Good day and thank you for standing by. Welcome to Karooooo Ltd. Cartrack Fourth Quarter and Full Year 2021 Results Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Mr. Zak Calisto, Founder and CEO of Karooooo..

Good day to everyone. I want to thank everybody for taking the interest and the time to listen to our earnings presentation for FY21. It is our first time presenting as Karooooo, as a newly listed entity on NASDAQ and -- listed entity on the JSE. What we will be presenting today is the Karooooo numbers.

As at February 2021, Karooooo was still a privately owned Company, owned by me. At that point in time, Karooooo owned 68.1% of Cartrack, and Cartrack was listed on the Johannesburg Stock Exchange. Subsequently to that, in April 2021, Karooooo listed on the NASDAQ and -- was listed onto the JSE and now owns 100% of Cartrack.

Cartrack was founded in South Africa and is now headquartered in Singapore under the entity KARO, which is the listed entity. In our view, all vehicles will be connected and data will drive all aspects of mobility in the future. And it is certainly our mission to build the leading mobility SaaS platform that maximizes the value of data.

We have a strong history of consistent organic growth and it's really important to stress that we've always grown organically. We have scaled, we have grown, and we've been profitable for many, many years. And our subscribers and we finished off as of February 2021 at 1,306,000.

Our revenue was at ZAR616 million for quarter four; and our net income was ZAR128 million at Q4. You can see a consistent growth throughout the most recent quarters; and certainly, also the last seven years Cartrack was listed on the JSE. We have strong financial discipline and that's what's enabled us to grow and to be profitable at the same time.

Our track record of execution, we have grown, despite COVID, 16% our subscriber base during 2021. Our revenue, we grew about 18% during this financial year; and 96% of our revenue is annuity based. Our ARR as at February 2021 was USD163 million, which equates to ZAR2.4 billion. Our operating profit margin was consistent with FY20 at 32%.

Our EBITDA margin has improved from 48% to 49% and per share grew by 19% for Karooooo. Our EBIT in profits earnings per share, it actually grew by 20%. The difference is being due to costs that echoed at -- level during -- those transaction happened. We also finished the year with over 75,000 commercial customers.

During the financial year, we saw our quarterly net subscriber additions fluctuate predominantly due to COVID. In our first quarter, our subscribers, if we compare to the last financial year, we only added 7,000 subscribers, which was 76% down compared to last year. We also had a subdued quarter -- compared to Q1 where we added 41,600 subscribers.

But by Q3 and Q4, we had our best quarters in our history; and in Q3 we are doing the added 71,000 net subscribers; and in Q4 we added 60,000 net subscribers. Overall, we picked up good momentum in the last half year of the financial year. And if you annualize that annual growth, it would actually be 23% year-on-year growth.

And our ARR in FY21, as I've said before, was USD163 million. And our operating profit continued to grow during these difficult times in the COVID by 15% and it grew to ZAR727 million, equating to approximately USD50 million.

Our adjusted EBITDA was approximately USD77 million if you take the exchange rates of ZAR14.62; and that means a growth of EBITDA at 21%. So overall, despite the COVID effects, we still believe we had a good year. Our cash flow -- our net cash flow from operating activities improved by 10% in this financial year and it grew to ZAR931 million.

Our cash flow from investing activities, which is the PPE, increased by 44% growth and that's predominantly as we scaled our business -- specifically in the last half year of the business to grow the business. And our free cash flow was down by 12% as expected whilst the growth -- good in the last two quarters.

We had a low cost of acquiring a subscriber. And if we look at our cost to acquire a subscriber, it has been improving over time. If we compare the FY21 compared to FY20 in terms of IFRS, the amount that we capitalized, that dropped from ZAR1,488 to ZAR1,433.

However, our non-capitalized cost to acquire a subscriber due to sales and marketing, actually increased to ZAR660 versus ZAR520. And that can be attributable to our growth in staff, specifically in Q4 and in late Q3, which clearly a lot of new staff who aren't as productive still will be a pipeline of sales. We have robust operating metrics.

