Q1 2025 Karooooo Ltd Earnings Call
Carmen: Hello and welcome to Karoo's Financial Year 2025 Q1 Earnings Call. On behalf of Karoo, 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 Chief Financial Officer, we'll be taking you through our key business updates and strong financial performance. All investors are advised to read through the disclaimer.
Hello, and welcome to <unk> financial year, 2025, Q1 earnings call on behalf of Carew, we'd like to thank you for joining us today I'm common the group's chief strategy, and marketing officer, and together with <unk>, Our group Chief Financial Officer, who will be taking you through our key business updates and strong finance.
Performance.
All investors are advised to read through the disclaimer.
Carmen: We will be reviewing both Cartrac and Karoo Logistics in today's webinar. After a milestone Q1 for Net Subscribers, we continue to profitably grow at scale and now have over 124,000 businesses choosing to power their operations every single day with our cloud. Management believes we are on track to achieving our FY25 outlook and remains excited to continue on our over 10 year track record of strong financial growth and performance. Physical operations bring us the food we eat and the infrastructure we rely on to call our families. They build our homes, and they keep our communities healthy.
We will be reviewing both contract and career logistics in today's webinar.
Speaker Change: After a milestone in Q1 for net subscribers, we continue to profitably grow at scale and now have over 124000 businesses choosing to power their operations every single day with all cloud.
Speaker Change: Management believes we are on track to achieving our FY 'twenty five outlook and remain excited to continue on all over 10 year track record of strong financial growth and performance.
Speaker Change: Physical operations bring us the food, we eat and the infrastructure, we rely on to call our families. They built out homes and they keep all communities healthy and clean well, it's often overlooked these physical operations power everything we do there the reason our lives have become easy they.
Carmen: Whilst often overlooked, these physical operations power everything we do. They're the reason our lives have become easier. They may not appear glamorous, but their work is admirable, and complex, and challenging. And still, as they continue on their missions to carry our economies, physical operations are experiencing big changes in their environment. This meeting is being recorded.
Speaker Change: They may not appear glamorous, but they work is admired bowl and complex and challenging and still as they continue on their missions to carryout economies physical operations are experiencing big changes in their environment. This meeting is being recorded more demanding cost of rapidly rising and competition is heightening.
Carmen: Customers are more demanding, costs are rapidly rising, and competition is heightened. In the day-to-day of running a physical operation, there are tons of moving parts. Between accidents, resource planning, timeline commitments, worker productivity, compliance, and customer expectations, there's a lot that can go wrong. And then there's the extra layer of executing on everything beautifully whilst keeping your costs down and your business efficient. This is no small feat.
Speaker Change: In the day to day of running a physical operation there are tons of moving parts between accidents resource planning timeline commitments worker productivity compliance and customer expectations. There's a lot that can go wrong.
Speaker Change: And then there's an extra layer of executing on everything beautifully whilst keeping your costs down and business efficient. This is no small feat now.
Carmen: Now the problem is that these physical operations are mostly paper-based or using five separate complex systems that don't speak to each other. The result is that they either don't have data, get lost in it, or are living siloed verticals within the same operation. What this means is that they severely lack visibility and control of their operation and have become crippled by their inability to make decisions. The left hand doesn't talk to the right hand.
Now the problem is that these physical operations, all mostly paper based or using five separate complex systems that don't speak to each other the result is that they either don't have data get lost in it or living siloed verticals within the same operation. What this means is that they severely lack visibility and control.
Speaker Change: Of their operation and become crippled by their inability to make decisions. The left hand doesn't talk to the right hand.
Carmen: As we continue to look beyond vehicles and equipment, Karooo brings all aspects of a physical operation into a single, easy-to-use, and unified platform that simplifies the decision-making of physical operations. By empowering simpler decision-making, our customers can spend less time, energy, and resources wondering about where they should be spending their time, energy, and resources. Instead, they can focus on executing on their own missions and goals; whether they want to boost safety, increase service delivery, double profitability, or reduce emissions, our cloud platform guides them on a great way to do it.
Speaker Change: As we continue to look beyond vehicles and equipment Carew brings all aspects of the physical operation into a single easy to use and unified platform that simplifies the decision making of physical operations.
Speaker Change: By empowering simpler decision, making our customers can spend less time energy and resources wondering about where they should be spending their time energy and resources. Instead, they can focus on executing on their own missions and goals, whether they want to boost safety increase service delivery double pronged.
Speaker Change: Stability or a juice emissions all cloud platform guides them on a great way to do it through simpler decision, making physical operations become faster more agile and exceed on efficiencies.
Carmen: Through simpler decision making, physical operations become faster, more agile, and exceed on efficiency. We collect over 170 billion valuable data points a month through IoT devices and open integration, contextualize this data with our advanced algorithms, and provide customers with a centralized platform that helps them overcome their challenges. Everyone talks about data, but the truth is, most people aren't great at interpreting it.
Speaker Change: We collect over 170 billion valuable data points monthly through Iot devices, and open integrations contextualize. This data with our advanced algorithms and provide customers with a centralized platform that helps them overcome the challenges.
