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]

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]

Core Viewpoint - Karooooo Limited, which fully owns Cartrack and holds an 81% stake in Karooooo Logistics, is set to release its Third Quarter 2026 Financial Results on January 20, 2026, after 04:00 p.m. Eastern Time [1] Group 1 - The Company will host a Zoom webinar on January 21, 2026, at 08:00 a.m. Eastern Time to discuss the financial results [1]

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][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]

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]