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]

Group 1 - U.S. stock futures were higher this morning, with the Dow futures falling more than 150 points on Wednesday [1] - Karooooo Ltd reported quarterly earnings of 44 cents per share, missing the analyst consensus estimate of 46 cents per share [1] - The company reported quarterly sales of $75.598 million, which beat the analyst consensus estimate of $75.510 million [1] Group 2 - Karooooo shares dipped 9.3% to $51.15 in pre-market trading [2] - Sable Offshore Corp shares dipped 38.7% to $10.85 in pre-market trading after falling 5% on Tuesday [4] - AKA Brands Holding Corp fell 19.6% to $11.60 in pre-market trading after gaining 39% on Tuesday [4] - CNFinance Holdings Ltd declined 10.2% to $4.30 in pre-market trading after gaining 10% on Tuesday [4] - Nova Minerals Ltd tumbled 9.2% to $65.19 in pre-market trading after surging 110% on Tuesday [4] - ASP Isotopes Inc fell 9% to $12.80 in pre-market trading after announcing a $250 million mixed shelf [4] - Nanobiotix SA declined 6.8% to $26.31 in pre-market trading after falling 7% on Tuesday [4] - Trilogy Metals Inc fell 6% to $9.96 in pre-market trading [4] - Critical Metals Corp fell 5.1% to $28.44 in pre-market trading after jumping 28% on Tuesday [4] - Akso Health Group declined 4.8% to $1.58 in pre-market trading [4] - Arvinas Inc fell 4.7% to $8.97 in pre-market trading [4]

Group 1: Market Overview - U.S. stock futures were higher this morning, with Dow futures falling more than 150 points on Wednesday [1] Group 2: Company Performance - Karooooo Ltd (NASDAQ:KARO) shares fell sharply in pre-market trading, down 9.3% to $51.15, following disappointing second-quarter earnings [2][4] - Karooooo reported quarterly earnings of 44 cents per share, missing the analyst consensus estimate of 46 cents per share [1] - The company reported quarterly sales of $75.598 million, which beat the analyst consensus estimate of $75.510 million [1] Group 3: Other Stocks Movement - Sable Offshore Corp (NYSE:SOC) shares dipped 38.7% to $10.85 in pre-market trading after falling 5% on Tuesday [4] - AKA Brands Holding Corp (NYSE:AKA) fell 19.6% to $11.60 in pre-market trading after gaining 39% on Tuesday [4] - CNFinance Holdings Ltd – ADR (NASDAQ:CNF) declined 10.2% to $4.30 in pre-market trading after gaining 10% on Tuesday [4] - Nova Minerals Ltd – ADR (NASDAQ:NVA) tumbled 9.2% to $65.19 in pre-market trading after surging 110% on Tuesday [4] - ASP Isotopes Inc (NASDAQ:ASPI) fell 9% to $12.80 in pre-market trading after announcing a $250 million mixed shelf [4] - Nanobiotix SA – ADR (NASDAQ:NBTX) declined 6.8% to $26.31 in pre-market trading after falling 7% on Tuesday [4] - Trilogy Metals Inc (NYSE:TMQ) fell 6% to $9.96 in pre-market trading [4] - Critical Metals Corp (NASDAQ:CRML) fell 5.1% to $28.44 in pre-market trading after jumping 28% on Tuesday [4] - Akso Health Group – ADR (NASDAQ:AHG) declined 4.8% to $1.58 in pre-market trading [4] - Arvinas Inc (NASDAQ:ARVN) fell 4.7% to $8.97 in pre-market trading [4]

Q2 2026 Financial Highlights - Cartrack's Annual Recurring Revenue (ARR) grew by 20% year-over-year to ZAR 4,806 million[38] - Subscription revenue increased by 20% year-over-year[43] - Operating profit margin remained robust at 29%[40] - Adjusted Earnings Per Share (EPS) increased by 13% year-over-year[60] - Karooooo Logistics revenue reached ZAR 139 million in Q2 2026, a 38% increase year-over-year[50] Subscriber Growth - Total subscribers increased by 15% year-over-year to approximately 2.5 million[43] - Asia subscriber growth was healthy at 21% year-over-year[43] - Net subscriber additions totaled 71,000[43] Regional Performance - South Africa subscription revenue grew by 18%[43] - Europe subscription revenue grew by 27%[43] - 71% of Cartrack's subscription revenue comes from South Africa[76] Financial Strength - The company maintains a strong and unleveraged balance sheet with net cash and cash equivalents of ZAR 393 million as of August 31, 2025[42] - The company paid a total cash dividend of USD 386 million or USD 125 per share to shareholders in August 2025[84]

