Karooooo Ltd. Q4 FY2025 earnings call

• Operate a SaaS platform for connected vehicles and mobile assets to enhance operational efficiency, reduce costs, improve safety, and ensure compliance.
• Cartrack's momentum drove growth, with ZAR4.1 billion in subscription revenue in FY '2025, 15% increase (19% US dollar basis) and 31% operating profit margin.
• Karooooo Logistics is a growing delivery-as-a-service business with ZAR420 million revenue in FY '2025, 33% increase (37% US dollar basis).
• Q4 FY '2025 highlights: Cartrack subscription revenue up 16% (20% US dollar), Southeast Asia constant currency revenue growth 31%, operating profit margin 34%, adjusted earnings per share ZAR9.48 (39% increase).
• Launched Cartrack Tag, a next-generation wireless asset tag for enhanced asset management.
• Strategic priorities for FY '2026: Cement leadership in scaled regions, expand distribution in Asia and Europe, broaden platform adoption, and capture demand for video capabilities.

Karooooo has two operating segments: Cartrack and Karooooo Logistics. Cartrack, the operations management SaaS platform, generated ZAR4.1 billion in subscription revenue in FY '2025, a 15% increase (19% on a US dollar basis) with an operating profit margin of 31%. In Q4 FY '2025, Cartrack subscription revenue was ZAR1.84 million, a 16% increase (20% US dollar basis), ARR accelerated to 17%, subscriber growth was 17%, subscription gross margin was 76%, LTV to CAC ratio was above 9, and commercial retention rate was 95%. Karooooo Logistics, the delivery-as-a-service business, had delivery-as-a-service revenue of ZAR420 million in FY '2025, a 33% increase (37% US dollar basis) with a 9% operating profit margin.

• FY '2026 guidance: Cartrack subscription revenue between ZAR4,700 million to ZAR4,900 million (16%-21% growth).
• Cartrack operating profit margin between 26% to 31%.
• Karooooo's adjusted earnings per share between ZAR32.5 to ZAR35.5.

• Forward-looking statements subject to risks and uncertainties as mentioned in the opening, with actual results possibly differing materially from expectations.

Q: Cartrack Tag launch use cases A: Dylan, we've only put up the infrastructure in Southern Africa so that infrastructure goes all the way from Cape Town up till about Kenya. We've started very successfully providing the product to our customers. It's been taken up really well by both businesses and by consumers in South Africa, and I believe it's got traction. It's very robust. We've now feel very comfortable that we already reaching quite a substantial amount of scale. So, we feel very comfortable it was the right decision that we took and that once it's working well we can then decide which is the next region that we can do the same, and it would probably be Asia.

Q: Drivers for acceleration for 2026 offering. But how would you think about components growth algorithm between subscriber count from new logos, incremental product upsell and AI Cameras, camera tag and asset to existing customers and rollout incremental assets A: We have planned that in FY '2026, we haven't given an outlook on subscribers, because we've decided that this year specifically in Southern Africa we're going to be very much focused on the tag, we're going to be focused on the video, we're going to focus on a lot of other sales to existing customers because we need to -- we've got the footprint into the customers, so we need to now enhance the customer offering. So that's going to be our primary focus in FY '2026 and we believe that will lead definitely to ARPU. We expecting an increase in ARPU by year-end of about 10% Q: Hiring, how are you thinking about the opportunity for added capacity here and where are you in the ramp maturation of existing Salesforce across three regions as they look increasingly own the entire customer footprint A: I think as we continue to hire, we now have got more than 5,000 employees. I think this is an ongoing challenge because if you want to grow and you want to accelerate your growth -- if you for instance, typically the mathematics behind it would be if you increase, for instance, in Asia, 70% of your Salesforce in a perfect world that should give you about 70% net ads. 70% net ads is probably to definitely increase the subscriber growth. But that just can -- you can sort of see the compounding effect. So, this year we -- last year we increased our staff by about 1,000 people. We expect in this year we could do as much as 1,500 people. So, it's an ongoing exercise. But I certainly believe that we started to get really good traction in the last six months and I believe in FY '2026 we'll continue that good traction Q: Regions, continued strength in South Africa, acceleration in Europe, strong momentum in Southeast Asia. Anything to call out relative to each of the core markets in enabling sustained broad-based success A: We focus on all the regions. I think all our regions offer a huge opportunity for growth over the long-term or we believe Asia's got the best -- it's the biggest market with the highest growth opportunity. But I believe we'll get good growth in FY '2026 from all the regions Q: How would you think about potential blended ARPU growth in cameras A: As I said before, we expecting about a 10% increase in our ARPU during FY '2026 Q: You ended the period with net cash of about ZAR840 million and no dividend declared. What is your thinking about the net cash balance A: Really, we remain very much focused that, it's all about how quickly can we allocate this capital for shareholders, because our return on investment is very high and we will deploy as much capital as we can to customer acquisition. Failing which we will return any excess cash that we believe the Board will look at it and to shareholders. Typically, we look at this at the end of Q1 and we typically have in the past decided whether we pay a dividend or not in Q2 and we pay the dividend also in Q2. Typically, this is how we've done it in the past Q: What is your current view on share buybacks A: I think share buybacks, it's very difficult with a low liquidity. We've tried to do it earlier on with little success. So, I think we must put our focus into other things at this point in time. We weren't very successful given the low liquidity Q: Total APAC net subscribers added FY '2025 are slightly down versus the FY '2024 levels. Is there anything you'd call out in the market, and how do you feel about the existing sales productivity in those markets, embark on great hiring A: I think the sales productivity in Asia was strong and we certainly believe as we hire more people that the sales productivity will probably take a little bit of a dip until typically these salespeople have been with us for over six months. And then I believe we'll get productivity even in the sales that -- salespeople that we all hire. In the first two months of the year, we've done very good progress already in the first two months Q: Alex, with 10% ARPU growth outlook, is there any like-for-like pricing increases for the core bundle plant or just camera tag attached growth A: It's mostly on the back of camera and the tag growth. So, to get a 10% increase you obviously can only sell to a small percentage of your base and it's -- and we expect a small percentage of our base to take up the products in year one and year two, and as we progress that should increase further