up by 18% to R1043 million.
Financial year 'twenty four has been an exciting year for us.
Speaker Change: We delivered record subscription revenue and earnings while maintaining our momentum of growth and demonstrating our financial discipline.
Speaker Change: Our consistent strong lease out further extend our longstanding track record of steel nabucco, providing us with multiple levers for continued expansion.
Speaker Change: In this quarter, our substation revenue up 18% to 935 million vein and on a year to date basis up by 17% to 3000 536 million win.
Speaker Change: Operating profit up by 25% to 296 million van and on a year to date basis up by 18% to 1040 3 million rent earned.
Hu Xin: Earnings per share were up by 45% to RM6.81 and on a year-to-date basis up by 24% to RM23.85. We will maintain our robust business model, with our focus remaining on growing our subscription revenue as we continue our investment to scale the business. Earnings for this quarter were VN215 million, and our fee cash flow was VN161 million. Our fee cash flow has remained positive despite our investment in the development of our new South African Central Office.
Speaker Change: Earnings per share up by 45% to six spin and 81 cents and on a year to date basis up by 24% due to NTT van and 85 cents.
We will maintain our robust business model with our focus remain on growing our subscription revenue as we continue our investment to scale the business.
Speaker Change: Earnings for this quarter were 215 million van and our fee cash flow was 161 million vein.
Speaker Change: Our free cash flow has remained processes. Despite our investment in the development of our new South African Central office.
Hu Xin: Up to this quarter, we have invested R263 million in this development. Our results were achieved through strong financial discipline as we continue to make strategic investments for sustainable long-term growth. Our high cash conversion demonstrates our focused capital allocation, and we will remain focused on this approach. Our earnings are benefiting from our robust economies of scale. Carew's earnings per share in this quarter grew by 45% to $0.0681.
Speaker Change: Up to this quarter, we have invested 263 million when in this defend them.
Speaker Change: Our results were achieved through strong financial discipline as we continue to make strategic investments for sustainable long term growth.
Speaker Change: Our high cash conversion demonstrate our focused capital allocation and we will remain focused in this approach.
Speaker Change: Our earnings are benefiting from our robust economies of scale chorused, earning per share in this quarter grew by 45% to six when an 81 since the.
Hu Xin: The increase is the result of positive revenue growth and improved profitability despite our prudent and strategic investment forego. On a year-to-date basis, our earnings per share accelerates to R23.85. Karoo Logistics started to see its traction, contributing $0.48 of positive earnings per share to the group. However, our year-to-date earnings per share was impacted by 1 rent and 40 cents for the provision we made for Kazuka's reduced operation. Going forward, we will cease reporting Kazooka as a standalone segment as it integrates into CarTracks' broader business operations.
Speaker Change: The increase is the result of positive revenue growth and improved profitability, despite our prudent and strategic investments for growth.
On a year to date basis, our earnings per share at the low rate stood at NTT ran at 85 cents career.
Speaker Change: Corona logistics stuff that to see its striction contributing 48 cents of positive earning per share Studer group.
Speaker Change: Our year to date earnings per share was impacted by one win and 40 cents for the police envy mate for Kazuko reduce operations.
Speaker Change: Going forward Lee, we will cease reporting kazuko at the thin alone segment as it integrates into contracts part of business operations.
Hu Xin: Our financial performance in this quarter showcased a strong cash position, with net cash-on-hand plus cash-in-bank fixed deposit reaching R922 million. That saw turnover days improving to 29 days, alongside prudent provisioning to weather off strong economic headwinds in some of the markets we are operating in. Given our strong cash position and cash generation, currently, we expect to declare a dividend in Q2 FY25, a testament to our confidence in our robust business model that is backed by a strong and clean balance sheet.
Speaker Change: Our financial performance in this quarter showcase our strong cash position with net cash on hand, plus cash in bank fixed deposits, reaching 922 million when.
Speaker Change: That does span over days, improving 2090 days alongside we have prudent provisioning to wear off strong economic headwinds in some of the markets. We are operating.
Speaker Change: Given our strong cash position and cash generation.
Speaker Change: Currently we expect to declare a dividend in quarter two F y 25.
Speaker Change: A testament to our confidence in our robust business model that are backed by a strong and clean balance sheet. We.
