“Despite the pandemic, our 2022 financial year commenced on a solid note as the strong growth in net subscriber additions continued.
New customer additions across a broad base of industries are at historical highs demonstrating our ability to innovate and to provide a differentiated fleet management platform corroborating the strength of our mission to build the leading mobility SaaS platform that maximizes the value of data.
The global vehicle parc continues to grow, and customers seek to reduce operating costs, optimize the use of resources, improve the efficiency of fragmented workflows and enhance safety, risk management and eco compliance.
Our comprehensive fleet management platform and vertically integrated business model differentiates us from competitors. Our focus on product development and distribution has led to our continued growth with limited industry or customer concentration risk.
As we think beyond the pandemic, it is imperative that we are positioned for expansion to meet the growing customer demand for our SaaS platform. After curtailed investment for expansion in the first two quarters of our 2021 financial year when the pandemic emerged, we entered a phase of investing for growth in
We are delighted to report strong subscriber and subscription revenue growth for our first quarter despite the ongoing operating restrictions imposed due to the pandemic.”
First Quarter 2022 Highlights:
(All comparisons relative to the First Quarter 2021)
SCALE
● 1,366,470 subscribers in total, up 21% (Q1 2021: 1,133,547)
● Net subscriber additions increased 760% to 60,470 (Q1 2021: 7,032)
GROWTH
● Total revenue increased 17% to
● Total revenue increased 22% on a constant currency basis
● Subscription revenue increased 15% to
● Subscription revenue increased 20% on a constant currency basis
● Subscription annualized recurring revenue (“ARR”), a non-IFRS measure, increased 18% to
New customer additions contributed significantly to the first quarter 2022 net increase of 60,470 in subscribers (vehicles or other mobile assets on our platform), meaningfully higher than the first quarter of 2021 where subscribers increased by 7,032. Sales and marketing basic salaries and marketing costs are a major component of the cost of acquiring new customers and are not expensed over the expected life span of a customer, but rather expensed when incurred. This component of operating expenditure was significantly higher by
Operating expenditure related to sales and marketing increased 71% in the first quarter of 2022 as the group continues to enhance its vertically integrated sales and marketing teams and drive customer acquisition. R&D operating expenditure increased 44% compared to the first quarter of 2021, supporting the continued enrichment and expansion of our SaaS platform. General and administration expenditure increased 21% compared to the first quarter of 2021.
The group delivered operating profit of
First Quarter 2022 Financial Overview
Subscription Revenue and Total Revenue
Total revenue increased 17% to
Operating Expenses
As planned, operating expenses increased 38% to
● Sales and marketing expenses as a percentage of subscription revenue increased to 14.6% compared to 9.9% in the first quarter of 2021.
● R&D expenses as a percentage of subscription revenue increased to 5.4% compared to 4.3% in the first quarter of 2021.
● General and administration expenses as a percentage of subscription revenue increased marginally to 21.2% compared to 20.2% in the first quarter of 2021.
Operating Profit, Adjusted Profit and Adjusted Earnings per Share
The group delivered operating profit of
Adjusted profit, a non-IFRS measure, decreased 11% to
The total IPO costs (including underwriters fees) have amounted to
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA, a non-IFRS measure, increased 3% to
Management’s Assessment of Subscriber Unit Economics
ARPU
ARPU measures the monetization of Karooooo’s SaaS platform and is an indicator of pricing efficiency, competitiveness and market positioning. It is calculated on a quarterly basis by dividing the cumulative subscription revenue for the quarter by the average of the opening subscriber balance at the beginning of the quarter and closing subscriber balance at the end of the quarter and dividing this by three.
The group’s ARPU of
Cost of Acquiring a Subscriber
The cost of acquiring a subscriber (vehicles or other mobile assets on our platform) includes the cost of the telematics device together with any labor related costs for our automotive technicians and the cost of the direct sales commission. Karooooo’s low cost of subscriber acquisition benefits from its vertically integrated business model, which allows it to control service levels, costs, improve efficiencies and be in direct contact with customers instead of relying on third parties.
Management’s assessment of the cost of acquiring a subscriber for the first quarter of 2022 was
Subscriber Contract Life Cycle
The average life cycle of a subscriber is an important indicator of the group’s ability to drive margin expansion. Based upon its latest internal actuarial assessment, the estimated average useful life of a subscriber contract is 60 months. When customers hold their vehicles on Karooooo’s SaaS platform for longer than 60 months, subscription revenue gross profit margins improve further.
