Karooooo Ltd (KARO) reported robust financial results for the second quarter of fiscal year 2025, with significant growth in revenue, subscribers, and earnings per share. The company also raised its full-year subscriber outlook and reaffirmed its commitment to sustainable growth.
Key Takeaways:
• Total revenue increased 16% year-on-year to ZAR1,107 million
• Subscription revenue rose 15% to ZAR986 million
• Adjusted earnings per share grew 31% to ZAR7.35
• Subscriber base expanded 17% to over 2.1 million
• Company raised FY25 subscriber outlook to 2.3-2.4 million
Company Outlook
• Raised FY25 subscriber outlook to between 2.3 million to 2.4 million
• Expects Cartrack subscription revenue between ZAR3.95 billion to ZAR4.15 billion
• Earnings per share outlook remains unchanged
• Anticipates continued growth driven by product innovation and geographic expansion
Bullish Highlights
• Record net subscriber additions for Cartrack in Q2
• Strong unit economics and capital allocation discipline
• 95% subscriber retention rate
• Investments in Southeast Asia began in August, targeting significant growth
• Free cash flow reached ZAR166 million
Bearish Highlights
• Karooooo Logistics reported lower margins despite maintaining profitability
• Share price decline from $35 to $28.80 led to termination of $75 million secondary offering
Q&A Highlights
• Company aims to enhance liquidity through market sales or M&A
• Maintains conservative approach to leverage, preferring net cash position
• LTV to CAC ratio averages 9, but company prepared for slight drop
• AI efforts focus on processing data to enhance customer business outcomes
• Plans to increase sales and marketing spending as percentage of subscription revenue
Karooooo Ltd, a leading global provider of mobility SaaS platforms, reported strong financial results for the second quarter of fiscal year 2025. The company's total revenue increased by 16% year-on-year to ZAR1,107 million, driven by a 15% rise in subscription revenue to ZAR986 million.
The company's subscriber base grew by 17% year-on-year to over 2.1 million, with a notable 95% retention rate. Cartrack, Karooooo's subsidiary, achieved record net subscriber additions in Q2, reflecting strong unit economics and disciplined capital allocation.
Karooooo's adjusted earnings per share rose by 31% to ZAR7.35, demonstrating the company's ability to translate revenue growth into improved profitability. The company maintained a strong balance sheet with ZAR674 million in net cash.
In light of these positive results, Karooooo raised its full-year subscriber outlook to between 2.3 million and 2.4 million. The company expects Cartrack subscription revenue to range between ZAR3.95 billion to ZAR4.15 billion for fiscal year 2025.
CEO Zak Calisto highlighted the company's ongoing investments in operational capabilities, particularly for Karooooo Logistics. He also reaffirmed the company's commitment to maintaining a clean balance sheet and pursuing sustainable growth.
Karooooo began investments in Southeast Asia in August, targeting significant growth in that market. The company plans to increase its sales and marketing investments, with a particular focus on expanding its presence in Southeast Asia.
During the Q&A session, management addressed concerns about a recent share price decline and the termination of a secondary offering. The company expressed its intention to enhance liquidity through market sales or potential M&A activities while maintaining a conservative approach to leverage.
Regarding AI capabilities, Karooooo emphasized its focus on processing substantial data to enhance customer business outcomes. The company plans to increase its headcount significantly, particularly in Asia, to support its growth initiatives.
As Karooooo continues to expand its global footprint and invest in product innovation, the company remains well-positioned to capitalize on the growing demand for mobility SaaS platforms.
InvestingPro Insights
Karooooo Ltd (KARO) continues to demonstrate strong financial performance, as reflected in both its recent quarterly results and key metrics from InvestingPro. The company's robust growth is underscored by its revenue increase of 15.89% over the last twelve months, aligning with the 16% year-on-year revenue growth reported in the article.