Speaker Change: Everyone talks about data, but the truth is most people aren't great at interpreting it given cruise vertical integration and long track record of strong capital allocation, we have a real edge in knowing what data actually Matt is that physical operations and how to take that data and transform it into an actionable insight that.
Carmen: Given Carew's vertical integration and long track record of strong capital allocation, we have a real edge in knowing what data actually matters to physical operations and how to take that data and transform it into an actionable insight that drives impact. We apply our own operational learnings to our platform and constantly innovate to ensure our platform screams of simple decision making, fast decision making, agile decision making, and profitable decision making.
Speaker Change: Drive's impact.
Speaker Change: We apply our own operational learnings talk platform and constantly innovate to ensure platform screams of simple decision, making a fast decision making of agile decision, making of profitable decision, making our platform is easy to use and it's pragmatic.
Carmen: Our platform is easy to use, and it's pragmatic. Our operations cloud drives digital transformation for over 124,000 commercial customers with a 95% retention rate across businesses of varying sizes in diverse markets and industries. Despite varying macroeconomic headwinds, we continue to grow.
All operations cloud drives digital transformation for over 124000 commercial customers with a 95% retention rate across businesses of varying sizes in diverse markets and industries.
Speaker Change: Despite varying macroeconomic headwinds we continue to grow the value proposition of our platform is a massive and we have a huge runway for growth.
Carmen: The value proposition of our platform is massive, and we have a huge runway for growth. On screen, getting a parcel from A to B seems relatively easy. You click add to cart, and it just shows up.
Speaker Change: On screen getting a parcel from a to b seems relatively easy you click add to cart and it just shows up but behind the scenes of a paper based logistics company is a lot of manual mapping distance calculating capacity restraint in time matching clustering sequencing shuffling tabling a.
Carmen: But behind the scenes of a paper-based logistics company is a lot of manual mapping, distance calculating, capacity restraint, and time matching, clustering, sequencing, shuffling, tabling, assigning, and reassigning. As you can imagine, not only is this a massive waste of time, energy, and resources, but it also leads to massive costs and inevitable wrong orders, which in turn leads to the inability to compete and But with the Cartrax Delivery Solution, a business simply uploads its jobs and details, selects which drivers are available, and our AI delivers them an optimized schedule that ticks all the boxes. They simply review it and say yes.
Speaker Change: Signing and reassigning as you can imagine not only is this a massive lease of time energy and resources, but it also leads to massive costs and inevitable wrong orders, which in turn leads to the inability to compete in a less than ideal customer experience.
Speaker Change: But with contracts delivery solution, our business simply uploads their jobs and details. So lake switch drivers are available and all AI delivers them with an optimized schedule that takes all the boxes. They simply review it and say, yes right.
Carmen: By digitalizing a leading medical lab's logistics infrastructure, they have gained full visibility and control of their operation. They have seen massive results in productivity, allowing them to differentiate themselves through a 20-minute SLA and scale their business, all whilst halving their admin costs. When decision making is decoded, it becomes simple, and when it's simple, companies can achieve great things. In other instances, operations lack the visibility to understand where their problems come from.
Speaker Change: Why did utilizing a leading medical labs logistics infrastructure. They have gained full visibility and control of their operation they've seen massive results in productivity, allowing them to differentiate themselves through a 20 minute SLE and scale their business all whilst having their admin costs when decision making is D.
Speaker Change: Got it it becomes simple and when it's simple companies can achieve great things.
Speaker Change: In other instances operations lack the visibility to understand where their problems come from with advanced steel solutions, we were able to help our customer understand that idling was costing them tens of thousands each year and through the simple decision of implementing a proactive buzzer and game of fine driver behavior They could slash.
Carmen: With advanced fuel solutions, we were able to help our customer understand that idling was costing them tens of thousands of dollars each year. And through the simple decision of implementing a proactive buzzer and gamifying driver behavior, they could slash this quick fix. Through our in-cabin idling buzzer and proprietary gamified driver scorecards, a leading F&B operation reduced their idling time by over 42,000 hours, equating to over US$300,000 in fuel costs over one year. When drivers spend hours on the road every single day, they begin to make mistakes that have huge consequences. They do this without even realizing it.
Speaker Change: Just quickly throw in cabin island buzzer and proprietary Gamify driver school cards are leading F. N b operation reduce their island time by over 42000 hours equating to over 300000 U S dollars in fuel costs over one year.
When drivers spend hours on the road every single day, they begin to make mistakes that have huge consequences. They do this without even realizing it in these cases decisions need to be made instantly to have the largest impact whilst the manager can coach after the fact on safe driving nothing quite beats alerting draw.
Carmen: In these cases, decisions need to be made instantly to have the largest impact. Whilst the manager can coach after the fact on safe driving, nothing quite beats alerting drivers in real time whilst they still have the chance to correct their behavior and avoid the high-risk incident from occurring in the first place. Now you can't have a paranoid passenger keeping drivers safe in every vehicle, but you can use CarTrack's AI-powered camera to do the same thing.
