Karooooo .(US:KARO)2025-05-15 13:00Financial Data and Key Metrics Changes - In Q4 FY25, total subscription revenue increased by 16% to ZAR 1,086 million, and on a U.S. dollar basis, it increased by 20% [37] - For FY25, total subscription revenue increased by 15% to ZAR 4,068 million, with a 19% increase on a U.S. dollar basis [38] - Adjusted earnings per share in Q4 increased by 39% to ZAR 9.48, while for FY25, it increased by 33% to ZAR 31.67 [38][44] - Operating profit in Q4 increased by 30% to ZAR 385 million, and for FY25, it increased by 26% to ZAR 1,312 million [38] Business Line Data and Key Metrics Changes - Kartrak generated ZAR 4,100 million in subscription revenue for FY25, a 15% increase or 19% on a U.S. dollar basis, with an operating profit margin of 31% [15] - Karoo Logistics' revenue reached ZAR 420 million, an increase of 33% or 37% on a U.S. dollar basis, with a 9% operating profit margin [16][27] - In Q4, Kartrak's subscription revenue increased by 16% to ZAR 1,084 million, comprising 98% of its total revenue [39] Market Data and Key Metrics Changes - South Africa represented 75% of the global subscriber base, with over 1,700,000 subscribers [23] - Southeast Asia and the Middle East accounted for 12% of total subscribers, with Q4 constant currency subscription revenue growth reaching 31% [24] - Europe had over 200,000 subscribers, with a 20% growth rate in Q4 [25] Company Strategy and Development Direction - The company aims to expand its distribution footprint in Asia and Europe while enhancing customer engagement and capturing demand for video capabilities [33] - A focus on disciplined capital allocation prioritizes organic growth and innovation, with plans to return surplus capital to shareholders when not efficiently invested [35] - The launch of Car Track Tag aims to enhance asset management and expand the platform's capabilities [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth momentum, particularly in Asia, which is viewed as having the highest growth opportunity [58] - The company anticipates a 10% increase in average revenue per user (ARPU) by the end of FY26, driven by upselling existing customers [55] - The outlook for FY26 includes subscription revenue guidance between ZAR 4,700 million to ZAR 4,900 million, implying growth of 16% to 21% [50] Other Important Information - The company ended Q4 with net cash and cash equivalents of ZAR 838 million, maintaining a strong balance sheet [22] - Adjusted free cash flow was ZAR 425 million, with a focus on strategic investments to support growth [45][46] Q&A Session Summary Question: What is the reception of the Car Track Tag launch? - The product has been well received in South Africa, with substantial scale achieved [54] Question: How does the company plan to drive growth in FY26? - The focus will be on enhancing customer offerings and increasing ARPU through existing customer sales [55] Question: What is the current view on net cash balance and dividends? - The company remains focused on capital allocation for growth, with decisions on dividends typically made in Q2 [61] Question: How does the company view share buybacks? - Share buybacks have been challenging due to low liquidity, and the focus will be on other growth initiatives [62] Question: What is the outlook for subscriber growth in Asia? - Subscriber growth is expected to improve as the sales force expands, with strong productivity anticipated [63]