If we look at our annual subscription revenue, that has grown from ZAR1.9 million to ZAR2.2 million. That means a subscription growth of 17% in FY21. The previous year, we had grown at 24%. The 17% is purely not as strong as the previous year, but that's predominantly due to COVID, and specifically in the first half year of weak growth.

Our ARPU increased from ZAR151 to ZAR155. That's mostly due to COVID fluctuations. Our ARPU has been consistent for the last 15 years. We have not tried to push ARPU. We've focused more on customer acquisition as opposed to ARPU as we believe the markets last year -- attractive. Our gross margins were consistent; FY20 70%, FY21 71%.

We've certainly indicated substantially more capital into R&D, and you can see R&D as a percentage of subscription revenue rose from 2% to 5%. Sales and marketing as a percentage of subscription revenue also increased from 10% to 11%. And general administration as a subscription revenue, that's gone down from 24% to 22%.

We believe these changes will continue into the long-term. Our operating profit margin remained consistent at 32% against 32% and, as I said before, our adjusted EBITDA margin increased from 48% to 49%.

Fundamentally, what we do -- we've got a very large customer base with conventional customers and consumers with different types of vehicles ranging from motorcycles to heavy-duty trucks that weigh 500 pounds --. We've got different industries.

And given all this data, what we do is we contextualize billions of data points that we collect and we focus on driving exceptional value for our customers. Currently, we collect over 50 billion data points per month and that's continuously increasing.

We collect the data first from our proprietary in-vehicle smart-devices, also from third-party and OEM in-vehicle smart-devices. We collect the data, we store the data, and we process the data. Further, we also have APIs and third-party systems that we receive and push data to.

Given all this data that we collect, using artificial intelligence and data analytics allows us to contextualize all this data to drive further intelligence reports, predictive analytics, and insight for measurements to drive the best insurance value for our customers.

With all the data, one is able to feed this data to certain business owners, banks, financial institutions to know the driver better, provided that, clearly, the driver has allowed us to do that. And with all this data, we're also in a very good position to know the quality of the vehicles that our customers have been driving.

And when they want to sell these vehicles, we will be able to get them the best price as we know we've stored the data and we can see the driver gauge of that vehicle, where the vehicle has been driven, how long it's been driven; and this data can be used to maximize the value of our customers' vehicles.

Further, we have the margins vertical on our platform that allows all our customers to do all their administration on our platform to keep all the records of maintenance, fines, licenses and all other administrative information that normally would've been done on an Excel spreadsheet or on different software packages.

Now it's all able to be done on one single platform which is the Cartrack platform. The communicator allows our customers to have visibility and communication with their drivers and their staff --. And that is a very -- there's a strong demand for that as we get into the more e-commerce environment and as drivers and staff work more remotely.

We operate in a large underpenetrated market. This specific report shows us that the expected annualized growth between 2018 and 2026 to be 26%. As at 2018, our global sales was USD12.2 billion. Clearly, a net -- USD2 billion is a lot of entry-level systems. And it is expected by 2026 that our global TAM will be USD77 billion.

We are well-positioned to grow in this market. Our organic customer growth can be seen. We divide that into four segments -- consumers and sole proprietors, small enterprises, medium-sized enterprises, and large enterprises. And one can see how year-on-year we continue to grow in all of these different verticals.

We have a low industry and customer concentration risk. The car rental industry is less than 1.2% of our revenue, and our largest customer is lower than 2.3% of our revenue. Clearly, in terms of earnings, it's an insignificant portion that we practice with that specific customer. We have a 95% commercial customer retention rate.

Our success across industries, we have strong growth in all our segments. South Africa is where we're the strongest and we continue to grow. The rest of Africa we had a weak year this last financial year, specifically due to Q4 COVID had a huge effect in the rest of Africa.

Europe we continue to grow -- they're facing a lot of lockdowns in Europe, but nevertheless, we still got good growth. Asia, we continue also to grow, despite it being very difficult for us to operate as a lot of our senior staff operate out of Singapore and they're unable to travel into the geographies in the region.

If we look at the numbers, our subscribers in South Africa grew from 869,000 to 1,014,000, a 17% increase. Subscription revenue also grew at 17%.

