Cartrack should truly reach economies of scale in the next 24 months, when the mobile asset management and asset recovery company should reach one-million global subscribers, says CEO Zak Calisto.

Speaking in Johannesburg as he announced Cartrack’s financial results for the six months ended August 31, he noted that the company had grown its subscriber base by 28%, to 849 772 subscribers, for the period under review, which was an acceleration of the compound growth rate in subscribers over the past six years of 21% a year. 

Around 73% of the group’s total subscriber base joined Cartrack in the past 36 months, with the average lifecycle of customers more than 64 months.

Calisto said the growth was as a result of ongoing strong investment in the company’s operational, distribution and service capacity.

The audited asset recovery rate was 91%, down from 94% at peak.

Revenue for the Cartrack group increased by 22%, to R766-million, compared with the six months ended August 31, 2017. Operating profit increased from R200.1-million to R263.4-million.

Cartrack operates in 24 countries on five continents.

Around 26% of Cartrack annuity revenue flows from outside South Africa. Calisto envisaged this to be 50/50 in future, “but we don’t know by when”.

The South Africa business saw annuity revenue increasing by 26%, to R518.8-million, with subscribers growing by 30%.

Calisto said the South African market remained underpenetrated in both the corporate and consumer segments, despite South Africa having one of the highest telematic penetration rates in the world.

He expected the South Africa business to deliver even stronger results in the next 18 months, as Cartrack was deploying an upgraded “proprietary customer-centric platform that allowed for improved efficiencies”.

Calisto also noted that vehicle theft in South Africa was probably at the worst level it had been in a decade.
 
Cartrack’s subscriber base in Africa decreased by 2%, while annuity revenue increased by 7% to R50.5-million, primarily because of currency movements.

The decline in subscribers was attributed to economic hardship on the continent. Cartrack has appointed a continent manager to drive sales.

The European business saw subscriber growth of 23%, with annuity revenue increasing by 28%, to R67.3-million.

Calisto said Cartrack was looking at opening offices in France and Germany.

“We’ll make a decision by January.”

Asia Pacific has become Cartrack’s second largest business unit based on revenue contribution, with annuity revenue up 54% to R71.7-million, and subscriber growth of 43%.

The US continues to be somewhat of a slow starter, with the company now at around 1 400 customers. Annuity revenue for the period under review was R2-million.

Looking ahead, Calisto expected double-digit annuity revenue and subscriber growth for the foreseeable future.

Gazing further into the future, he noted that vehicle manufacturers currently made up a small percentage of Cartrack’s business. However, this might become 70% over the long term as the trend for manufacturers to embed security and safety systems in their vehicles become more entrenched, with 100% take-up envisaged in 2035.

Calisto said Cartrack was talking to vehicle manufacturers about the use of Cartrack systems. Discussions were also focused on sharing the annuity revenue stream between Cartrack and the manufacturers.

However, he noted that the “market will be very different in the next 10 to 15 years, not in the next five”.