Financial Data and Key Metrics Changes - In Q3 FY 2026, Karooooo's ARR increased by 22% to ZAR 5,106 million, and on a U.S. dollar basis, it increased by 28% to $298 million [4][20] - Total revenue for Q3 increased by 22% to ZAR 1,410 million, with subscription revenue rising by 20% to ZAR 1,239 million [7][19] - Operating profit increased by 14% to ZAR 369 million, and earnings per share rose by 11% to ZAR 8.55 [19][24] Business Line Data and Key Metrics Changes - Cartrack's subscription revenue grew by 20% to ZAR 1,236 million, accounting for 97% of its total revenue [20][21] - Karooooo Logistics' revenue reached ZAR 135 million, an increase of 24% [15][20] - Cartrack's operating profit margin was 28%, while Karooooo Logistics had a 7% operating profit margin [7][15] Market Data and Key Metrics Changes - South Africa represented 72% of total Cartrack subscription revenue, with a subscription revenue growth of 21% [11][12] - Southeast Asia and the Middle East saw a 14% increase in subscription revenue, while Europe experienced a 24% increase [13][14][22] - The total subscriber count increased by 16% to approximately 2.6 million, with record net additions of 111,000 in Q3 [10][21] Company Strategy and Development Direction - The company aims to strengthen its leadership position in South Africa by increasing the adoption of video solutions and Cartrack Tag among existing customers [16][27] - Karooooo is focused on expanding its distribution capabilities in Asia and Europe, with a strong emphasis on capital allocation for organic growth and innovation [17][28] - The company is committed to maintaining strong unit economics and profitability while pursuing growth opportunities in under-penetrated markets [4][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market opportunity in South Africa, highlighting a long runway for subscription growth [12][13] - The company noted that the appreciation of the South African rand has created a currency translation headwind on reported revenue, but underlying operating momentum remains strong [25][26] - Management remains focused on long-term growth and shareholder value, prioritizing investments in sales capacity and customer acquisition [17][28] Other Important Information - The company reported a net cash position of ZAR 531 million and maintained healthy debtor collection days at 31 days [24] - Karooooo's LTV to CAC ratio remains above nine times, indicating strong retention and efficient distribution [5][11] - The company plans to return surplus capital to shareholders through dividends when growth opportunities are not available [17] Q&A Session Summary Question: How is the headcount increase in Asia progressing? - The company is currently at around 40% of the targeted 70% increase, with many hires expected in January and February [30] Question: When will the investment in sales and marketing stabilize? - The stabilization will depend on the efficiency of sales and marketing strategies, with plans to continue increasing investment given the large addressable market [31] Question: How far along is the cross-selling of Tag and video in South Africa? - The company is in the early stages of cross-selling and expects stronger momentum in the next financial year [32] Question: What drove the strong pickup in South Africa subscriber growth? - Subscriber growth is in accordance with the plan, driven by increased footprint and execution capabilities [36] Question: How does the Volkswagen OEM integration impact European growth? - The integration allows for quicker vehicle onboarding to the platform, although operational issues with OEM telemetry devices remain [40]

Financial Data and Key Metrics Changes - In Q3 FY 2026, Karooooo's ARR increased by 22% to ZAR 5,106 million, and in U.S. dollars, it increased by 28% to $298 million [4][20] - Total revenue for Q3 increased by 22% to ZAR 1,410 million, with subscription revenue rising by 20% to ZAR 1,239 million [7][19] - Operating profit increased by 14% to ZAR 369 million, and earnings per share rose by 11% to ZAR 8.55 [19][22] Business Line Data and Key Metrics Changes - Cartrack's subscription revenue grew by 20% to ZAR 1,236 million, comprising 97% of its total revenue [20][22] - Karooooo Logistics' revenue reached ZAR 135 million, an increase of 24%, with a 7% operating profit margin [15][20] - Cartrack's operating profit margin was 28% in Q3, reflecting strong financial performance [6][8] Market