Africa-other, we saw our subscribers grow by 3%, but we saw our subscription revenue decline by 12%, that was primarily as we gave not a lot of credit to our struggling customers on the ground in the rest of Africa; and it's been our policy almost to work with our customers in difficult times. In Europe, our subscribers grew by 12%.

Subscription revenue grew by 27%, but this alignment with subscription revenue is largely the cause of a weaker Rand in the beginning of the financial year. Asia, Middle East, and USA subscribers grew by 20%, and subscription revenue grew by 22%.

Our outlook, we believe we are well geared for growth and to scale our business; and we have strong financial discipline. Our subscribers -- numbers of subscribers, we expect by FY22 to grow to between 1.5 million and 1.6 million subscribers. Our subscription revenue, we are expecting between ZAR2.5 billion and ZAR2.7 billion.

And our adjusted EBITDA margin is expected to be between 45% and 50%, and that is because we are increasing our staff count and we've got expansion costs; and we're not certain on the COVID how that will affect us in terms of our operating margins.

We have a reconciliation of the Karooooo and Cartrack EBITDA and net income and this is for anyone to go to at their leisure. Thank you very much and I open the questions. I have with me Morné, our CFO. So, please feel free to ask any questions. .

Hello, everyone. I just want to make a correction. On slide 9, I said cash flow from investing activities grew 43% -- 44%, actually 43%. And on slide 11, I said ZAR2.2 million in subscription revenues, actually ZAR2.2 billion. And the ARPU increased to ZAR154 and not ZAR 155.

And sales marketing as a percentage of subscription revenue increased from 9% to 10 -- 11% as opposed to 10% to 11%. We're going to open up to the audience for questions. I've got the first question from David Everall [ph].

If you could give some detail on your APAC segment, what investments have been made over the last year to grow sales and installers? David, over the last 12 months it's been very difficult to trade in Asia.

Pre-COVID our approach to growing Asia was very much a centralized approach where we had the management and we used Singapore as the head office as you'd use any big city in a big country. And we operated from Singapore into all the neighboring countries.

When COVID came, it clearly hampered our ability to grow, specifically because none of our senior staffers were able to go into the territories. So, we've had quite a lot of the senior staff trying to run the business through Zoom calls and, obviously, that's not very effective.

And given that, we've invested fully in growth in sales and installers, but nowhere as much as we had envisaged and we've done just critical staff. We're hoping that this will change in the near future.

But I must let everyone know that Singapore has just changed their rules that if you travel out of Singapore and you come back into Singapore it's no longer a quarantine for two weeks, it is now going to three weeks. So, the COVID has definitely played havoc with us specific in the Asia-Pacific region.

What was the growth in subscribers in APAC in Q4? I haven't got it in front of me. I can certainly get it. When do you anticipate -- to accelerate its growth? I think what APAC are getting to have been to accelerate the growth we need to get over COVID. And we're not certain when that will happen.

But I certainly believe even the way we are all running APAC we'd still get very good growth. Just to give you -- I'm going to get you the growth figures. I can always email that to you, David, if you don't mind the growth in APAC in Q4.

And David, now that you anticipate monetizing the data that you've accumulated -- in this phase -- I mean, what we want to do is use the data for the benefit of our own customers. At this stage, I don't think it's the right time to be selling any of this data. A lot of our peers are doing that. I don't believe that's the real value.

I think we need to drive value for our subscribers, for our customers, and that's what we are focused on. Clearly at the latest stage we would be able to explore this considering the amount of data that we have and that we collect on a monthly basis. Does anyone else have any further questions.

Operator, will you allow anyone to ask questions?.

[Operator Instructions]. Our first question comes from the line of Matt Pfau with William Blair. Please go ahead..

Congrats on the nice traction and subscriber additions, Zak. So, wanted to start off asking about that. Obviously we are two months into your first quarter.

Did you see the momentum that you saw in the fourth quarter continue into the first two months of the first quarter that we are in now?.

Sorry, I didn't get your name. Who is speaking? I'm getting used to the system….

Yes, Zak, it is Matt Pfau from William Blair..

Hi, Matt. So, we have now surpassed 1,350,000 subscribers. So, we continue to see the growth that we saw in the last few quarters. Traditionally our worst quarters are Q4 and Q1. And those quarters are traditionally the worst given all the holidays. And we've seen a very good Q1 in the first few months. We're quite happy with the growth in Q1..

