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Karooooo (KARO)
NASDAQ:KARO
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Karooooo
(NASDAQ:KARO)
Rating:75Outperform
Price Target:
$54.00
▲(11.36%Upside)
Positive Factors
Market Expansion
Southeast Asia is identified as the most compelling growth opportunity due to its large addressable market.
Revenue Growth
Karooooo Logistics revenue is expected to grow double-digits over the next few years.
Subscriber Growth
Cartrack subscribers are expected to grow by 19% at the mid-point in the fiscal year forecast.
Negative Factors
Economic Uncertainty
There is a possibility to accelerate subscription revenue growth in the coming fiscal years despite the current uncertainty in the macro environment.
Market Risks
The main risks for Karooooo are competition, emerging markets, foreign exchange, customer churn, and stolen vehicle recovery services.
Valuation Concerns
Concerns in the national power grid have led to a 25% discount in the target multiple compared to SaaS peers.
Karooooo (KARO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.47B
Dividend Yield8.82%
Average Volume (3M)91.21K
Price to Earnings (P/E)29.3
Beta (1Y)1.28
Revenue Growth11.15%
EPS Growth27.97%
CountryUS
Employees4,387
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.54
Shares Outstanding30,893,300
10 Day Avg. Volume94,671
30 Day Avg. Volume91,206
Financial Highlights & Ratios
PEG Ratio-1.19
Price to Book (P/B)8.20
Price to Sales (P/S)0.00
P/FCF Ratio15.76
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$54.33Price Target Upside12.04% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Karooooo Business Overview & Revenue Model
Company DescriptionKarooooo Ltd. is a leading provider of a comprehensive, cloud-based software platform for connected vehicles and equipment, operating primarily in the telematics sector. The company is headquartered in Singapore and delivers a suite of services under the brand Cartrack, which includes real-time vehicle tracking, fleet management, and insurance telematics. Karooooo's platform is designed to help businesses increase the efficiency and safety of their vehicle operations, reduce operational costs, and enhance customer engagement.
How the Company Makes MoneyKarooooo generates revenue primarily through subscription fees for its telematics and fleet management services. Customers, including businesses with vehicle fleets and individual vehicle owners, pay recurring fees to access the platform's capabilities, which include real-time tracking, driver behavior analysis, and vehicle diagnostics. The company also offers value-added services such as stolen vehicle recovery, driver communication tools, and analytics reporting, which enhance its revenue streams. Karooooo's revenue model is supported by its scalable software-as-a-service (SaaS) platform, allowing it to expand its customer base globally. Additionally, partnerships with vehicle manufacturers and insurance companies can provide further revenue opportunities by integrating Karooooo's solutions into new markets and enhancing the overall value proposition for end-users.
Karooooo Earnings Call Summary
Earnings Call Date:May 14, 2025
(Q4-2025)
| % Change Since: 8.00%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Positive
Karooooo demonstrated strong financial performance and subscriber growth, particularly through its Cartrack segment and geographic expansion. However, there were challenges with free cash flow and subscriber additions in the APAC region. The company maintained a strong balance sheet but did not declare a dividend. The highlights outweigh the lowlights, indicating a positive outlook overall.Q4-2025 Updates
Positive Updates
Strong Financial Performance
Cartrack generated ZAR4.1 billion in subscription revenue, an increase of 15% or 19% on a US dollar basis, with an operating profit margin of 31%. Karooooo's adjusted earnings per share increased 39% to ZAR9.48.
Continued Subscriber Growth
Cartrack's subscriber growth rate was 17% for FY '25, a 200 basis point acceleration compared to FY '24. Net subscriber additions increased 25% in Q4 and 30% for FY '25.
Robust Geographic Expansion
Southeast Asia's constant currency revenue growth accelerated to 31% in Q4, with strong subscriber growth in Europe at 20%.
Successful Product Launch
Launch of the Cartrack Tag in Southern Africa, offering advanced asset protection and operational oversight.
Strong Balance Sheet
Karooooo ended the quarter with net cash and cash equivalents of ZAR838 million, maintaining a strong and unleveraged balance sheet.
Negative Updates
Decline in Free Cash Flow
Adjusted free cash flow decreased due to increased capital expenditure and strategic investments.
Lower APAC Subscriber Additions
Total APAC net subscribers added in FY '25 were slightly down compared to FY '24 levels.
No Immediate Dividend Declaration
Despite a strong cash position, no dividend was declared at the end of FY '25.
