Earnings Call: Q1 2022

Jul 20, 2021

Good day, and thank you for standing by. Welcome to the Karru First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Zach Callister, CEO, Founder. Thank you. Please go ahead, sir. Thank you very much, Ajay. I want to thank everybody that's made time for our presentation, the Q1 FY 'twenty two results. I will go through the presentation and clearly the I will answer as many questions as I possibly can. I founded the company in 2000 M1 we launched in South Africa in 2004. And during April this year, we Muir Thai headquarters to Singapore. And we the holding company is called Kuru, and it now owns 100% of Kartrak ASK from April in the Q1. Since we set out in the business in 2004, we always have the view that all vehicles will be connected and data Well, drive all aspects of mobility in the future. This has taken much longer than anticipated, but our mission is certainly to build the leading mobility SaaS platform that maximizes the value of data. With over 76,000 commercial customers and approximately sole proprietors or consumers of 500,000 customers, we've got a data set and collect over 58,000,000,000 data points on a monthly basis, a comprehensive data from customers in different industries, in different geographies, using different types of vehicles, different fleet sizes. And all of this data, it allows us to contextualize a lot of different businesses, a lot of different business processes. And that allows us to give comprehensive business intelligence report and predictive analytics to our customers, whether they be just fleet management in the insurance industry. And that's fundamentally what we do. We collect data from variety of vehicles smart devices. We also collect data from 3rd party OEM vehicles devices in vehicles. We store the data and fundamentally we then process the data to create the value. We have APIs into 3rd party systems Where we push and receive data from. We've got a relatively consistent history where we've year on year consistently or quarter, even on quarter on quarter consistently have increased our customer base, our subscribers. We've grown our revenue on a consistently and our operating profit is also growing consistently. However, from time to time, it does go a little bit up or down. But over time, the line is certainly trend upwards. One of the things we found ourselves is the way we allocate capital. We've got strong financial discipline and we're continuously monitoring our process on a daily basis. We're quite fortunate that our business is annuity based business. Healthy subscription revenue growth. 97% of our revenue comes from annuity. And that obviously gives us quite a bit of confidence into the months to come into the of what our revenue line would look like. Our subscriber growth, if we compare it this quarter compared to the previous last year's quarter. We grew by 21%. Revenue growth grew by 17%. On a constant currency, we Grew by 22%. I think it's important to note that on a constant currency, our subscription revenue grew by 20%. We now ARR as of May is DKK 2,500,000,000, which is up 18%. We did have quite a bit of play in terms of currencies over this last year. We saw the rand appreciate substantially against the basket of currency that we operate in. And if you then look at our ARR in U. S. Dollars, you will see a 51% increase $281,000,000 A lot of that is led by the appreciating South African trade. We've had a relatively good Q1. We grew compared to Q1 last year in terms of net subscription additions, 7 60%. That could be a little bit out of context given that in Q1 last year it was really the beginning of COVID. It's a very difficult time. The times are still difficult for us at this point in time, but we've got a bit more used to trading in this current environment. But irrespective of that, if you look back to Q1 of FY 2020, our net quarterly subscriber additions It's still more than 100%. And I would say that the last three quarters have been very good quarters in AdiNet subscribers. And typically, our Q1 is not normally our strongest quarter given quite a lot of the Jewish and Christian holidays And also the Asian holidays. So we're quite content with the results and our achievement in Q1. We continue to see growth of our customer base. What we are experiencing with COVID is more than normally what we're seeing is the different sizing of customers where you'll have a customer that has 30 vehicles now with 20 vehicles or there is a bit of more movement in the downsizing or increasing of vehicles throughout our customers. Our commercial customer retention has remained strong at 95%, and we have very low industry and customer concentration risk. The car industry, which is considered to be quite risky given COVID. It's less than 1.1% of our base and our largest customer is less than 1.7% of our revenue. And also, I must add that the largest customer, the 1.7% in terms of bottom line, due to the discounts, it's substantially less than 1%. In terms of cash flow, Our operating activities were actually up 19% compared to Q1 of FY 2021. Clearly, with the growth, we've invested more into PPE. So we've seen a 77% growth in PPE, And our free cash flow is down 12%, primarily