Karooooo (KARO) Q1 2027 earnings summary

Executive summary

• Q1 FY 2027 saw Cartrack subscription revenue grow 19% year-over-year, with ARR up 19% in ZAR and 32% in USD, despite FX headwinds.

• Record net subscriber additions reached 142,472, with total subscribers surpassing 2.8 million, driven by strong growth in South Africa.

• Operating profit hit a record ZAR 410 million, up 16% year-over-year, with moderating sales and marketing investments.

• FY 2027 outlook reiterated, targeting 18–24% subscription revenue growth and 18–23% EPS growth at midpoint, excluding secondary offering costs.

• Dividend per share increased 20% to USD 1.50, reflecting strong earnings and cash flow.

Financial highlights

• Total revenue increased 22% year-over-year to ZAR 1,564 million; subscription revenue up 19% to ZAR 1,354 million, representing 97% of total revenue.

• Earnings per share increased 11% to ZAR 9.53.

• Adjusted EBITDA margin for Cartrack was 45%, supporting a "Rule of 60" financial profile.

• Free cash flow was ZAR 60 million, reflecting proactive investment in IoT devices and working capital.

• Karooooo Logistics revenue surged 46% to ZAR 177 million, with an 8% operating profit margin.

Outlook and guidance

• FY 2027 guidance reaffirmed: subscription revenue growth of 18–24%, gross profit margin 70–72%, operating margin 27–30%, and EPS growth of 18–23%.

• Sales and marketing expenses will continue to rise but at a slower rate than FY 2026, with a focus on salesforce efficiency and leveraging AI.

• Focus remains on optimizing recent sales capacity investments and growing distribution at a moderate pace.