InvestingPro data reveals that Karooooo's market capitalization stands at $1.28 billion, reflecting investor confidence in the company's growth trajectory. The company's P/E ratio of 28.46 suggests that investors are willing to pay a premium for its earnings, likely due to its strong growth prospects and market position in the mobility SaaS sector.
One of the InvestingPro Tips highlights that Karooooo has raised its dividend for 3 consecutive years, which aligns with the company's commitment to delivering value to shareholders. This is particularly noteworthy given the company's focus on growth and expansion, especially in Southeast Asia.
Another relevant InvestingPro Tip indicates that Karooooo operates with a moderate level of debt. This conservative approach to leverage is consistent with the company's stated preference for maintaining a net cash position, as mentioned in the Q&A highlights of the article.
For investors seeking a deeper understanding of Karooooo's financial health and growth potential, InvestingPro offers 11 additional tips, providing a comprehensive analysis of the company's performance and outlook.
The impressive year-to-date price total return of 92.95% and the one-year price total return of 97.25% reflect the market's positive reception of Karooooo's strategic initiatives and financial results. These figures align with the company's raised subscriber outlook and expectations for continued growth driven by product innovation and geographic expansion.
Full transcript - Karooooo Ltd (KARO) Q2 2025:
Carmen Calisto: Hello and welcome to Karooooo's Financial Year 2025 Q2 Earnings Call. On behalf of Karooooo, we would like to thank you for joining us today. I'm Carmen, the Group's Chief Strategy and Marketing Officer. And together with Hoeshin, our Group Chief Financial Officer, will discuss our Q2 results and key business highlights. Our Group CEO and founder, Zak Calisto, will be available for Q&A following our presentation. All investors are advised to read the disclaimer. During the call, we will review both of Karooooo's operating units, Cartrack and Karooooo Logistics. For those new to Karooooo, Cartrack is our operations management SaaS platform focused in Asia, Africa, and Europe. Cartrack operates at scale and has a very attractive financial profile. As of August 2024, Cartrack's annual recurring revenue was [ZAR3,990 million] (ph) or $224 million. And Cartrack's Q2 operating profit margin was 29%. Historically, Cartrack's operating momentum has driven Karooooo’s growth and strong financial performance. Karooooo Logistics is our rapidly growing delivery as a service business that empowers large enterprises to scale their ecommerce operations and capabilities. Karooooo Logistics is a structurally lower margin business than Cartrack, and it is growing rapidly. As of August 2024, Karooooo Logistics annualized B2B delivery-as-a-service revenue was ZAR418 million or $24 million. Given Karooooo Logistics' robust revenue growth, we are very excited about the long-term growth opportunity for the business. We are also proud that Karooooo Logistics is profitable at its current scale. In Q2, Karooooo delivered another strong quarter with total revenue of 1,107 million ZAR, an increase of 16% year-on-year, subscription revenue of ZAR986 million, an increase of 15% year-on-year, and adjusted earnings per share of ZAR7.35, an increase of 31% year-on-year. Q2 continued our track record of delivering profitable growth at scale. In Q2, we were a rule of 60 company when adding our Q2 subscription revenue growth of 15% year-on-year, and our Q2 Cartrack adjusted EBITDA margin of 45%. For the benefit of investors in the US, we believe our quality of earnings is high, as there is no stock-based compensation in our adjusted EBITDA reconciliation, unlike many US-based technology companies. We ended Q2 with over 2.1 million subscribers, an increase of 17% year-on-year, and more than 125,000 businesses across all industries trust us to power their daily operations. We continue to build upon our strong data pool and our platform now generates over 180 billion valuable data points monthly, strengthening our position to capitalize on our strong network effects and continue driving enhanced insights for our customers. In Q2, we started to move to our newly built central office in South Africa, which positions us to support higher organic growth in South Africa. Not only does this office ensure that we can continue to grow our headcount, but it also provides a layout