Speaker Change: <unk> is in real time or else they still have the chance to correct their behavior and avoid the high risk incident from occurring in the first place.
Speaker Change: Now you can't have a paranoid passenger keeping drivers safe and every vehicle, but you can use contracts AI powered camera to do the same thing all cameras. It takes for high risk driving behavior alert drivers in real time and upload footage for managers to review.
Carmen: Our cameras are teched for high-risk driving behavior, alert drivers in real-time, and upload footage for managers to review. Managers simply review the infractions, alongside trend insights, to quickly know which course of action to take next using our powerful coaching tools. Through AI decision-making and practical tools, managers take simple steps towards maximizing their fleet's safety with impressive results in only months. Not only do our vision solutions help customers make instant improvements to safety, they also offer operations a way to make factual decisions about events.
Speaker Change: Manages simply review the infractions alongside trend insights too quickly you know, which course of action to take next using our powerful coaching tools through AI decision, making and practical tools manages take simple steps towards maximizing their fleet safety with impressive results in only months.
Speaker Change: Not only do all vision solutions help customers make instant improvements to safety. They also offer operations a way to make factual decisions about events, rather than leaving things to guesswork and draining he said she said there's.
Carmen: Rather than leaving things to guesswork and draining he said, she said, businesses can remotely request footage from our cloud to gain the evidence they need to simply investigate an event and exonerate their innocent drivers. One customer saved over US$60,000 in 5 months just by proving their drivers were not at fault in incidents.
Speaker Change: This is can remotely requests footage from one cloud to gain the evidence they need to simply investigating event and exonerate their innocence drivers.
Speaker Change: One customer saved over 60000 U S dollars in five months just by proving their drivers were not it folds in incidents not only is this a massive cost efficiency, but the simplicity of decision, making eliminated manager work attentions from Lindsay and often inconclusive investigations, which is.
Carmen: Not only is this a massive cost efficiency, but the simplicity of decision making has eliminated manager work attention from lengthy and often inconclusive investigations, which has had a large impact on driver attention and morale. After years of strong execution, we believe we are only getting started. Our strong track record of innovation and successful execution with sustained capital allocation discipline puts us in a strong position for growth. We continue to believe Southeast Asia will be a large driver of growth and continue to invest in continuous platform innovation, both in solutions that will simplify the decision-making of businesses today and tomorrow. We continue to leverage our large data scale to add value to our customers' operations with enhanced analytics and comparative benchmarks. However, our data scale remains largely untapped and has a massive opportunity ahead.
Speaker Change: Had a large impact on driver retention and morale.
Speaker Change: After years of strong execution. We believe we are only getting started a strong track record of innovation and successful execution with sustained capital allocation discipline puts us in a strong position for growth. We continue to believe southeast Asia will be a large driver for growth and continued to invest in continuous plot.
Speaker Change: Foam innovation, both in solutions that will simplify the decision making of businesses today and tomorrow.
Speaker Change: We continue to leverage our large data scale to add value to our customers' operations with enhanced analytics and comparative benchmarks.
Speaker Change: They just scaled remains largely untapped and has a massive opportunity ahead. This quarter, we look forward to moving into our new office in Johannesburg that will allow us to further unleash our potential as we move into an environment that is more conducive to all working culture.
Carmen: This quarter, we look forward to moving into our new office in Johannesburg that will allow us to further unleash our potential as we move into an environment that is more conducive to our working culture. The key differentiator for Karooo is our culture, largely driven by our founder-led approach to business. Our culture is not for everyone.
Speaker Change: A key differentiator for Korea is all culture, largely driven by our founder led approach to business. All culture is not for everyone. It is highly entrepreneurial practical agile fast demanding transparency and customer centric.
Carmen: It is highly entrepreneurial, practical, agile, fast, demanding, transparent, and customer-centric. Our culture is at the core of our ability to achieve strong growth at scale with compelling financials and a robust balance sheet. Our culture keeps us innovative, ensuring we continue to deliver an easy-to-use platform that drives strong value through simplified decision-making for our customers. We are vertically integrated. We own the systems and tools that empower us to deliver world-class service to our customers.
Speaker Change: Our culture is at the core of our ability to achieve strong growth at scale with compelling financials and a robust balance sheet all culture keeps us innovative ensuring we continue to deliver an easy to use platform that drives strong value through simplify decision, making for our customers. We are vertically integrated we.
Speaker Change: One the systems and tools that empower us to deliver world class service to our customers more importantly, we continue to invest in these proprietary tools to ensure we remain agile and resilient against headwinds we understand the importance of successful implementation and how to ensure our customers achieve it we believe in strong mom.
Carmen: More importantly, we continue to invest in these proprietary tools to ensure we remain agile and resilient against headwinds. We understand the importance of successful implementation and how to ensure our customers achieve it. We believe in strong monitoring and strategic and disciplined capital allocation. We have a robust business model and are geared for growth with a massive opportunity ahead of us. I will now hand over to Hu Xin, who will take us through our strong financial performance for the quarter.
