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South African tycoon Zak Calisto's Karooooo Ltd. is winning over analysts after the Singapore-based owner of vehicle-tracking business Cartrack grew second-quarter revenue 22% and added a record number of subscribers.
Analysts have lifted their earnings estimates for the current year, and David Shapiro, chief global equity strategist at Otto1890, said this week that Karooooo has delivered and looks set to keep growing as it expands its footprint beyond South Africa.
The Nasdaq-listed company, which also has a secondary listing in Johannesburg, reported revenue of R1.64 billion ($98.8 million) for the three months ended Aug. 31, up from R1.34 billion a year earlier, it said in its results on Oct. 19. Operating profit rose 19% to a record R422.3 million ($25.4 million), and profit for the period climbed to R291 million ($17.5 million) from R248.6 million.
Earnings per share rose 18% to R9.28. Net cash from operating activities more than doubled to R558 million ($33.6 million).
"We are pleased to report another quarter of acceleration," Calisto, Karooooo's founder and chief executive officer, said in the statement.
Subscribers drive growth
Cartrack, which sells subscription-based software for tracking and managing cars, trucks and fleets, added a record 94,516 net subscribers in the quarter, up from 70,740 a year earlier. Its subscriber base rose 18% to 2.9 million.
South Africa remains its biggest market, with almost 2.19 million subscribers. Asia Pacific and the Middle East account for 367,270, Europe for 244,878 and the rest of Africa for 101,264.
Group subscription revenue grew 20% to R1.42 billion ($85.4 million). In constant currency, Cartrack's subscription revenue rose 23%, faster than the 21% pace of the first quarter. Annualized recurring revenue at Cartrack reached R5.71 billion ($343.9 million).
Calisto said free cash flow was held back by capital spending to support subscriber growth and to protect the company against rising prices for memory chips. Free cash flow came to R40.7 million for the quarter, up from R19.6 million a year earlier.
Karooooo kept its full-year forecast unchanged. It expects Cartrack subscription revenue of R5.7 billion to R6 billion ($343.4 million to $361.4 million) for the year ending in February, and earnings per share of R38.50 to R40.
The company paid R752 million ($45.3 million) in dividends in July. In October, its board approved a buyback by Cartrack Polska that lifted Karooooo's effective ownership of the Polish unit to 93.5% from 90.9%.
Calisto's stake
Calisto, who founded Cartrack in 2001 and remains Karooooo's controlling shareholder, has seen the value of his stake grow more than fivefold over eight years, to about $1.1 billion in October, even after selling part of his holding. He sold about $6.3 million of Karooooo shares over four days in late July.
Calisto dropped out of university twice and completed compulsory military service before starting the business that became Cartrack. He moved Karooooo's headquarters to Singapore and listed it on Nasdaq in 2021.
Figures were converted at R16.6 to the dollar.
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