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Karooooo Ltd. (KARO)
:KARO
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Karooooo
(NASDAQ:KARO)
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Rating:82Outperform
Price Target:
$60.00
▲(5.89% Upside)
Karooooo's strong financial performance and positive earnings call sentiment are the primary drivers of its high score. While technical indicators show bullish momentum, the high P/E ratio suggests a premium valuation. The company's strategic expansion efforts and robust cash flow management further support its favorable outlook.
Positive Factors
Revenue Growth
Consistent revenue growth indicates strong demand for Karooooo's services and successful market expansion, supporting long-term business sustainability.
Customer Retention
High customer retention reflects the value of Karooooo's services, ensuring stable recurring revenue and reducing churn-related risks.
Cash Flow Management
Strong cash flow growth enhances financial flexibility, enabling strategic investments and reducing reliance on external financing.
Negative Factors
ARPU Growth Challenges
Delays in ARPU growth can impact revenue projections and profitability, necessitating adjustments in pricing strategies or market focus.
Upfront Customer Acquisition Costs
High acquisition costs can strain short-term financials, affecting cash flow and requiring efficient cost management to maintain margins.
Stand-alone Product Sales Challenges
Lower revenue from stand-alone products can dilute overall ARPU, necessitating a focus on bundled solutions to enhance revenue per user.
Karooooo (KARO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.75B
Dividend Yield2.21%
Average Volume (3M)44.89K
Price to Earnings (P/E)33.1
Beta (1Y)1.21
Revenue Growth14.21%
EPS Growth23.74%
CountryUS
Employees4,387
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.49
Shares Outstanding30,893,300
10 Day Avg. Volume39,206
30 Day Avg. Volume44,886
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.96
Enterprise Value/Revenue0.37
Enterprise Value/Gross Profit0.53
Enterprise Value/Ebitda1.13
Forecast
1Y Price Target
$60.75Price Target Upside7.22% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
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:Jul 22, 2025
(Q1-2026)
| % Change Since: |
Next Earnings Date:Oct 09, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in ARR, subscription revenue, and customer retention, alongside strategic expansion in Southeast Asia. However, there are challenges in meeting ARPU growth targets and managing upfront costs. Overall, the positive growth metrics outweigh the challenges.Q1-2026 Updates
Positive Updates
Strong ARR Growth
Q1 FY '26 annual recurring revenue (ARR) increased 18% to ZAR 4.57 million, with a 24% increase on a U.S. dollar basis to USD 254 million.
Subscription Revenue Surge
Cartrack subscription revenue rose by 19% to ZAR 1.1 billion, equivalent to a 24% increase in U.S. dollar terms.
Impressive Operating Profit Margin
Cartrack maintained a strong operating profit margin of 30% despite increased investments in sales capacity and infrastructure.
High Customer Retention
Commercial customer ARR retention rate remained at 95%, supporting the company's strong financial profile.
Karooooo Logistics Revenue Growth
Karooooo Logistics' Delivery-as-a-Service revenue reached ZAR 121 million, a 20% increase, with a 26% increase in U.S. dollars.
Robust Subscriber Growth
Total subscribers increased by 17% to approximately 2.4 million, with notable growth in Southeast Asia (22%) and Europe (20%).
Strong Cash Position
The company ended the quarter with net cash and cash equivalents of ZAR 1.103 million.
Continued Expansion in Southeast Asia
Southeast Asia subscription revenue growth accelerated to 30%, supported by plans to increase sales headcount by 70% by February 2026.
Negative Updates
Potential Delay in ARPU Growth Target
The goal to increase ARPU in South Africa by 10% in FY '26 may take longer than expected due to nuanced market dynamics.
Impact of Upfront Customer Acquisition Costs
Substantial upfront customer acquisition costs lead to a mismatch between expenses and revenue recognition.
Challenges in Stand-alone Product Sales
Sales of stand-alone Cartrack tags, which carry a lower revenue per subscriber, partially offset ARPU uplift.
