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CARTRACK HOLDINGS LIMITED - Business update for the quarter ended 31 May 2020

Release Date: 04/08/2020 14:45
Code(s): CTK     PDF:  
Wrap Text
Business update for the quarter ended 31 May 2020

Cartrack Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/036316/06)
Share Code: CTK ISIN:ZAE000198305
(“Cartrack”, “the Group” or “the company”)

BUSINESS UPDATE INCLUDING FINANCIAL HIGHLIGHTS FOR THE FIRST QUARTER ENDED 31 MAY
2020 AND THE IMPACT OF COVID-19

YEAR-ON-YEAR HIGHLIGHTS

•   Net subscriber growth to 1,133,547 (Q1 FY20: 990,073), up 14%

FIRST QUARTER FINANCIAL HIGHLIGHTS (YEAR-ON-YEAR)

•   Subscription revenue of R526 million (Q1 FY20: R441 million), up 19%
•   Subscription revenue is 98% of the total revenue and growing (Q1 FY20: 94%)
•   Total revenue of R535 million (Q1 FY20: R468 million), up 14%
•   Operating profit up 15%


Zak Calisto, founder and Group Chief Executive Officer, commented, “Given all the economic
headwinds and the challenges resulting from the Covid-19 pandemic, we are content with our first
quarter performance. Our performance demonstrates the strong demand for our Software-as-a-
Service “SaaS” platform and the resilience of our subscription-based business model.

As to be expected, in this quarter we experienced a significant slowdown in new subscriber additions
from both new and existing customers as a result of the pandemic. However, our customers have
continued to derive significant insights and value from our SaaS platform and our subscriber churn
remains materially in line with prior periods. Our broad industry approach with a low customer and
industry concentration risk has assisted in delivering year-on-year subscriber, subscription revenue
and operating profit growth.

We remain prudent in our capital allocation. Our clean balance sheet, SaaS business model and our
ability to adapt to new challenges has allowed us to continue growing during these difficult times.

As anticipated, the demand for our software platform has assisted us in weathering the storm.”



SHORT-TERM OUTLOOK ON THE IMPACT OF COVID-19

Zak Calisto commented further, ”Whilst the effects of Covid-19 still remain uncertain, in July we
experienced a strong demand for our platform and our second best month of new subscriber additions
in our 16 years of business. We have also seen a significant improvement in collections.”
FINANCIAL PERFORMANCE FOR THE THREE MONTHS ENDED 31 MAY 2020

GROUP PERFORMANCE

Despite the Covid-19 disruptions, Cartrack delivered a solid performance across its key metrics, with
subscription revenue growing by 19%, from R441 million to R526 million. Subscription revenue now
represents 98% (Q1 FY20: 94%) of total revenue as the trend of customers choosing the bundled SaaS
platform contracts with no up-front fee continues. Despite the impact of Covid-19, the number of total
subscribers increased by 14% from 990,073 to 1,133,547.

In preparation for a potential transaction, Cartrack had engaged the services of various professional
advisors. It is anticipated that the costs for this will be circa R37 million.

During the quarter, and as a direct result of the pandemic, Cartrack experienced a reduction in cash
collections from customers, primarily from small and medium business customers who are being
supported by Cartrack, where possible, through the pandemic. Despite these headwinds, at the end
of the quarter, Cartrack’s balance sheet has strengthened further with cash and cash equivalents
growing from R146 million at the end of FY20 to R245 million.

Short term liquidity and solvency remain carefully managed, with the current and quick ratios ending
the quarter at 1.7 and 1.3 compared to 1.4 and 1.0 at the end of FY20. Bank debt as a percentage of
equity has reduced to 5% from 6% at the end of FY20 and 28% a year ago. Total liabilities as a
percentage of equity has reduced further to 50% from 52% at the end of FY20 and 68% a year ago.
Cartrack’s credit facility of R600 million with RMB remains available and unutilised at this stage.



SEGMENTAL OVERVIEW

Cartrack’s significant reportable segments have all delivered strong year-on-year subscription revenue
and operating profit growth despite the substantial challenges presented by the Covid-19 pandemic.

Amidst the hard lockdown in South Africa, this segment delivered robust subscription revenue growth
of 15% from R323 million to R371 million.

Cartrack’s highest growth segment, Asia-Pacific, delivered subscription revenue growth of 39% from
R52 million to R72 million.

Europe delivered subscription revenue growth of 35% from R40 million to R53 million.

Africa (excluding South Africa) delivered subscription revenue growth of 12% from R26 million to R29
million.

At an operational level, Cartrack has prudently frozen most new positions and has primarily only
conducted strategic recruitment in research and development.

GROUP PROFILE

Cartrack is a leading global SaaS platform provider of mobility solutions for small, medium and large
fleets and an insurance analytics, security and safety provider for both businesses and consumers.
Data analytics remain Cartrack’s primary offering while growing its artificial intelligence and value-
added services to deliver a tangible return on investment to its subscribers. Cartrack is also renowned
for its agility and speed in developing innovative, first-to-market solutions that are aimed at further
enhancing customer experience.

Cartrack’s impressive organic growth since being launched in 2004 has resulted in an extensive
footprint in 23 countries across Africa, Europe, North America, Asia Pacific, and the Middle East. With
an active subscriber base now in excess of 1.1 million, the Group ranks among the largest of its peer
companies globally.

Cartrack is a vertically integrated service-centric organisation owning all its unique intellectual
property and business processes ranging from in-house design, device and software development,
mobile-technical-workshops and sales. Hence, Cartrack is in full control of delivering a superior service
while also protecting its industry-leading margins and clean balance sheet.

The information contained in this announcement has not been reviewed or reported on by the
Group’s external auditors.




On behalf of the board
David Brown                                                       Zak Calisto
Chairman                                                          Group Chief Executive Officer
Johannesburg
4 August, 2020

Sponsor
The Standard Bank of South Africa Limited



CORPORATE INFORMATION
Registered office
Cartrack Corner
11 Keyes Road
Rosebank
Johannesburg
2196
(PO Box 4709, Rivonia, 2128)

Directors
Independent Non-Executive Directors
David Brown (Independent Chairman)
Thebe Ikalafeng
Kim White
Sharoda Rapeti

Executive Directors
Isaias Jose Calisto (Group Chief Executive Officer)
Morne Grundlingh (Group Chief Financial Officer)
Company Secretary
Anname de Villiers
Cartrack Corner
11 Keyes Road
Rosebank
Johannesburg
2196
(PO Box 4709, Rivonia, 2128)

Transfer Secretary
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Street
Rosebank
2001
(PO Box 61051, Marshalltown, 2107)


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Date: 04-08-2020 02:45:00
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