Speaker Change: Entering in strategic and disciplined capital allocation, we have a robust business model and are geared for growth with a massive opportunity ahead of us.
<unk>: I will now hand over to <unk>, who will take us through our strong financial performance for the quarter.
Speaker Change: Thank you will come and I will now talk through <unk> financial performance for quarter. One F. Y 25. Please note that all comparisons are against quarter, one FY 'twenty full unless otherwise stated.
Hu Xin: Thank you, Carmen. I will now talk through Karoo's financial performance for Q1 FY25. Please note that all comparisons are against Q1 FY24 unless otherwise stated. Our proven and profitable SaaS business model continued and delivered a solid start for the financial year. In this quarter, Carew experienced strong customer acquisition, with Total Subscription Revenue up 15% to R964 million, and, as expected, after substantial investment for future growth in all segments, Operating Profits up 34% to R300 million, and Earnings Per Share up 41% to R7.17. All segments continue to see strong traction, with the benefits of our strategic investment beginning to show.
Speaker Change: Our pooling and profit both search business model continue and delivered a solid start for the financial year and this quarter caboose experian strong customer acquisitions, though.
Speaker Change: Subscription revenue up 15% to 964 million win and as expected after substantial investments for future growth in all segments operating profits up 34% to 300 million van and earnings per share up 41% to seven van and seven.
Speaker Change: 17 cents.
Speaker Change: All segments continue to see strong traction with the benefits of our strategic investment beginning to show.
Hu Xin: As our earnings improved with high cash conversions, free cash flow in this quarter stood at R83 million. The free cash flow generated is keeping with our planned capital allocation for future growth. In this quarter, RM37 million was invested in the development of South Africa's central office, and a total of RM304 million were invested to date.
Speaker Change: As our earnings improve with high cash conversion free cash flow in this quarter stood at 82 million when the free cash flow generate that is keeping with our planned capital location for future growth.
Speaker Change: And this quarter, the 7 million when I invest in the development of South Africa Central office, and a total of 304 million we invested to date.
Hu Xin: Capital expenditure in Curr relates to telematic device installations as a result of an increase in new subscribers. Our strong track records of discipline, capital allocations, earnings, and free cash flow will continue to bolster our balance sheet. Karoo's earnings per share increased by 41% to 7.17 rand in this quarter. The increase is driven by higher subscription revenue and expanded margins. The negative impacts from Kazooka's on earnings are now resolved with Kazooka fully integrated to support car track operations.
Speaker Change: The expenditure incurred relates to telematic device installed as a result of increase in new subscribers.
Our strong track record self discipline capital locations earnings and free cash flow will continue to bolster our balance sheet.
Core earnings per share up by 41% to seven men and 17 cents in this quarter. The increase is driven by higher subscription revenue and expanded margins the negative impact from cause Lucas on earnings are now resolved because luca fully integrated to support contracts.
Speaker Change: Operations.
Speaker Change: Contracts earnings per share up 29% to six ran at 94 cents and Peru logistic earnings per share up herein and 88% to rent any tree since Cooley will continue to scale GUL and increases earnings to meet our outlook.
Hu Xin: CarTracks Earnings Per Share Up 29% to $0.0694 and Karoo Logistics Earnings Per Share Up 188% to $0.23, Karoo will continue to scale, grow, and increase its earnings to meet our outcomes. Our consistent results extend our track records of growth at scale, profitability, and cash generation ability. Our net cash-on-hand plus cash-in-bank fixed deposits stood at R950 million, and debtors' turnover days stood at 30 days, alongside prudent provisioning to weather off strong economic headwinds in some of the markets we operate in.
Speaker Change: Our consistent results extend our track record of growth at scale profitability and cash generation ability on that cash on hand, plus cash in banks 60 policy suite at and I haven't and 50 million van that this thing to where they stood at the D days alongside with prudent provisioning to read off strong.
Speaker Change: Economic hate beans in some of the markets we are operating.
Hu Xin: The Healthy Cash Generation continues, and we are pleased to announce a cash dividend of $33.4 million to our shareholders, and the dividend will be paid in August 2024. We have strong unit economics, robust operating margins, an unleveraged balance sheet, and a strong cash conversion. We remain confident that our track record of success, especially our ability to generate healthy cash flow, is sustainable. We will now focus on Kartrack, the underlying assets of Karoo's success.
Speaker Change: The healthy cash generation continues and we are pleased to announce a cash dividend after the tree point $4 million to our shareholders and the dividend will be paid in August of 'twenty 'twenty four.
Speaker Change: We have strong unit economics robust operating margins and leverage balance sheet and a strong cash conversions, we remain confident that our track record of success, especially our ability to generate healthy cash flow is sustainable we will now focus on contract the underlying assets of <unk> success.
