Welcome to Karooooo Limited Earnings Presentation for the Third Quarter of Karooooo’s 2022 Financial Year. Today, Zak Calisto, CEO and Founder will be presenting to you. Zak will take questions from participants after the presentation. Over to Zak to commence with the presentation.

Good day to everybody that’s taken the time to look into our Q3 results, both potential investors and investors that are not too familiar with our structure. Karooooo is the entity and Cartrack was where it originally started. It was founded in South Africa and now we are headquartered in Singapore. We have had the track record of being in the business for 15 years and as we go we've evolved over time. We certainly are investing a lot into R&D to accomplish our vision and mission. We see mobility as core to all on-the-ground operations. What we also see is customer needs are quickly evolving at a relatively fast pace and it's going far beyond connected vehicles and equipment driven by the technology where we’ve gone from GPRS to 3G to 4G to 5G. This field of technology has evolved us to be able to see a much larger opportunity that drives much stronger value for our customers. Our mission is to establish the leading on-the-ground operations cloud. What we do is we solve problems by transforming the on-the-ground operations of our customers. We add value to the day-to-day operations of our customers. In that, we do fleet and equipment management, logistics and delivery operations management, and we assist our customers with their field workers and management thereof. We do video safety. In today's day and age, there's more and more demand for ESG compliance and reporting. We're planning to control that. We do risk mitigation and integrations into the back office of customer systems and warehouses. We recently – we're in beta phase and we will be launching towards the end of Q4, early Q1, our vehicle buying and selling platform despite launching the beta type at this point in time. We are certainly growing our insurance platform for our customers. Can everybody hear me? Is it clear? We fundamentally add open operations cloud with seamless integrations into our customer systems. We collect data from proprietary in-vehicle smart devices. We also connect data from third party and OEM in-vehicle smart devices, AI video telematics, and we certainly also collect data and push data through APIs through third party systems. We take the data and on our cloud we do data analytics; we do artificial intelligence. We understand that in the very early stages of the potential of artificial intelligence, and with that then we drive our fleet of verticals that exist on our one platform. Further, we help monetize the data by adding fundamental value to our customers. We do not sell data to third parties, and we see the real value of data is really how we assist our customers and our future customers. You should also be aware of the untapped network effect of our platform. We are starting to invest in our REIT, and we are able to unlock all this value. At this point in time, we collect over 70 billion data points and we consider them as valuable because there are other data points that we disregard as not being valuable. We certainly believe that as technology evolves, the opportunity seems to be getting bigger, and we are in the very early stage of this large and long-term growth opportunity. IoT data is certainly key to improving operations for our customers. If we look at our customers' operations, fundamentally a majority of it is driven around their fleets, their vehicles. Any customer of ours that hasn't got any on-the-ground operations, you will find that vehicles are key to those operations. If we look at the market size, South Africa has about 10 million vehicles. At this point in time, we've got about 10% of all vehicles in South Africa on our platform. Southeast Asia, we estimate there to be over 100 million vehicles. We've got 138,000 vehicles, which is really a very small percentage. We've got a huge growth opportunity in Southeast Asia. Europe is much the same as South Africa; a large opportunity as well. We believe in South Africa we can grow relatively fast for maybe another four to six years, but in Southeast Asia and Europe, we really have a long runway for growth. Africa has about 10 million vehicles; it's not our major focus at this point in time, and we've got 67,000 vehicles in Africa. It is estimated that over 40% of global GDP actually relates to on-the-ground operations and what really gets spent to generate economic value on the ground. For the last 15 years, we've had a robust and consistently profitable business model. If you look at our SaaS ARR growth over the last few years, we've averaged around 20%. We need to bear in mind that there are currency fluctuations. As of November 30, 2021, the exchange rate was ZAR16 to the dollar, equating to US$172.5 million. We have just over 78,000 commercial customers on our platform. They are vertically integrated, providing an end-to-end all-inclusive IoT cloud software platform, with a well-established infrastructure and expanding distribution network. We have certainly proven over time that we can execute and scale. If we just take the highlights of Q3, we grew our subscriber base by 18% to 1.47 million subscribers. We are quite proud to announce that we have surpassed 1.5 million subscribers; it's public information. Our subscription revenue improved by 19% on a constant currency basis. 