Data and Key Metrics Changes - South Africa represented 72% of total Cartrack subscription revenue, with a growth rate of 21% in Q3 [11][12] - Southeast Asia and the Middle East saw a 14% increase in subscription revenue, while Europe experienced a 24% growth [13][14][22] - The total subscriber base increased by 16% to approximately 2.6 million, with record net additions of 111,000 in Q3 [10][21] Company Strategy and Development Direction - The company aims to strengthen its leadership position in South Africa by increasing the adoption of video solutions and Cartrack Tag among existing customers [16][27] - Karooooo is focused on expanding its distribution capabilities in Asia and Europe, with a strong emphasis on capitalizing on the growing demand for video capabilities, including AI video [16][28] - The capital allocation framework prioritizes organic growth and innovation, with a commitment to returning surplus capital to shareholders when growth opportunities are limited [17][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market opportunity in South Africa, indicating a long runway for subscription growth [12][27] - The company noted that the appreciation of the South African rand has created a currency translation headwind on reported revenue, but underlying operating momentum remains strong [25][26] - Management remains focused on long-term growth, emphasizing the importance of customer retention and service over strict adherence to contract terms [43][50] Other Important Information - The company reported a strong balance sheet with net cash and cash equivalents of ZAR 531 million [10][24] - Year-to-date adjusted free cash flow increased by 37% to ZAR 597 million, reflecting the strength of the operating model [23][24] Q&A Session Summary Question: How are we doing with the 70% increase in headcount in Asia? - The company is currently at around 40% and expects to reach the target by the end of Q4 as many hires are planned for January and February [30] Question: When will our investment in sales and marketing stabilize? - The stabilization will depend on the efficiency of sales and marketing strategies, which will continue to be increased given the large addressable market [31] Question: How far along are we in the cross-selling tag and video cycle in South Africa? - The company is in the early stages and anticipates stronger momentum in the next financial year [32] Question: How do you see market demand today relative to sales execution in key markets? - Sales and marketing have been substantially increased this year, and the company is seeing strong productivity in key markets [33] Question: Can you address adoption trends for AI camera penetration rates per region? - Adoption is strong in South Africa, but the company believes it is still early days for broader adoption [34] Question: Is the market saturated for Carelli in Europe or Southeast Asia? - The company believes it is early days in the e-commerce space and does not consider the market saturated [35] Question: How has the shift from used vehicle sales to new vehicle sales in South Africa impacted subscriptions? - The impact is considered insignificant as customer acquisition is based on existing vehicles [37] Question: How do you think about growth versus margin trade-off? - The company focuses on long-term value for shareholders, viewing upfront costs as temporary and necessary for future revenue [38] Question: What are the drivers for subscription ARPU growth in South Africa? - Continuous improvements in technology and service have been key drivers, with no significant changes in strategy [49]

Financial Data and Key Metrics Changes - In Q3 FY 2026, the company's Annual Recurring Revenue (ARR) increased by 22% to ZAR 5,106 million, and on a US dollar basis, it increased by 28% to $298 million [4][22] - Total revenue for Q3 increased by 22% to ZAR 1,410 million, with subscription revenue rising by 20% to ZAR 1,239 million [8][21] - Operating profit increased by 14% to ZAR 369 million, and earnings per share rose by 11% to ZAR 8.55 [21][24] Business Line Data and Key Metrics Changes - Cartrack, the primary operating segment, generated approximately ZAR 1.2 billion in subscription revenue, reflecting a 20% increase or 27% on a US dollar basis [6][22] - Karooooo Logistics reported Delivery-as-a-Service revenue of ZAR 135 million, an increase of 24% or 31% on a US dollar basis [8][17] - Cartrack's operating