that ensures we continue to foster the Cartrack DNA and our strong culture as we scale. We completed the move in September and are already seeing the positive improvement. We also increased our sales and marketing investment in Southeast Asia, beginning in August, to capitalize on the attractive and sizable opportunity in the region. We continue to see Southeast Asia as the most compelling growth opportunity for the group over the medium to long-term. Finally, Cartrack delivered record net subscriber additions in Q2, whilst maintaining strong unit economics with an LTV to CAC ratio greater than 9. Our commercial customer retention rate remains at 95%, and we continue to grow the business at scale with strong discipline. Our Q2 financial highlights included; Cartrack subscription revenue increased 15% year-on-year to ZAR983 million. Cartrack's gross margin improved approximately 300 basis points year-on-year to 74%. Cartrack subscribers increased 17% year-on-year to 2.14 million. Karooooo's adjusted earnings per share increased 31% year-on-year to ZAR7.35. Our balance sheet remains strong and unleveraged, and we ended the quarter with net cash and cash equivalents of ZAR674 million. Additionally, given our strong Q2 financial performance and operating momentum, we are increasing the midpoint of our guidance ranges for our FY '25 outlook for subscribers and Cartrack subscription revenue. We believe that we are very well positioned to drive profitable and durable growth given our efficient unit economics, and have a proven track-record and culture of operating with financial and capital allocation discipline. We offer an easy-to-use and differentiated enterprise SaaS platform that leverages our vast and proprietary data assets. We have a strong track record of compelling financials and our rule of 60 company with a strong and unlevered balance sheet. Finally, we are founder-led with a unique winning culture, and operate in a very large TAM, with a massive runway ahead of us. Karooooo simplifies the lives of operators to help them maximize the scale and efficiency of their operations. Our innovative platform goes far beyond connected vehicles and equipment. We simplify the decision-making of physical operations. Our platform transforms decision-making by unifying and contextualizing the data and information we collect from OEM devices, proprietary devices as well as open APIs. It centralizes the operations of businesses across diverse industries into a single place, and helps customers conquer complex challenges around safety, compliance, productivity, service delivery, cost management, fuel, maintenance, routing, resource allocation, driver and worker retention and more. Our platform leverages our large data scale, AI and data analytics to offer customers pragmatic and impactful insights that are easy to execute on. Given Karooooo's vertical integration and long track record of strong capital allocation and efficiencies, we have a real edge in knowing what data actually matters to physical operations and how to provide that data in a way that is easy to implement and will drive real impact. We constantly innovate to ensure our platform keeps decision-making simple, fast and agile. Our platform is easy to use and it is pragmatic. From start to finish, our entire solution focuses on simplifying complex decisions to ensure huge ROI for our customers. Our customers choose us because we deliver ROI by reducing costs, increasing productivity and improving safety, with a user-friendly platform supported by a best-in-class service team. The value proposition of our platform is massive. If you think about your day-to-day, the toughest part really is around decision-making. Let's say, for example your business is suffering from high fuel costs. Well, firstly we'll benchmark you to others in your industry, so you can understand how much of a problem this really is. Then there are three key things that could cause this. You're paying for fuel your vehicles aren't using, spending too much fuel per mile traveled or traveling more miles than you need to, to achieve the same result. Our platform takes customers through each of these, highlighting where the [changes] (ph) are and more importantly, offering solutions for each. By simplifying these decisions, we empower our customers to spend their time, energy and resources, overcoming their challenges and improving their businesses. We have some businesses saving over $300,000 purely on idling in a year, and we have others who have