98% of our revenue comes from subscription revenue, and total revenue improved by 25% on a constant currency basis. Our subscription revenue has consistently increased over all quarters, and we are now at ZAR664 million in Q3, an increase from ZAR628 million in the previous quarter. Regarding profitability, our operating profit for the quarter was ZAR205 million compared to ZAR178 million in the previous quarter, primarily due to investments in sales and marketing in Q4/Q1. With COVID, we had to become a bit more prudent with our capital allocation, leading us to cut back on sales and marketing costs and subsequently see the increase in operating profit. Our intention is to grow subscription revenue and subscribers in a financially disciplined manner. Our total revenue for the quarter was ZAR720 million, our best quarter ever. We've consistently grown our revenue every quarter historically. In terms of earnings per share, we had ZAR4.72 for quarter three. In terms of unit economics, we believe we’ve got robust operating margins and we've consistently beaten the Rule of 40. Our balance sheet is unleveraged and we sit in a very strong cash position at this point in time. The most important takeaway strategically is that we have ample capacity to increase our investment in sales and marketing while remaining profitable, and we have the balance sheet to support it. Regarding net subscriber additions for the nine months, we had 164,000, compared to 119,000 last year in the first nine months; in the prior year, it was 128,000. In Q3, we had 61,000 net subscribers, while last year during the same quarter, we had 71,000, a difference of around 9,000 subscribers. Although we experienced better sales growth this quarter, we did see more churn than last quarter as we came to the tail end of customers we had not been billing due to financial difficulties caused by COVID. We still maintain very strong unit economics with a lifetime value of customer relationships that is very healthy. Our LTV to CAC stands at over 9x, placing us in a favorable position for increasing our growth investments. It's often confused, the lifetime value of a customer with the lifetime value of a subscriber, and I would like to clarify and differentiate between the two. A customer onboarded will keep vehicles on our platform, but they may churn the vehicles and buy new ones over time. One customer may remain with us for several years, with an expected duration based on historical data of approximately 61 months. We amortize over 60 months. We calculate the cost to acquire a subscriber and onboard them onto our platform, considering averages for both new and existing customers. Clearly, a new customer is more expensive than an existing one, but we've combined the figures to provide one summary number. In Q3 of FY 2022, it was ZAR1981, of which ZAR697 gets expensed upfront and ZAR1284 gets capitalized and depreciated over 60 months. Our lifetime value of a subscriber for Q3 of FY 2022 was ZAR6634, a slight decrease compared to ZAR6739. There is some noise due to currency fluctuations and increased sales and marketing investments without having derived the necessary value amidst COVID headwinds; nevertheless, it's still very healthy. Our contracts operating profit margin for the quarter was 31%. We have ample profit margin to increase and ramp up our sales. Regarding growth per region, South Africa saw a 90% increase in subscribers, Asia increased by 20%, Europe by 15%, and Africa by 8%. Overall, we are content given the headwinds, maintaining a tremendous amount of financial discipline throughout the quarter. We are investing for long-term growth and evolving our platform to build our customer base for the future. Our sales and marketing expense has increased by 23%. Our R&D spend has increased by 80%, and much of that investment will provide benefits in the medium to long term. Our G&A has gone up by 10% while remaining tight on a discipline basis. Our operating margins for research and development remain at 6%, aligning with the long-term targets set when we IPO'd in April on the NASDAQ. Our sales and marketing subscriptions stand at 12%, consistent with the same quarter last year, and we aim to increase that to between 17% and 19%, which we believe will yield better results and substantially faster growth than the current 20%. General and administrative costs as a percentage of subscription revenue are at 20%, down from 21%, and ideally, we want to see that at 12% to 16% in the long term. Our adjusted EBITDA margin as a percentage of subscription revenue for the quarter was 52%, slightly down from 53% last year, and we believe our target should be between 50% and 55%. Fundamentally, the trends are aligned with our long-term financial goals as set upon our listing. In terms of free cash flow, despite our strategic investment in customer acquisition and R&D during the pandemic, we still generated what we believe is a good free cash flow of ZAR306 million. From our operating activities, we generated ZAR750 million. We invested ZAR445 million into PPE and with strong revenue generation, earnings growth, and cash flow, we feel comfortable with our balance sheet and have ample capacity to fund growth. Cash on hand at the end of Q3 was ZAR799 million, compared to ZAR67 million in the same period last year. Our debtor days are at 34 days, which is quite healthy. This consistency has been maintained over several years. We have traditionally experienced early 50 to 35 days. This is supported by our proprietary internal systems, including our collection management of debtors. Our outlook for the year remains unchanged despite the pandemic. Our initial outlook was between 1.5 million and 1.6 million subscribers. We have already surpassed 1.5 million, so we feel very confident in reaching subscription revenue between 2.5 million and 2.7 million. Our adjusted EBITDA margin outlook was between 45% and 50%, and year-to-date we are at 47%. We feel comfortable we will meet our outlook. Our ARR as of the end of November was ZAR2.76 billion, reflecting good growth. I want to thank you for listening to this brief presentation, and I'll be taking questions.