Hu Xin: CarTracks continues to prove its ability to scale in varying macroeconomic conditions and consistently beat the rule of 60. Overall, subscriber growth at scale by 17% to 2,047,442. And in this quarter, subscription revenue grew 15% to R960 million, while operating profit stood at R287 million.
Contracts continue to prove its ability to scale in varying macroeconomic conditions and consistently beat than the rule of 60 overall subscriber grew at scale by 17% to 2.047 million full hybrid and 42 and in this quarter subsequent shouldn't revenue grew 15%.
Speaker Change: Do I hear it and $60 million in.
Operating profit stood at 287 million van.
Hu Xin: CarTrack Experiences Strong Customer Acquisition with Net Subscriber Addition Up 88% in This Quarter. We operate in a huge addressable market and are comfortable we will continue to grow at scale with the opportunities in front of us. As CarTracks continues with strong sales revenue growth, total revenue and subscription revenue were up 15% to R981 million and R960 million in this quarter. CarTracks total subscription revenue represents 98% of total revenue, which is in line with our sales business model.
Speaker Change: Contract experienced strong customer acquisition with net subscriber addition up 88% in this quarter, we operate in a huge addressable market and are comfortable we will continue to grow at scale with the opportunities in front of us.
Speaker Change: As contracts continue via strong SaaS revenue growth contracts total revenue and subscription revenue up 15% to 981 million van and Nighthawk rent and 60 million rent in this quarter contracts. Although subscription revenue represented 98% of total revenue, which is in line with a SaaS business model.
Speaker Change: <unk>.
Hu Xin: CarTrack earnings per share up 29% to $0.0694. Our earnings will continue to benefit from our strong economies of scale. As CarTrack continues to have strong visibility of its future sales revenue, our realization of economies of scale continues to demonstrate our ability to drive earnings. Gross profit in this quarter was up 19% to R713 million.
Contract, earning per share up 29% to six ran at 94 cents. Our earnings will continue to benefit from our strong economies of scales.
Speaker Change: As contract continues to have strong visibility of its future assess revenue a realization of economies of scale continue to demonstrate our ability to drive earnings gross profit in this quarter up 19% to seven and the $10 million in gross profit margin improved to 73%.
Hu Xin: Gross profit margin improved to 73%. Despite the investment for growth, our operating profit increased 24% to R287 million, and our operating profit margin improved to 29%. Our adjusted EBITDA increased 16% to R392 million, and adjusted EBITDA margin remained consistent at 46%. Car Track's low cost of acquiring a customer, high customer lifetime value and retention rate, as well as strong benefits from economies of scale results in our leading unit economy. Our LTV to CAC is overnight.
Speaker Change: Despite the investment for growth, our operating profit up 24% to 287 million van and operating profit margin improved to 39%.
Speaker Change: Adjusted EBITDA up 16% to 392 million van and adjusted EBITA margin remained consistent at 46%.
Speaker Change: I'll try and low cost of acquiring a customer high customer lifetime value and retention rate as well 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 74% and commercial customer retention rate of 95%. We are well-positioned to continue growing while we remain prudent and disciplined with our capital allocation. We will continue to invest in the growth of the business. Over the years, CarTrack has maintained a steady upward trend and an average upfront cost of acquiring a subscriber. Apu for the quarter was R159.
Speaker Change: We had strong profit margins, our gross profit margin on subscription revenue at 74% and commercial customer retention rate of 95%.
Speaker Change: <unk> decision to continue scaling, while we remain prudent and disciplined with our capital allocation.
Speaker Change: We'll continue to invest in territorial expansion and goof up the business.
Speaker Change: Well, whether yes contract has maintained a steady Apple and then average upfront cost of acquiring a subscriber.
Speaker Change: For the quarter was 159 in.
Hu Xin: In this quarter, CarTrack's average lifetime revenue per subscriber was R9,551, and the average upfront cost of adding a subscriber to our cloud was R2,370. This cost mainly relates to sales commissions and telematic devices, which are capitalized, and sales and marketing expenses that are expenses. The headroom, derived from the average lifetime revenue per subscriber, after subtracting the average upfront cost of adding a subscriber was R7,181 per subscriber. From the 7,181 rent, we incur the cost to service a subscriber over the contract life cycle of 60 months.
In this quarter contracts average lifetime revenue per subscriber a 9551 win and the average upfront cost of adding a subscriber to our cloud was 2370 when.
Speaker Change: These costs, mainly relates to sales commissions and telematic device feature capitalize and sales and marketing expense that I expand self.
Speaker Change: Do you hate boom derived from the average lifetime revenue per subscriber after subtracting the average upfront cost of adding a subscriber was 7181 rent a subscriber.
Speaker Change: From the 7181, when we incur the cost to service our subscribers with a contract lifecycle of 60 months.
Hu Xin: The cost to service a subscriber will decrease as we grow our subscriber base. Our unique economics have remained steady, allowing us to make strong operating profits. CarSec will continue to grow its subscriber base and ARL to expand in all geographies. Our subscriber base in South Africa grew by 16%, and the prospect of improved economic conditions in South Africa gives us confidence that we can continue to extend our long-standing track records of profitable growth at scale and robust cash generation. I'll move to our newly built central office in coming September 2024.
