Karooooo (KARO)
NASDAQ:KARO
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Karooooo
(NASDAQ:KARO)
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Rating:79Outperform
Price Target:
$57.00
▲(19.92% Upside)
Action:ReiteratedDate:01/24/26
KARO scores well primarily on strong underlying profitability and the earnings-call-driven outlook, including raised subscription guidance, accelerating ARR, high retention, and solid unit economics supported by net cash. The score is moderated by uneven free cash flow conversion/volatility, signs of recent financial growth deceleration in the statements, and a valuation that is not especially cheap despite the supportive dividend.
Positive Factors
Recurring Revenue & ARR Growth
Karooooo's SaaS subscription model delivered accelerating ARR and record net subscriber additions, giving durable, predictable revenue streams. High recurring revenue and scale of ~2.6m subscribers support long-term revenue visibility, better forecasting, and organic upsell opportunities.
Negative Factors
Free Cash Flow Volatility
Volatile free cash flow conversion reduces the predictability of internally generated funds for investments or returns. Even with strong operating cash flow in aggregate, swings in FCF from reinvestment and working capital make capital allocation and dividend/shareholder planning more uncertain over time.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring Revenue & ARR Growth
Karooooo's SaaS subscription model delivered accelerating ARR and record net subscriber additions, giving durable, predictable revenue streams. High recurring revenue and scale of ~2.6m subscribers support long-term revenue visibility, better forecasting, and organic upsell opportunities.
Read all positive factors
Karooooo (KARO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.47B
Dividend Yield2.66%
Average Volume (3M)41.66K
Price to Earnings (P/E)22.7
Beta (1Y)1.22
Revenue Growth18.30%
EPS Growth22.19%
CountryUS
Employees4,387
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.50
Shares Outstanding30,893,300
10 Day Avg. Volume43,754
30 Day Avg. Volume41,663
Financial Highlights & Ratios
PEG Ratio1.25
Price to Book (P/B)8.12
Price to Sales (P/S)5.71
P/FCF Ratio28.08
Enterprise Value/Market Cap17.25
Enterprise Value/Revenue4.83
Enterprise Value/Gross Profit6.97
Enterprise Value/Ebitda11.40
Forecast
1Y Price Target
$59.00Price Target Upside24.13% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)38.38
Revenue Forecast (FY)$6.41B
Karooooo Business Overview & Revenue Model
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...
How the Company Makes Money
Karooooo generates revenue primarily through subscription fees for its software services. The company offers tiered pricing models based on the number of vehicles being monitored, with additional charges for premium features and advanced analytics...
Karooooo Key Performance Indicators (KPIs)
Any
Operating Income by Segment
Reveals profit from core operations within each segment, providing insight into which areas are most financially productive.
Reveals profit from core operations within each segment, providing insight into which areas are most financially productive.
Data provided by:
The Fly
The FlyKarooooo Earnings Call Summary
Earnings Call Date:Jan 20, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 20, 2026
Earnings Call Sentiment Positive
The call emphasized strong and accelerating SaaS momentum: ARR and subscription revenue growth, record net subscriber additions, high retention, robust unit economics (73% gross margin; LTV:CAC >9x), and improved guidance. These positives outweigh the primarily tactical and manageable negatives — a planned 47% increase in sales & marketing expense, currency translation headwinds, ARPU dilution risk from lower-ARPU regional expansion, and hiring/execution demands. Management framed the investments as strategic and temporary, while balance sheet strength and cash generation provide flexibility.Positive Updates
Accelerating ARR Growth to Near USD 300M
ARR increased 22% year-over-year to ZAR 5,106 million and 28% in U.S. dollar terms to USD 298 million, bringing the company to the verge of USD 300 million in ARR.
Negative Updates
Significant Upfront Sales & Marketing Investment
Sales and marketing expenses increased 47% in Q3 as planned to drive future growth; this compressed IFRS operating margins in the quarter despite management describing it as strategic and temporary.
Read all updates
Q3-2026 Updates
Positive
Negative
Accelerating ARR Growth to Near USD 300M
ARR increased 22% year-over-year to ZAR 5,106 million and 28% in U.S. dollar terms to USD 298 million, bringing the company to the verge of USD 300 million in ARR.
