Cartrack shrugs off lockdown to grow revenue
Vehicle-tracking company records its second-best month for new subscribers in 16 years
Listed vehicle-tracking company Cartrack has reported revenue growth for the May quarter despite the slowdown in vehicle sales due to the lockdown.
Global lockdowns aimed at curbing the spread of the coronavirus have halted or slowed economic activities, including car sales.
Cartrack said it was able to maintain its performance despite Covid-19 disruptions in the first three months of its financial year.
Subscription revenue rose 19% to R526m from R441m. Cartrack said subscriptions accounted for 98% of total revenue compared with 94% in the previous matching period as “the trend of customers choosing the bundled SaaS (Software as a Service) platform contracts with no upfront fee continues.”
The company increased total subscribers 14%, from 990,073 to 1,133,547.
In a note to shareholders on Tuesday, Zak Calisto, founder and CEO of Cartrack, said: “While 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.”
Though it did not give detail on July’s financial performance, Cartrack is likely to have experienced a rebound locally and internationally as economic activity picks up.
This week, the National Association of Automobile Manufacturers of SA reported that 32,396 vehicles were sold in July, markedly down on 46,042 in July 2019. But July 2020 figures are still higher than those of June, when vehicle sales resumed officially.
SA, which accounted for most of group revenue, recorded a 15% rise in subscription revenue to R371m, while Asia-Pacific had the biggest increase at 39% to R72m for the period. Europe had a 35% rise to R53m, with the rest of Africa growing 12% to R29m.
During the quarter, Cartrack experienced a reduction in cash collections from customers “as a direct result of the pandemic”. This was primarily from small and medium business customers who are being supported by Cartrack.
Despite these headwinds affecting operations, Cartrack grew its cash and cash equivalents to R245m by May, up from R146m in February.
Short-term liquidity and solvency “remain carefully managed” the company said. Its credit facility of R600m with RMB “remains available and unutilised at this stage”.
“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 ... platform and the resilience of our subscription-based business model,” said Calisto.
Cartrack’s share price soared on news of its performance, rising 11.11% to end the day at R28, its highest close so far in 2020. The stock is trading 15.2% firmer for the year, giving it a market value of R8.4bn.
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