Speaker Change: Cost to service our subscribers, we will decrease as we grow our subscriber base.
Our unit economics have remained steady, allowing us strong operating puppies.
Contracts continue to grow its subscriber base and they are out to expand in all geographies.
Speaker Change: Our subscribers in South Africa grew by 16% and the prospect of improve economic condition in South Africa gives us confidence that we can continue to extend our long standing track record of profitable growth at scale and robust cash generations.
Speaker Change: I'll move to our newly built Central office and coming September and you're doing your full they'll continue to support strong organic growth in this region.
Hu Xin: We'll continue to support strong organic growth in this region. In Asia, the Middle East, and the USA, subscribers grew by 23%, with solid traction in Southeast Asia. Southeast Asia remained as the second largest contributor to the group's revenue, presenting the most compelling growth opportunity to the group in the medium to long term. Europe saw a healthy growth of 17% and remains as a region we are focusing our resources on.
Speaker Change: In Asia, the Middle East and U S. A subscriber grew by 22% with solid sections in South East Asia.
Speaker Change: Southeast Asia remain as the second largest contributor to the group's revenue presenting the most compelling growth opportunity to the group in medium to long term.
Speaker Change: Europe saw a healthy growth of 17% and remain as a region, we are focusing our resources on.
Hu Xin: Leading OEMs partner with us to give their customers access to our platform. We expect this partnership to contribute to our results in the medium term. In addition, we are experiencing encouraging demand for our propriety compliance technology in this region. Africa Others maintains its growth with a 14% increase in subscribers. At the end of Quarter 1, our ARL increased 14% to R3,864,000,000.
Speaker Change: Leading Oems partner with us to give their customer access through our platform. We expect this partnership to contribute to our results in medium term. In addition, we are experiencing encouraging demand for output by a deep compliance technology in this region.
Speaker Change: Africa, others maintains its growth with 14% increase in subscriber.
Speaker Change: At the end of quarter, one our E are all up 14% due 2000 864 million Ren This is a good trending as we continue to see the momentum of growth in our subscriber and E. R O.
Hu Xin: This is at a good trend as we continue to see the momentum of growth in our subscriber and ARL. In this quarter, our subscription revenue gross profit margin grew to 74%, which is consistent with our expectation. As we continue to invest in territorial expansion and growth in the region we are operating in, our research and development expense as a percentage of subscription revenue is 6%, and sales and marketing expense as a percentage of subscription revenue has increased to 15%.
Speaker Change: In this quarter, our subscription revenue gross profit margin grew to 74%, which is consistent with our expectation.
Speaker Change: We continue to invest in territory expansion and growth in the region via operating in.
Speaker Change: Our research and development expense as a percentage of subscription revenue up 6% and sales and marketing expense as a percentage of subscription revenue increased to 15%.
Hu Xin: This strategic investment in customer acquisition will position us well for continued growth. General and admin expense as a percentage of subscription revenue is at 21%. As we are investing to build strong infrastructure to support our growth, we are also demonstrating our ability to contain costs. Operating profit as a percentage of subscription revenue is 30%, and our adjusted EBITDA as a percentage of subscription revenue is at 47%.
Speaker Change: These strategic investments in customer acquisition will position us well for continued growth.
General and admin expense as a percentage of subscription revenue at 21% S. We are investing to build strong infrastructure to support our growth. We are also demonstrating our ability to contain costs.
Speaker Change: Operating profit as a percentage of subscription revenue up 30% and our adjusted EBITDA as a percentage of subscription revenue at 47%.
Hu Xin: CarTrack continues to have consistent operating metrics with our strong track record of performance. Karoo Logistics continues to gain adoption by our large enterprise customers seeking to scale their e-commerce capabilities. In this quarter, Karoo Logistics delivered significant growth, generating R101 million in revenue and an operating profit of R13 million. We see a large opportunity for Carew Logistics, and we believe we have the correct strategy to win as we are customer-centric, and we will help our large enterprise customers to be customer-centric as well.
Speaker Change: Contract continues to have consistent operating metrics with a strong track record performance.
Speaker Change: Coolers as they continue to gain adoption by our large enterprise customer seeking to scale with their e-commerce capabilities and this quarter coal logistics delivered significant growth generating 101 million ran in revenue and an operating profit of 10 million van.
Speaker Change: We see lots of opportunity for crude logistics and we believe we have the correct strategy Devine S. We are customer centric and we will help our large enterprise customer to be customer centric as well.
Speaker Change: We have had a solid start to all financial year 'twenty to 'twenty five and we are on track to meet our outlook our guidance, while our outlook remains unchanged. We've contracts numbers of subscribers between 2.2 to $2 4 million contracts subscription revenue between $3 94.15 million win contracts opera.