Hu Xin: We will now focus on CarTrack, the underlying assets. Our momentum continues in this quarter as CarTrack extends its decade-plus track record of growth at scale, profitability, and cash generation ability. Overall, subscribers grew at scale by 15% to 1,972,000. Subscription revenue grew by 17% to R930 million, while operating profit grew to R289 million. CarTrack has consistently proved its ability to scale in varying macroeconomic conditions and consistently beaten the rule of 40. Our compounded annual growth rate has proven to be strong and consistent over the past 10 years.
Speaker Change: We will now focus on car track the underlying assets to caboose.
Speaker Change: Our momentum continue in this quarter as contract extend a decade plus track record of growth at scale profitability and cash generation of the D. Illiberal subscriber grew at scale by 15% to 1 million I have it in 72000.
Speaker Change: Subscription revenue grew by 17% to 930 million win while operating profit grew to 289 million vein.
Speaker Change: Contract has consistently proved its ability to scale in varying macro economic conditions and consistently beaten the rule of 40.
Speaker Change: Our compounded annual growth rate has proven to be strong and consistent with the past 10 years.
Hu Xin: Specifically, our subscriber CAGR stood at 19%, and Subscription Revenue CAGR at 22%, Gross Profit CAGR at 18%, and Operating Profit CAGR at 15%. These results underscore our robust business model and strategic execution. Our commitment to disciplined financial management and strategic investment positions us well for continued success and sustainable long-term growth. Hashtag Strong Subscriber Joe Fist Overall Sales Revenue, Total revenue growth in this quarter grew by 20% to $958 million
Speaker Change: Specifically, our subscriber CAGR stood at 19% and subscription revenue <unk> at 22%.
Speaker Change: <unk> profit takeout at 18% and operating profit kicker at 15%.
Speaker Change: These results underscore our robust business model and strategic execution.
Our commitment to disciplined financial management and strategic investment position, a staff of continuous success and sustainable long term growth.
Speaker Change: Contract strong subscriber Joe first of all of our SaaS revenue growth total revenue growth in this quarter grew by 20% to 958 million van on the year to date basis total revenue grew 17% to 3000 614 million van.
Hu Xin: On a year-to-date basis, total revenue grew 17% to $3,614 million. CarTracks total subscription revenue grew 17% to $930 million. On a year-to-date basis, CarTrack's total subscription revenue grew 17% to $3,523 million. CarTrack's total subscription revenue represents 97% of total revenue, in line with our SaaS business model. The strong performance of CarTrack was largely supported by demand from small to large enterprises to improve their compliance function and to digitally transform their business to become more efficient and competitive.
Speaker Change: Contracts total subscription revenue grew 17% to 900 and that the median van on the year to date basis contracts total subscription revenue grew 17% to 3000 523 million van <unk>.
Speaker Change: Contracts total subscription revenue represented 97% of total revenue in line with our SaaS business model.
Speaker Change: The strong performance of contract West Lashley supported by demand of small to large enterprise to improve compliance function and to digitally transform their business to become more efficient and competitive.
Speaker Change: As contract continues to have strong visibility of its future SaaS revenue our realization of economies of scale continue to expand our earnings and maintain our high margin.
Hu Xin: As CarTrack continues to have strong visibility of its future sales revenue, our realization of economies of scale continues to expand our earnings and maintain our high margin. In the Group Quarter, Earnings per share stood at $0.0652, up 27% compared to the previous quarter.
Speaker Change: And good quarter earnings per share stood at six <unk> and 52 cents up 27th of think comparing to previous quarter.
Hu Xin: Gross Profit for Q4 was up by 21% to R686 million, and on a year-to-date basis, Gross Profit was up by 18% to R2,589 million. Gross Profit Margin has remained consistent at 72%. Operating Profit for Q4 was up by 17% to RM289m, and on a YTD basis, Operating profit was up by 17% to RM1,069m.
Speaker Change: Gross profit for quarter, four up by 31% to 686 million van and on a year to date basis gross profit up by 18% to 2580 9 million van gross profit margin has remained consistent at 72%.
Speaker Change: Operating profit for quarter, four up by 17% to 289 million van and on a year to date basis operating profit up by 17% to 1060 9 million van opt.
Hu Xin: Operating profit margin has remained consistent at 30%. Adjusted EBITDA was up by 22% to 454 million Venn and, on a year-to-date basis, adjusted EBITDA was up by 17% to 1,710 million Venn. Adjusted EBITDA margin has remained consistent at 47%.
Speaker Change: Operating profit margin has remained consistent at 30%.