on the back of our growth and investing in our growth of our business. We believe one of our advantages over and above our internal systems and our platform. Over years, we're improving substantially in our ability to acquire customers, to acquire subscribers, subscriber being the vehicle that belongs to customers. I always tell we have a certain element of control on retaining customers, But the vehicles of the subscribers, that's really, by default, we compress car to our customers how long they retain their vehicles on our platform. So we do see customers selling their vehicles after they've been in the platform for 12 months, others after 18 months. And but all of these unit economics we take into consideration to build out our model. So what we saw in Q1 this year compared to Q1 of last year. We saw an ARPU drop from S155 to S151 predominantly that drop is actually got to do with currency, where strong range, the negative impact on our ARPU. And it's also got to do with quite a lot of customers In some Asian countries and in Africa, outside South Africa, where they're getting holidays, where they're not actually using their vehicles. So that's had negative impact. But I think overall on the constant currency, our actual ARPU is actually increase compared to last year. But it's still trading in the range that we find the out in range, which is between ZAR150. Our subscriber contract life cycle remains very consistent just over 60 months. We depreciate any capitalization of customer acquisition or subscriber acquisition over 60 months. It's more subscriber acquisition. What you do see is a huge decline in our cost of acquiring a subscriber from ZAR2,636 2,005. There's a little bit of noise in that in the sense that in Q1 last year, We had substantially less overheads in terms of salespeople, but there was substantially much less the productivity is substantially Less because of COVID. At this point in time, our productivity is still not where we want it Because we onboard, there's a substantial amount of sales and marketing stuff. But nevertheless, we've seen that improvement from 2,636 South African Grain to 2,005. In terms of what we capitalized, that's drop from 16.24 to €489,000,000 and that's got predominantly to do with our new generation telematics hardware. Subscription revenue gross profit margin, that dropped to 72% as opposed to 74%. But once again, that is also driven by the revenue in pool, which is lower because of the currency predominantly the exchange rates against the rent. It's important to note on the slide that the portion that we expense upfront. It's normally related strongly to customers that we've onboarded, And these customers will have the 2nd cycle of vehicles coming. When they de fleet the vehicles and bring in more vehicles, That would normally we wouldn't be incurring that the sales salaries again nor the marketing costs. So over time, it would stand to reason that your cost of acquiring a subscriber will decline. However, we see that that could change 5 gs units that we'll have in the year probably within the next year or 2 and that could also have an impact Funded Unit Economics. We operate in a large underpenetrated market. South Africa is kind of just it's our estimates and sometimes it's very difficult to get numbers with huge amounts of accuracy. And it's just over 10,000,000 vehicles. Some people talk about 12,000,000 vehicles. We've got just under 1,100,000 vehicles. So we have, At this point in time, we believe about 8% of the market. We believe that allows us to grow at very good rates, specifically store for another 5 years before we slow down growth. In Africa, we believe we've got So we can really grow Africa. It hasn't been one of our priorities. We will focus on that priority probably in 4 years' time once we believe South Africa has reached a certain level where we've moved that 1,000,000 customers to a few million and then we can use our stronghold in South Africa and the human capital guide in South Africa to move into Africa. In Southeast Asia, it's a huge opportunity with well over 100,000,000 vehicles, it's substantially more than 100,000,000 vehicles. We've only got 124,000 vehicles. And we approximately 2 years ago were feeling very positive about growing Asia and we are at our best. When COVID came, which is basically now 15 months ago, 16 months ago, and that's really made it very difficult for us to be able to move around Asia to be able to onboard people. We were hoping if you ask 5 months ago, 6 months ago, how would Asia look like. Our report by middle of this year to the market sort of opened up much more. The reality is they're actually closing up more. So Southeast Asia is we see Singapore is going to a relatively closing. Most people working from home, they're closing all the restaurants from tomorrow. So the trading conditions don't seem to be very favorable, But we're very well positioned to grow in Asia once the market opens up. We have employed about 150 people in this last quarter in Asia in the hope of the market opening up. And we are moving some of our staff that are sitting in Europe, in America end in South Africa that were meant to go into Asian countries. And we are bringing