Company Guidance
During Karooooo's Q1 FY 2026 earnings call, the company reported strong financial performance driven by its SaaS platform, Cartrack, and its logistics segment, Karooooo Logistics. Cartrack's subscription revenue grew by 19% in ZAR terms and 24% in USD, with an operating profit margin of 30%. The company achieved an 18% increase in annual recurring revenue (ARR) to ZAR 4.57 million, or 24% to USD 254 million. Subscription revenue accounted for 98% of total revenue, while the commercial customer ARR retention rate was 95%. The subscriber base grew by 17% to approximately 2.4 million, with notable growth in Southeast Asia and Europe. Karooooo Logistics also reported robust growth, with delivery-as-a-service revenue increasing by 20% in ZAR and 26% in USD. The company maintained a healthy subscription gross margin of 74% and an LTV to CAC ratio above 9x. Earnings per share rose by 19% to ZAR 8.55, and the company ended the quarter with net cash and cash equivalents of ZAR 1.103 million. As part of its strategic priorities, Karooooo is expanding its sales capacity, particularly in Asia, with plans to increase its sales headcount by 70% by February 2026. The company remains committed to profitable growth, capitalizing on the vast total addressable market (TAM) and the growing demand for its AI video solutions.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.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 | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.57B | 4.57B | 4.21B | 3.51B | 2.75B | 2.29B |
| Gross Profit | 3.20B | 3.20B | 2.69B | 2.27B | 1.82B | 1.62B |
| EBITDA | 1.49B | 2.06B | 1.81B | 1.51B | 694.92M | 1.15B |
| Net Income | 921.03M | 921.03M | 738.19M | 597.15M | 449.95M | 497.42M |
Balance Sheet | ||||||
| Total Assets | 5.08B | 5.08B | 4.31B | 3.75B | 3.09B | 2.99B |
| Cash, Cash Equivalents and Short-Term Investments | 1.04B | 1.04B | 459.53M | 965.79M | 731.75M | 987.36M |
| Total Debt | 725.09M | 725.09M | 266.81M | 181.32M | 217.28M | 1.03B |
| Total Liabilities | 1.83B | 1.83B | 1.30B | 1.06B | 915.42M | 1.71B |
| Stockholders Equity | 3.20B | 3.20B | 2.96B | 2.66B | 2.15B | 917.17M |
Cash Flow | ||||||
| Free Cash Flow | 1.67B | 851.99M | 27.47M | 500.35M | 335.26M | 407.76M |
| Operating Cash Flow | 1.93B | 1.93B | 955.04M | 1.13B | 931.71M | 931.05M |
| Investing Cash Flow | -1.08B | -1.08B | -932.19M | -615.81M | -658.22M | -524.67M |
| Financing Cash Flow | -443.76M | -443.26M | -592.95M | -426.43M | 334.97M | 390.58M |
Karooooo Technical Analysis
Positive
56.66
Price Trends
50.21
Positive
49.88
Positive
46.53
Positive
Market Momentum
1.77
Positive
68.82
Neutral
73.86
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KARO, the sentiment is Positive. The current price of 56.66 is above the 20-day moving average (MA) of 54.78, above the 50-day MA of 50.21, and above the 200-day MA of 46.53, indicating a bullish trend. The MACD of 1.77 indicates Positive momentum. The RSI at 68.82 is Neutral, neither overbought nor oversold. The STOCH value of 73.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $1.75B | 33.09 | 29.66% | 2.21% | 14.21% | 23.74% | |
66 Neutral | $1.49B | -29.83 | -6.32% | ― | 11.36% | 46.67% | |
63 Neutral | $1.74B | -1,368.00 | -0.12% | ― | 21.92% | 95.91% | |
62 Neutral | $826.33M | -14.80 | -37.20% | ― | 14.79% | 27.52% | |
62 Neutral | $1.78B | 36.83 | -190.60% | ― | -7.41% | ― | |
60 Neutral | $1.51B | -15.18 | -34.47% | ― | 9.93% | -11.15% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
KARO
Karooooo
56.66
18.06
46.79%
SPT
Sprout Social
14.04
-15.03
-51.70%
PRCH
Porch Group
17.09
15.55
1009.74%
JAMF
Jamf Holding
11.25
-6.10
-35.16%
OLO
Olo
10.26
5.30
106.85%
AMPL
Amplitude
11.38
2.41
26.87%
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.