Cartrack rallies ahead of results


Cartrack rallies ahead of results

Published Date: 2020-10-14 | Source: Stephen Gunnion | Author: Stephen Gunnion

Cartrack rallies ahead of results

The group is expected to report that first-half profit increased by at least a fifth.

Cartrack's shares rose in in brisk trade yesterday ahead of the release of its interims results, expected today. At their best, they were 16% higher at R46.

In a trading statement last month, the vehicle telematics group said it experienced significant distribution difficulties over the six months to end-August as a result of limited capacity to install its in-vehicle IoT (Internet of Things) technology due to Covid-19 lockdown restrictions. However, it still expected to deliver strong earnings in line with a big increase in subscription revenue. It said its results would show the continued acceleration in demand for its software platform and the resilience of its business model under difficult trading conditions.

The company expected earnings and headline earnings per share (HEPS) for the period to be 20-22% higher than last year when it reported EPS of 72.2c and HEPS of 72.3c.

In a quarterly business update in August, Cartrack said it experienced a big slowdown in new subscriber additions from new and existing customers in the first quarter of its financial year as the pandemic took grip. Still, it managed to grow revenue and operating profit due to continued strong demand for its Software-as-a-Service (SaaS) platform and the annuity income it earns from the subscriptions.

It reported a 19% increase in subscription revenue to R526 million for the three months to end-May, with total revenue rising 14% to R535 million from a year earlier. Subscription revenue now makes up 98% of total revenue, up from 94% last year. Despite the impact of Covid-19, the number of total subscribers grew 14% to 1.13 million from a year earlier.

The company's shares retraced some of their gains to close 6.3% higher at R42.

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