managed to scale their business 12-fold as a result of the control, visibility and digitalization our platform provides. We remain committed to investing in product innovation that leverages AI to deliver ROI to our customers. From fatigue driving to unscheduled stopping and detecting fuel fraud to end user risk profiles, our platform harnesses AI to deliver insights around areas that negatively impact operational performance. In doing so, we believe we are using AI to help our customers mitigate risk, improve their service delivery, save money and likely, save lives. For example, our AI-powered cameras, alongside our fully digitalized coaching platform and actionable analytics, helped the South African customer reduce fatigue driving by 32% and mobile phone usage by 13%, whilst improving their seat belt compliance all of which are key contributors to eliminating fatalities on the road. During Q2, momentum for our camera business was strong, and we are excited about customer interest in our vision solutions. As businesses look to increase their e-commerce offerings, many are also looking to move away from online marketplaces, as they see a risk in losing control of their customers. This has been a continued driver for Karooooo Logistics, which continues to gain adoption by our large enterprise customers seeking to scale their e-commerce capabilities under their own terms. During Q2, Karooooo Logistics delivered revenue of ZAR101 million, an increase of 40% year-on-year, and an operating profit of ZAR9 million. We see a large opportunity for Karooooo Logistics, and continue to maintain a positive outlook on this business unit. Our commitment to product innovation and a disciplined approach to profitable growth positions us to capitalize on the large and growing market opportunity. We believe we have ample runway for growth as businesses across industries seek to leverage technology to optimize their physical operations. As we continue to execute and scale, we believe we are only getting started. We believe there is ample opportunity for growth, and we plan to increase subscription sales to existing customers, expand our customer base, expand the scope of our operations in newer geographies and expand our operations platform and services. We will continue to invest in all geographies to expand our sales and support infrastructures to achieve growth and maintain our customer centricity, and expect Southeast Asia will be our largest driver of growth over the medium to long-term. Our balance sheet and strong cash generation put us in a good position to accelerate our customer acquisition strategy, whilst remaining highly profitable. Our founder-led culture and vertically integrated business model have created an entrepreneurial environment with high customer centricity. This, alongside our open APIs, innovative platform that is easy to use and continuous investment in proprietary internal systems ensures we offer customers an unparalleled offering, and is why we win. In Q2, we maintained our leading unit economics with an LTV to CAC ratio of over 9. Our strong discipline in capital allocation, high platform ROI, customer centricity and tight efficiencies at scale lead to our low cost of acquiring a customer, high customer lifetime value and retention rate, as well as strong benefits from economies of scale. Our Q2 gross profit margin was 75% and our Q2 commercial customer retention rate was 95%. We are excited about our massive TAM and remain committed to profitable growth, as we pursue the expansive growth opportunity ahead of us. I will now hand over to Hoeshin, who will discuss our Q2 financial performance.
Goy Hoeshin: Thank you, Carmen. I will now discuss Karooooo's financial performance for quarter-two FY '25. Please note that all comparisons are against quarter-two FY '24, unless otherwise stated. Our proven and profitable SaaS business model continued to deliver strong results in quarter two. Karooooo's total subscription revenue increased 15% to ZAR986 million, operating profit increased 22% to ZAR302 million and adjusted earnings per share increased 31% to ZAR7.35. In this quarter, Cartrack experienced strong customer acquisition and quarter two subscriber increased 17% to 2,136,000 subscribers. Subscription revenue increased 15% to ZAR983 million and operating profit was ZAR293 million. Cartrack continues to prove its ability to scale in varying macroeconomic conditions, and was the rule of 60 companies when adding our second quarter subscription revenue