Financial Performance Highlights - Karooooo's subscription revenue for FY 2025 reached ZAR 4,055 million, a 15% year-over-year increase[23] - Subscription revenue grew by 19% year-over-year in USD[23] - The company achieved a 31% operating profit margin for FY 2025[23] - Adjusted Earnings Per Share increased by 39% year-over-year to ZAR 9.48 in Q4 2025[27] - Karooooo's Adjusted Earnings Per Share for FY 2025 increased 33% year-over-year to ZAR 31.67[69, 103] Subscriber Growth - Cartrack subscribers increased by 17% year-over-year, reaching 2.3 million[34] - Net subscriber additions in Q4 2025 increased by 25% year-over-year to 79,000[34] - European subscriber growth accelerated to 20% year-over-year[34] Regional Performance - Southeast Asia subscription revenue growth accelerated to 31% year-over-year in Q4 2025[38, 103] - South Africa Cartrack subscribers are approximately 1.7 million[43] - Southeast Asia Cartrack subscribers are approximately 274,000[44] - Europe Cartrack subscribers are approximately 201,000[45] Karooooo Logistics (Delivery-as-a-Service) - B2B Delivery-as-a-Service revenue for FY 2025 was ZAR 420 million, a 33% year-over-year increase[23] - The Delivery-as-a-Service platform achieved a 9% operating profit margin in FY 2025[24, 47]

Financial Data and Key Metrics Changes - The company's total subscription revenue increased by 16% to ZAR 1,086 million in Q4, and by 15% to ZAR 4,068 million for FY25 [37][38] - Operating profit rose by 30% to ZAR 385 million in Q4 and by 26% to ZAR 1,312 million for FY25 [38][39] - Adjusted earnings per share increased by 39% to ZAR 9.48 in Q4 and by 33% to ZAR 31.67 for FY25 [38][44] Business Line Data and Key Metrics Changes - Kartrak's subscription revenue grew by 16% to ZAR 1,084 million in Q4 and by 15% to ZAR 4,055 million for FY25 [39][40] - Karoo Logistics' revenue reached ZAR 420 million, an increase of 33% for FY25 [17][28] - Kartrak's operating profit margin was robust at 34% in Q4, while adjusted EBITDA margin was 48% [19][23] Market Data and Key Metrics Changes - South Africa's subscription revenue growth was 15% in Q4, while Southeast Asia's constant currency revenue growth accelerated to 31% [42][25] - Europe saw a 20% subscriber growth in Q4, with a 100 basis point quarter-on-quarter acceleration [27][28] - The company ended FY25 with over 1,700,000 subscribers in South Africa, representing 75% of the global subscriber base [24] Company Strategy and Development Direction - The company aims to expand its distribution footprint in Asia and Europe while enhancing customer engagement and capturing demand for video capabilities [34][49] - A focus on disciplined capital allocation and organic growth is emphasized, with plans to return surplus capital to shareholders when not reinvested for growth [35][49] - The launch of Car Track Tag is expected to enhance customer offerings and increase average revenue per user (ARPU) by approximately 10% by year-end [51][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute sales plans, citing strong momentum in the last six months and a normalization of hiring conditions post-COVID [58] - The outlook for FY26 includes expected subscription revenue growth between 16% to 21%, with operating profit margins projected between 26% to 31% [49] - The company remains optimistic about growth opportunities in all regions, particularly in Asia, which is viewed as having the highest growth potential [57] Other Important Information - The company generated significant free cash flow of ZAR 425 million in FY25, with a strong balance sheet and net cash position of ZAR 838 million [44][46] - The adjusted free cash flow decline in Q4 was attributed to strategic investments to support growth, not indicative of structural issues [45][46] - The company has a healthy subscription gross margin of 76% and a commercial retention rate of 95% [23] Q&A Session Summary Question: What is the reception of the Car Track Tag launch? - The product has been well received in South Africa, with substantial scale achieved and plans to expand to Asia next [52][53] Question: How will subscriber growth be driven in FY26? - The focus will be on enhancing customer offerings and increasing ARPU through existing customer sales [54][55] Question: What is the outlook for hiring and sales productivity? - The company plans to increase its sales force significantly, expecting improved productivity as new hires gain experience [56][62] Question: What is the strategy regarding net cash and dividends? - The company aims to allocate capital efficiently for growth, with dividends considered at the end of Q1 [60][61] Question: What is the view on share buybacks? - Share buybacks have been challenging due to low liquidity, and the focus will remain on other growth initiatives [61] Question: How does the company plan to achieve ARPU growth? - The expected ARPU growth is primarily driven by the adoption of new products like the camera and tag [59][62]

