Covid-19 was like getting a puncture when you are driving really fast on the highway, says Cartrack CEO Zak Calisto.
“We were ready to grow in the 2021 financial year, and we still got growth, but not quite what we anticipated, or what we had planned for, but our economies of scale allowed us to keep our margins.”
The mobility solutions group managed to counter the negative effects of Covid-19 for the six months ended August 31, growing operating profit by 16%, to R368-million, compared with the same period last year.
Subscriber revenue grew by 19%, to just more than R1-billion.
Subscription revenue made up 98% of total revenue, up from 96% in the comparable period last year.
Total revenue was up by 16%, to almost R1.1-billion.
The company, which operates in 23 countries and on five continents, also reported year-on-year subscriber growth of 13%, to 1.12-million customers.
“This reporting period was materially affected by a substantial number of our loyal customers facing cash flow and operational difficulties due to the severe global lockdowns and travel restrictions,” says Calisto.
“We stood by our customers and afforded them all reasonable assistance possible.”
Cartrack also had to deal with limited capacity to install its in-vehicle Internet-of-Things technology, owing to the restrictions imposed around Covid-19.
“We had no problems with sales, but with getting our devices into vehicles,” says Calisto.
“The latter months of the period saw us record two of our best months of new subscriber additions.”
South Africa delivered 17% subscription revenue growth for the period, from R655-million to R763-million, and subscriber growth of 13%.
The subscriber base in Africa (excluding South Africa) grew by 2%, and subscription revenue for the period was flat, at R54-million.
The region remains a positive cash generator and strategic to operations in Southern Africa, especially as many South African companies continue to expand cross border, says Calisto.
Asia Pacific was the second largest revenue contributor and the fastest growing segment in the group in the period under review, with subscription revenue up by 33%, from R105-million to R140-million, and subscriber growth of 28%.
Calisto says the Asia Pacific region presents the greatest potential in the medium to long term, as markets here remain underpenetrated owing to fragmented market participants delivering entry-level offerings.
The European segment delivered subscription revenue growth of 34%, from R81-million to R109-million, with subscriber growth of 11%.
Calisto says Cartrack has a strong focus to grow its business in Europe, but expects a tough few months ahead, owing to Covid-19 lockdowns as the region enters its winter period.
Looking ahead, Calisto says Covid-19-related operational and travel restrictions will impact the group’s full-year results, predominantly owing to limited capacity to install in-vehicle technology, as well as the inability to deploy talent currently in Singapore, into the Asia Pacific region.
While difficult to quantify, Cartrack’s current assumption is that the disruption caused by Covid-19 will have less of an impact on the second half of the financial year, and that new subscriber add-ons and subscription revenues will likely experience “solid growth” when compared with the first half of the financial year.