Earnings Labs

Karooooo Ltd. (KARO)

Q3 2023 Earnings Call· Fri, Jan 20, 2023

$49.85

+0.02%

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Transcript

Richard Schubert

Management

Welcome to the Karooooo 2023 results webinar. I am Richard, the group’s COO and we are pleased to present the Q3 results to our shareholders and investors. We are excited to share our performance, growth, and future plans. Our team led by our CEO and Founder, Zak, is committed to delivering on our strategic goals and creating long-term value for all of our stakeholders. With Hoeshin, our Chief Financial Officer and the rest of the team, we are confident in our abilities to continue driving growth and innovation in the future. All shareholders and investors are advised to read this disclaimer. Today, we will review the three entities within Karooooo, mainly Carzuka, Cartrack, and Karooooo Logistics. At Karooooo, we understand that mobility is core to all underground operations. We are not only thinking about connected vehicles and equipment, but also on how to improve the overall mobility ecosystems. We are constantly exploring new ways to use data to optimize operations and make them more efficient. We are establishing the leading connected cloud platform, enabling customers to develop effective controls and workflows, while digitizing their daily operations in one enterprise grade platform. Our cloud platforms seamlessly embeds into the day to day activities of our customers and offers unprecedented visibility of varying aspects of their operations covering driver, vehicle, cargo, worksite and more. Our platform contextualize these data points to offer actionable insights for their challenges. This helps customers understand and ultimately streamline their operations, enabling them to deliver on their service offering to a higher level and remain competitive within their industries. We are committed to providing our customers with the best possible service and support, and we are constantly looking for new ways to improve our platform and our service offering. Karooooo's cloud platform is well-positioned to successfully service…

Carmen Calisto

Operator

Thank you, Richard. I will now talk through Karooooo's financial performance for Q3 FY 2023. Please note that all comparisons are against Q3 FY 2022 unless otherwise stated. As expected, after substantial investment for future growth in all segments, earnings per share for the period was ZAR4.70. Year-to-date earnings per share increased 20% to ZAR14.59. Our cash generation continues to bolster our quality balance sheet. Free cash flow increased by 27% in this quarter and by 42% to ZAR434 million on a year-to-date basis. These robust earnings were achieved despite the group's strategic investment for expansion, brand building, and custom acquisition, a testament to our resilient business model that is highly cash generative. Supported by a high customer retention rate, Karooooo continues to grow at scale with a 14% growth in subscribers to 1,678,606 and 29% growth in revenue to ZAR930 million. Our growth remains organic and we continue to be prudent with capital allocation, focusing on deploying capital in key opportunities that will drive short and long-term value. Karooooo’s success is largely attributable to our innovative and customer centric culture, which has led us to become an operational technology partner that offers high customer return on investment through our end-to-end all-inclusive IoT operations cloud. Even with our large scale, our vertically integrated business model empowers us to remain agile and adaptable with full control over infrastructure, advanced internal systems, and our expanding distribution network. We have a proven ability to execute and achieve strong growth at scale. Our profitable SaaS business model continues to bolster cash flow generation with net cash on hand up by 2% at the end of November 2022 at ZAR819 million, despite paying a cash dividend of US$18.6 million in the period. Debtor’s turnover days improved to 31 days. We have strong unit economics, robust…