Core Insights - Cartrack has partnered with Volkswagen Group Info Services AG to integrate multi-brand vehicle data across Europe [1] - This collaboration enables the direct integration of real-time fleet data from various Volkswagen brands into Cartrack's SaaS fleet platform [1] Company Overview - Cartrack is a leading global mobility solutions provider and a subsidiary of Karooooo Limited (NASDAQ: KARO) [1] - The partnership enhances Cartrack's capabilities in fleet management by incorporating data from Volkswagen Passenger Cars, Volkswagen Commercial Vehicles, Audi, Škoda, SEAT, and CUPRA [1]

Group 1 - The article does not provide any specific content related to a company or industry [1]

Key Points Karooooo delivered strong revenue growth but disappointing earnings today. Despite some margin compression, the company's Cartrack unit is still exceeding the rule of 60. The sell-off is likely an opportunity to buy this little-known international telematics leader. 10 stocks we like better than Karooooo › Shares of Karooooo Limited (NASDAQ: KARO) fell on Wednesday, declining 16.5% on the day. Karooooo is a leader in telematics and data software for truck fleets across South Africa, S ...

Key Points Karooooo beat analyst expectations in the second quarter, with its revenue growth accelerating. The Cartrack subscriber base grew by 15%, and Cartrack subscription revenue surged by 20%. The company maintained its outlook for the full fiscal year. 10 stocks we like better than Karooooo › Here's our initial take on Karooooo's (NASDAQ: KARO) second-quarter financial report. Key Metrics Metric Q2 2025 Q2 2026 Change vs. Expectations Revenue ZAR1.11 billion ZAR1.34 billio ...

Core Viewpoint - Karooooo, a software company based in Singapore, owns Cartrack and controls 81% of Karooooo Logistics, indicating a strong market position in the logistics and software sector [1]. Company Overview - Karooooo is primarily focused on subscriber growth, which is a key metric for its business model [1]. - The company is categorized as a small- to mid-cap entity, often overlooked by many investors, but it also occasionally examines large-cap companies to provide a broader market perspective [1].

Financial Data and Key Metrics Changes - Annual recurring revenue (ARR) increased 20% to ZAR 4,806 million, and on a U.S. dollar basis, increased 21% to $272 million [4] - Total revenue of ZAR 1,344 million increased 21%, with subscription revenue of ZAR 1,182 million increasing 20% [7] - Operating profit increased 18% to ZAR 356 million, and adjusted earnings per share increased 13% to ZAR 8.28 [16][20] Business Line Data and Key Metrics Changes - Cartrack generated approximately ZAR 1.2 billion in subscription revenue, an increase of 20% [5] - Karooooo Logistics's delivery-as-a-service revenue reached ZAR 139 million, an increase of 38% [6][12] - Cartrack's operating profit margin was a healthy 29% in Q2 [9] Market Data and Key Metrics Changes - South Africa's subscription revenue growth accelerated to 18%, contributing 71% of total subscription revenue [10] - Southeast Asia and the Middle East subscription revenue growth increased 26%, with approximately 303,000 subscribers [11] - European subscription revenue accelerated to 27%, with approximately 216,000 subscribers [12] Company Strategy and Development Direction - The company focuses on expanding its distribution capabilities and enhancing customer engagement through video solutions and AI [14][21] - Strategic investments in sales capacity are aimed at accelerating organic growth and broadening the customer base [10][22] - The company prioritizes organic growth and innovation while maintaining a disciplined capital allocation strategy [14][15] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate healthy cash flow and sustain growth in an expanding market [21] - The company is encouraged by the strong performance and believes it is well-positioned for future growth due to robust customer demand [21][22] - Management acknowledged the challenges in scaling operations but remains focused on building teams to meet demand [24][27] Other Important Information - The company ended Q2 with net cash and cash equivalents of ZAR 393 million [9] - The total subscriber base reached approximately 2.5 million, an increase of 15% [7][9] - The company paid a total cash dividend of approximately $38.6 million to shareholders [21] Q&A Session Summary Question: Can you talk about the touch rates on newer offerings and ARPU growth? - The company has grown ARPU by 4%, with a target of 10% growth in South Africa [24][25] Question: How does the sales capacity compare to demand? - The company is experiencing more demand than it can deliver, indicating a need to build teams faster [25][26] Question: What is the market penetration in each region? - South Africa is estimated at 35%, Europe at 20%-25%, and Asia at under 10% [34][35] Question: How is AI being utilized in scaling go-to-market efforts? - AI is being explored for efficiency, but there are challenges in customer acceptance in certain markets [36]