Read all positive updates
Company Guidance
Karooooo raised FY‑2026 guidance for Cartrack subscription revenue to ZAR 4,785–4,900 million (implying 18–21% growth), narrowed Cartrack operating profit margin guidance to 27–30% (from 26–31%), and left group adjusted EPS guidance unchanged at 32.5–35.5; management flagged the currency translation headwind from a stronger ZAR (no hedging) even as ARR accelerated to ZAR 5,106m (+22% YoY; USD ARR $298m, +28%), Q3 subscription revenue was ZAR 1,239m (+20%), total revenue ZAR 1,410m (+22%), Cartrack operating profit margin ~28%, record net subscriber adds 111,478 (total ~2.6m, +16%), subscription gross margin 73%, commercial ARR retention 95%, LTV:CAC >9x, Q3 adjusted free cash flow ZAR 239m (YTD ZAR 597m), net cash ZAR 531m and management expects FY‑2027 subscriber upside from increased sales & marketing investment (S&M was up 47% in Q3) while prioritizing profitable, capital‑disciplined growth and potential shareholder returns (annual dividend) when excess cash cannot be better deployed.Karooooo Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
74
Positive
Cash Flow
71
Positive
| Breakdown | TTM | Feb 2025 | Feb 2024 | Feb 2023 | Feb 2022 | Feb 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.24B | 4.57B | 4.21B | 3.51B | 2.75B | 2.06B |
| Gross Profit | 3.64B | 3.20B | 2.69B | 2.27B | 1.82B | 1.46B |
| EBITDA | 2.22B | 2.07B | 1.83B | 1.51B | 1.26B | 1.03B |
| Net Income | 1.02B | 921.03M | 751.90M | 597.15M | 449.95M | 285.97M |
Balance Sheet | ||||||
| Total Assets | 5.21B | 5.10B | 4.27B | 3.72B | 3.04B | 2.86B |
| Cash, Cash Equivalents and Short-Term Investments | 574.68M | 1.05B | 456.03M | 957.38M | 719.21M | 967.58M |
| Total Debt | 800.18M | 727.53M | 263.86M | 179.14M | 211.46M | 1.00B |
| Total Liabilities | 1.98B | 1.84B | 1.29B | 1.05B | 899.74M | 1.60B |
| Stockholders Equity | 3.18B | 3.21B | 2.94B | 2.64B | 2.11B | 838.18M |
Cash Flow | ||||||
| Free Cash Flow | 0.00 | 928.88M | 80.15M | 595.43M | 387.59M | 413.27M |
| Operating Cash Flow | 1.67B | 1.97B | 972.78M | 1.23B | 952.64M | 842.91M |
| Investing Cash Flow | -1.17B | -1.10B | -949.50M | -677.29M | -740.88M | -475.67M |
| Financing Cash Flow | -816.69M | -452.00M | -603.97M | -457.21M | -442.92M | -426.42M |
Karooooo Technical Analysis
Positive
47.53
Price Trends
47.55
Negative
46.47
Positive
48.05
Negative
Market Momentum
0.06
Negative
51.75
Neutral
51.62
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 47.53 is above the 20-day moving average (MA) of 47.02, below the 50-day MA of 47.55, and below the 200-day MA of 48.05, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 51.75 is Neutral, neither overbought nor oversold. The STOCH value of 51.62 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 |
|---|---|---|---|---|---|---|---|
79 Outperform | $1.47B | 22.71 | 31.88% | 2.66% | 18.30% | 22.19% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $857.19M | -17.26 | -32.90% | ― | 12.78% | -20.47% | |
59 Neutral | $329.81M | -15.25 | -22.88% | ― | 13.09% | 32.34% | |
56 Neutral | $717.57M | 61.80 | -13.21% | ― | -2.13% | ― |
* Technology Sector Average
KARO
Karooooo
47.53
6.10
14.72%
SPT
Sprout Social
5.53
-16.46
-74.85%
PRCH
Porch Group
6.76
-0.53
-7.27%
AMPL
Amplitude
6.41
-3.78
-37.10%
Karooooo Corporate Events
Karooooo Posts Accelerating Q3 ARR and Revenue Growth, Lifts FY26 Outlook
Jan 20, 2026
On January 20, 2026, Karooooo reported unaudited results for its third quarter of fiscal 2026, covering the period ended November 30, 2025, highlighting accelerating growth across its subscription and logistics businesses. Cartrack’s subscri...
Karooooo Sets January 20 Date for Third Quarter 2026 Results
Jan 12, 2026
On January 12, 2026, Karooooo Limited announced that it plans to release its Third Quarter 2026 financial results on January 20, 2026, after the U.S. market close, and will host a follow-up Zoom webinar on January 21, 2026 to discuss the numbers w...
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.