Okay, got it.

And then with the subscription revenue guidance that you gave for fiscal 2022, how should we think about the cadence of that from a growth perspective? Do you expect growth to improve throughout the year or should it be relatively the same quarter-to-quarter?.

Matt, to be brutally honest I'm not certain myself and that's why we've given quite a wide range. Every single time -- every month I wonder when is COVID -- how is that going to impact us, new variants coming. Everybody goes into lockdown, then out of lockdown, vaccinations. There's different news.

Every morning I get up and there's something different on the news. Countries are being vaccinated, quarantines continue. So, that's why we've given quite a broad range.

But fundamentally, over the years, the best way to look at or to predict our subscription revenue is to see our subscriber growth of this current year and add it to the subscriber growth of the previous year divided by 2, and that should equate to our subscription revenue growth. So, last year subscriber growth was 16%.

Depending how much we grow our subscriber growth this year, you'd add the 2 divided by 2, and that should give you a very good indication. If we take our current growth in the last two months and if we take the current growth in the last two quarters of FY21 and you annualize that, we are growing currently in the region of about 23% year-on-year.

So, it really depends how COVID plays out in the rest of the year. But we certainly have been employing and been optimistic that we can grow our business. And we've certainly taken the risk in employing people, because I think if you don't take the risk you also could lag behind. So, we have taken that risk that will definitely weigh in our OpEx.

And hopefully we will get the benefit of COVID opening up, our senior management being able to get into regions where we are not that strong. And currently with the restrictions in -- we are focusing on our key markets..

Got it. And then in terms of the investment priorities for fiscal 2022, it seems like adding headcount in the Asia region is one.

Any other areas to call out for your investment priorities for FY22?.

So, we've invested a lot in R&D. We are investing a lot in our platform. We certainly believe that's a very important investment and we are continuing investing. You can see the increase in our investment. We will continue that increase in this financial year as well.

But we've seen our headcount in all our segments -- Asia-Pacific, South Africa, -- Africa and also Europe. We certainly want to grow and get into an accelerated growth environment in all the regions and that's what we are attempting to do..

Got it. And last one for me, just on the prescription revenue growth versus the total revenue growth for the quarter, there was a bigger disconnect there than typical. Maybe you can just discuss the dynamics that drove that..

So, in Q4, we've got one really big mining house and -- bundled sales. So, they actually want the cash, they want to divorce the subscription revenue from the cash. The mining house is actually Anglo American De Beers. And in terms of -- in Q4. And that's obviously where the disparity comes in in our subscription revenue over total revenue.

But I think if we take the first three quarters, that's a better reflection of what percentage of our revenue is subscription revenue. Thank you very much, Matt. I've got a question from Roy Campbell.

Can you break the last quarter's growth out by region? Which segment did you grow in? And consumer or small/medium given that profile, is there any element of percent of demand? So, I think, first of all, we grew in all our enterprise customers, consumers, medium/small and we're growing in all of those segments.

And the best thing to do, Roy, if you'll take our Q3 presentation, we did show you the amount of customers that we had in each of those verticals, and you can compare that to the Q4. These are public numbers and one can see our growth. We had over 70,000 commercial customers. We have now got over 75,000 commercial customers.

Now I haven't got the exact number between the one and the other, but it appears that our -- reconcile exactly what those numbers are. I haven't got them in front of me at this point in time, Roy. Perhaps Susan can give you those numbers. I've got another question from Daniel Bolt [ph].

How should we think about ARPU going forward? He says Asia has higher ARPU. Daniel, we've always --. We have been very consistent with our ARPU. I know a lot of our peers, they chase ARPU. We are not chasing ARPU. We believe our ARPU is a very healthy ARPU where our customers can get a lot of value for that -- average of ZAR150 per month.

We certainly -- our philosophy has been to add more value and keep the ARPU the same. The reason why we've had this mindset and business approach is because the markets are very underpenetrated. And if we try to increase our ARPUs at this point in time, I think it's premature.