Financial Data and Key Metrics Changes - Annual recurring revenue (ARR) increased 20% to ZAR 4,806 million, and on a U.S. dollar basis, increased 21% to $272 million [4] - Total revenue of ZAR 1,344 million increased 21%, with subscription revenue of ZAR 1,182 million increasing 20% [7] - Operating profit increased 18% to ZAR 356 million, and adjusted earnings per share increased 13% to ZAR 8.28 [16][20] Business Line Data and Key Metrics Changes - Cartrack generated approximately ZAR 1.2 billion in subscription revenue, an increase of 20% [5] - Karooooo Logistics's delivery-as-a-service revenue reached ZAR 139 million, an increase of 38% [6] - Cartrack's operating profit margin was a healthy 29% in Q2 [9] Market Data and Key Metrics Changes - South Africa's subscription revenue growth accelerated to 18%, contributing 71% of total subscription revenue [10] - Southeast Asia and the Middle East subscription revenue growth increased 26%, with approximately 303,000 subscribers [11] - European subscription revenue accelerated to 27%, with approximately 216,000 subscribers [12] Company Strategy and Development Direction - The company focuses on expanding its distribution capabilities and enhancing customer engagement through video solutions and AI [14][21] - Strategic investments in sales capacity are aimed at accelerating organic growth and broadening the customer base [10][22] - The company prioritizes organic growth and innovation while maintaining a disciplined capital allocation strategy [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate healthy cash flow and sustain growth in an expanding market [21] - The company is encouraged by the strong performance and believes it is well-positioned for future growth due to robust customer demand [21][22] - Management acknowledged the challenges in scaling operations due to the need for sufficient teams to meet demand [24][26] Other Important Information - The company reported a commercial customer retention rate of 95% and a subscription growth margin of 72% [9] - The balance sheet remains strong with net cash and cash equivalents of ZAR 393 million [9][20] - The company aims to return surplus cash to shareholders primarily through an annual dividend [14] Q&A Session Summary Question: Can you talk about the touch rates on newer offerings and ARPU growth? - The company has grown ARPU by 4%, with a target of 10% growth in South Africa [24][25] Question: How does the sales capacity compare to demand? - The company is experiencing more demand than it can deliver, indicating a need to build teams faster [25][26] Question: What is the market penetration in each region? - South Africa is estimated at 35%, Europe at 20%-25%, and Asia at under 10% [34][35] Question: How is AI being utilized in scaling go-to-market efforts? - AI is being explored for efficiency, but there are challenges in customer acceptance in certain markets [36]

Financial Data and Key Metrics Changes - Annual recurring revenue (ARR) increased 20% to ZAR 4,806 million, and on a U.S. dollar basis, increased 21% to $272 million [4][17] - Total revenue of ZAR 1,344 million increased 21%, with subscription revenue of ZAR 1,182 million increasing 20% [7][17] - Operating profit increased 18% to ZAR 356 million, with an operating profit margin of 29% [7][17] - Adjusted earnings per share increased 13% to $0.0828 [17][21] Business Line Data and Key Metrics Changes - CARTRACK's subscription revenue increased 20% to approximately ZAR 1.2 billion, with a 29% operating profit margin [5][19] - Karooooo Logistics revenue reached ZAR 139 million, an increase of 38% [6][13] - CARTRACK's total subscribers increased 15% to approximately 2.5 million [9][19] Market Data and Key Metrics Changes - South Africa's subscription revenue growth accelerated to 18%, comprising 71% of total subscription revenue [10][20] - Southeast Asia and the Middle East subscription revenue growth increased to 26%, with approximately 303,000 subscribers [11][20] - European subscription revenue growth accelerated to 27%, with approximately 216,000 subscribers [13][20] Company Strategy and Development Direction - The company focuses on expanding its distribution capabilities and enhancing customer engagement through video solutions and CARTRACK tag [15][22] - Strategic investments in sales capacity are aimed at supporting future growth and improving customer acquisition [15][23] - The company prioritizes organic growth and innovation, with a disciplined capital allocation strategy [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate sustainable cash flow and maintain strong growth in an expanding market [22] - The company is encouraged by the acceleration in subscription revenue growth and remains committed to achieving FY2026 growth ambitions [23][24] - Management acknowledged the challenges in scaling operations due to high demand and the need for sufficient sales teams [25][29] Other Important Information - The company reported a net cash position of ZAR 393 million and healthy debtor collection days at 31 days [9][21] - The company aims to return surplus cash to shareholders through dividends when growth investments are not feasible [15][22] Q&A Session Summary Question: Can you talk about the touch rates on newer offerings and ARPU growth? - The company has grown ARPU by 4%, with a target of 10% growth in South Africa [26] Question: How does the new sales capacity compare to demand? - The company is experiencing more demand than it can deliver, indicating a need to build teams faster [27][29] Question: What is the market penetration in each region? - South Africa is estimated at 35%, Europe at 20-25%, and Asia under 10% [36][37] Question: How is AI being utilized in scaling go-to-market efforts? - AI is being explored, but there are challenges in customer acceptance in certain markets [38]