Speaker Change: Adjusted EBITDA up by 22% to fall habit, and 54 million van and on a year to date basis, adjusted EBITDA up by 17% to 1000 710 million van.
Speaker Change: Adjusted EBITDA margin has remained consistent at 47%.
Hu Xin: These results prove CarTrack's ability to maintain high margins and bolster our winning capability to be a leading operation cloud service provider in the market. CarTrack's low cost of acquiring a customer, high customer lifetime value and retention rate, as well as strong benefits from economies of scale, result in our leading unit economics. Our LTV to CAG is over 9.
Speaker Change: These readouts proof contract's ability to maintain high margins and bolster our winning Capably D to b of leading operation and cloud service provider in the market.
Okay.
Speaker Change: Contract low cost of acquiring a customer high customer lifetime value and retention V. ESMO as strong benefits from economies of scale results in our leading unit economics, our LTV to CAC is overnight.
Hu Xin: We have strong profit margins, with our gross profit margin on subscription revenue at 72% and a commercial customer retention rate of 95%. Given our track record, we are well positioned to continue scaling our business. Over the years, CarTrack has maintained a steady APU and average upfront cost of acquiring a subscriber. APU for the quarter was RM160. CarTrack's average lifetime revenue per subscriber in this quarter stood at RM9,593. The average upfront cost of adding a subscriber to our cloud in this quarter was RM2,281. These costs mainly relate to sales commissions and telematic devices, which are capitalized, and sales and marketing expenses that are an expense of.
Speaker Change: Strong profit margins with our gross profit margin on subscription revenue at 72% and commercial customer retention rate of 95%.
Speaker Change: Given our track record the about decision to continue scaling our business.
Speaker Change: Yes.
Speaker Change: Over the years contract has maintained a steady apple and average upfront costs of acquiring a subscriber.
Speaker Change: Apple for the quarter was 160 van.
Speaker Change: Contracts average lifetime revenue per subscriber in this quarter stood at 9000 Psi haven't in 93 are in.
Speaker Change: The average upfront cost of adding a subscriber to our cloud in this quarter was 2281, when Nick costs, mainly relate to telecommuting, and telematic device, which are capitalized and sales and marketing expenses that are expand self.
Hu Xin: The headroom, derived from the average lifetime revenue per subscriber after subtracting the average upfront cost of adding a subscriber, was RM7,312 per subscriber. From the 7,312 friends, we incur the cost to service a subscriber over the contract life cycle of 60 months. The cost to service the subscriber decreased as we grow our subscriber base. Our unit economics have remained steady, allowing us to make strong operating profits.
Speaker Change: The haynesville derived from the average lifetime revenue per subscriber after subtracting the average upfront cost of adding a subscriber was 7300 NGL friend per subscriber.
Speaker Change: From the 7200 and Chao fan, we incurred a cost of services subscriber or where the contract lifecycle of 60 months.
Speaker Change: Cost to service a subscriber decrease as we grow our subscriber base.
Speaker Change: Our unit economics have female Sadie, allowing a strong operating profit.
Speaker Change: Okay.
Hu Xin: Cardstrikes continues to grow its subscriber base and ARR to expand in all geographies. Our subscriber base in South Africa grew by 14% despite challenging trading conditions. 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. In Asia, the Middle East, and the USA, subscriber grew by 24% as demand in Southeast Asia has been encouraging.
Speaker Change: Contracts continue to grow its subscriber base and Ara to expand in our geographies our subscribers in South Africa grew by 14% despite challenging trading conditions.
Speaker Change: Given that we continuously pass an additional benefit to our customer and have a rich data pool. We believe he will continue to see strong customer demand in this region.
Speaker Change: In Asia, the Middle East and U S. E subscribers grew by 24% S detection in southeast Asia has been encouraging.
Hu Xin: Southeast Asia remained the second largest contributor to the group's revenue, presenting the most compelling growth opportunity and delivered increasing and sustainable income to the group in the medium to long term. Europe saw a healthy growth of 16% and remains a key focus area for our resource allocation.
Speaker Change: Southeast Asia remain as the second largest contributor to the group's revenue presenting the most compelling growth opportunity and deliver increasing and sustainable income to the group in medium to long term.
Speaker Change: Europe saw a healthy growth of 16% and remain a key focus area for our resource allocation.