them to Singapore. And hopefully, they will owe it With the Singapore team and it will we'll start gathering momentum hopefully in the near future in Because we certainly believe that's our biggest opportunity. Europe, also a massive opportunity for us. Europe is what we're waiting for. We certainly want to start really investing for growth in Europe. What we do see in Europe is they go from lockdown to open up the market and it's quite it fluctuates. The policy seems to change quite frequently. And we would like to see Europe through this next winter And then after that, start investing substantially in Europe, just the same way as we've invested in South Africa in the last 6 months or 7 months where we've actually employed in the region of about 700 people, 650 people. So and we look forward to the opportunity. We believe it's huge. We will focus on customer acquisition. And as the markets become more penetrated, then at that point in time, we can focus on increasing our ARPU by charging for the value added services that we're continuously adding onto our platform that at this point in time we're giving to our loyal customers just put customer retention and to create customer stickiness and to make our proposition very attractive. If we look at our subscribers in this quarter, quarter on quarter, South Africa grew by 23%, Africa by 5%, Europe by 14% and Asia by 17%. During this quarter and actual fact, I would say actually for the last 6 to 7 months. We've been investing quite heavily for growth. And if you look at the amount of capital that we've allocated to sales and marketing. That's gone up by 71%, R and D by 44% and G and A approximately 21%. We did experience growth in the G and A, There's also expansion costs for Asia and even for South Africa Day. So we believe we have reap the rewards of this investment in months to come. We've onboarded a lot of people. They'll probably take a few months to become totally productive. And given COVID, Which obviously slows down the process of the transfer of knowledge. We believe that by Q4 of this year, we'll get the results that we desired out of all the staff that we've onboarded, And we're very excited about the future that holds for us. Our operating metrics, our subscription revenue grew from €526,000,000 to €6,000,000 ARPU, a drop from $155,000,000 to $151,000,000 Our gross profit margin dropped from 73% to 71%. Most of this is really due to the foreign exchange On the ARPU, it brings those margins down. In research and development, that we increased from 4% as a percentage of subscription revenue to 5%. Sales and marketing, that's been increased from 10% to 15%, all in line with our plans. And G and A, that's increased from 20% to 21%. Our adjusted EBITDA margin last year was 50%. This year. It's 44%. It's very much in keeping with our expectations. And we believe that adjusted EBITDA margin will increase about 45% by the financial year end. Outlook that we gave at the end of FY 2021, we maintained the same outlook, And that is to get subscribers to be between €1,500,000,000 1,600,000 our subscription revenue between €2,500,000,000 2,700,000,000 And our adjusted EBITDA margin between 45% 50%. It's just important to note that our ARR is actually at €2,500,000,000 as of May. On that note, I would like to thank everybody for taking the time to listen to us. And I will open up for questions. Question number 1 from repo Malozzi. Good day, Zach. What do you honestly think about prospects so far about expanding into mature markets like Europe and the U. S? Don't you think it's too risky? Or do you think the competitive advantage we have is strong enough to compete in such markets? And if yes, what makes you think so? So it's quite a long question. So we're not we've got a very small office in the U. S. I think the U. S. Market is a very exciting market full of opportunity. But we just haven't got the human we haven't got enough we have always spread too thin to go tackle the U. S. We're in Europe. We compete very favorably with our competitors there. In actual fact, we won a lot of the business over them. And we believe that that's definitely an area where we want to certainly invest in Europe. And I think the U. S. Over time to come, we've got enough on our plate that probably the best solution for us would be an acquisition Or a merger in the U. S. At the later times to come. I don't think right now. Right now, I think we've got enough on our plate and a lot to do. Next question from Brady Van Nelke. What was the impact of COVID restrictions during the period? How do you think your net adds would compare If we had 0 COVID restrictions in your operating regions. Really, I obviously haven't got a crystal ball, But my gut feel is and the way we've prepared is to obviously be growing much faster than what we're growing at. I think under the circumstances, we had to focus On the market that we believe was the easiest to trade under COVID, South Africa, the very open market, just like the U. S. Europe was half open. Asia was very closed. Asia was a very closed market. So we focused where we could do best. And this is the results we feed. Obviously, under COVID, we believe and our targets for our management would