Cartrack slashes dividend to invest in growth

Cartrack, a leading car safety provider, has recently reported strong financial results marked by a significant 28% increase in subscriptions. The company has distributed earnings in the form of a 12 cents dividend, with headline earnings per share amounting to 116 cents, reflecting a 15% increase since the previous reporting period. This positive growth trajectory has prompted Cartrack to introduce a shift in its dividend strategy to prioritize investments in future expansion. In a recent interview with CNBC Africa, Global CEO Zak Calisto discussed the company's decision to slash dividends in favor of fueling growth initiatives. Calisto highlighted the company's unwavering focus on driving growth through investments in distribution channels and customer acquisition. He emphasized that, as a growth-oriented entity, Cartrack prioritizes using available cash for future expansion rather than distributing it as dividends. Calisto acknowledged the presence of debt on the company's balance sheet and expressed intentions to reduce or strategically manage this debt to support the company's long-term growth trajectory. One key aspect propelling Cartrack's growth is its emergence as a dominant player in the market, particularly in fleet management services. Calisto outlined how technology, once an advantage over competitors, has now become a requirement to stay relevant in the industry. Despite economic challenges, the demand for Cartrack's services remains robust, as its technology offerings continue to provide real value for customers. In response to queries about potential impacts from companies cutting costs during tough times, Calisto asserted that Cartrack's technology solutions are integral to helping businesses reduce expenses and enhance productivity. He stressed that rather than being an area where costs are cut, Cartrack's services are essential tools for companies seeking to optimize operational efficiency. Looking ahead, Calisto forecasts double-digit revenue growth for the upcoming year, driven by the company's subscription-based model. He expressed confidence in sustaining the current growth momentum and highlighted opportunities for further market penetration, even amid economic challenges in South Africa. Calisto's optimism about market expansion aligns with Cartrack's projection for continued growth in subscribers and revenue in the foreseeable future. In the context of evolving economic policies under a new government in South Africa, Calisto articulated hopes for policies that prioritize job creation and facilitate investment. He emphasized the importance of striking a delicate balance between delivering on electoral promises and fostering an environment conducive to economic development and foreign investment. Reflecting on his personal journey as the founder of Cartrack, Calisto shared insights into the company's humble beginnings and the arduous path to establishing a successful business. Recalling the initial struggles of building a customer base and establishing brand recognition, Calisto underscored the tenacity and perseverance required to overcome challenges in the competitive market landscape. Aspiring entrepreneurs were encouraged to embrace the long-term commitment needed to grow a sustainable business, with Calisto suggesting that a solid business typically takes at least five years to develop and a fully established enterprise may require a decade of dedicated effort. His journey from a small startup to a prominent industry player exemplifies the resilience and determination necessary for entrepreneurial success.