Hu Xin: Leading OEMs have partnered with us, providing their customers access to our platform and driving our goal. We are poised to leverage our extensive offering to further develop the connected vehicle ecosystem and expect this partnership to contribute to our results in the medium term. In addition, we are experiencing encouraging demand for our proprietary compliance technology in the region. Africa Others maintained its growth with a 12% increase in subscribers. At the end of Q4, our ARR increased 16% to RM3,749 million.
Speaker Change: Leading Oems have partner with us providing their customer access to our platform and driving our growth.
Speaker Change: We are poised to leverage our extensive offering to further develop the connected vehicle ecosystem and expect this partnership to contribute to our results in medium term.
Speaker Change: In addition, we are experiencing encouraging demand for our proprietary compliance technology in the region.
Africa, others maintain its growth with chop a sudden increase in subscriber.
Speaker Change: At the end of quarter four our E. R. R increased 16% to 3000 749 million van <unk>.
Hu Xin: These encouraging trends reflect our continued momentum in subscriber growth and ARR. Contracts continue to have robust operating margins, and our trends are in line with the long-term financial goals set out upon our listing in 2021. Our subscription revenue gross profit margin stood at 72%, which is consistent with our expectation.
This encouraging trend reflects our continued momentum in our subscriber group N E. R. R.
Speaker Change: 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.
Speaker Change: Our subscription revenue gross profit margin stood at 72%, which is consistent with our expectation reset.
Hu Xin: Research and development expense as a percentage of subscription revenue is 6% as we focus on driving substantial benefit from our R&D capital allocation. Our planned investment in improving, enriching, and expanding our operation cloud and internal management system aims to enhance our value proposition to our customers. Sales and marketing expense as a percentage of subscription revenue stood at 13%. We believe the strategic investment in customer acquisition positioned us well for continued growth, and we expect to see future benefit from this investment.
Speaker Change: Research and development expense as a percentage of subscription revenue up 6% as we focus on driving substantial benefit from our R&D capital location.
Speaker Change: Our planned investment in improving and reaching and expanding our operation in cloud and internal management system aimed to enhance our value proposition to our customers.
Speaker Change: Sales and marketing expense as a percentage of subscription revenue stood at 15%.
Speaker Change: We believe this strategic investment for customer acquisition decision as well for continued growth and we expect to see future benefit from this investment.
Hu Xin: General and admin expenses as a percentage of subscription revenue are at 21%. The expenses have been relatively stable to reflect our commitment to build strong support infrastructure to meet our future growth plan, yet being pragmatic in our spending. Operating profit as a percentage of subscription revenue is 30%, and adjusted EBITDA as a percentage of subscription revenue is at 49%.
Speaker Change: General and admin expenses as a percentage of subscription revenue at 21% deal.
The expenses have been relatively stable two reflects our commitment to build strong support infrastructure to meet our future growth plan, yet being pragmatic in our spending.
Speaker Change: Operating profit as a percentage of subscription revenue at 30% and adjusted EBITDA as a percentage of subscription revenue is at 49%.
Hu Xin: Karoo Logistics delivers significant growth, generating 93 million rand in revenue, up by 65%, and a commendable operating profit of 7 million rand, up by 201% in this quarter. Its focus on delivery as a service through selected third-party crowdsource drivers and logistics companies has been highly scalable and is delivering substantial growth. While it continues to integrate into the CarTrack platform to expand its customer base, the Karoo Logistics stack is expected to deliver a long-term revenue stream to the group.
Speaker Change: Carew logistic deliver significant growth generating 93 million ran in revenue up by 65% and a commendable operating profit of 7 million win up baidu her it and 1% in this quarter.
Speaker Change: It focus on delivery as a service to selected that bought the crops off drivers and logistic companies has being highly scalable and is delivering substantial go well.
Speaker Change: While we continue to integrate into contract platform to expand its customer base. The career logistics that is expected to deliver long term revenue stream do their group.
Hu Xin: We believe the benefits of our strategic investment in this segment are starting to manifest given its strong quarter-to-quarter revenue growth. We are pleased to have comfortably met our 2024 outlook and are satisfied with our performance. We are committed to maintaining this momentum and driving further growth in 2025. Our mission is to be a leading operational cloud service provider, and we believe Careus is well positioned for growth. We operate in a growing and largely under-penetrated market, with strong demand coming from customers needing to differentiate and digitalize themselves.
Speaker Change: We believe the benefits of our strategic investment in this segment are starting to manifest given his strong quarter to quarter Das revenue growth.
Speaker Change: We are pleased to have comfortably met our 'twenty 'twenty four outlook and as satisfied with our performance.