Hu Xin: We have had a solid start to our financial year 2025, and we are on track to meet our outlook. Our guidance for our outlook remains unchanged, with CarTracks' 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 earnings per share between 27.5 rand to 31 rand. Our mission is to be a leading operational cloud service provider. 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: <unk> profit margin between 27% to 31% and Coos, earning per shares between 27.5 rental 31 win.
Speaker Change: Our mission is to be a leading operation in cloud service provider.
Speaker Change: 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.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Carmen Calisto: Good morning, good afternoon to everyone, and good evening. Thank everybody for making time for us today.
Speaker Change: Good morning, good afternoon to everyone and good evening.
Speaker Change: Everybody for making time for us today I will go through the questions and explain.
Carmen Calisto: I will go through the questions and explain and answer all the questions. I'll first start off with a question from Dylan Becker. He talked about the improving environment in South Africa, the most mature market, but still seeing nice growth. How should we think about the runaway, yes?
Chris: And answer questions Chris.
Chris: First start off with a question from Victor.
Chris: Talked about the breathing and Brian and South Africa, most mature market, but still seeing nice growth.
Chris: How should we think about are underway or yeah, how much larger can these customers.
Carmen Calisto: How much larger could these customers be if they were to adopt more pets? We saw growth of 16 percent this year in South Africa. We believe we will continue this momentum, and, as Ashim said, we'll be moving to our new office in Johannesburg in September. And that will definitely give us the opportunity to grow our headcount. At the moment, one of our bottlenecks is that we haven't got space to house more people.
Chris: Adopt more respectful.
Chris: And we saw great.
Chris: Sure.
Chris: 16%.
Chris: And we believe we will continue with this momentum and his team.
Chris: And we think our new office in Germany in.
Chris: In September and that's all good.
Speaker Change: No opportunity to earn at the moment one of the bottlenecks ease we haven't got.
Speaker Change: Nice to have more people.
Carmen Calisto: In terms of the platform, we don't all our customers use as much of the platform as they should be using, but we are embarking specifically in September on getting more customers to use parts of the platform that they could be using that they're not using. Next question, [inaudible] Re South Africa, Roy Campbell from Morgan Stanley, Re South Africa, what is your estimated market share in South Africa? What do you estimate the penetration rate is? Can you describe the tech equipment compared to the environment?
And in terms of the tax pool.
Speaker Change: Got it.
Speaker Change: Our customers use as much of the platform that that should be using them.
Speaker Change: But we are embarking specifically from September on getting more customers to use parts of the platform that they could be using that they're not choosing.
Speaker Change: Yeah.
Arrow: Next question Arrow.
Arrow: Campbell.
Speaker Change: South Africa array camera from Morgan Stanley.
Arrow Campbell: I forget what is your estimated market share in South Africa, what you estimate the penetration rate is can you describe the competitive environment.
Carmen Calisto: So I first would like to say that South Africa is an extremely competitive environment. All our competitors have been in the market for approximately 10 years longer than us. We came to the market in 2004, and they've been around from 94 to about 96. They're all very strong.
Speaker Change: So I first would.
Speaker Change: I would like to say that I think south Africa, the extremely competitive environment.
Speaker Change: All our competitors have been in the market.
Speaker Change: Approximately 10 years more than us.
Speaker Change: And to the market in 2000 and forward they've been around from 94 to about 96 that were very strong.
Carmen Calisto: And I think it's one of the geographies that we certainly see strong competition. We estimate our market share in South Africa at this point in time to be approximately 40 percent of the installed base. That's based on some internal calculations that we've done, but it might not be fully accurate. And what do you estimate the penetration is in South Africa at the moment? We estimate the penetration to be between 3.5 to 4 million vehicles, and the total vehicle park is 12 million, and we believe that, I've been saying this for years, eventually, this will go up, when the whole market will be penetrated. Another question from Roy Campbell.
Speaker Change: It's one of the one of the geographies that we certainly see strong competition.
Speaker Change: We estimate that our market chain, Okay ask at this point in time to be approximately 40% of the installed base.
Speaker Change: That's based on some internal calculations that we've done that it might not be fully accurate.
Speaker Change: Okay.
Speaker Change: And what do you estimate.
Speaker Change: The penetration as in South Africa at the moment.
Speaker Change: It's made the penetration to be between three five to 4 million vehicles.
Speaker Change: And the total vehicle park is strong.
Speaker Change: And we believe that I've been saying this for years. Eventually this will go up with the golf market will be penetrated.
Speaker Change: Okay.
Carmen Calisto: Your 16% growth in South Africa, is that a traditional track and trace, or are you gaining more market share in fleet telematics? We grew our business in South Africa. I think 40% of our growth came from consumers, and 60% came from commercial customers. A question from Alex from Raymond James: Can you talk more about your improved macroeconomic in South Africa? What did you see in June growth relative to prime month? And what we see in South Africa, we've, you know, South Africa has had elections, and most South Africans are very confident that these election results will lead to a better South Africa.
Speaker Change: Another question from Brian Campbell.
Speaker Change: 16% guidance, you said that traditional check in trays or you are gaining more market.
And in their fleets in the core.
Great kinematics.