Company Guidance
During the call, Karooooo provided comprehensive guidance for fiscal year 2026, highlighting its strategic priorities and financial expectations. The company anticipates Cartrack subscription revenue to reach between ZAR4,700 million and ZAR4,900 million, indicating a growth of 16% to 21%. Cartrack's operating profit margin is projected to range from 26% to 31%, while Karooooo's earnings per share are expected to be between ZAR32.5 and ZAR35.5. Despite planned upfront investments in sales and marketing, the company aims to sustain strong growth, driven by expanding its distribution footprint and increasing platform adoption. Karooooo also emphasized its commitment to disciplined capital allocation and innovation, with a focus on organic growth, and maintaining a strong balance sheet with net cash and cash equivalents of ZAR838 million. The company expects to continue leveraging its SaaS platform to enhance operational efficiency across its markets, with a particular emphasis on growth in Southeast Asia and Europe.Karooooo Financial Statement Overview
Summary
Karooooo exhibits impressive financial health with strong revenue growth, robust profitability, and a stable balance sheet with low leverage. Cash flows have improved substantially, highlighting excellent cash management. Overall, Karooooo stands out as a financially sound and efficiently managed entity within the software application industry.Income Statement
Karooooo shows robust financial performance with consistent revenue growth and strong profitability. Gross Profit Margin improved to 70.11% in 2025 from 64.00% in 2024. Net Profit Margin increased to 20.17% in 2025 from 17.55% in 2024. Revenue Growth Rate was 8.61% in 2025, showcasing a strong upward trend. EBIT and EBITDA margins are healthy, reflecting operational efficiency.92
Very Positive
Balance Sheet
The balance sheet is strong with a Debt-to-Equity Ratio of 0.23 in 2025, indicating low leverage. The Return on Equity improved to 28.76% in 2025, signifying effective use of equity. The Equity Ratio stands at 63.05%, reflecting a well-capitalized structure. Overall, the company maintains a stable financial position with low financial risk.88
Very Positive
Cash Flow
Karooooo demonstrates solid cash flow performance. Free Cash Flow Growth Rate surged by 2102.97% in 2025, showcasing exceptional improvement. Operating Cash Flow to Net Income Ratio is strong at 2.10, indicating excellent cash conversion. Free Cash Flow to Net Income Ratio is 0.93, reflecting effective cash management despite high capital expenditures.85
Very Positive
| Breakdown | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 4.57B | 4.21B | 3.51B | 2.75B | 2.29B |
| Gross Profit | 3.20B | 2.69B | 2.27B | 1.82B | 1.62B |
| EBITDA | 2.06B | 1.81B | 1.51B | 694.92M | 1.15B |
| Net Income | 921.03M | 738.19M | 597.15M | 449.95M | 497.42M |
Balance Sheet | |||||
| Total Assets | 5.08B | 4.31B | 3.75B | 3.09B | 2.99B |
| Cash, Cash Equivalents and Short-Term Investments | 1.04B | 459.53M | 965.79M | 731.75M | 987.36M |
| Total Debt | 725.09M | 266.81M | 181.32M | 217.28M | 1.03B |
| Total Liabilities | 1.83B | 1.30B | 1.06B | 915.42M | 1.71B |
| Stockholders Equity | 3.20B | 2.96B | 2.66B | 2.15B | 917.17M |
Cash Flow | |||||
| Free Cash Flow | 851.99M | 27.47M | 500.35M | 335.26M | 407.76M |
| Operating Cash Flow | 1.93B | 955.04M | 1.13B | 931.71M | 931.05M |
| Investing Cash Flow | -1.08B | -932.19M | -615.81M | -658.22M | -524.67M |
| Financing Cash Flow | -443.26M | -592.95M | -426.43M | 334.97M | 390.58M |
Karooooo Technical Analysis
Neutral
48.49
Price Trends
49.18
Negative
46.14
Positive
44.52
Positive
Market Momentum
-1.01
Positive
46.23
Neutral
81.12
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KARO, the sentiment is Neutral. The current price of 48.49 is below the 20-day moving average (MA) of 51.55, below the 50-day MA of 49.18, and above the 200-day MA of 44.52, indicating a neutral trend. The MACD of -1.01 indicates Positive momentum. The RSI at 46.23 is Neutral, neither overbought nor oversold. The STOCH value of 81.12 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KARO.
Karooooo Risk Analysis
Karooooo disclosed 70 risk factors in its most recent earnings report. Karooooo reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
Our use of AI and generative AI tools presents risks and challenges that could adversely affect our business and require that we incur substantial costs Q1, 2025
2.
Under certain attribution rules, our non-U.S. subsidiaries are expected to be treated as controlled foreign corporations for U.S. federal income tax purposes, and, as a result, there could be adverse U.S. federal income tax consequences to U.S. investors that own our shares (directly or indirectly) and are treated as "Ten Percent Shareholders." Q1, 2025
Karooooo Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $750.98M | 13.60 | 30.02% | 5.16% | 3.73% | 11.24% | |
75 Outperform | $1.47B | 29.27 | 30.85% | 8.82% | 11.15% | 27.97% | |
74 Outperform | $1.53B | 93.00 | 2.20% | ― | 7.98% | -40.59% | |
69 Neutral | $565.90M | 146.70 | 1.94% | ― | 3.62% | -53.21% | |
66 Neutral | $1.23B | ― | -36.95% | ― | 17.79% | 16.49% | |
63 Neutral | $33.22B | 5.73 | -11.55% | 1.90% | 5.54% | -20.14% | |
62 Neutral | $1.31B | ― | -6.49% | ― | 5.15% | 28.27% |
* Technology Sector Average
Performance Comparison
KARO
Karooooo
48.98
19.14
64.14%
ITRN
Ituran Location And Control
39.39
16.02
68.55%
SPT
Sprout Social
21.13
-14.98
-41.48%
PUBM
PubMatic
12.67
-8.00
-38.70%
NABL
N-able
8.18
-6.68
-44.95%
MLNK
MeridianLink
16.84
-4.50
-21.09%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.