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1. Company Snapshot

1.a. Company Description

Karooooo Ltd.provides mobility software-as-a-service (SaaS) platform for connected vehicles in South Africa, rest of Africa, Europe, the Asia-Pacific, the Middle East, and the United States.The company offers Fleet Telematics, a fleet management SaaS platform that provides real-time insights; LiveVision, which offers pro-active risk management and fleet visibility; MiFleet advanced fleet administration and business intelligence that provides cost management and administration capability services; and Karooooo Logistics, a software application for management of last mile delivery and general operational logistics.


It also provides Cartrack Field Service, a software application for management of field and on site workers; Business Intelligence for high-level view of fleet statistics; asset tracking for tracking and tracing moveable assets; asset recovery services that assists vehicle owners and insurance companies with the recovery of vehicles and other assets; and insurance telematics that allows insurers to tailor premiums for commercial and consumer customers using analytics; Protector, a safety package for consumer vehicles; and Car Watch, a mobile application that lets users track and watch their vehicles.In addition, the company offers specialist mobility solutions that include Bike Track, a GPS-based solution for commercial motorbike fleets; Credit Management that predicts payment cycles and facilitate active credit management for asset-based vehicle finance; electronic monitoring services application that allows law enforcement agencies to monitor persons of interest; and mobility and monitoring solutions, such as Carzuka, cartrack insurance agency, and on-demand rideshare taxi application, as well as smart IoT products.It provides its solutions through direct sales force to consumers and sole proprietors, small and medium-sized businesses, large enterprises, and other connected devices.


Karooooo Ltd.was founded in 2001 and is headquartered in Singapore.

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1.b. Last Insights on KARO

Karooooo Ltd.'s recent performance was negatively impacted by the lack of recent earnings releases, which may indicate a delay in reporting. The company's strong growth prospects, including a 17% year-over-year increase in subscribers and expansion into new markets, were not reflected in recent news. The launch of Cartrack-Tag, a wireless asset tag, may have been overshadowed by the absence of recent financial updates. The company's participation in the Raymond James 26th Annual Institutional Investors Conference in February suggests a focus on investor engagement, but the lack of recent news may have contributed to market uncertainty.

1.c. Company Highlights

2. Karooooo's Q3 FY 2026 Shines with Accelerated ARR Growth and Robust Profitability

Karooooo's Q3 FY 2026 delivered outstanding financial performance, with total revenue increasing 22% to ZAR 1,410 million, driven by a 20% growth in subscription revenue to ZAR 1,239 million. The company's operating profit rose 14% to ZAR 369 million, with a healthy subscription gross margin of 73%. Earnings per share increased 11% to ZAR 8.55, while adjusted free cash flow grew 28% to ZAR 239 million. The company's net cash and cash equivalents stood at ZAR 531 million, providing a solid foundation for future growth.

Publication Date: Jan -22

📋 Highlights
  • ARR Growth Acceleration: 22% YoY to ZAR 5,106M (USD 298M) in Q3 FY2026.
  • Operating Profit Increase: 14% YoY to ZAR 369M with 27–30% margin outlook for FY2026.
  • Subscription Revenue Dominance: 97% of Cortrak revenue, up 20% YoY to ZAR 1,239M.
  • Adjusted Free Cash Flow Surge: 37% YoY to ZAR 597M (ZAR 239M in Q3 alone).
  • Dividend Payment: $38.6M distributed (ZAR 1.35/share) amid ZAR 531M net cash position.

Revenue Growth and Customer Retention

The company's ARR growth accelerated to 22% to ZAR 5,106 million, with a commercial customer ARR retention rate remaining at 95%. Karooooo Logistics, the delivery-as-a-service offering, saw revenue growth of 24% to ZAR 135 million. The company's focus on organic growth, innovation, and returning capital to shareholders is evident in its disciplined and profitable growth strategy.

Valuation and Pricing

With a P/E Ratio of 28.02 and an EV/EBITDA of 13.39, the market appears to be pricing in a certain level of growth. The company's ROE of 31.57% and ROIC of 19.39% indicate a strong ability to generate returns on equity and invested capital. The Dividend Yield of 2.88% provides a relatively stable source of return for investors. Analysts estimate next year's revenue growth at 16.1%, which may be challenging to achieve given the company's already strong performance.

Operational Highlights and Outlook

Karooooo is executing on two fronts: expanding sales capacity to drive new customer acquisition and strengthening relationships with current customers through increased adoption of video and Cartrack. The company is confident that its investment in sales capacity this year will have a positive impact on subscriber growth in FY 2027. The company's guidance for FY 2026 Cartrack subscription revenue has been increased to between ZAR 4,785 million and ZAR 4,900 million, implying growth between 18% and 21%.

Regional Growth and ARPU

The company's ARPU in Southeast Asia is lower than in South Africa, and as the Southeast Asia market grows, ARPU is expected to decrease. Karooooo expects Southeast Asia to make up a bigger portion of the business, with countries like Philippines, Indonesia, and Thailand having lower ARPUs compared to New Zealand, UAE, or Singapore. The company is on track to meet its target of 6% ARPU growth by 2026, with a slight lag.