When the market is more mature, at that point in time, as we add services, as we add value, we will certainly try and increase our ARPU at that point in time. But right now we'd rather go for landgrab and try to acquire more customers. We believe that's more an important at this point in time. Thanks, Daniel, for your question.

I've got a question now from F.G., I'm not sure who that is. Any commercial progress on insurance and used car sales projects? Yes, we are making good progress. I believe by the second half of FY22 we will be reporting some of these numbers independently from --.

But we're still very much in the beater phase and we're feeling very optimistic about that. And when do we expect to deploy proceeds from the equity raise most aggressively? We are certainly gearing up for that. From our operations we continue to add cash onto our balance sheet. And we've also got the proceeds that we've raised over the IPO.

And we certainly will -- the minute it is opportune to do it we will. And it's just a question of time and we will definitely deploy those funds. So, I believe by the second half of this year one could expect that, but we are a little bit subject to COVID.

And as I said earlier, I'm a little bit surprised what's happened in the last maybe month in terms of COVID. I certainly didn't think we'd be going backwards on an international level in terms of the restrictions being imposed by COVID, considering all the vaccinations that are actually happening.

Any further questions? Operator, could you let Mike from Canaccord ask a question, please?.

Certainly. Please ask your question, Mike..

Zak, just wanted to ask one question. Just on the industry, some of your competitors are struggling to source components for the connectivity piece to drive their businesses.

Any comments on your ability to source components to get your new customers up and running? Are you seeing any impact from the global supply shortages?.

There's definitely a supply shortage coming through, Mike. We certainly are seeing that. If you look at our inventory, which we now have -- reported and -- , you'll see a substantial increase in the inventory. And we already started planning for this I would say in the last six months or so, or even maybe right at nine months.

So, we have seen an increase. We are talking to certain of our suppliers; they're telling us that our lead times are not going to be --. They are now looking at 18 to 24 months in lead times. But fortunately we have got sufficient stock for the next 9 to 12 months. And hopefully in a year's time we will be in a better situation.

So, for FY22 we believe -- we have reason to believe that we're not going to have stock shortages..

Okay, great. Yes, with that type of stock you should be able to maybe take some share from these competitors. Just switching gears on competitive dynamics. If you look at the South Africa market, you have Inseego selling their seat track business, and you have maybe AMIX Telematics who lowered some headcount while you're still investing for growth.

Maybe you could talk about the competitive dynamics in that market and if you think you are poised to maybe gain some market share..

So, all of South Africa our competitors are sophisticated, they've all got a good product. We believe that we gave our position to compete with all our peers in South Africa and we see the market is largely underpenetrated. We certainly believe we've got a good management team on the ground and we continue to make progress.

And I believe we will continue to see growth and I'm hoping to push or accelerate its growth in South Africa. So, I feel quite confident we're going to do well. But there's no reason for our peers also not to do well..

Thanks. Last question for me, kind of an open-ended one here and then I'll pass the line.

But as you look at fiscal 2022 and beyond, and with the areas you're investing in, are there certain markets -- I know it's hard with COVID, but are there certain markets you are more bullish about in terms of demand trends, whether it be from some of your new technology solutions going into those markets or just some areas where the economies might be reopening faster than others?.

So, I think in all the markets we operate in there is demand. It really is at the end of the day -- of our teams and to the way we allocate capital into these different geographies. Clearly we can't -- there's a limitation of how much we can do at any given time. And we're certainly striving to grow as quickly as we can.

And even under COVID I think the fact that we grew 16% despite all these restrictions I think is a good outcome. I certainly believe would have done a better had that not been the case. And we currently have also vetted quite a lot through COVID.

Our biggest restriction now is not really even COVID; it's our ability to get senior executive -- senior management onto the ground to interview, to train and to guide and that's really important. And you try and do it through a Zoom call and it's not that effective. So, I think all markets are exciting that we are in.

And obviously we will continue to focus on our key markets under COVID because that's the easiest because we've got already strong management on the ground..

It certainly seems like you grew much faster than your peers from our work during the fiscal 2021 challenging year. So, congrats on the execution and best wishes for continued success. I'll pass the line..

Operator, if you could move to Daniel from Bank of America to ask a question, please..