Speaker Change: We are committed to maintaining this momentum and driving for the group in 2025, our mission is to be a leading operation in cloud service provider and we believe caboose is well positioned for the growth.
Speaker Change: We operated in a growing and largely underpenetrated market with.
Speaker Change: Strong demand coming from customer needing to differentiate and digitalize themself.
Speaker Change: We expect our continuous investment in our AI products platform and customer experience continue to generate robust retail in the future.
Hu Xin: We expect our continuous investment in our AI products, platform, and customer experience to continue to generate robust results in the future. Our outlook for FY 2025 is Number of subscribers between 2.2 to 2.4 million, CarTracks subscription revenue between 3.9 to 4.15 million rand, CarTracks operating profit margin between 27 to 31 percent, and Caroo's earning per share between 27.5 to 31 rand. I would like to thank everybody for joining us today, and we will now open the floor to Q&A with our group CEO and founder, Mr. Zach Calisto.
Speaker Change: Our outlook for FY 'twenty 'twenty five a number of subscriber between two two to two point golf million contract subscription revenue between $3 92 for one 5 million van contracts operating profit margin between 27% to 31% and koos, earning per shares between 27, 5%.
Speaker Change: 31 vein.
Speaker Change: I would like to thank everybody for joining us today, and we will now open the floor to Q&A with our group CEO and founder Mr. Zack Callisto.
Speaker Change: Okay.
Sharon: Thank you Sharon.
Carmen Calisto: Thank you, Ishaan. Good morning, or good afternoon, or good evening, to everybody.
Speaker Change: Good morning, or good oxygenated good evening everybody.
Carmen Calisto: I've got a few questions, so I will start off with Matthew from Confluence. What underpins to improve the effective tax rate? There are two aspects to that. The one aspect is that certain of our operations were loss making, and as they become profitable, that improves our tax rate. That is one aspect. The other aspect is intercompany dividends, the amount of dividends we've flowed through all the way to Karoo. That also impacts the taxes we've paid. Um, a question from David. Overall, congrats on the results, Zach.
Speaker Change: But to your question, so I will start off with Matthew from confluence what underpinned by improved effective tax rate.
Speaker Change: I speak to that.
Speaker Change: One.
Speaker Change: As you know our operations were lossmaking and as they become profitable.
Speaker Change: That improves our tax rate.
Speaker Change: Daddy's the one aspect the other aspect is in good company dividend.
The amount of dividends we flowed.
Speaker Change: All the way to go.
Speaker Change: All her impact.
Speaker Change: Taxes paid.
Christian: Christian from very rich.
Carmen Calisto: You announced in February that you're a company buying back 1 million shares, but only 50,000 were purchased this quarter. David, the first thing is we said up to 1 million, not 1 million, but I get your point. Are you planning to buy the 1 million shares? David, we continue to plan to buy shares. So we will definitely do that.
Christian: We're all good.
Speaker Change: Congrats on a strong track you announced in February that your company.
Speaker Change: I'm back.
Speaker Change: 1 million shares, but Ami 50000 purchase this quarter.
David the first name's receive up to 1 million not one again.
Speaker Change: To your point are you planning to buy the 1 million shares.
David: David We continue to plan to Brian's sheets, so we will definitely do that and what.
Carmen Calisto: And what's and only allowed us to buy in the region of about 50,000 shares was really the strict SEC rules to buy shares on the open market. So we've got quite severe limitations given our low liquidity, but we rely heavily on being able to buy blocks. And our broker has reached out to our investor base, and we bought two very small blocks, and we weren't able to buy any, and none of the other investors with salad. Next question from Alex from Stafford.
Speaker Change: And only allowed us to buy in the region of about 50000 shares was really the strict FCC rules.
Speaker Change: By shares on the open market. So that we were quite severe limitations given out in our liquidity.
Speaker Change: We rely heavily on being able to buy.
Speaker Change: Blocks and our broker has reached out to our investor base.
Speaker Change: And then.
Speaker Change: We bought to be small blocks, and we weren't able to buy any of none of the other investors with sellers.
Speaker Change: And our next question from Alex from Stifle.
Speaker Change: Okay.
Carmen Calisto: Comment if anything changed throughout fiscal year, our outlook. And, you know, given the outlook we're getting for this year, we certainly believe we'll definitely meet it. But so far, the first two months of the year have been very encouraging.
Speaker Change: Commented imaging change triage periscope.
Speaker Change: No.