growth of 15% and our second quarter adjusted EBITDA margins of 45%. Our solid start in quarter one continue as we gain momentum in quarter two, with a record net subscriber addition of over 89,000 in this quarter, an increase of 18% year-over-year. We operate in a massive addressable market. In August this year, we accelerated our capital allocation to sales and marketing, and we are comfortable that we can continue to grow our subscriber base profitably at scale. Cartrack continues to grow its subscriber base across geographies. In quarter two, South African subscriber increased 16%, represents 76% of total subscribers. We believe the economic environment in South Africa continues to improve, and we are confident that our move to our newly built central office in September 2024, position us to support strong organic growth as it will allow us to expand our customer base and increase subscription sales to existing customers. Asia, the Middle East and USA subscribers increased 21%, with strong momentum in Southeast Asia. This region made up of 12% of our total subscribers. Southeast Asia remains the second largest contributor to the group's revenue, representing the most compelling growth opportunity over the medium to long-term. As such, in September we started to prudently invest in sales and marketing in Southeast Asia to drive incremental growth. Europe subscriber increased 17% and comprised 8% of total subscribers. We remain focused on increasing our presence in the region, especially through OEM partnership with our proprietary compliance technology. Africa, excluding South African subscriber, increased 15% and comprised 4% of total subscribers. With the strong tractions, we believe we are well positioned for geographical expansion. Karooooo's quarter two adjusted earnings per share increased 31% to ZAR7.35 mainly driven by highly subscription revenue and expanding gross margin. Cartrack's earnings per share increased 22% to ZAR7.17, and Karooooo Logistics earnings per share increased 29% to [ZAR0.18] (ph). As Karooooo continues to scale, grow and increase its earnings per share, we are confident in our FY '25 earnings per share outlook. In quarter two, we continue to demonstrate high cash conversions as our earnings increase. Free cash flow was ZAR166 million. We invested ZAR49 million in the development of our South African Central office, bringing the total investment in our new office to ZAR316 million. We believe our strong track record of disciplined capital allocation, earnings and free cash flow will continue to bolster our balance sheet. Our consistent results extend our track record of growth at scale, profitability and cash generation ability. In this quarter, our net cash on hand plus cash in bank fixed deposits stood at ZAR674 million. Debtor’s turnover days was 27 days, which includes prudent provisioning given strong economic headwinds in some of the markets we are operating. In August, we paid a cash dividend of $1.08 per share, a total of $33.4 million to our shareholders, an increase of 27% per share year-over-year. We have strong unit economics, robust operating margin and unleveraged balance sheet and strong cash conversion. Our robust business model are geared for growth, with massive opportunities ahead of us. This was backed by a strong and clean balance sheet, and we remain confident that our track record of success, especially our ability to generate healthy cash flow is sustainable. Given our strong quarter two results and operating momentum, we are raising our outlook for FY '25 subscriber and Cartrack subscription revenue at the midpoint. We are now expecting Cartrack subscriber to be between 2.3 million to 2.4 million compared to 2.2 million to 2.4 million previously. Cartrack subscription revenue to be between ZAR3.95 billion to ZAR4.15 billion as compared to ZAR3.9 billion to ZAR4.15 billion previously. Cartrack operating profit margin outlook of between 27% to 31% and Karooooo's earnings per share outlook of between ZAR27.5 to ZAR31 remains unchanged. In closing, we are excited about the operating momentum in the business and our strong first half results highlighted by our improved outlook for FY '25. Looking forward, we believe our attractive SaaS business model, strong cash generation and strong balance sheet position us to capitalize on the expensive growth opportunity in front of us. I would like to thank everybody for joining us today, and we will now open the floor to Q&A with our group CEO and Founder, Mr. Zak Calisto.