certainly be to be doing better than we're currently doing. Anthony Geert, Isaac, great subscriber growth. Can you provide more color on the geographic split of sales and marketing spend, please? Where are you spending the extra money and when do you think the fruit of this investment will be evident? Also the travel restrictions and so most of out of the way now, Azure team able to travel in the region. So the travel restrictions, if anything that intensified, still very difficult to travel in the region. And I think, Anthony, quite frankly, I thought by now things would look very different. But it's really I would say it's even tougher now than it was 3 months ago. Where did we spend most of our sales allocation of sales and marketing? It was predominantly South Africa And a bit of Asia. We want to then spend the growth in Europe. Just I would say in about 2 quarters' time, we just want to see after the summer holidays of Europe what that would look like. And the minute we see Asia will open up, that's where we really want to allocate a lot of capital to. We see Asia as the big opportunity, But at the moment, it's very tough to do business, especially if you haven't got the strong presence on the ground and you're busy growing the business, It's quite difficult. Daniel Bartus? Okay. Daniel says he'll ask the question. Okay. I'll do it afterwards. Roy Campbell, could you talk through the seasonality embedded in your 4 quarters in a normalized environment? So our business is not very seasonal, although our 2 weakest quarters is Q4 and Q1. And those quarters are normally quite weak quarters given all the holidays, specifically in South Africa in December and then obviously with the Easter and the Jewish holidays and some Asian holidays around the Q1. It makes traditionally because for us, it's all about trading days. The less trading days we have, That's how the impact does. It's not really the weather. It's more the trading day, if one had to take it directly. I'm not sure if I've answered your question, but I think I had. Ajay, can you ask the questions from Mike from Canaccord. Perfect, sir. Mike, your line is open. You can ask question. Great. Thank you. Zach, congratulations on the strong start to fiscal 2022 despite probably some of these markets more locked down than you anticipated when you gave the initial guidance. Can you just talk longer term, just should some of these regions such as Southeast Asia start to reopen? How do you think the business might reaccelerate in terms of longer term growth, particularly with the sales and marketing headcount additions you've made over the past year. Most of sales, the sales increase was actually in South Africa, although we did add about 157 people in total in the last few months in Asia in anticipation of the market opening. We believe we will do really well in Asia. We feel very confident in it. Our management feels very confident. And We will have to build our expansion in terms of distribution. Our distribution is quite limited given the size of Asia. We should be able to allocate capital and we believe we'll do well. So where we have got traction, we believe we're winning on the ground. Asset. We believe that our platform is superior, far superior and our solutions we are comparing that our SBI will be really well in it. Great, thanks. And just a follow-up question for me and I'll pass the line. Zach, are you seeing any change in competitive dynamics in South Africa? Inseego sold their Ctrack business, mixed telematics made some headcount reductions last year and then there's companies such as Samsara moving in there. So could you just talk about competitive dynamics as it looks like You guys continue to do very well in the South Africa market. The telemarket is very competitive. It's also one of the most highly penetrated markets in the board. It's very competitive. I don't really always have the color What our peers are doing, but we're winning on the ground and we're growing our business. And I think that's maybe the most the thing we're really focused on. And at the end of the day, we've only got 8% of the full market. So we believe Amil Continuum. Great. And maybe just one quick follow-up to just on South Africa. There's been some social unrest in the news there. Any impact to your business in the current quarter? Or do you feel like trends remain pretty strong in that region? Thank you. So it was certainly have an impact in this quarter. So what the social unrest was profit losses, if my memory serves me correctly, about 2 weeks. It appears that it's all calmed down. It's all back to normal. BitLicense. We all know these under situations that we forecasted in a very sense. So we have a great month and we probably have seen that of the business that we could have normally done. However, in August, we'll have another growth month in August. So June was absolutely the best. Slide that's cited. It's probably for you have told you more than half of the sales. So Under the circumstances, I think it will impact the quarter, but it will not be good. Obviously, some of our customers smallmedium businesses. Good to have a team on us in terms of some loss of customers with COVID. But nevertheless, I think