profit margin was 28% in Q3, while Karooooo Logistics had a 7% operating profit margin [8][17] Market Data and Key Metrics Changes - South Africa represented 72% of total Cartrack subscription revenue, with subscription revenue growth accelerating to 21% [12][23] - Southeast Asia and the Middle East saw a 14% increase in subscription revenue, while Europe experienced a 24% increase [15][16][24] - The company ended Q3 with approximately 318,000 subscribers in Southeast Asia and the Middle East, a 20% increase [15] Company Strategy and Development Direction - The company aims to strengthen its leadership position in South Africa by driving the adoption of video solutions and Cartrack Tag within its existing customer base [18][30] - There is a focus on expanding distribution capabilities in Asia and Europe, with ongoing investments in sales capacity expected to yield positive results [18][30] - The capital allocation framework prioritizes organic growth and innovation, with a commitment to returning surplus capital to shareholders when growth opportunities are limited [19][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market opportunity in South Africa, indicating a long runway for subscription growth [15][30] - The company noted that the appreciation of the South African rand has created a currency translation headwind on reported revenue, but underlying operating momentum remains strong [28] - The outlook for FY 2026 Cartrack subscription revenue has been revised to between ZAR 4,785 million and ZAR 4,900 million, implying growth between 18% and 21% [29] Other Important Information - The company reported a strong balance sheet with net cash and cash equivalents of ZAR 531 million [11][26] - The subscription gross margin was 73%, and the lifetime value to customer acquisition cost (LTV to CAC) ratio remained above nine times [12][25] - The company has a disciplined approach to capital allocation, focusing on sustainable growth and shareholder value [19][20] Q&A Session Summary Question: How is the headcount increase in Asia progressing? - The company is currently at around 40% of the targeted 70% increase, with many hires expected in January and February [32] Question: When will investment in sales and marketing stabilize? - The stabilization depends on the efficiency of sales and marketing strategies, with plans to continue increasing investment given the large addressable market [32] Question: How far along is the cross-selling of tag and video in South Africa? - The company is in the early stages of cross-selling and expects stronger momentum in the next financial year [33] Question: What are the drivers of acceleration in subscriber growth? - The acceleration is attributed to increased sales and marketing efforts, with strong productivity in key markets [34] Question: How does the company view the competitive landscape for AI camera adoption? - The company feels comfortable competing with peers and believes adoption will strengthen over time [36] Question: What impact does the strong South African rand have on operations? - The strong rand has a mixed impact, positively affecting production costs but negatively impacting reported revenue in rands [43] Question: Is the subscriber growth in South Africa diluting ARPU growth? - On a group level, ARPU growth remains on track, with slight lagging expected but overall performance is largely on target [51]

On CNBC's “Halftime Report Final Trades,” Jim Lebenthal, partner at Cerity Partners, said Adobe Inc. (NASDAQ:ADBE)  had a terrible couple of years, but the earnings continue to come in better-than-expected, and the stock is starting to respond.As per the recent news, Adobe, on Dec. 18, 2025, disclosed a multi-year strategic partnership with Runway to deliver the next generation of AI video for creators, studios and brands.Stephen Weiss, chief investment officer and managing partner of Short Hills Capital Pa ...

AI video allows us to do these like, funny mashups of like, the familiar and the unexpected. And that’s what goes viral, right. It’s like, you set a norm that’s relatable, and then you add one ridiculous element to it.That’s the secret, I think, to virality at some level. The script is always the most important part. I think this is going to be the future of narrative, is like, unique characters, unique worlds, unique IP.But I do think that the creators that learn the fundamentals of storytelling are gonna ...