A - Zak Calisto: I've got a few questions. So I'll start with the first question from [Addie Al] (ph). Karooooo Logistics reported revenue of ZAR101 million for Q2 FY '25, which while demonstrating a strong 40% year-on-year growth, shows muted quarter-on-quarter growth as it matches the Q1 FY '25 revenue. This appears to be the first time we've seen muted Q-on-Q growth for Karooooo logistics. Could you comment on the factors contributing to the stagnation? Additionally, do you anticipate Karooooo logistics will achieve double-digit annual revenue growth over the next few years? And if so, are the key drivers expected to support this growth? So in Q1, we really stagnated quite a lot because we needed to basically increase our driver capacity, and we needed to onboard more drivers to be able to deal with the increased demand. Further, we also needed to increase our operational capabilities, so we did stagnate intentionally. You will see in Q3, you'll already see a much better performance compared to Q2. And we certainly believe that we can continue delivering double-digit growth. A question from Alex Sklar. Zak, can you talk about the mix of the record subscriber adds this quarter? Any change in commercial mix or larger enterprise net adds? It was very much a situation where most of our [driver growth] (ph) was still SME business. Clearly, we did get some large enterprise customers. We've got one or two customers with more than 2,000 trucks. But fundamentally, it was driven by SME being still primarily the most -- the biggest contributor to our growth. Another question from Alex. Zak or Hoeshin, [implied] (ph) Cartrack gross margin ex-logistics looks like a new record this quarter. Can you talk about the drivers there? How sustainable is this higher gross margin level? A lot of it comes from operational efficiencies. But as you've seen over the past years, our margins tend to go up and down in a very tight band. So we did see a very good increase in gross profit. I think we're not -- our business model is not to try and keep it at 74%. But frankly, if it goes down to 72%, it's still great margins. And we look at the full margins of the business. I do not believe that we can get much better margins if we still want growth. While we're growing, I think these margins will fluctuate, but in a very narrow band. Jackson. Thanks for taking my question. I'm Jack for -- from [indiscernible] Research. What is the major driving force for ARPU this quarter? Could you give some color on the ARPU for the next few quarters? Given our new products, I believe that our ARPU will have a tendency to increase. Although in Asia, as Singapore becomes a smaller part of the business, the ARPU in Asia will probably decrease because the ARPUs we experience in most Asian countries are very much in keeping with the South African ARPU. So our drive in revenue is really just customer acquisition. And it's been our model for -- since day 1, which is 20 years ago, we've continuously driven subscription revenue through customer acquisition. Question from Roy Campbell from Morgan Stanley (NYSE:MS). Has the company participated in further share buyback over the last quarter? Roy, we haven't participated. What we experienced in the ability for our -- ability to buy shares, it's quite difficult. The SEC rules make it very difficult in the way we can buy shares. And at the moment, we are picking up liquidity. And I think we need to support the growth in our liquidity. We've also brought on [Paul Beaver] (ph) as either by internal relations. So we will be doing a lot more activity on the investor side to build up liquidity. And I don't believe a share buyback that we're getting considering that we're now starting to get momentum, we'll send the right message. A question from Seki from Ashmore. How is subs growth in Asia Pacific, the Middle East [paying] (ph) versus management base case? And what would constitute a good outcome in terms of numbers and subs say in 3 years versus the current 250,000? We started in September, a huge drive to get our sales head count to a level that we really wanted. I think we've sorted out a lot of our ability to recruit into build the team. And I believe that we would certainly like to start growing at over 30% year-on-year and I believe we can do that starting in FY '26. A question from Gokul Raj. Could you update on the secondary public offering of your shareholding? And also what should be the long-term float in the stock that we should expect? In July this year, we basically did an offering to the market, the second half of into the market, where it was me selling down secondary shares, my shares. And I've made it public that over time, I will sell about 6 million of my shares over the next five years or six years. I'll do it in a responsible way. So this is public knowledge, there is documentation out there. So the first [block bill] (ph) that we did, we wanted to sell 75 million shares. We were well oversubscribed already in the first day. And then for reasons that I don't really understand, our share price drops from $35 to $28.80. And then if I remember correctly, we had the book build of over $150 million for the $75 million offering, but I wasn't willing to sell at $28.80, and for that matter, we terminated the secondary offering. So over time we do expect, as I sell into the market or if we happen to do M&A, we will expect higher liquidity, and we are certainly working towards