QUARTER ONE | ||||||||||
2022 | 2021 | |||||||||
Average revenue per subscriber per month (“ARPU”) | ZAR | 151 | 155 | |||||||
Subscriber contract life cycle | Months | 60 | 60 | |||||||
Management’s assessment of cost of acquiring a subscriber | ZAR | 2,005 | 2,636 | |||||||
Sales commission and telematics devices (Capitalized) | ZAR | 1,489 | 1,624 | |||||||
Sales and marketing operating expenses (Non-capitalized) | ZAR | 516 | 1,012 | |||||||
Subscription revenue gross profit margin | Percentage | 72 | % | 74 | % | |||||
Life cycle contribution per subscriber1 | ZAR | 6,523 | 6,882 |
1.ARPU multiplied by the contract life cycle months, multiplied by the subscription revenue gross margin percentage which is defined as subscription revenue divided by gross profit.
Outlook
Operating in a growing and materially underpenetrated global automotive market coupled with a growing vehicle parc and the trend of customers seeking digitalized software solutions to address higher operating costs, unproductive use of resources and inefficient workflows, we believe
As a result of the numerous uncertainties associated with the ongoing impact of COVID-19, it is difficult to provide guidance with certainty. However, Karooooo’s growth expectation ranges for full year 2022 compared to full year 2021 remain unchanged to what was reported previously in the results announcement on
● Number of subscribers between 1,500,000 and 1,600,000
● Subscription revenue between
● Adjusted EBITDA margin between 45% and 50%
Actual results may differ materially from Karooooo’s Financial Outlook as a result of the pandemic and exchange rate fluctuations, among other factors described under “Forward-Looking Statements” below.
Balance Sheet, Liquidity and cash flow
● Karooooo’s highly cash generative business model resulted in cash generated from operations of
● The group generated Free Cash Flow, a non-IFRS measure, of
● After the group paid a dividend of
● The group has a
Karooooo’s paid-up share capital of
The negative reserve of
First Quarter 2022 Segmental Overview
During the pandemic,
Revenue and subscription revenue in
At the end of the first quarter of 2022,
Based on our estimates, we are the largest and fastest growing enterprise mobility SaaS provider for commercial fleets in
With
On a constant currency basis revenue in this region increased 10% compared to the first quarter of 2021, even in the context of ongoing COVID-19 related impacts in the
The group’s strategic office in
The European segment delivered subscription revenue growth of 14% on a constant currency basis which corresponds to the net subscriber growth of 14%. This result was offset by currency headwinds with the ZAR strengthening significantly against the EURO, with revenue earned unchanged compared to the first quarter of 2021. Karooooo’s intended expansion strategy in
Africa (excluding
This segment remains a positive cash generator and is strategic to Karooooo’s operations in
Change to the Board of directors of
Mrs
Siew Koon Ong (
She joined
In addition to Siew Koon’s global financial expertise and deep understanding of regulatory and technical compliance in a listed environment, her extensive local knowledge and experience would be of much value to the Board.
Commenting on this appointment
Conference Call Information
Webcast: Registration is available at https://edge.media-server.com/mmc/p/knmvwv59. A live and archived webcast of the conference call will also be available on the Investors section of the Company’s website at www.karooooo.com.