Q4 in terms of linearity of subscriber additions and now have subscriber addition strength thus far in fiscal first quarter.
Speaker Change: We sing a baby good Q1 at this point in time.
Speaker Change: It's public knowledge that we have surpassed 2 million subscribers now and we are expecting to have a good Q1 in this quarter not being called last year, its very much in keeping with our outlook.
Speaker Change: Given the outlook, we've given for this year, we certainly believe we'll definitely meets it but so far the cruise two months of the year it bring agreeing karri-tree.
Carmen Calisto: Another question from Alex from Stifel: looks like the subscriber count guide implies a step up in quarterly ads from about 60,000 this year to 80,000 throughout fiscal year 2025. So what gives you the confidence in the acceleration there? I think during the last two financial years and specifically in the last financial year, we've really allocated a lot of capital to growing and improving the way we guide, manage, and educate internally our staff and our sales teams, and we believe that's certainly going to give us yield in FY25 and beyond. Question from Sangheili:
Speaker Change: Another question from Alex from Stifle, Luke Soccer subscriber Count guide implies a step up in quarter adds from about six 2000. This year to 80000 throughout fiscal year 2020.
Speaker Change: So what gives you the confidence in the acceleration phase.
Speaker Change: I think during the last two financial years, and specifically in the last financial year, we've really allocated a lot of capital in gravy and improving the way, we guide and manage and educate internally our store and take ourselves teams and we believe that soon.
Speaker Change: And again it gave us yield in April 25 and beyond.
Speaker Change: Question from Sam Geely.
Carmen Calisto: You are buying back 10% of your shares in issue. Who is selling? Uh, well, who is selling? Any shell that's willing to sell; we are in the market buying. Secondly, on current investment in growth and current pre-cash flow run, what needs to happen under your control to double non-operated free cash flow to over a billion, just as you have doubled EBIT over four years? I think our pre-cash flow is something that we definitely look at, but our main focus is not growing pre-cash flow.
Speaker Change: You are buying back 10% of your shares in issue recently.
Around <unk> initio base, that's willing to sell we are in the market by.
Speaker Change: Secondly, on Carrington based bank in growth and current free cash flow run what makes trip and under your control to double <unk> free cash flow to open up again, just as you have doubled EBIT over four years.
Speaker Change: I think our free cash flow is something that we definitely look at that.
Speaker Change: Our main focus is not growing free cash flow.
Carmen Calisto: Our main focus is actually growing the business as such. And if we grow our business substantially faster than we're growing now, that will actually have a negative impact on our pre-cash flow. So while pre-cash flow is definitely a very important measure to us, it's more important for us the way we allocate capital, and we've got other metrics that we prioritize over the pre-cash flow metrics. Why is the share repurchase program more appealing to you over dividends? Well, the share buyback is, in itself, a dividend to all the shareholders, and we believe that our share price is undervalued, and that's why we have opted to also do share buybacks.
Speaker Change: Main focus is actually growing the business as such and if we grow our business substantially phosphate recovery now that will actually have a negative impact on our free cash flow. So raw pre cash raise definitely a very important measure to us it's more important for us is the way we allocate cap.
Speaker Change: And we've got other matrix that we prioritize either pre K that free cash flow metrics.
Speaker Change: And Jim why the share repurchase program more appealing to you over dividend.
The share buyback is in itself evident.
Speaker Change: To all the shareholders and we believe that the.
Speaker Change: Our share is undervalued and that's why we opted to also do share buybacks.
Carmen Calisto: Another question from David Everall. Just looking at your guidance, if we take this incremental revenue, and incremental subs for the high scenario, the output is projected to drop from 160 to 120. David, I haven't got the exact metrics, and I'm reading these questions as they come through. So I'd have to look at that to see how you get to these numbers. But just looking at the question, something looks wrong.
Speaker Change: Another question from David overall, just looking at your guidance, if we take this incremental revenue or incremental hubs for the EIS scenario, the ARPA projected to about 460 to 120.
David: David I haven't got the exact metrics and I'm reading these questions as they come through so they have to look at that to see how you get to these numbers, but just looking at the question something looks wrong and I don't believe that would be the case.
Carmen Calisto: And I don't believe that would be the case. So it just depends on how you've calculated this, David. I will look at it, and I'll answer you via email because I'd have to look at how you did the arithmetic.
David: Just depends how you've calculated this David our look at it and I'll answer you via email because.
David: Because I was absolutely correct now you did this arithmetic.
