6 days ago
1
You can also listen to this podcast on iono.fm here.
SIMON BROWN: I’m chatting now with Zak Calisto, CEO of Karooooo. Full-year 2025 results and also a quarter-end for February saw earnings per share for the year up 25%, subscribers up 17%.
Zak, before we jump into numbers, tariffs and tariff wars are coming and going. My sense is it’s not an issue for you or really even your customers, because there’s not much crossing of US borders.
ZAK CALISTO: Hi, good morning, Simon. First of all, I’m not so certain how these wars will actually land, weigh in or land. But up to now they’ve had no effect on our business. Our business has typically weathered quite difficult times and, even in these difficult times, they might even be in our favour. But I’m not certain how this all lands before we have an opinion on it.
SIMON BROWN: Fair point. A lot of moving parts. They’re still happening and probably continuing to move for a while. Running through the numbers, they are for Q4 but also of course for the full 2025 financial year. Q4 was in many respects the best quarter of the year, which really bodes well looking into financial year 2026. There was definite momentum building during the financial year.
ZAK CALISTO: We are starting to really do well in Europe and in Asia – and in South Africa as well. We started doing quite a considerable amount of investment from around September [during] this year, and we’re starting to get good momentum. So we are hoping that this financial year that we’re in now will actually be better than the last financial year if the momentum continues.
SIMON BROWN: You talk around that, and we’ll dig into some of the areas. You’re still seeing healthy organic growth in South Africa. This is still a growth market for you. Many might think it’s matured, but you’re saying no, there is growth opportunity here.
ZAK CALISTO: Well when everybody thought South Africa was very gloomy, about three or four years ago, we went out and embarked on building a R400 million building and investing in South Africa. I think South Africa is a very resilient place. It’s a country with good people, good talent, great opportunity. And despite the low GDP growth that we experience in South Africa, I believe that we’re still very much in the beginning of a much larger opportunity.
SIMON BROWN: Do you have the granularity of data? Are people perhaps holding cars for longer than they were maybe a decade ago? Is that something that you can see in your numbers or not?
ZAK CALISTO: Yes. The people are holding on to their cars for longer than before, for two reasons. One, because of economic strain and the dollar price, the change in index and all of that. And secondly, what we find with our commercial customers; we normally increase the life span of those vehicles by about 20% just because the vehicles are very well looked after by the drivers. So there are two reasons. We’re really seeing where customers are holding their vehicles for longer – actually the commercial customers.
SIMON BROWN: Gotcha. Southeast Asia is an important market for you. You’ve mentioned it already and you are saying it’s your largest medium- to long-term growth opportunity. It is a significant market. It is a big market and a huge opportunity for Karooooo in the years ahead.
ZAK CALISTO: Yes. In this past financial year we’ve really focused more on selling our more sophisticated tech and differentiating ourselves from the less sophisticated competitors in Asia. What you’ll see is our revenue per customer has increased substantially. So that is very much our focus area and we’ll continue with that sort of focus into this new financial year as well. It’s part of our strategy for the long term.
SIMON BROWN: Cartrack – you make the point [of] general administration, administration expenses as a percentage of revenue, down at 20%. Do you get leverage effect? As you add a new customer to the base you bring in a bit of cost, but there’s some fixed cost which is there, whether they are there or not. In other words, each customer almost becomes a little more valuable than the previous.
ZAK CALISTO: Yes. However, because we are in this year we’re going to go into expansion mode. That’s probably this year. It’s called being negative because we are bringing in quite a lot of back office for future growth. Normally when you employ people it takes them about 12 to 18 months before they really become an asset to the company. So there is that investment we’re going to do this financial year to just be able to deal with a bigger business in the future.
SIMON BROWN: Absolutely. In the results you talk around boosting headcount, particularly to build new customer pipelines. And this comes back to the growth opportunity that that you see in the future and therefore increasing headcount in customer acquisition.
ZAK CALISTO: Yes. But overall I think it’s all planned. And we will see that our GNA [general and administrative expenses] will increase as a percentage of subscription growth this year.
SIMON BROWN: We’ll leave it there. That’s Karooooo CEO Zak Calisto on their financial year 2025 results. Appreciate the early morning.
Listen to the full MoneywebNOW podcast every weekday morning here.
English (US) ·