Speaker Change: We grew our business that's got a 40% growth.
Speaker Change: Coming from consumer and 60% came from commercial customers.
Speaker Change: A question from Alex <unk> from Raymond James.
Speaker Change: Can you talk more about your improved macro youre thinking South Africa, what did you see in June.
Speaker Change: Brian.
Brian Campbell: What are we seeing South Africa.
Brian Campbell: So that's good.
Brian Campbell: Election.
Speaker Change: And then most.
Speaker Change: Most south Africans all very confident that this election results will lead to greater South Africa, and what we are seeing is that business.
Carmen Calisto: And what we are seeing as a business is that in terms of customer defaults, that's starting to decrease. It probably started to decrease about three, four months ago. And I think, just generally speaking, also the whole economic environment is starting to look quite positive compared to what it was a year ago. And from Alex as well.
Speaker Change: In terms of customer default, that's starting to decrease that's probably start to decrease about three four months ago and I think just generally speaking also the whole economic environment is starting to look quite positive compared to what it was a year ago.
Speaker Change: Yeah.
Carmen Calisto: Could you provide some more color on the launch of Next Gen Vision? What are the central commercial customers' take on the Vision solution? So the Next Gen Vision, we actually really only started launching it about two months ago. It's not fully launched, and we're finding it to have a very positive uptake, and we're very excited about that. What are the output uplifts and what features are in the next-gen product that might increase adoption relative to your prior version? I think this version is really, it's got more AI than our previous version, firstly.
And from electric creature.
Could you provide some more color on the launch of Nexgen vision, what's essentially a commercial customer.
Speaker Change: Good vision solution.
Speaker Change: So the Nexgen vision, we actually you really only started launching it about two months ago. So it's fully launched and refine yet to be a very positive uptake and we're very excited about that as well.
Speaker Change: What are the let's say on what features are in the nexgen product it might increase adoption relative to your current version.
Carmen Calisto: And second of all, there is also improvement in the AI that we had in our previous versions. Also, the way it integrates into our platform, the improvements there, I think are quite big, and we're actually only rolling out all the improvements within the next two months. So I believe by the time we get to about October, we will have rolled out our new AI capabilities on the Vizio cap.
Speaker Change: The station, it's really it's got more than our previous vision Christie and second of all get he's also improvement on the AI that we are done at previous versions.
Speaker Change: <unk>.
Speaker Change: So the way it integrates into our platform it's been proven.
Speaker Change: Pink quite big.
Speaker Change: We actually only rolling out all the improvement within the next few months. So I believe by the time, we get to about October.
It would've rolled out.
Speaker Change: <unk> capabilities on the budget and the video cameras.
Speaker Change: Okay.
Speaker Change: Okay.
Carmen Calisto: Then, Jack Sun, thanks for taking my question. I'm Jack from Kalingu Research. I've got questions on contracts, geography, Asia Pacific, the Middle East, and the USA.
Dan Jackson: Dan Jackson.
Jack: Thanks for taking my question I'm Jack from their language research Ah got Christian on contract geography, as you prepared me briefing yesterday, Gluttonize striping subscribers and subscription we've got low price and compelling regional growth. This year could you give some color on the growth rate for the region and financial.
Carmen Calisto: Got the highest rate of subscribers and subscriptions. We've got a low base and compelling regional growth in the city. Could you give some color on the growth rate for the region in financial year FY25? We certainly believe that we can keep the current growth rates and increase those growth rates. And in actual fact, we had a relatively weak quarter in Asia, but we are really seeing a much better quarter now in Q2. A question from James: Has your investment in hardware related to AR capabilities grown dramatically later, or is it in line with previous trends? getting much more for our buck in R&D, but despite that, our R&D is going up.
Karen: Thank you Karen.
Karen: We certainly believe that we can keep that.
Speaker Change: Current growth rates and increase our growth rate and in actual fact, we had a relatively weak quarter in Asia, but we are really seeing a much better quarter now in Q2.
Speaker Change: Yeah.
Speaker Change: A question from James.
James: As your investment in audio related your IR capabilities growing dramatically like it was in line with previous James.
Speaker Change: And our.
Speaker Change: R&D is at about 6% of subscription revenue and we are seeing a quite a big increase in RMB and compared to last year and I believe we will by the end of Q4 that we'll add back under control and we are obviously getting much bigger.
Speaker Change: Talent in the R&D Department. So overall I think we're getting much more for outback in R&D, but despite that now are in the east.
Speaker Change: Okay.
Speaker Change: Yeah.
Carmen Calisto: Is there any other question? I think that's all the questions for today. Thank you everybody for joining us. Thank you. Bye.
Speaker Change: Okay is there any other question.
Speaker Change: Okay.
Speaker Change: I think that's all the questions for today.
Unknown Executive: Thanks, everybody, for joining us. Thank you.
Speaker Change: Thanks, everybody for joining us thank you bye bye.
Unknown Executive: Bye bye.
Speaker Change: Goodbye.
Speaker Change: Bye.