that. [indiscernible]. If Karooooo doesn't make transformational acquisitions, why isn't the balance sheet leveraged? I don't think that's really our DNA. I mean one can get into very clever financial engineering, where you start, but I don't believe we need to do that. And I'm quite prudent. If we look, we've been a public company as Cartrack before JSE. We've always run a very clean balance sheet. I believe you only get debt if it's absolutely necessary. And we might have a few raining days and we want to be well-positioned. When COVID came, we continue growing. We weren't worried about the balance sheet. So we never know what's around the corner. And we don't want to be where, when the banks knock at our door, we start panicking. We'd rather be -- we're very comfortable to remain in a net cash position as opposed to net -- in a debt position. However, we are not scared of debt, if it makes absolute sense. But I don't think, we need to do it just to leverage our balance sheet so that we can engineer our balance sheet. A question from Prasanth Premkumar. Is there LTV to CAC much higher in Southeast Asia versus company average of 9? Has this metric for Southeast Asia changed much in the past few years? Prasanth, I don't have the LTV to CAC for each geography. And then LTV to CAC to 9, is for the whole of Cartrack. But fundamentally, we've got very high LTV to CAC in all our geographies. And we are now going to -- go into quite a substantial increase in headcount, and we normally find these headcounts don’t normally deliver results in the first six months, that could obviously have a negative impact on our LTV to CAC. But we believe that we should be -- still be able to keep it over 9. And if it drops below 9, it is also fine. LTV to CAC of 9 is very high. If it goes to 8, if it goes to 7, and we believe we are going to get the results, and if we believe the way we're allocating capital, we are on the right path. We don't mind dropping the LTV to CAC of 7 for that matter. Thank you for showcasing the AI capabilities of the company. Approximately what percentage of [indiscernible] used Cartrack AI-based benefits as opposed to just vehicle tracking. How fast is the base of AI usage customers growing. The onset to that, AI is in my opinion, it's just the latest fashionable word. So for me to answer that, I would just like to give a bit of color of what I believe AI is. And AI is really just ability in our case, is to have a substantial amount of data, the ability to process the data, the ability of algorithms and ability to give instant information to our customers to better improve their businesses. And that's really AI. Then the terminology is a -- it's a new terminology. It's loosely used. But we've been doing this for many years. Over time, obviously we get better and better with our predictions, our data, the amount of data we've got, our algorithms get better, but we've been doing it. So I would say that all our business customers have got some form of AI in real time and access to it. It just depends what exactly are we talking about. So when it comes to the video, that's very much something that we've introduced in the last year. But I mean when it comes to the business intelligence reports, the live alerts, all of that is part-and-parcel of a broader definition of AI. A question from [indiscernible] from William Blair. Can you provide some color on the S&M investment across each region as growth since to be broad-based? How are you thinking about sustainable efficiency across these investments? So we've got a capital allocation team that is run by [homeup] (ph). And in this capital allocation team, they actually look at each country. And not at each country, they also look at each go-to-market strategy within each country. And on that basis, we're always continuously measuring our return on investment. So it's something that we do as a full-time job, and we don't do it just across the company. We do it quite granular. And we've been doing this for many years, and we do it, in my opinion really well. I think like our lead is that we perhaps have been to prudent in the way we allocate capital. So there is -- we definitely are going to see less yield in the short term, as we grow our sales force. But over time, we will go back to very high returns on our sales force. Seki Mutukwa from Ashmore. Any guidance about sales and marketing as a percentage of such revenue as contract going forward? That is currently increasing at this point in time. We will obviously do this in keeping with our track record, which is in a very disciplined way. But the intention is definitely to increase that as a percentage of subscription revenue, to increase the spend on sales and marketing. A question from Alex Sklar. Can you elaborate on your headcount growth targets over the next 12 months? How much are you planning to grow sales and marketing headcount in the next 12 months? Alex, we actually busy most of the day to day with these budgets for the next year. And my gut feel is at this point in time, we're probably going to grow the sales head count. In terms of Asia, that will be substantial. But in South Africa, probably about 25%. And in Europe, it will be about 25%. But in Asia, we're expecting to go that we’ll be able to do about a 70% increase in headcount – about 70%. That's all questions for today. Thank you very much for joining me. Thank you. Bye-bye.
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