Core Insights - The entertainment industry is undergoing a significant transformation driven by AI video technology, which is reshaping the content creation ecosystem [1][4][52] - Ordinary creators, often dismissed as producing "nonsense content," are leading this revolution by leveraging AI tools to create engaging characters and content that attract millions of followers [2][3][9] Group 1: AI Video Technology - The maturity of AI video technology marks a critical turning point, enabling anyone to create high-quality video content quickly and easily [4][6][8] - Google’s Veo 3 stands out as a leading tool, integrating audio generation capabilities that simplify the video creation process [6][8][29] - The rapid evolution of AI video tools suggests that current content quality is just the tip of the iceberg compared to future possibilities [8][28] Group 2: Business Logic of Nonsense Content - Creators of seemingly absurd characters demonstrate sharp commercial instincts, utilizing decentralized meme creation to build engaging narratives [9][10][13] - These characters can generate numerous videos daily, fostering emotional connections with audiences much faster than traditional media [15][16] - The model allows for real-time market feedback and low marginal costs in content production, enhancing creative iteration [16][21] Group 3: Fundamental Shift in Content Creation Ecosystem - The origin of content trends has shifted, with viral content now emerging from platforms like TikTok and Instagram rather than traditional forums [22][25] - A new "content arbitrage" ecosystem is developing, where creators adapt and repurpose content across different platforms to maximize reach [26][27] - The transition from a "one-to-many" to a "many-to-many" content creation model signifies a collective intelligence approach to entertainment [27] Group 4: Rapid Evolution of Tool Ecosystem - The current AI video tool ecosystem is dynamic, with various tools like MiniMax and Eleven Labs enhancing creative flexibility and audio capabilities [28][30] - Creators are discovering specific content types that perform well with AI generation, indicating the need for understanding model capabilities [28][30] Group 5: Diversification of Monetization Models - Current monetization strategies for AI video creators are complex, with many opting for "content as marketing" to build personal brands and offer services [35][39] - The emergence of virtual IPs from digital content to physical products represents a new model for IP development, allowing for market testing before significant investment [39][40] Group 6: Restructuring of Power Dynamics in Traditional Media - AI video is redistributing narrative control from large media companies to independent creators, allowing audiences to engage with content they can influence [40][41] - The success of independent creators poses a significant threat to traditional media, as they can quickly establish competitive narratives and characters [42][44] Group 7: Future Predictions and Considerations - The next few years will be crucial for the development of AI video, with expectations for more user-friendly tools and innovative content formats [52][53] - New job roles related to AI video creation will emerge, necessitating educational systems to adapt to these changes [54][55] - The decentralization of cultural creation may lead to a more diverse representation in mainstream media, although concerns about information overload and the value of human creativity persist [56]

Financial Data and Key Metrics Changes - Total revenue for Q4 reached $104 million, representing a 40% year-over-year growth, while adjusted EBITDA increased by 80% to $20 million [34][60] - For FY 2025, revenue grew from $135 million in FY 2024 to $362.5 million, nearly tripling, with adjusted EBITDA rising from $7 million to $71 million, a tenfold increase [61][62] - The company targets approximately $430 million in revenue for FY 2026, indicating a 20% growth [62] Business Line Data and Key Metrics Changes - The company has transitioned to a subscription-first business model, with recurring revenue making up 79% of total revenue [34] - Cross-sell revenue increased by 96% year-over-year, and in-warehouse solutions grew by 71% in high-intensity verticals [25][26] - AI video deployments increased by 52% within the largest indirect channel partner in the US [27] Market Data and Key Metrics Changes - The company signed contracts with over 600 new mid-sized and large customers across various industries, indicating a strong market presence [23] - North America, Europe, and Australasia continue to deliver strong performance, with significant traction in key segments [24] - The pipeline for AI video and in-warehouse products showed substantial growth, with AI video pipeline growing 120% quarter-over-quarter [37] Company Strategy and Development Direction - The company is focused on revenue expansion through cross-sell and upsell strategies, with a strong emphasis on the Unity platform [20] - A disciplined approach to integration and cost synergies has been a core part of the strategy, with $34 million in annualized cost synergies targeted by the end of FY 2026 [68] - The company aims to enhance its indirect channel partnerships, particularly with telco partners, to drive growth [50][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the pipeline and sales execution, despite some macroeconomic challenges affecting CapEx budgets [85][88] - The company is implementing third-party financing options to help customers manage capital expenditures [90] - Management anticipates organic momentum to accelerate in the second half of FY 2026 as the pipeline from indirect channel partnerships ignites [64] Other Important Information - The company was recognized as the number one global leader in platform solutions and innovation by ABI Research, enhancing its credibility in enterprise conversations [31][32] - The company ended Q4 with net debt of $225 million, consisting of $49 million in cash and $274 million in total debt [60] Q&A Session Summary Question: Can you reconcile the positive outlook with the macro environment and extended sales cycles? - Management acknowledged some impact from macroeconomic conditions on CapEx budgets but emphasized strong pipeline momentum and sales execution [85][86] Question: What metrics are being settled on for future guidance? - Management indicated that metrics will continue to evolve as the business systems integration progresses, with a focus on pipeline and net revenue retention [92][93]