Carmen Calisto: Good call Raj, our big cancer religious is getting 3 to 4 year time, in a 3 to 4 year time frame, what margins can the segment generate? I think the margins we are currently generating are really optimized profit margins; they could certainly improve, but we don't believe we must model our long-term growth. [inaudible] Again, Sebastian Tagus, what things or projects are in the South African competitive landscape? I think we have been in the market for 10 years less than our competitors, and we continue to grow our business, but not only with subscribers and subscription revenue but also by pushing through their brains. Rudy Farnica, could you please confirm whether the company will continue with the recently announced Shared Power Pack program? Rudy, yes, we will.
Speaker Change: Uh huh.
Speaker Change: Good code Raj, how big <unk> is getting three to four year time in that.
Speaker Change: Three to four years timeframe.
Speaker Change: Or what margins, Kansas segment generate I think the margins. We are currently generating a really optimize profit margins. They could certainly improve but we don't believe we must margo our long term growth.
Speaker Change: Higher margins and recurring <unk>.
These sort of margins as what we can expect and how fast you kinga. Congrats I certainly believe in the next four years, we will see growth of no less than 25%.
On Europe, and I'm being quite conservative, but it's very much my personal view.
Speaker Change: Dean.
Speaker Change: Aspen cadre.
Change of contracts seamless of African competitive landscape.
Okay.
Speaker Change: And I think we have been in the market for 10 years less than our competitors.
Speaker Change: And then we continue to.
Speaker Change: Grow our business.
Speaker Change: Not adding subscribers and subscription revenue.
Speaker Change: We don't rely on OE aim low subscription revenue model.
Speaker Change: To grow our subscribers and <unk>.
Speaker Change: And we'd not a company that's focused on the white labeling and you mentioned one of our competitors, that's great and growing why youre guiding subscriber where they're taking the share I think it's.
Speaker Change: I think the complexity you mentioning is very much around white labeling.
Speaker Change: And not pushing through their brands.
Speaker Change: <unk> could you please confirm whether the company will continue with our recently announced share buyback program through the yes, we will.
Speaker Change: Yes.
Carmen Calisto: Sebastian, are car tracks in the Pleatsaz in South Africa growing given the failure of the rail network? I think it's still very early days and I think the transport industry in South Africa is also in a bit of a... This array
Sebastian: Sebastian is projects in the pre traveling South Africa going given the failure of the round metric I think it's still very early days.
Sebastian: I think.
Speaker Change: The transport industry in South Africa is also in a boat.
Sebastian: Yeah.
Carmen Calisto: However, what we are seeing is courier companies getting larger. But in terms of long-haul companies, we don't really see anybody getting bigger. Another question from Riddhi Phanikak: What is the scope of scaling career logistics? Do you think it could grow to a level where it could... I think I've answered that question, Riddhi. Sorry, I'm reading the questions and answering them. That's why.
This array our Eva what we are seeing is Korea companies getting larger but in terms of loan Oh company, we don't really see anybody getting bigger.
Speaker Change: And I have a question from Britain.
Rudy: What is the scope of <unk> logistics do you think it could grow to a level way to think of answer that question Rudy.
Yes.
Speaker Change: The questions and answering yet.
Speaker Change: That's why Patrik.
Carmen Calisto: Patrick O'Reilly, Europe compromised 16% of your subscriber base. What countries have you penetrated in Europe given that Europe has a massive number of telematics suppliers? Are any European AMs selecting projects that I am offering? Is that happening in South Africa?
Speaker Change: Alrighty Youre in a compromised 16% of your subscriber base what countries have you penetrated in Europe, given that Europe is a massive number of kitimat think surprise.
Speaker Change: In the European I am so taking projects I am offering as it happened in South Africa. So.
Carmen Calisto: So Patrick, we've got the... I would say probably close to all the OEMs in Europe are dealing with us, and they've opted to use our platform. However, we're still in the very early stages of doing that, and we believe in the medium term that's definitely going to be... it's going to be a significant source of our business. Then came a question from Dylan Becker. As you expand into new geographies, call out new provinces in the quarter.
Speaker Change: Okay.
Speaker Change: We've got the more I would say probably close to all of them.
Speaker Change: Oems in Europe are dealing with us and they've opted to use our platform.
Speaker Change: Our Eva we still in very early stages in doing that and we believe in the medium term that definitely going to be.
Speaker Change: It's going to be.
Speaker Change: A significant source of our business.