Financial Data and Key Metrics Changes - In Q4 FY25, total subscription revenue increased by 16% to ZAR 1,086 million, and on a U.S. dollar basis, it increased by 20% [37] - For FY25, total subscription revenue increased by 15% to ZAR 4,068 million, with a 19% increase on a U.S. dollar basis [38] - Adjusted earnings per share in Q4 increased by 39% to ZAR 9.48, while for FY25, it increased by 33% to ZAR 31.67 [38][44] - Operating profit in Q4 increased by 30% to ZAR 385 million, and for FY25, it increased by 26% to ZAR 1,312 million [38] Business Line Data and Key Metrics Changes - Kartrak generated ZAR 4,100 million in subscription revenue for FY25, a 15% increase or 19% on a U.S. dollar basis, with an operating profit margin of 31% [15] - Karoo Logistics' revenue reached ZAR 420 million, an increase of 33% or 37% on a U.S. dollar basis, with a 9% operating profit margin [16][27] - In Q4, Kartrak's subscription revenue increased by 16% to ZAR 1,084 million, comprising 98% of its total revenue [39] Market Data and Key Metrics Changes - South Africa represented 75% of the global subscriber base, with over 1,700,000 subscribers [23] - Southeast Asia and the Middle East accounted for 12% of total subscribers, with Q4 constant currency subscription revenue growth reaching 31% [24] - Europe had over 200,000 subscribers, with a 20% growth rate in Q4 [25] Company Strategy and Development Direction - The company aims to expand its distribution footprint in Asia and Europe while enhancing customer engagement and capturing demand for video capabilities [33] - A focus on disciplined capital allocation prioritizes organic growth and innovation, with plans to return surplus capital to shareholders when not efficiently invested [35] - The launch of Car Track Tag aims to enhance asset management and expand the platform's capabilities [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth momentum, particularly in Asia, which is viewed as having the highest growth opportunity [58] - The company anticipates a 10% increase in average revenue per user (ARPU) by the end of FY26, driven by upselling existing customers [55] - The outlook for FY26 includes subscription revenue guidance between ZAR 4,700 million to ZAR 4,900 million, implying growth of 16% to 21% [50] Other Important Information - The company ended Q4 with net cash and cash equivalents of ZAR 838 million, maintaining a strong balance sheet [22] - Adjusted free cash flow was ZAR 425 million, with a focus on strategic investments to support growth [45][46] Q&A Session Summary Question: What is the reception of the Car Track Tag launch? - The product has been well received in South Africa, with substantial scale achieved [54] Question: How does the company plan to drive growth in FY26? - The focus will be on enhancing customer offerings and increasing ARPU through existing customer sales [55] Question: What is the current view on net cash balance and dividends? - The company remains focused on capital allocation for growth, with decisions on dividends typically made in Q2 [61] Question: How does the company view share buybacks? - Share buybacks have been challenging due to low liquidity, and the focus will be on other growth initiatives [62] Question: What is the outlook for subscriber growth in Asia? - Subscriber growth is expected to improve as the sales force expands, with strong productivity anticipated [63]

Company Performance - Karooooo Ltd. reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, and showing an increase from $0.36 per share a year ago, resulting in an earnings surprise of 18.92% [1] - The company achieved revenues of $66 million for the quarter ended February 2025, surpassing the Zacks Consensus Estimate by 4.93%, compared to $57.64 million in the same quarter last year [2] - Over the last four quarters, Karooooo has consistently surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Future Outlook - The immediate price movement of Karooooo's stock will largely depend on management's commentary during the earnings call and the sustainability of earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $64.77 million, and for the current fiscal year, it is $1.72 on revenues of $272.15 million [7] - The estimate revisions trend for Karooooo is currently mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Internet - Software industry, to which Karooooo belongs, is currently ranked in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [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 Insights - The Motley Fool aims to enhance the financial literacy and well-being of individuals by providing investment solutions and market analysis [1] Company Overview - Founded in 1993, The Motley Fool is a financial services company focused on making the world smarter, happier, and richer [1] - The company reaches millions of people monthly through various platforms, including premium investing solutions, free guidance, and market analysis on Fool.com [1] - The Motley Fool also produces top-rated podcasts and operates a non-profit organization, The Motley Fool Foundation [1]

Group 1 - Karooooo Ltd. (NASDAQ: KARO) and Ituran Location (ITRN) share similarities in their product offerings and growth prospects [1] - Both companies operate in a market that is considered promising [1] - Henriot Capital emphasizes a quant-driven investment approach, prioritizing data-driven decisions over human bias [1] Group 2 - The investment philosophy at Henriot Capital is to "invest first, investigate later," focusing on model-driven stock selection [1]

Company Overview - Karooooo Ltd. is based in Singapore and its main business unit is Cartrack, which operates almost exclusively on a subscription revenue model [1] - Cartrack has developed a method to connect various services through its subscription model [1] Research Principles - Grassroots Trading focuses on providing objective, unbiased, and balanced research, supported by solid data and free from emotional influences [1] - The research emphasizes small- to mid-cap companies, offering compelling investment opportunities that are often overlooked [1] - The scope of research also includes identifying potential opportunities in large- and mega-cap companies, providing comprehensive coverage of the equity markets [1]

Financial Data and Key Metrics Changes - For FY '25 year-to-date, Cartrack subscription revenue was approximately ZAR3 billion, an increase of 15% year-on-year or 20% year-on-year on a U.S. dollar basis [6] - In Q3, total revenue was ZAR1,159 million, an increase of 15% year-on-year, with subscription revenue of ZAR1,032 million, an increase of 14% year-on-year [8] - Adjusted earnings per share increased by 21% year-on-year to ZAR7.67, with a strong balance sheet ending the quarter with net cash and cash equivalents of ZAR856 million [16][56] Business Line Data and Key Metrics Changes - Cartrack's year-to-date subscription revenue increased 20% year-on-year on a U.S. dollar basis, with an operating profit margin of 30% [6] - Karooooo Logistics delivered revenue of ZAR310 million, an increase of 38% year-on-year or 45% year-on-year on a U.S. dollar basis [7] - Cartrack's total subscribers increased by 17% year-on-year, reaching over 2.2 million [9] Market Data and Key Metrics Changes - South African subscribers increased by 16% year-on-year, comprising 75% of total subscribers, while Southeast Asia saw a 20% year-on-year increase, making it the second largest contributor to revenue [51][52] - European subscribers increased by 19% year-on-year, with a 200 basis point quarter-on-quarter acceleration [53] Company Strategy and Development Direction - The company is focused on expanding its presence in Southeast Asia, viewing it as a compelling growth opportunity due to rapid urbanization and a growing middle class [13][37] - Investments in sales and marketing are ramping up, particularly in Southeast Asia, to capture significant growth opportunities [36][39] - The company aims to maintain a disciplined approach to capital allocation, prioritizing organic growth and product innovation [41][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic environment in South Africa and the potential for strong organic growth following the move to a new central office [52][56] - The company reaffirmed its financial outlook for FY '25, highlighting a commitment to durable and profitable growth driven by strong unit economics [16][60] Other Important Information - The company operates a unique SaaS platform that integrates various data sources to enhance operational efficiency for customers [19] - The platform's AI capabilities have shown significant results, such as a 32% reduction in fatigue-related driving incidents for a customer in South Africa [30][31] Q&A Session Summary Question: How does the company attract human capital? - The company handles recruitment internally through various channels, finding it easy to attract senior talent but more challenging for sales positions [62][64] Question: What is the impact of self-driving technologies? - Management believes self-driving technologies are still in early stages and does not see an immediate need to adapt business operations [65][68] Question: What is the contribution to ARR from different regions? - The ARR and subscription revenue were impacted by the stronger rand, but management sees potential for growth as currency dynamics change [70] Question: What are the global sales and marketing hiring plans? - The company plans to increase headcount by about 70% in Asia and 50% in South Africa and Europe over the next 12 months [72][73] Question: How does the Africa Free Trade Agreement impact opportunities? - Management sees vast opportunities regardless of the trade agreement, with logistics benefiting from increased free trade [74]

Core Insights - Karooooo Ltd. (KARO) reported quarterly earnings of $0.43 per share, exceeding the Zacks Consensus Estimate of $0.38 per share, and showing an increase from $0.34 per share a year ago, resulting in an earnings surprise of 13.16% [1] - The company achieved revenues of $65.51 million for the quarter ended November 2024, surpassing the Zacks Consensus Estimate by 0.87% and up from $57.36 million year-over-year [2] - Karooooo has outperformed the S&P 500, gaining approximately 5.9% since the beginning of the year, while the S&P 500 has declined by 0.8% [3] Earnings Outlook - The future performance of Karooooo's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - Current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $66.9 million, and for the current fiscal year, it is $1.61 on revenues of $256.42 million [7] Industry Context - The Internet - Software industry, to which Karooooo belongs, is currently ranked in the top 14% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Subscriber Growth - Karooooo's subscribers increased 17% year-over-year to 2.22 million as of November 30, 2024[1] - Cartrack's net quarterly subscriber additions rose 15% year-over-year to 86,617[3] - Cartrack's subscriber base in South Africa increased by 16% to 1,675,473 as of November 30, 2024, with subscription revenue growth of 14%[56] - In the Asia Pacific, Middle East, and United States regions, subscribers grew by 20% to 264,342, resulting in a 21% increase in subscription revenue[59] - Cartrack's European subscriber count rose by 19% to 191,781, translating to a 14% growth in subscription revenue[61] - The number of subscribers in Africa (excluding South Africa) increased by 16% to 91,631, although subscription revenue remained stagnant due to billing suspensions in Mozambique[63] Revenue Growth - Karooooo's subscription revenue increased 14% to ZAR1,032 million compared to ZAR904 million in Q3 2024[5] - Cartrack's subscription revenue also grew 14% to ZAR1,029 million from ZAR900 million in Q3 2024[5] - Karooooo's total revenue increased 14% to ZAR3,348 million for the nine months ended November 30, 2024, compared to ZAR2,933 million in the previous year[25] - Total revenue for the three months ended November 30, 2024, was ZAR 1,159,390, compared to ZAR 1,080,143 for the same period in 2023, reflecting a growth of 7.3%[83] - Subscription revenue for the nine months ended November 30, 2024, reached ZAR 2,981,695 thousand, a 15% increase compared to ZAR 2,600,643 thousand in the previous year[102] Profitability Metrics - Adjusted EBITDA for Karooooo increased 17% to ZAR501 million, while Cartrack's Adjusted EBITDA rose 10% to ZAR491 million[21] - Operating profit for Karooooo increased 18% to ZAR325 million, with earnings per share rising 21% to ZAR7.68[18] - Adjusted EBITDA for Karooooo grew 17% to ZAR1,430 million, while Cartrack's Adjusted EBITDA rose 11% to ZAR1,397 million[37] - The profit margin for the three months ended November 30, 2024, improved to 21%, up from 18% in the same period of 2023[94] - Adjusted basic and diluted earnings per share for the nine months ended November 30, 2024, were ZAR 22.19, compared to ZAR 17.04 in the prior year, marking a 30.1% increase[96] Operating Expenses - Karooooo's operating expenses increased 15% to ZAR1,416 million, primarily driven by investments in infrastructure and headcount[30] - Cartrack's sales and marketing expenses increased 29% to ZAR453 million, reflecting a focus on customer acquisition[32] Cash Flow and Financial Position - At November 30, 2024, Karooooo reported a net cash balance of ZAR856 million, up from ZAR436 million in February 2024[49] - Total cash and cash equivalents at the end of the period were ZAR 855,926 thousand, an increase from ZAR 781,980 thousand at the end of the same period last year[91] - For the three months ended November 30, 2024, net cash flows from operating activities were ZAR 442,420 thousand, a slight decrease of 0.1% compared to ZAR 442,851 thousand in the same period of 2023[91] - Free Cash Flow for the three months ended November 30, 2024, was ZAR 187,609 thousand, representing an increase of 15.5% from ZAR 162,451 thousand in the prior year[93] Strategic Focus and Guidance - The company reaffirmed its FY25 outlook for subscribers, subscription revenue, and adjusted EPS[3] - Southeast Asia is identified as a key growth opportunity, with a strong focus on increasing sales and marketing efforts starting September 2024[60] - The company emphasizes the importance of acquiring new customers and retaining existing ones as a key growth strategy[124] - The company is focused on international expansion and the introduction of new solutions to increase sales to existing customers[124] Risks and Forward-Looking Statements - The company acknowledges risks related to geopolitical tensions, macroeconomic events, and competition from industry consolidation[124] - The company does not undertake any obligation to update forward-looking statements based on new information or future developments[125] Financial Metrics and Calculations - The company calculates the Lifetime Value (LTV) of a subscriber by multiplying the Average Revenue Per User (ARPU) with the expected contract life cycle months and the subscription revenue gross margin percentage[118] - The Cost of Acquiring a Subscriber (CAS) is calculated as the sum of sales and marketing expenses, sales commissions, and the cost of installing IoT equipment, divided by the average subscriber base for the period[118] - The Cost of Servicing a Subscriber (CSS) is determined by operating expenses excluding estimated general business expansion costs, plus costs of sales related to subscription revenue, less all costs used to calculate CAS, divided by the average subscriber balance for the period[119] - The long-term unit economics operational profit is estimated by multiplying the expected life cycle of a subscriber on the connected cloud by ARPU, minus CAS and CSS[120] Non-IFRS Measures and Market Data - Non-IFRS financial measures are included in the announcement, which may exclude significant items in understanding financial results[126] - The company relies on third-party sources for market and industry data, which may not be independently verified and are subject to uncertainty[127]