Core Insights - Karooooo Ltd. (KARO) reported quarterly earnings of $0.47 per share, exceeding the Zacks Consensus Estimate of $0.46 per share, and showing an increase from $0.40 per share a year ago, resulting in an earnings surprise of +2.17% [1] - The company achieved revenues of $76.13 million for the quarter ended August 2025, surpassing the Zacks Consensus Estimate by 0.83% and up from $60.7 million year-over-year [2] - Karooooo's stock has increased approximately 16.3% since the beginning of the year, outperforming the S&P 500's gain of 13.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.48, with expected revenues of $78.35 million, and for the current fiscal year, the consensus EPS estimate is $1.93 on revenues of $308.19 million [7] - The estimate revisions trend for Karooooo was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Internet - Software industry, to which Karooooo belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Viewpoint - Karooooo Limited will release its Second Quarter 2026 Financial Results on October 14, 2025, indicating ongoing financial transparency and engagement with investors [1] Financial Results Announcement - The financial results will be announced shortly after 04:00 p.m. Eastern Time on October 14, 2025 [1] - A corresponding Zoom webinar will be hosted on October 15, 2025, at 08:00 a.m. Eastern Time, allowing investors and analysts to engage directly with the company [1]

Group 1 - Karooooo Ltd. (NASDAQ: KARO) is a leader in fleet management in South Africa, characterized by strong subscription revenue and industry-leading margins [1] - The company's operating profit has more than doubled since 2019, driven by scale and a high fixed-cost base [1]

Group 1 - Karooooo Ltd. (KARO) has reached a significant support level and is considered a good pick for investors from a technical perspective, having recently broken through the 50-day moving average, indicating a short-term bullish trend [1] - The 50-day simple moving average is a key indicator for traders and analysts to determine support or resistance levels, and KARO shares have increased by 6.4% over the past four weeks, currently holding a Zacks Rank 2 (Buy) [2] - Positive earnings estimate revisions strengthen the bullish case for KARO, with 2 upward revisions compared to none lower for the current fiscal year, and the consensus estimate has also increased [3] Group 2 - Investors are encouraged to consider adding KARO to their watchlist due to the important technical indicator and the positive movement in earnings estimate revisions [3]

Company Overview - Karooooo, founded by Zak Calisto, operates in the connected vehicle industry, providing a software platform for fleet management, logistics, and safety [4][5]. - The company started with a focus on vehicle tracking and has evolved into a comprehensive telematics solution [7]. Business Model and Revenue - Approximately 50% of Karooooo's business in South Africa is commercial, while the other 50% is consumer-based [7]. - South Africa accounts for 70% of the company's subscription revenue, with the remaining 30% generated from international markets [7]. Financial Performance - Karooooo has a strong financial profile, with a return on unlevered net tangible assets (RONTA) of about 35%, exceeding Warren Buffett's preferred threshold of 25% [9]. - The company aims for a "rule of 60," combining growth and EBITDA margins, indicating a healthy and profitable business model [10][11]. Leadership and Management Style - Zak Calisto emphasizes the importance of building strong teams and maintaining a culture that supports sustainable growth [12]. - The leadership style focuses on high-level vision while ensuring that critical details affecting business health are monitored [12]. Technological Integration - The company utilizes AI for predictive analysis and risk mitigation, particularly in banking and fraud prevention [14]. - Karooooo is adapting to advancements in autonomous driving, recognizing the need for management systems even as driver roles evolve [16]. Market Position and Growth Potential - The company sees significant growth opportunities in both existing and new markets, with a potential for rapid expansion if execution aligns with market demand [13]. - Karooooo's approach to capital allocation is disciplined, with a focus on sustainable growth rather than aggressive expansion without sufficient cash flow [13].

Core Viewpoint - Growth investors are increasingly focused on stocks with above-average financial growth, which can lead to solid returns, but identifying such stocks can be challenging due to inherent volatility and risks [1] Group 1: Company Overview - Karooooo Ltd. (KARO) is identified as a promising growth stock, supported by a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 13.5%, with projected EPS growth of 18.6% this year, surpassing the industry average of 18.3% [5] Group 2: Key Growth Metrics - The asset utilization ratio for Karooooo is 0.97, indicating that the company generates $0.97 in sales for every dollar in assets, significantly higher than the industry average of 0.58 [6] - Sales for Karooooo are expected to grow by 23% this year, compared to the industry average of 5.7% [7] Group 3: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Karooooo, with the Zacks Consensus Estimate for the current year increasing by 3.9% over the past month [9] - The combination of a Growth Score of A and a Zacks Rank 1 positions Karooooo favorably for potential outperformance in the market [11]