Speaker Change: Then a question from Dylan Becker.
Dylan Becker: As you're expanding into new geographies called out new provinces in the quarter.
Carmen Calisto: I think just, Dylan, when we talk about the geography, we nearly, we refer to a country and when we refer to provinces, we refer to, you know, we are, for instance, in a very large country like Indonesia, but we only have presence in maybe two or three of the provinces, but there's a substantial, there's a lot of large cities where we still have no presence, and that's what we refer to as provinces.
Speaker Change: <unk>.
Speaker Change: Pink.
Speaker Change: Yes.
Speaker Change: When we talk about the geography, we nearly we refer it to our country and when we did for two <unk>.
Speaker Change: Provinces, we referred to.
Speaker Change: We are bringing to us in a very large country like Indonesia by three Danielle prison in maybe two or three of the provinces.
Speaker Change: Substantial.
Speaker Change: There's a lot of large cities, we still have no payments and that's what created characterize provinces.
Carmen Calisto: With your quick ROI, are you seeing initial customer acquisitions serving as references that are driving additional customer acquisitions in the market as brand awareness grows? Certainly so, Dylan. As our brand gets stronger, we certainly get bigger momentum in the business. And in a lot of these geographies, we're starting to get a lot of brand recognition, but I still think we, in a lot of them, still fall short of being a very strong brand.
Speaker Change: With your quick color on are you seeing initial customer lens, serving as references that are driving additional customer acquisitions in your market as brand awareness grows.
Speaker Change: So Kevin as our brand gets stronger.
Kevin: We certainly get big and momentum in the business and in a lot of these geographies, we're starting to get a lot of brand recognition.
Brian: The increase in the amount of them, we still far from being a very strong brand clearly in certain countries. We already are a very strong brand, but in some countries, we still bogging it Brian.
Carmen Calisto: Clearly, in certain countries, we are already a very strong brand, but in some countries, we're still building the brand. [inaudible] Can you please provide some insight into what factors are necessary to substantially accelerate subscriber additions in Southeast Asia from the current 24 percent, possibly back towards the growth levels pre-COVID pandemic severe expectations of 55 percent and 58 percent?
Speaker Change: Chris slogan.
Speaker Change: Can you. Please provide some insight into what effective unnecessary to substantially accelerate subscriber editions in southeast Asia from the current 24%.
David: Possibly back towards the growth wave of Covid Hey, David.
Speaker Change: Uh huh.
Speaker Change: Or 50.
55% and 58%.
Chris: Chris I think it just really.
Carmen Calisto: Chris, I think it's just really us building our distribution, which I believe we've made really good progress on in FY24. I think that progress is going to serve us well in FY25 and beyond. But we continue to expand into other provinces in the countries we operate. So as we build our capabilities to distribute, we will certainly get back to much higher levels of growth. Another question from Ridi Faneke.
Speaker Change: Bogey or distribution, which I believe we've made really good progress in FY 'twenty four I think that Brexit is going to serve as strong in FY 'twenty and beyond but we continue we continue to expand into other provinces in the countries. We operate so as we build our capabilities.
Distribute we will certainly get back to a much higher levels of growth.
Carmen Calisto: How does the gradual adoption of EVs impact the car tax business? You know, our platform is able to deal with EV vehicles. We've integrated with a lot of EV vehicles, and in fact, we got one OEM sending us their vehicles, actually two OEMs sending us their EV vehicles. So for us, it's well advanced with our EV technology.
Another question from Green different nature.
Speaker Change: The gradual adoption of Evs impact cortex Prisma.
Speaker Change: Our platform is able to deal with EV vehicles a.
We've integrated with a lot of EV vehicles and in actual fact, we got a one O in simi as a vehicle to actually to Oems.
Speaker Change: The EV vehicles.
Speaker Change: For us.
Speaker Change: We are well advanced with our <unk> technology.
Carmen Calisto: And I want to thank everybody for joining. Are there any other questions? from Myles Ferry. Any acquisitions in the pipeline? No, Myles, not at this stage. I want to thank everybody for attending, and we'll speak again at our Q1 results. Thank you.
Speaker Change: I want to thank everybody for joining I'd take another question.
Speaker Change: Pro-morals free in me.
Speaker Change: Acquisitions in the pipeline now Mazda up at this stage, Alan and I. Thank everybody for attending and we'll speak again add back Q1 results. Thank you.
Speaker Change: Barbara.
Speaker Change: Goodbye.