Conference call: Listeners may access the live conference call by dialing the following numbers and are advised to dial in approximately 10 minutes prior to the start of the call:
United States Toll Free: 1 844 760 0770
International: +65 671 353 30
Singapore Toll Free: 800 616 2392
South
United Kingdom Toll Free: 0800 051 4241
Access Code: 8473126
IFRS Accounting
We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. The summary consolidated financial information presented has been derived from the consolidated financial statements of
About
Investor Relations Contact | Media Contact |
IR@karooooo.com | media@karooooo.com |
+27 84 512 5393 |
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
(UNAUDITED)
QUARTER ONE | ||||||||
2022 | 2021 | |||||||
(ZAR Thousands) | ||||||||
Revenue | 626,193 | 534,991 | ||||||
Cost of sales | (182,341 | ) | (144,807 | ) | ||||
Gross profit | 443,852 | 390,184 | ||||||
Other income | 785 | 178 | ||||||
Expected credit losses on financial assets | (26,404 | ) | (27,330 | ) | ||||
Operating expenses | (250,109 | ) | (180,762 | ) | ||||
Sales and marketing | (88,693 | ) | (51,852 | ) | ||||
General and administration | (128,675 | ) | (106,232 | ) | ||||
Research and development | (32,741 | ) | (22,678 | ) | ||||
Operating profit | 168,124 | 182,270 | ||||||
Initial public offering costs (“IPO”) | (10,288 | ) | - | |||||
Finance income | 712 | 1,443 | ||||||
Finance costs | (1,891 | ) | (1,577 | ) | ||||
Profit before taxation | 156,657 | 182,136 | ||||||
Taxation | (48,742 | ) | (49,279 | ) | ||||
Profit for the period | 107,915 | 132,857 | ||||||
Profit attributable to: | ||||||||
Owners of the parent | 88,275 | 87,741 | ||||||
Non-controlling interest | 19,640 | 45,116 | ||||||
107,915 | 132,857 | |||||||
Earnings per share | ||||||||
Basic and diluted earnings per share (ZAR) | 3.49 | 4.32 | ||||||
Adjusted Earnings per share (a non-IFRS measure) | ||||||||
Adjusted Basic and diluted earnings per share (ZAR) (a non-IFRS measure) | 3.90 | 4.32 |
RECONCILIATION OF PROFIT TO ADJUSTED PROFIT (A NON-IFRS MEASURE)
(UNAUDITED)
QUARTER ONE | ||||||||
2022 | 2021 | |||||||
(ZAR Thousands) | ||||||||
Profit for the period | 107,915 | 132,857 | ||||||
IPO costs | 10,288 | - | ||||||
Adjusted profit (a non-IFRS measure) | 118,203 | 132,857 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
AS OF 2021 | AS OF 2021 | AS OF 2020 | ||||||||||
ASSETS | (ZAR Thousands) | |||||||||||
Non-current assets | ||||||||||||
127,694 | 124,152 | 143,326 | ||||||||||
Intangible assets | 57,389 | 59,339 | 46,774 | |||||||||
Property, plant and equipment | 1,164,674 | 1,137,192 | 1,070,443 | |||||||||
Capitalized commission assets | 213,564 | 201,075 | 152,095 | |||||||||
Deferred tax assets | 44,191 | 47,046 | 55,931 | |||||||||
Loans to related parties | 19,400 | 19,400 | 11,000 | |||||||||
Long-term prepayment | 11,472 | - | - | |||||||||
Total non-current assets | 1,638,384 | 1,588,204 | 1,479,569 | |||||||||
Current assets | ||||||||||||
Inventories | 2,616 | - | - | |||||||||
Trade and other receivables and prepayments | 321,841 | 324,170 | 319,341 | |||||||||
Taxation | 4,190 | 15,412 | 5,176 | |||||||||
Cash and cash equivalents | 553,584 | 104,937 | 245,596 | |||||||||
Other financial asset | - | 882,420 | ||||||||||
Total current assets | 882,231 | 1,326,939 | 570,113 | |||||||||
Total assets | 2,520,615 | 2,915,143 | 2,049,682 | |||||||||
EQUITY AND LIABILITIES | ||||||||||||
Equity | ||||||||||||
Share capital | 7,142,853 | 2,739,629 | 10 | |||||||||
Reserves | (5,440,302 | ) | (1,884,316 | ) | 1,001,261 | |||||||
Equity attributable to equity holders of parent | 1,702,551 | 855,313 | 1,001,271 | |||||||||
Non-controlling interest | 18,057 | 427,133 | 405,756 | |||||||||
Total equity | 1,720,608 | 1,282,446 | 1,407,027 | |||||||||
Liabilities | ||||||||||||
Non-current liabilities | ||||||||||||
Term loans | 9,670 | 10,468 | 17,021 | |||||||||
Lease liabilities | 69,914 | 60,283 | 63,764 | |||||||||
Deferred revenue | 73,921 | 85,655 | 54,866 | |||||||||
Deferred tax liabilities | 39,020 | 42,024 | 43,387 | |||||||||
Total non-current liabilities | 192,525 | 198,430 | 179,038 | |||||||||
Current liabilities | ||||||||||||
Term loans | 3,784 | 5,462 | 4,464 | |||||||||
Trade and other payables | 297,646 | 281,882 | 176,074 | |||||||||
Loans from related parties | 6,578 | 891,977 | 8,891 | |||||||||
Lease liabilities | 36,677 | 38,401 | 45,520 | |||||||||
Taxation | 67,039 | 25,615 | 59,460 | |||||||||
Provision for warranties | 2,057 | 981 | 1,565 | |||||||||
Deferred revenue | 193,701 | 161,110 | 167,643 | |||||||||
Bank overdraft | - | 28,839 | - | |||||||||
Total current liabilities | 607,482 | 1,434,267 | 463,617 | |||||||||
Total liabilities | 800,007 | 1,632,697 | 642,655 | |||||||||