Daniel, please ask your question..

Congrats on the IPO and thanks for taking my call here. I just have a couple questions for you. The first one is a bit of a clarification perhaps. You are seeing good strength in 4Q. It sounds like it's extending into 1Q so far.

Can you just go back and dissect for us what's driving this? How much of it is the COVID situation improving versus how much of it is maybe the recent investments that you're making are already bearing fruit? Or maybe it's just something else. But if you can walk through the components driving the growth that would be helpful..

So, Daniel, we've got at the moment over 3,000 employees. At the yearend we had 2,999. So, we've now over 3,000 employees. To bolt the teams that we bolt we vertically integrated. We do everything ourselves. It has taken us many years to get to where we are today.

Given -- and if you can just recap the fundamental part of your question, sorry, I lost because I started talking. If you can just give it to me, please, again. Sorry, Daniel..

Yes, I'm just curious -- recently it looks like the net subscriber trend is improving, you guys are seeing it picking up.

Is it more the COVID situation getting better or is it more you guys did some recent investments and you're starting to execute better around those?.

We've grown to 3,000 stocks, so that took quite a lot of investment. Before FY21, in other words in December 2019 when we did our budget for FY21, we were at our best. We had planned to add -- to employing in the region of 750 people.

And then COVID came in the beginning of February and started really adding an impact on us in about the middle or end of February last year. That obviously -- we then froze hiring people and we froze all capital allocation into growth. And we saw that was the right decision, specifically for the first two quarters.

We then decided to start investing that money that we anticipated starting to invest around March. And we started doing it I would say around September/October. So, we started seeing that, but the capital allocation itself wouldn't just get you there. You'd also have to have more open market and more less restrictions around COVID.

So, we believe that in FY21 we'll have certainly done much better without COVID.

And I certainly believe that all the investment we are doing is -- although there is an element of risk because if COVID goes into severe lockdowns like it did 12 months ago, that would be -- it would be -- it would sort of -- our bottom line because it will be carrying operating expenses.

But I certainly believe had it not been COVID, it just really is our organic growth. And us being able to grow our distribution, grow our business, improve on what we bought. And we continue improving on our distribution, on operations, on our platform. It is really like a garden. We're continuously improving on our business.

So, I think it's just a product of us improving..

Sounds good. And clearly you want to invest more for faster growth and operating margin coming down a little bit. Is there a floor for operating margin that you are comfortable with? Or kind of draw the line of how you would grow in terms of increasing the investment for higher growth..

My view, Daniel, is that when I look at the business I don't really look at the margins as being my key driver.

Our key driver for us is are we allocating capital, is it being used prudently, are we going to see the rewards? And for as long as we believe we've got things under control, we've got the right management in place, we will continue to invest in allocating capital.

The more you allocate, because of the nature of the business that a lot of the expenses in acquiring new customers, they basically go through your income statement on year one, in actual fact on the day you acquire those customers on the month.

Obviously those expansion costs and those customer acquisition costs will ever drain on your P&L in the short term or in the current year. But our customer retention is 95% -- to retain a customer is 95%. So, we will get that -- for many years to come we will get the reward of acquiring those customers.

So, given this philosophy and way of looking at business, I would say that we don't put a bottom to that. It's more about our ability to prudently allocate capital. And that's for us the most important thing. And for that you need the right staff and the staff needs to be trained as well to be able to grow fast.

Does that make sense?.

Yes, yes, sounds good. And just last one from me. The Carzooka [ph] opportunity is pretty interesting. I know it's super early, but it sounds like you guys have an interesting hybrid strategy where you may look into buying some used cars and also help aggregate or connect the sellers to the buyers as well, more of a platform approach.

So, just hypothetically, if Carzooka does really well coming out of beta, how much more investment is required to support Carzooka and would that be pretty capital-intensive as well?.

So, we are quite excited about the Carzooka opportunity. We are still in our beta phase and we -- I'm very excited and so is my team. There's many ways of the capital that you require. Banks are very much willing to finance us. So, if we wanted to take bank debt, it is easily available. Or we could go to the markets and raise capital.