Financial Data and Key Metrics Changes - Annual recurring revenue (ARR) increased 20% to ZAR 4,806 million, and on a U.S. dollar basis, increased 21% to $272 million [4][18] - Total revenue of ZAR 1,344 million increased 21%, with subscription revenue of ZAR 1,182 million increasing 20% [8][18] - Operating profit increased 18% to ZAR 356 million, and adjusted earnings per share increased 13% to $0.0828 [18][21] Business Line Data and Key Metrics Changes - CARTRACK generated approximately ZAR 1.2 billion in subscription revenue, an increase of 20% [5][19] - Karooooo Logistics's delivery-as-a-service revenue reached ZAR 139 million, an increase of 38% [6][14] - CARTRACK's operating profit margin was a healthy 29% in Q2 [10][19] Market Data and Key Metrics Changes - South Africa's subscription revenue growth accelerated to 18%, contributing 71% of total subscription revenue [11][20] - Southeast Asia and the Middle East subscription revenue growth increased 26%, with approximately 303,000 subscribers [12][20] - European subscription revenue growth accelerated to 27%, with approximately 216,000 subscribers [13][20] Company Strategy and Development Direction - The company focuses on expanding its distribution capabilities and enhancing customer engagement through video solutions and CARTRACK tag [16][24] - Strategic investments in sales capacity are aimed at accelerating organic growth and broadening the customer base [11][16] - The company prioritizes organic growth and innovation while maintaining a disciplined capital allocation strategy [16][17] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate sustainable cash flow and achieve growth ambitions despite elevated operating expenses [21][22] - The company is well-positioned to capitalize on the expanding market driven by digital transformation and operational efficiency needs [22][23] - Management noted that the acceleration in subscription revenue growth reflects the strength of the operating model and strategic investments [23][24] Other Important Information - The company ended Q2 with net cash and cash equivalents of ZAR 393 million, maintaining a strong balance sheet [10][21] - The company paid a total cash dividend of approximately $38.6 million to shareholders [22] Q&A Session Summary Question: Can you talk about the touch rates on newer offerings and ARPU growth? - The company has grown ARPU by 4%, with an initial target of 10% growth in South Africa [25][26] Question: How does the new sales capacity compare to demand? - The company is experiencing more demand than it can deliver, indicating a need to build teams faster [26][27] Question: What is the market penetration in each region? - South Africa's market penetration is estimated at about 35%, Europe at 20-25%, and Asia at under 10% [35][36] Question: Can AI help in scaling go-to-market efforts? - AI is being explored, but there are challenges in customer acceptance in certain markets [37]

Financial Data and Key Metrics Changes - In Q2 FY26, total revenue increased by 21% to ZAR1,344 million, with subscription revenue rising by 20% to ZAR1,182 million [11][24] - Operating profit increased by 18% to ZAR356 million, and adjusted earnings per share rose by 13% to ZAR8.28 [25][30] - Annual recurring revenue (ARR) grew by 20% to ZAR486 million, and on a U.S. Dollar basis, it increased by 21% to USD272 million [5][6] Business Line Data and Key Metrics Changes - Kartrak's subscription revenue grew by 20% to ZAR1,204 million, with a healthy operating profit margin of 29% [8][25] - Karoo Logistics revenue reached ZAR139 million, marking a significant increase of 38% [10][19] - Subscription revenue from Kartrak accounted for 98% of its total revenue, indicating a strong reliance on subscription-based income [25] Market Data and Key Metrics Changes - South Africa's subscription revenue growth accelerated to 18%, contributing 71% of total subscription revenue [16] - Southeast Asia and the Middle East saw a subscription revenue growth of 26%, with a total of approximately 303,000 subscribers [17] - European subscription revenue growth accelerated to 27%, with 216,000 subscribers in the region [18] Company Strategy and Development Direction - The company aims to strengthen its leadership position in South Africa while expanding its distribution footprint in Asia and Europe [20][21] - There is a focus on capital allocation towards organic growth and product innovation, with a disciplined approach to M&A [22][23] - The company is committed to enhancing its distribution capabilities and increasing product adoption among existing customers [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying demand driven by digital transformation and the need for operational efficiency [32] - The company anticipates continued growth in subscription revenue, supported by strategic investments in sales and marketing [33] - There is a recognition of the bottleneck in customer onboarding and cross-selling due to insufficient team capacity [35][39] Other Important Information - The company reported a net cash position of USD393 million, reflecting a strong balance sheet [31] - The subscription gross margin was 72%, with a lifetime value to customer acquisition cost (LTV to CAC) ratio remaining above 9x [15][14] Q&A Session Summary Question: Can you talk about the tax rates you're seeing on some of your newer offerings? - The company has grown its average revenue per user (ARPU) by 4%, with expectations to grow ARPU in South Africa by 10% [35] Question: How do you think about drivers of momentum in the market? - The company has been focused on recruiting and building teams to support new customer acquisitions and cross-selling [39] Question: What did you see from vision attach rate by geo? - Most sales currently come from the existing customer base, with video sales accounting for about 10% of total sales [40] Question: How is the change in mix shift towards videos impacting gross margins? - Gross margins have remained in the range of 70% to 74%, with a slight decrease to 72% this quarter due to increased cost of sales [41] Question: How did your new sales reps compare to the existing base? - New sales reps typically take time to reach the performance levels of established salespeople [43] Question: How long do you expect elevated operating expenses to persist? - The company plans to continue investing in infrastructure and sales, indicating that elevated expenses may be a long-term strategy [44] Question: What is the estimated market penetration in each region? - South Africa is estimated to have a market penetration of about 35%, Europe around 25%, and Asia under 10% [46]