Total equity and liabilities | 2,520,615 | 2,915,143 | 2,049,682 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
QUARTER ONE | ||||||||
2022 | 2021 | |||||||
(ZAR Thousands) | ||||||||
Net cash flows from operating activities | 223,822 | 187,846 | ||||||
Net cash flows utilized by investing activities | (127,030 | ) | (76,194 | ) | ||||
Net cash flows from/(utilized by) financing activities1 | 400,944 | (19,067 | ) | |||||
Net cash and cash equivalents movements for the quarter | 497,736 | 92,585 | ||||||
Cash and cash equivalents as at the beginning of the quarter | 76,098 | 146,591 | ||||||
Translation differences on cash and cash equivalents | (20,250 | ) | 6,420 | |||||
Total cash and cash equivalents at the end of the quarter | 553,584 | 245,596 |
1. Including net proceeds of the corporate action in
RECONCILIATION OF PROFIT FOR THE QUARTER TO ADJUSTED EBITDA (A NON-IFRS MEASURE)
(UNAUDITED)
QUARTER ONE | ||||||||
2022 | 2021 | |||||||
(ZAR Thousands) | ||||||||
Profit for the quarter | 107,915 | 132,857 | ||||||
Finance income | (712 | ) | (1,443 | ) | ||||
Finance costs | 1,891 | 1,577 | ||||||
Taxation | 48,742 | 49,279 | ||||||
Depreciation of property, plant and equipment and amortization of intangible assets | 107,005 | 84,161 | ||||||
IPO costs | 10,288 | - | ||||||
Adjusted EBITDA (a non-IFRS measure) | 275,129 | 266,431 |
RECONCILIATION OF FREE CASH FLOW (A NON-IFRS MEASURE)
(UNAUDITED)
QUARTER ONE | ||||||||
2022 | 2021 | |||||||
(ZAR Thousands) | ||||||||
Net cash generated from operating activities | 223,822 | 187,846 | ||||||
Less: purchase of property, plant and equipment | (118,163 | ) | (66,589 | ) | ||||
Free Cash Flow (a non-IFRS measure) | 105,659 | 121,257 |
RECONCILIATION OF BASIC AND DILUTED EARNINGS AND ADJUSTED EARNINGS PER SHARE (A NON-IFRS MEASURE)
(UNAUDITED)
QUARTER ONE | ||||||||
2022 | 2021 | |||||||
(ZAR Thousands) | ||||||||
Basic and diluted earnings per share | ||||||||
The calculation of basic and diluted earnings per share has been based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares in issue. | ||||||||
Basic and diluted earnings per share | ||||||||
Basic and diluted earnings per share (ZAR) | 3.49 | 4.32 | ||||||
Weighted average number of ordinary shares in issue at period end (000’s) | 25,305 | 20,333 | ||||||
25,305 | 20,333 | |||||||
Basic earnings | ||||||||
Profit attributable to ordinary shareholders | 88,275 | 87,741 | ||||||
Profit attributable to ordinary shareholders | 88,275 | 87,741 | ||||||
Adjusted basic and diluted earnings per share (a non-IFRS measure) | ||||||||
The calculation of adjusted basic and diluted earnings per share (a non-IFRS measure) has been based on the adjusted profit attributable to ordinary shareholders (a non-IFRS measure) and the weighted average number of ordinary shares in issue. | ||||||||
Adjusted basic and diluted earnings per share (a non-IFRS measure) | ||||||||
Adjusted basic and diluted earnings per share (ZAR) (a non-IFRS measure) | 3.90 | 4.32 | ||||||
Weighted average number of ordinary shares in issue at period end (000’s) | 25,305 | 20,333 | ||||||
25,305 | 20,333 | |||||||
Reconciliation between basic earnings and adjusted earnings (a non-IFRS measure) | ||||||||
Profit attributable to ordinary shareholders | 88,275 | 87,741 | ||||||
Adjust for | ||||||||
IPO costs | 10,288 | - | ||||||
Tax effect on above | - | - | ||||||
Adjusted profit attributable to ordinary shareholders (a non-IFRS measure) | 98,563 | 87,741 |
Definitions
Adjusted Profit
Adjusted profit, a non-IFRS measure, is defined as, profit after tax defined by IFRS excluding the impact of non-recurring operational expenses relating to IPO costs of
Adjusted Earnings per Share
Adjusted earnings per share, a non-IFRS measure, is defined as, earnings per share defined by IFRS excluding the impact of non-recurring operational expenses relating to IPO costs of
Adjusted EBITDA
We define Adjusted EBITDA, a non-IFRS measure, as profit less finance income, plus finance costs, taxation, depreciation and amortization, plus once-off IPO costs. In addition to our results determined in accordance with IFRS, we believe Adjusted EBITDA, a non-IFRS measure, is useful in evaluating our operating performance. We use Adjusted EBITDA in our operational and financial decision-making and believe Adjusted EBITDA is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure profitability. However, non-IFRS financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS. Investors are encouraged to review the related IFRS financial measure and the reconciliation of Adjusted EBITDA to profit, its most directly comparable IFRS financial measure, and not to rely on any single financial measure to evaluate our business.