We can go either way. The reality is, I believe, worth $200 million. We can do really a lot. And for us to raise $200 million, whether it's through finance through bank or whether it is through raising capital, we can certainly do that. But we'll always do it in a very prudent way where we'll get a good return on capital.

So, initially it might be an expense for us while we break out the model. But once we've got the model and we've got the right people in place, I certainly believe it's going to be a very good business. And I think it's coming on really well. I'm very proud of the R&D team, what they're delivering. Each day I just see improvements.

And we're also growing -- starting to grow our operational staff in terms -- our -- experimenting. And I'm feeling very good about the business. But I certainly believe this is 12 to 24 months before we see real business coming out of it. Operator, if you could let Parker from Stifel ask questions, please..

Certainly. Parker, please go ahead..

Great quarter. Just wondered if you could discuss the live video solution for a second. How mature that is from a product standpoint? And maybe give us a sense of how many of your customers have adopted that solution and where you expect that to trend maybe throughout the rest of 2021..

So, on that solution, the actual hardware is third-party hardware. And on top of that hardware we put in our firmware. So, we've got two different providers of hardware. We asked -- telematics department.

And we believe that the video telematics department will become a very important part of the business and it will be something that we will see grow over the coming years. At this point in time, we've got it with strategic customers. And we actually have run out of stock and we haven't got inventory at this point in time.

But -- we've got back orders for the video telematics -- for the video telematics. And we certainly believe that's also going to be an important part of the business, but it will never be as big as the traditional telematics..

Got it. Makes a lot of sense. And then core assets have really been driving a lot of the growth in the story for a long time here.

But as we think about emerging opportunities, areas like bikes and scooters and micro mobility, how well suited is the platform for those assets today? And how substantial, I guess, do you think that opportunity could be as we look out over the three- to five-year horizon?.

So, our platform allows -- -- even do prisoner tracking. So, the Singapore prisoners that are able to stay at home, we've got that contract in Singapore. So, our platform allows us to check any tracking device.

And then we take the data, we contextualize it and we can do quite a lot of the data whether it's motorcycles, whether it's boats, whether it's big lorries, it doesn't really matter for us.

So, I think the opportunity is huge and the way we're developing our platform it's really to deal with mobility as a whole, irrespective whether it's a large truck delivering mining equipment or whether it is an engine or whether it's a passenger vehicle.

And we're driving our platform to be a solution for -- irrespective whether it's for passengers or whether it's for cargo and it's for multiple use. And we've got a very comprehensive platform that we believe is very easy to use whether it's enterprise customers or consumers..

Got it. And then maybe a last one for me. You mentioned a lot of different COVID lockdowns and restrictions in some of the key markets, particularly APAC.

Is that something that could potentially delay installation of the subscribers that you're bringing onto the platform? Or do you think that you are largely insulated from any potential risk there?.

No, we've got -- , just to give you a bit of color. We've got one customer now that's signed up -- 350 vehicles. Just to go and install these vehicles all -- technicians have to do COVID tests. They've got to do swabs.

The logistics around COVID, specifically in a place like -- I'm talking a Singaporean company, it's -- just to get your technicians to work and to be able to do it and to do all the COVID tests in itself is already quite stressful from an operations perspective.

So, COVID is having an impact on us even on our day-to-day operations in different geographies in different ways. Operator, if you could allow Anthony from Investec in, please..

Certainly. Anthony, please ask a question..

Congratulations on a good quarter and congratulations on your listing. I just want to ask philosophically -- I mean clearly COVID is still around and any headwinds that you are navigating are unfortunate and very restrictive. But it kind of feels like the business was operating in third gear and you've been knocked back a little bit.

But you said 12 to 24 months out you hope to be running at full throttle.

Can you just give us a sense, without necessarily attaching numbers to it, just around your ambitions? To go from third gear to about sixth, seventh gear, how much faster can the business expand? And then what does that mean in terms of marketing, R&D, expense? What's the capacity of the business to -- or in order to drive that top line?.

So, Anthony -- thanks for making time for us, Anthony. So, the thing is the way we've grown our business -- and you'd be familiar with us and our story for quite a long time.