Great. Thanks, Zak. Just Zak I wanted to get your thoughts as far as the recent IPO and the U.S. market getting a premium valuation, how do you compete with them? Do you compete with them, and if you do, how do you fare head to head and maybe you can talk about how their strategy is either similar or different from yours?

The first thing I’d like to mention is that I haven't really studied Samsara in huge detail, but from the literature that I've read, I think they play in the same market as us and have competitors in America like Geotab. There are quite a few competitors that we have. We haven't really come across any in the market, but from what I read I think they are a worthy competitor. They certainly appear to be doing a great job in terms of growing their business. I see their growth is 68%. They are allocating a tremendous amount of cash; they are not profitable but they are growing at 68%. They are allocating a lot of cash into sales and marketing, which I think is quite a good strategy in America because I think America and South Africa have similarities in the sense that COVID hasn’t quite affected America in the way it's affected Asia. Overall, I think they are doing a good job. In terms of valuation, let's be honest, I'm not really an expert on valuing companies compared to others. Hopefully, we'll be out of COVID in Asia and then we can start going faster.

Okay, thanks. And then on your follow-up question, just on the sales and marketing investment, how should we think about modeling sales and marketing as it ramps towards your longer term product of 17% to 19% target?

At this point in time we've actually ramped up – if you go back to Q1, I got it wrong. I thought another three to six months we – even when we gave our outlook, my view was that we would have COVID for six months, and in the last six months of the year, we would see little to no COVID effects. I got it wrong. It seems like we're going to have 12 months of full COVID effects, but despite that we're still going to meet our outlook. Regarding sales and marketing, we have adjusted our spending – if you look at Q2 and Q3, we cut back on the sales and marketing spend. We're still getting the growth, but clearly, if we want to start growing at over 30% or 40%, we're going to have to increase that, but we need to do it when the market conditions allow; once we can travel, and deploy our people. At this point in time, we feel comfortable that we're doing a relatively good job while maintaining strong unit economics. There’s a case for us to compromise on unit economics to accelerate growth, but this is something management continuously evaluates, determining whether we should compromise our unit economics in pursuit of growth. Hopefully, we will see the pandemic’s restrictions lessen in the near term.

Okay, well congrats on keeping your full year guidance and the results despite COVID restrictions being more extended than expected. I'll pass the line to the next caller.