Adjusted EBITDA Margin
We define Adjusted EBITDA Margin, a non-IFRS measure, as Adjusted EBITDA divided by revenue. In addition to our results determined in accordance with IFRS, we believe Adjusted EBITDA Margin, a non-IFRS measure, is useful in evaluating our operating performance. We use Adjusted EBITDA Margin in our operational and financial decision-making and believe Adjusted EBITDA Margin is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate our competitors and to measure profitability. However, non-IFRS financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS.
Annualized Recurring Revenue (ARR)
ARR, a non-IFRS measure, is defined as the annual run-rate subscription revenue of subscription agreements from all customers at a point in time, calculated by taking the monthly subscription revenue for all customers during that month and multiplying by twelve.
Average Revenue per Subscriber per month (ARPU)
ARPU, a non-IFRS measure, is calculated on a quarterly basis by dividing the cumulative subscription revenue for the quarter by the average of the opening subscriber balance at the beginning of the quarter and closing subscriber balance at the end of the quarter and dividing this by three.
Earnings per share
Basic earnings per share in accordance with IFRS.
Free Cash Flow
We define Free Cash Flow, a non-IFRS measure, as net cash generated from operating activities less purchases of property, plant and equipment. Free Cash Flow margin is calculated as Free Cash Flow divided by revenue. In addition to our results determined in accordance with IFRS, we believe Free Cash Flow and Free Cash Flow margin, which are non-IFRS measures, are useful in evaluating our operating performance. We believe that Free Cash Flow and Free Cash Flow margin are useful indicators of liquidity and the ability of the company to turn revenues into Free Cash Flow, respectively, that provide information to management and investors about the amount of cash generated from our operations that, after the investments in property and equipment and capitalized internal-use software, can be used for strategic initiatives, including investing in our business, and strengthening our financial position. However, non-IFRS financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS. Investors are encouraged to review the related IFRS financial measure and the reconciliation of Free Cash Flow and Free Cash Flow margin to net cash generated operating activities and net cash generated from operating activities as a percentage of revenue, their most directly comparable IFRS financial measure, and not to rely on any single financial measure to evaluate our business.
Forward-Looking Statements
This press release (which includes any oral statements made in connection therewith, as applicable) includes “forward-looking statements.” Forward-looking statements are based on our beliefs and assumptions and on information currently available to us, and include, without limitation, statements regarding our business, financial condition, strategy, results of operations, certain of our plans, objectives, assumptions, expectations, prospects and beliefs and statements regarding other future events or prospects. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “seek,” “anticipate,” “estimate,” “predict,” “potential,” “assume,” “continue,” “may,” “will,” “should,” “could,” “shall,” “risk” or the negative of these terms or similar expressions that are predictions of or indicate future events and future trends.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, the development of the industry in which we operate and the effect of acquisitions on us may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and liquidity, the development of the industry in which we operate and the effect of acquisitions on us are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.
Important factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements are disclosed under the “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” sections of the Annual Report on Form 20-F filed on
You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this press release. We disclaim any duty to update and do not intend to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release.
Non-IFRS Financial Measures
This press release includes certain non-IFRS financial measures, including Adjusted Profit, Adjusted EBITDA, Adjusted EBITDA margin, adjusted earnings per share, Annualized Recurring Revenue, Average Revenue per Subscriber per month, Free Cash Flow and Free Cash Flow margin. These non-IFRS financial measures are not measures of financial performance in accordance with IFRS and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative or superior to IFRS measures. You should be aware that our presentation of these measures may not be comparable to similarly-titled measures used by other companies. Please see the reconciliations included in this press release.
●
Source:
2021 GlobeNewswire, Inc., source