given that we are really at so many of our customers that we Within Incentive Conference. Thanks for taking my questions and best wishes for ongoing success. Sure, sir. We have our next question. The line is open. You ask your questioner. Thanks for taking my questions, Zach. Just wanted to follow-up on Your supply chain and how you feel about your inventory levels and ability to source new inventory. And is there any sort of concern about that being a constraint from a At this point in time, Matt, I don't believe we've got certainly enough inventory at this point in time to conduct business as normal. And if we did ever get into a situation where we haven't got inventory, I would see it's probably in the next financial year Should something that we cannot think about go wrong in terms of the supply chain, but we believe this financial year, we Great. And then just one more question for me. Just wondering if you could provide some detail on some of your newer growth initiatives such Carzuca or the insurance initiative that you have. With Carzuca, we're hoping to launch in Q4 of this year. With COVID, we've always put out that we are launched in the latter part of this financial year. We're doing tests at this point in time and we feel very confident we're going to do well and we're going to build this business over the next 2 to 3 years and I believe we'll grow it into a good business. I don't want to promise the market or promise anybody expectations, create expectations. But myself and management feel that It's we're doing the right thing and we believe that's going to create a tremendous amount of value not only for us but for our customers as well. Great. Thanks a lot for taking my questions, Zach. Thank you. The next question is Daniel Barker. Hey, Zach, Daniel. Your line is open. Okay, great. Hey, Zach. Thanks for taking the question. First, I noticed the large fleets continue to grow as well. Can you just talk a little bit about what you're thinking in terms of second half or next year? How much of the growth should be coming from larger fleets versus the smaller fleets. And are you changing strategy at all to go after that opportunity more? So my view, Daniel, is this large fleet actually a very small percentage of the vehicle park in the world. So we've Taken with you that we go for the small, medium enterprises and then after time we're going to the large fleets. We've started going to the large fleets. The penetration rate in large fleets is larger than in the small and medium enterprises. And we certainly are going to target the large fleets and we are already starting to see a lot of quite a few of the large fleets switching from the current providers to us. But I think there's a long runway for growth in my view. And given all of that, I think we We must go and focus on large fleet as a core business. I believe the way we've grown the business, we must stick to Alcon Arena. Yes, yes, that makes sense. And then Just wondering, Zach, if you could talk a little bit about what you're seeing in Africa outside of South Africa. That's kind of the one area where you've seen a little bit of weaker growth. Are there things that you see that you can or leverage you can pull to improved growth outside of South Africa in the African region. I think it's on our core focus to grow at this point in time to grow Africa. It hasn't been our focus for the last 4 years. We have put in a bit more focus, but with COVID and the traveling restrictions. It's become a bit more difficult. I think we need to focus on Asia, Europe and South Africa. And Obviously, we will focus on Africa and it's not that we're not focusing on it. And we are growing the Africa business, but it's not our major focus. Although we are investing, we've now done quite a comprehensive deal with Toyota for the whole of Africa. We are investing that relationship. But I think fundamentally the real growth is right now in the next 2 to 3 years not going to come from Africa, it's going to come from other segments. Got it. Got it. Got it. I'll just Africa at this point in time is also being made quite hard with COVID, specifically Q4 of last year. And we see Q1 this year, COVID even taking a more deadly toll in Africa where Medical Assistance is Not the Greatest. And so Africa, you said that COVID is definitely having a very strong impact South Africa, specifically outside South Africa. Got you. And then just quickly, lastly, The travel restrictions have been hurting you guys in certain regions and we've talked a lot about it. Holding back your growth to some degree in certain pockets of the world. Are there ways that you can adjust the business to operate more efficiently remotely and not needing to travel on the ground. I'm wondering if you could just give us some color on Is it sales and marketing that's being hurt by the travel restrictions? Is it more G and A in getting management on the ground? Or is it mostly related to the implementation of the devices? Thanks. I think it's a combination of everything. But I think fundamentally, if you get to the bottom line is, if you look at Asia, we've got a very strong team in Singapore. We've got a relatively strong team in Thailand, but our teams aren't strong