Thanks very much, Mike. The next caller, Alex from Raymond James.

Thanks, Zak. Last quarter, you talked about the record ads in September; I'm curious about how many you already placed at the rest of the quarter? And with that, you called out some of the retention from some of the earlier customers that you subsidized during the pandemic? Any update on how much of that is left?

That's basically since we started subsidizing customers; we're really at the tail end. Even in this last year Q3, we churned in the region of about – I don’t have the exact number, but we churned between 11,000 and 16,000 vehicles that we had been subsidizing without billing for a good six months. We've actually switched them off. We probably have another 20,000 of those vehicles that we'll do in Q4, and after that, I think it's business as usual without incurring the costs of sales while generating no revenue due to COVID. Despite that, we still achieved very good net additions in the quarter.

Got it. Okay. And then on the messaging evolution now to kind of the on-the-ground operation cloud, what can you tell us in terms of where you're investing today and how that breaks down into core telematics versus other components of the platform? And then longer term, how do you think about the monetization of that broader platform?

We've got several investment areas. The first is that we’re investing significantly more in R&D; as you could see, we’ve increased R&D spending by 80% compared to a year ago, which is really substantial. Much of that investment is aimed at the medium and long-term. Our spending priorities include video safety, integrations into customer assistance, and software to support last-mile delivery among others. We're integrating our technology into large retailers' stores and warehouses, which helps customers digitalize and streamline vehicle and equipment management. We’re doing extensive work beyond our traditional fleet management. The advancements in data technology allow us to do much more today than we could in the past; this started with SMS, then GPRS, 3G, 4G, and now we're leveraging this data for various verticals on our platform. We launched our latest platform toward the end of last year and believe we have a significant way to go to improve our offerings to deliver a world-class product for our customers. Thank you. Next, we have Matt Pfau from William Blair.

Hey Zak. Thanks for taking my questions. Wanted to first ask about the impact of Omicron and what you've seen so far from that in the fourth quarter?

I happened to be in South Africa when Omicron surfaced. At that time, Asia just started opening up their borders approximately two weeks for neighboring countries like Thailand, Malaysia, Philippines, Indonesia. They were easing restrictions, then Omicron appeared, and all the borders got closed again. I had to get onto – all flights from South Africa got cancelled; it was a nightmare getting back into Singapore. My family was supposed to visit South Africa; that didn’t happen. So, it's clear that there were immediate reactions from different governments and policies. On the ground in South Africa, what we saw was that the hospitals were nearly empty. Doctors are indicating that Omicron hasn't posed a significant issue. I feel the market will open again soon, which gives me hope. However, I was optimistic and then everything went back into lockdown. I’m not sure if I fully answered your question.

Yes, I think that does. You know, you mentioned ramping up sales and marketing and investments into next fiscal year. Can you give us some insight into your priorities and how you will allocate those investments?

We must approach this prudently. Our biggest priority is Asia; we need to be able to execute otherwise we're just burning money. Asia represents our most significant opportunity, followed by Europe. We want to invest accordingly, as we believe that’s where the real potential lies. In South Africa, we've already captured about 10-11% of the vehicles on the road. I believe we can grow well for another five to seven years, after which revenue growth will likely depend on charging for additional verticals on our platform. We could consider that in South Africa in about two or three years to enhance revenue and ARPU once we've secured a significant share of the market. However, Asia and Europe still present many early stage opportunities, especially Asia. Okay, next question, Roy from Morgan Stanley.

Thanks, Zak. Just a quick question on the on-the-ground opportunities. Can you provide clarity on Carzuka, specifically regarding its revenue recognition and its profitability? Additionally, what growth do you expect with Carzuka? Lastly, could you touch on the insurance aspect and the Logistics acquisition?

Carzuka is currently in beta phase. In Q2, I think we generated about ZAR9 million in revenue. In Q3, that number rose to about ZAR24 million, and I'm estimating we will exceed ZAR40 million in Q4. We hope to go live towards the end of Q4; we might be a little delayed and go live in Q1, then we'll have a platform to start scaling the business. At this moment, it’s primarily about readying our tech and fine-tuning our processes and procedures. I’m confident we will execute well and establish a successful business within two to three years. Regarding the insurance aspect, we have maintained over 1000 policies per month, which has been relatively flat for the last two to three quarters. We hope to start scaling that next financial year. As for Picup, we've collaborated with them for over two years. A lot of the subscription revenue they generated came through our already established contract platform. They were primarily focused on integrations into warehouses and retail stores of customers, and the use of cloud-sourced drivers and professional couriers. We are currently merging their technology with ours, aiming to consolidate everything onto our platform. Afterward, we'll spend time and resources investing in scaling that business, which I believe is a crucial long-term driver for assisting our customers with their operations. Next question, Parker Lane from Stifel.

Hey Zak. Thanks for taking the questions. I wanted to talk about the unit economics of the business; they are obviously very strong today at 9x LTV to CAC, but what does that look like when you enter some of these newer markets in Southeast Asia and Europe? Is it typically lower initially and then scales over time, or can those unit economics hold true regardless of the location?

Currently, our LTV to CAC is 9x. I do believe we might see it drop a bit as we initially scale in those markets. However, I’m optimistic that we can maintain similar LTVs to CAC once we've ironed out any inefficiencies, provided the pricing holds steady. I believe we can preserve robust unit economics even as we enter new markets.

Got it. And just considering your broader strategy around on-the-ground operations, how much will tuck-in acquisitions contribute to platform expansion in the future? Obviously, with the Picup deal, can we expect that to be a regular cadence of separate acquisitions each year as you expand the platform?

The reality is that this is the first acquisition we've made. Traditionally, we have been very much vertically integrated. Even our internal systems demonstrate that we rely on proprietary software. What led to this acquisition was our three-year collaboration with Picup. We have a good understanding of their management and the value we can derive from integrating our technologies into one platform. I don't believe we are wired to grow through acquisition, though we remain open to it. However, I feel confident we have sufficient tailwinds to achieve our growth targets organically. I’m reading a question from Gregory. What do you see as the largest challenge to your growth? Is it internal, external capacity, competition, exposure, or something else? I always say the biggest challenge is typically what you don’t know, as you don’t know how to address it. Currently, the real challenge lies with human capital. All businesses face similar challenges, whether for sales and marketing, G&A, or R&D, acquiring skilled individuals is never easy. Challenges arise continuously, often unexpected, but we’ve built a flexible team that can tackle these challenges as they arise. Hi Zak. Given the strong and unleveraged balance sheet and healthy cash position, can you provide insight into the company’s inorganic growth strategy or M&A opportunities? Are you currently pursuing bolt-on acquisitions or partnerships to diversify the business? If so, what types of businesses are on your radar? As I mentioned earlier, we’re not currently pursuing acquisitions or to grow via M&A, but we are practical. Given the market's size, multiple players can succeed. There could certainly be opportunities for M&A down the road, but if we were to pursue any business, it would have to be strategic.

What does the ideal customer look like, what services do they subscribe to, and what are the business opportunities within them?

Fundamentally, we don’t have an ideal customer. Our portfolio includes customers ranging from individual consumers to large enterprises. Our smallest customer has one vehicle, while our largest has 37,000 vehicles. The types of vehicles vary from motorcycles to massive trucks used in mining, weighing 500 to 600 tons. In terms of industries, we serve a wide range including tourism, logistics, oil and gas, mining, retail, and wholesale. We can cater to 99% of typical customer needs in terms of fleet management, and we are now investing significantly beyond traditional fleet management to provide additional value and integrate all collected data into their operations. Thank you, everybody, for attending. We will see you in three months’ time. Thank you very much. Goodbye.

Well, that does conclude our conference for today. Thank you for participating. You may all disconnect.