We've always grown our business in a way that -- we were very focused about margins because most investors in South Africa there really looked at about -- our margins, our profitability and about our dividends. And if you recall, two or three years ago I started to accelerate growth. And we got subscriber growth to nearly 30%.

And most investors were very unhappy that I started growing the business so fast, because there was a disalignment between top-line growth and bottom-line growth. And what our thought was starting to be a great result for us to accelerate. Actually our shareholder base wasn't -- didn't really appreciate it.

So, for us to grow in the high 20%s, we've done that already before COVID. And if you look at our average unit growth, it has been 22% pre-COVID in terms of -- pre-COVID for five years it was 22%. Where clearly some years just before COVID or the year before COVID we saw growth close to 30%.

So, ideally what we'd like to do is to grow and double our business every two years. That's what we'd like to do as management. But I think if COVID is out of the way that's when we can really allocate capital for that type of growth. But obviously even that type of growth doesn't come overnight.

We certainly have also invested a lot, specifically in the last Q4, in HR. In terms of recruiters, I think our headcount -- in the HR department is one of the departments that's increased the most. I think our team has tripled the size now in HR to deal with the recruiting for the bigger group.

So, we are investing but we previously invested and, at this point in time, given some of the negativity coming out of COVID, we've actually decided to perhaps freeze hiring for another one to three months to see if it's really going to lift -- and the vaccinations are really going to help where we normalize the economies.

But even without that I'm still very content and our team is very content with our current --. Operator, it doesn't appear that there are any other calls. I've got a call coming through from Chris Logan. Your cost to acquire -- has fallen nicely over the last two years, -- a capitalized portion.

Can we expect this trend to continue as you scale increases in technology cost -- ? Chris, in essence, yes. However, we will be moving our technology and our R&D being very busy with our 5G technology.

And it is all -- as well what will we be doing in 18 months' time or in 12 months' time in terms -- because we are developing already new technology around 5G. So, that could certainly have an impact, but it's an investment we need to do. But fundamentally, even if it does increase, we will derive the value out of it to potentially more services.

So, -- both in terms of modeling, I wouldn't worry too much whether to increase that cost acquiring a subscriber. It could increase. And I don't think that -- one can expect a further decrease. But it could actually increase because of the new technology that we're now working on for the future. I've got a question from Pauline Lowe [ph].

Is there concern regarding growth related to bigger impact as far as workforce moving towards working from home? Pauline, we certainly believe that working from home -- and this is me personally -- you can only do so many people working from home. The efficiencies of people working from home, I believe, is short-lived.

People at the end of the day still need to see people. You can't run a business everybody working from home. So, you can do it for a while.

So, I certainly believe mobility and transportation will normalize, but I do believe working from home could be something bigger than it was in the past, but I don't think it's going to be the solution for the future. Another question from Pauline.

It there any plans for large acquisitions or mergers in the near future? We would certainly look at an acquisition or a merger if it made sense. But at this point in time we cannot announce any acquisition or any merger. Do you feel the new listing was fairly priced? Do you expect a market correction? Pauline, I believe -- was fairly priced.

I Certainly believe whoever invested in us at the 42 range investment -- certainly I believe they got a big deal for themselves. But it's not for me to decide whether it was fair or not fair. I can only say that I own 66% of the Company. And I feel very comfortable with my personal investment.

But I would hate to say that -- and start making judgment on somebody else's investment. But I feel very comfortable being in long -- in the investment in Karooooo. I've got another question from --.

What's the most critical factor that differentiates you from your competition and keeps you outgrowing your peers? It's sometimes a very difficult question to answer, but we've got quite a lot of reasons why we believe we win. We are vertically integrated, we are cut of the same shape. We have found -- business.

We have got a great platform and we've got great technology. I think the way we operate our internal systems allows us to be quite lean and mean in the way we're able to service and deliver service to all our customers. I think what's important to note, -- , is that we've never focused on increasing our --.

Our customers feel that we're their partners -- technology partners. And because of that we are continuously getting referrals from our customers. So, I think that also helps us win.

Operator, if there no further questions -- are there any other questions?.

There are currently no questions. Please continue, sir..

If there are no more questions, I thank everybody for joining us today wherever you are. And thank you very much for supporting us. Thank you. Bye-bye..

Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect..