Karooooo Q3 Earnings Call Highlights

Core Insights - Karooooo reported strong third-quarter fiscal 2026 results, highlighting accelerating annual recurring revenue (ARR) growth, record subscriber additions, and continued profitability despite increased sales and marketing spending [4][6][7] Financial Performance - Total revenue for the quarter was ZAR 1,410 million, up 22%, with subscription revenue at ZAR 1,239 million, up 20% [1] - Operating profit increased 14% to ZAR 369 million, and earnings per share rose 11% to ZAR 8.55 [1] - Adjusted free cash flow increased 28% to ZAR 239 million, with year-to-date adjusted free cash flow up 37% to ZAR 597 million [7] Subscriber Growth - Total subscribers increased 16% to approximately 2.6 million, with a record net addition of about 111,000 during the quarter [2][6] - Commercial customer ARR retention remained at 95%, with subscription revenue representing 97% of contract revenue [1] ARR Growth - ARR increased 22% year over year to ZAR 5,106 million, and on a U.S. dollar basis, it rose 28% to $298 million [3][6] - This marked the fourth consecutive quarter of ARR growth acceleration [3] Segment Performance - Cartrack, the company's SaaS operations management platform, was the primary driver of growth, with revenue increasing 21% to ZAR 1,275 million [9] - Karooooo Logistics reported delivery-as-a-service revenue of ZAR 135 million, up 24%, with an operating profit margin of 7% [12] Regional Trends - In South Africa, subscription revenue growth accelerated to 21%, accounting for 72% of total Cartrack subscription revenue [13] - Average revenue per user (ARPU) in South Africa increased 7% to 162 ZAR [14] - In Europe, subscribers increased 16% to about 223,000, with subscription revenue rising 24% [15] Outlook - Management raised its fiscal 2026 Cartrack subscription revenue outlook to ZAR 4,785 million to ZAR 4,900 million, implying growth of 18% to 21% [16] - The company cautioned that the appreciation of the South African rand has created a currency translation headwind [17]