enough in a lot of countries. And approximately 2 years ago, we had a lot of managers. And I think we went wrong. We had Americans, South Africans, Singaporeans, Europeans The Go Run-in these countries and work side by side and localize the business. The reality is that We don't allow the people on the ladder get into the countries. It's very difficult to get them in. And even if they do get in, to get out and visit their families, it's very difficult. So we need to it's very difficult also to onboard people, train them through Zoom, get the culture aligned Distribution is quite difficult. As we know that Asia was still going to be a little bit difficult like it is Good day. We have probably put that focus in Europe, which is much less there's much less restriction in Europe. And what we will see now is you'll probably find that if Asia continues this way, we're just going to take our focus into Europe and to grow Europe South Africa. So the real opportunity is really Asia. Asia is a massive opportunity, but so is Europe and We just don't want to allocate capital at this point in time until after the summer holidays, because just judging by what happened last year, our post summer then dollar geo pointing total lockdowns because it starts getting cold. So I'm not a specialist on this, Well, I don't think that anyone is really, so we just want to be quite specific in the way we allocate our capital. Okay, great. That's really helpful. Thanks, Zach. Thank you. And then we've got Alex from Raymond James. Certainly. Alex, your line is open up. Great. Thanks, Zach. I have two questions on the pricing environment. You mentioned some pricing uplift constant currency. I'm just wondering if you could can you talk about what drove that increase absent the FX impact? And then you also talked about providing some support still to certain customers that were impacted in the quarter. Could you just help us quantify that impact? Is it 5% of the base? And how that level of support has kind of trended over the past 16 months. Thanks. So in terms of the ARPU, it's very difficult to keep your ARPU absolutely consistent. So we believe ARPU between 1 52160 is really consistent. We don't otherwise, you start nitpicking about your ARPU, if that makes any sense. And I think it's just it's really it's gone up by approximately a RFP. I think in constant currency, it's gone up by about R3, if I'm not mistaken. It's not that material, but that is offset against the currency and against the customers that we're giving them either discounts or we're allowing in 2 months or 3 months. How we do that, we have visibility of the seats of our vehicle, of our customers' vehicles. And if we see the customer is not using their vehicles or the vehicles are parked and they call us and they have issues with the vehicles, Obviously, we cooperate with them. It's in our interest to get the goodwill. And I believe in the long term, we great relationships and we are super happy with you. Approximately, I would say at this point in time, about 4% to 5% of base. I've got some level of discounts. I would say it's approximately 4% to 5% is our full base. Most of that would be some in South Africa, some in Africa and quite a lot in Asia. Okay, that's great. That's great color. One thing I don't think we've talked about as much and you kind of teased this when talking about customer acquisition costs. Buck, can you just talk about the 5 gs refresh cycle? What it's going to mean for the business down the road in terms of costs? And what are some of the incremental revenue opportunities that you're working on? I think the best way to look at sometimes it's quite difficult to differentiate customer acquisition and subscriber acquisition. So a customer acquisition, once you have the customer, you have service of customers. So if we decide that tomorrow we're not going to acquire any more customers, then it's really about customer service and Damian, looking after those relationships, which is a very different thing to necessarily marketing sales salaries. I don't want to say there will be no sales, salaries and marketing, but it will be substantially different in terms of the amount of money that And obviously, the subscriber cost is really when someone one of our customers de fleets and see And that's really what we capture on is it's the vehicle, the technology that goes into the vehicle, the customer acquisition as such That gets explained upfront. So when you're acquiring customers, you have the negative effect on your P and L today That you could have that customer for the next 20, 30, 40 years where you've got very little sales and marketing to Rick and Jeff. Does that make sense? Yes, that makes sense. But I guess, A little bit more specifically, I'm just curious what 5 gs is going to mean in terms of the refresh cycle and some of the incremental revenue opportunities that you're already working on now for when 5 gs comes into your base. It's all really about data and it's all about us evolving our platform to be able to deal with much more data and much quicker. I do believe before we have That sort of environment we saw probably 2 years before we did, if that makes any sense. We're busy getting We're