3. NewsRoom

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Why Karooooo (KARO) Might be Well Poised for a Surge

Jan -26

Source: zacks.com

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Karooooo (KARO) Upgraded to Buy: Here's What You Should Know

Jan -23

Source: zacks.com

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Karooooo: Q3 Results Might Fuel A Positive Re-Rating

Jan -23

Source: seekingalpha.com

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Karooooo Ltd. (KARO) Q3 2026 Earnings Call Transcript

Jan -21

Source: seekingalpha.com

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Karooooo Accelerates ARR Growth by 28% to USD298 Million

Jan -20

Source: businesswire.com

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Financial Review: NiCE (NASDAQ:NICE) and Karooooo (NASDAQ:KARO)

Jan -14

Source: defenseworld.net

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Karooooo to Announce Third Quarter 2026 Results on January 20, 2026

Jan -12

Source: businesswire.com

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Breakfast News: Powell Under Pressure

Jan -12

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.25%)

6. Segments

Subscription - Cartrack

Expected Growth: 10.27%

Karooooo's Cartrack subscription growth of 10.27% is driven by increasing demand for vehicle tracking and fleet management solutions, expansion into new markets, and a growing need for businesses to optimize their logistics and transportation operations. Additionally, the rise of IoT and telematics adoption, as well as government regulations promoting vehicle safety and security, contribute to the segment's growth.

Vehicle

Expected Growth: 10.43%

Karooooo Ltd.'s 10.43% growth in Vehicle segment is driven by increasing adoption of its SaaS-based fleet management solutions, expansion into new markets, and growing demand for digitalization in the logistics industry. Additionally, the company's focus on improving operational efficiency, reducing costs, and enhancing customer experience through its innovative technology platform has contributed to its rapid growth.

Delivery

Expected Growth: 9.27%

Karooooo Ltd.'s 9.27% growth is driven by increasing demand for its logistics and delivery services, expansion into new markets, strategic partnerships, and investments in technology and infrastructure. Additionally, the company's focus on operational efficiency, cost reduction, and customer satisfaction have contributed to its growth momentum.

Hardware

Expected Growth: 12.07%

Karooooo Ltd.'s 12.07% growth in Hardware is driven by increasing demand for telematics solutions, expansion into new markets, and strategic partnerships. The company's focus on innovation, particularly in AI-powered fleet management, has also contributed to its growth. Additionally, the rising need for vehicle tracking and monitoring systems in various industries has fueled demand for Karooooo's hardware products.

Installation

Expected Growth: 10.27%

Karooooo Ltd.'s 10.27% growth is driven by increasing adoption of its fleet management solutions, expansion into new markets, and strategic partnerships. The company's innovative technology, which provides real-time tracking and analytics, has resonated with customers seeking to optimize their logistics operations. Additionally, the growing demand for digitalization in the transportation industry has contributed to the company's rapid growth.

Miscellaneous Contract Fees

Expected Growth: 10.08%

Karooooo Ltd.'s Miscellaneous Contract Fees growth of 10.08% is driven by increasing adoption of its digital payment solutions, expansion into new markets, and strategic partnerships. Additionally, the company's focus on innovation, improving operational efficiency, and enhancing customer experience have contributed to the growth.

Subscription - Karooooo Logistics

Expected Growth: 10.27%

Karooooo Logistics' 10.27% growth is driven by increasing demand for digital logistics solutions, expansion into new markets, and strategic partnerships. The company's innovative platform, which provides real-time tracking and monitoring, has attracted a large customer base. Additionally, the rise of e-commerce and the need for efficient supply chain management have contributed to the segment's growth.

7. Detailed Products

Karoooo Fleet

A fleet management system that helps businesses to track and manage their vehicles in real-time, providing insights on vehicle performance, driver behavior, and route optimization.

Karoooo Route

A route optimization platform that helps businesses to plan and optimize their delivery routes, reducing miles driven and lowering emissions.

Karoooo Track

A GPS tracking system that provides real-time location tracking and monitoring of vehicles, assets, and equipment.

Karoooo Drive

A driver behavior and safety platform that provides insights on driver performance, helping businesses to reduce accidents and improve road safety.

Karoooo Analytics

A business intelligence platform that provides data analytics and insights on fleet operations, helping businesses to make data-driven decisions.

8. Karooooo Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Karooooo Ltd. operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the growing demand for alternative transportation services.

Bargaining Power Of Customers

Karooooo Ltd. has a large customer base, but the bargaining power of customers is high due to the availability of alternative services and the ease of switching.

Bargaining Power Of Suppliers

Karooooo Ltd. has a diverse supplier base, and the bargaining power of suppliers is low due to the availability of alternative suppliers and the company's strong negotiating power.

Threat Of New Entrants

The threat of new entrants is moderate due to the presence of barriers to entry, such as regulatory requirements and high capital costs, but the market is still attractive to new entrants.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of established competitors and the growing demand for transportation services, leading to a competitive market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 6.44%
Debt Cost 3.95%
Equity Weight 93.56%
Equity Cost 9.13%
WACC 8.80%
Leverage 6.88%

11. Quality Control: Karooooo Ltd. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
InterDigital

A-Score: 6.6/10

Value: 3.7

Growth: 8.8

Quality: 9.0

Yield: 3.0

Momentum: 9.5

Volatility: 5.7

1-Year Total Return ->

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Karooooo

A-Score: 6.3/10

Value: 1.7

Growth: 7.3

Quality: 8.4

Yield: 5.8

Momentum: 6.0

Volatility: 8.3

1-Year Total Return ->

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SS&C Technologies Holdings

A-Score: 5.9/10

Value: 3.7

Growth: 6.1

Quality: 7.0

Yield: 2.0

Momentum: 7.0

Volatility: 9.7

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Agora

A-Score: 4.5/10

Value: 8.2

Growth: 3.3

Quality: 5.6

Yield: 0.0

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

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Commvault Systems

A-Score: 3.4/10

Value: 1.0

Growth: 6.9

Quality: 6.5

Yield: 0.0

Momentum: 1.5

Volatility: 4.3

1-Year Total Return ->

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AMTD Digital

A-Score: 3.1/10

Value: 1.9

Growth: 3.2

Quality: 6.8

Yield: 0.0

Momentum: 3.0

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

49.75$

Current Price

49.75$

Potential

-0.00%

Expected Cash-Flows