busy improving our business. We're busy building our data capabilities. And I believe with that, we'll be able to drive more value to our customers. But fundamentally, at the end of the day, it's just going to be a faster A more comprehensive service. You touched the button and you've got the answers. That's the way we see it, but that's still going to take a little bit of time to get That level where we've got a total 5 gs base. At this point in time, we have low 5 gs. And that obviously will impact your that certainly will impact your cost of acquiring a customer or a subscriber. However, having said that, what we also expect is the 5 gs prices to also substantially drop business same way as 2 gs and 3 gs and 4 gs. We don't believe that's going to be Okay, very helpful. Thanks, Zach. Thank you very much, Alex. We got one call from Parker first cycle. Certainly. Park, your line is open now. Great. Thanks for taking my questions. Zack, just one for me today. If I look at the consumer and sole proprietor aspect of your business, Can you remind us how you go to market there? Is that primarily a self-service approach where consumers are buying your platform online? And Do you see any heightened levels of churn and contraction right now in that area of the business relative to small enterprise, medium enterprise and those large fleets? We're trying to address our target rate is over 60 months. We see the business not very what it was 5 years ago. We've also improved our internal systems to deal with the reality all the economic headwinds that we are seeing that part of the business that we would have faced Had we not developed we've really invested a lot in our internal systems in the last 3 years. And I think that's also allowing us have I answered your question, Farke? I might have missed the point. Yes. I'm just trying to figure out, When we think about the opportunity for you to sell to a large fleet, that seems like a very involved sales process. But if it's just a person that is buying your technology for 1 car or their family's vehicles. The sales process seems quite different in those situations. I'm just wondering if there's been any change In a more distributed world where salespeople can't be on the ground in the way you're actually selling to those smaller customers. So what we find is happens, for instance, in South Africa. In America, as you know, A lot of the business can be done over telephone and live demos. South Africa was not that way inclined, but things have changed substantially in the last years. And today, we can do quite a lot of business with demos on the phone. So we're becoming quite successful and we're certainly increasing On month on month and we're getting better at it. So I would say most of our sales today is done very much in the way they get conducted in America, which is live demos and over the phone. Got it. Congrats on the quarter and thanks for taking my questions. Thank you very much. We've got one question from Chris Logan. There was a big decrease in the unit cost of acquiring subscriber from 2,000 Is this sustainable? And keep more declines of cost. Chris, I think I'll answer that. I'm not sure. What I'll do, Chris, if you don't mind, I'll give you a call after this Just to take you through more detail in case I did not articulate myself enough. It's Anthony. Mia again. Can you provide a bit more color on the Sebastian subscriber base, please. Are you doing particularly well in gaining corporate clients or doing corporate clients add new vehicles? It does seem like a really strong results. So well done. Thanks. So Anthony, what we're seeing in South Africa is we're winning both on the business front and on the consumer front. And we're running equally on both fronts. What we had The amount of customers that we're onboarding with that are business customers that in terms of percentages is starting to increase substantially quicker than consumers. Really with cars, do you foresee expanding the business by being similar rebunk cars or do you take ownership of vehicles, make a margin selling those vehicles or do you only foresee it being a more sophisticated online marketplace? So, Rudi, the way we see our business in terms of Kozhikode, very much a boom model, the American model, where we take and we buy the vehicles from our own customers. We actually keep the inventory and we sell them on. And I think today it's all about convenience. Just the platform the way it used to be in the olden days. I think that's an old model. I don't believe it's got legs anymore. Today, you've got everybody wants convenience and they want certain level of warranties. We're in a very strong position that we know who's owned the vehicle, where that is from the vehicle, the type of the age that the way the vehicle is being driven. So that puts us in quite a strong position. So for us, it's all about bringing value to the seller and to the buyer I think that's all the questions for today. I want to thank everybody that stayed on the call. Thank you very much and look forward to talking to you again thank you. Ladies and gentlemen, that does conclude your conference for today. Thank you for participating. You may all disconnect now. Thank you.