Karooooo Continues to Grow at Scale and Increases Earnings by 41%

Rhea-AI Summary

Karooooo, owner of Cartrack and 74.8% of Karooooo Logistics, reported strong Q1 2025 results with continued growth at scale. Highlights include:

- Cartrack subscribers up 17% to 2,047,442
- Net subscriber additions increased 88% to 75,910
- Operating profit grew 34% to ZAR300 million
- Earnings per share up 41% to ZAR7.17
- Cartrack revenue grew 15% to ZAR981 million
- Subscription revenue up 15% to ZAR960 million (98% of total revenue)
- Karooooo Logistics revenue grew 63% to ZAR101 million

The company maintains a positive outlook, citing expansion, platform enhancements, and potential improved economic conditions in South Africa. A dividend of USD1.08 was declared for August 2024.

Positive

• Cartrack subscribers increased 17% year-over-year to 2,047,442
• Net subscriber additions grew 88% to 75,910
• Operating profit increased 34% to ZAR300 million
• Earnings per share rose 41% to ZAR7.17
• Cartrack revenue grew 15% to ZAR981 million
• Subscription revenue increased 15% to ZAR960 million, representing 98% of total revenue
• Karooooo Logistics revenue grew 63% to ZAR101 million
• Declared dividend of USD1.08 payable in August 2024
• 95% commercial customer retention rate across diverse businesses

Negative

• None.

Insights

Financial Analyst

Karooooo's latest earnings report shows significant growth, with earnings per share (EPS) increasing by 41% to ZAR7.17. This robust performance is further supported by a 34% rise in operating profit to ZAR300 million. The figures reflect a solid expansion in both Cartrack and Karooooo Logistics, emphasizing the strength in their core business and logistics services. The company has also managed to maintain a high subscription revenue rate, which accounts for 98% of total revenue, a critical indicator of sustained recurring income.

From an investor's perspective, the consistent growth in subscriber numbers (up 17% to 2,047,442) suggests a strong demand for Karooooo's offerings. Net subscriber additions almost doubling to 75,910 highlights aggressive customer acquisition strategies paying off. The decision to retain cash reserves in USD and declare a dividend of USD1.08 is also a positive sign, indicating a healthy cash flow situation. However, investors should be mindful of the economic conditions in South Africa and Europe, which could impact growth projections.

Overall, Karooooo is displaying strong financial health, with strategic investments yielding positive results. The focus on expanding into Southeast Asia could open new growth avenues, providing long-term benefits to stakeholders.

Market Research Analyst

The expansion into Southeast Asia and the European market is particularly noteworthy. These regions present significant growth opportunities due to the rising demand for digital transformation solutions and logistics services. Karooooo's investment in a vertically-integrated cloud platform and AI-Powered telemetry systems can offer a competitive edge in these burgeoning markets. However, the success of this expansion largely depends on how well the company can navigate local market dynamics and regulatory environments.

Additionally, the move to a new central office in Rosebank, South Africa, is projected to support higher organic growth by enabling an increase in headcount. This strategic decision indicates the company's commitment to strengthening its operational base and expanding its workforce to meet growing demand. Investors should watch for how effectively this new setup improves operational efficiencies and drives customer acquisition.

Tech Expert

Karooooo's enhancements to its vertically-integrated cloud platform and the introduction of new generation AI-Powered telemetry are critical developments. These technological advancements provide the company with a unique selling proposition, aiding clients in making data-driven decisions to improve business operations and road safety. The high customer retention rate of 95% is a testament to the effectiveness of these solutions in meeting customer needs.

The focus on digital transformation, especially in logistics (via Karooooo Logistics), offers substantial potential. By leveraging an elastic fleet of third-party delivery drivers, the company allows large enterprises to scale and digitalize e-commerce operations cost-effectively. This model can be particularly appealing to businesses looking to avoid heavy capital investments in logistics infrastructure.

As Karooooo continues to innovate, maintaining its technological edge will be crucial. Investors should consider the long-term benefits of these advancements, as they are likely to drive sustained growth and customer loyalty.

SINGAPORE--(BUSINESS WIRE)-- Karooooo, that owns 100% of Cartrack and 74.8% of Karooooo Logistics, reported strong results for the quarter ended May 31, 2024 (“Q1 2025”) and retained its positive outlook for the year.

Zak Calisto, CEO and Founder:

“The group's robust results, distribution expansion, vertically-integrated cloud platform enhancements, new generation AI-Powered telemetry and the prospect of improved economic conditions in South Africa, give us confidence that we can continue to extend our long-standing track record of strong customer acquisition and profitable growth at scale.

Based on actionable data, we help our customers easily make decisions that improve their businesses and drive safety in their operations and on the road.

In South Africa, our move to a newly built central office in Rosebank is also expected to support higher organic growth as it will enable us to increase our headcount. In addition, our investment in Europe for growth is yielding very positive results. We expect Southeast Asia to present the most compelling growth opportunity for the group in the medium to long term.”

Cartrack subscribers increased 17% to 2,047,442 at May 31, 2024 (Q1 2024: 1,757,452), with net subscriber additions having increased by 88% to 75,910 (Q1 2024: 40,375). At the time of this press release, Cartrack had exceeded 2,1 million subscribers.

Karooooo’s operating profit grew by 34% to ZAR300 million (Q1 2024: ZAR224 million) and earnings per share by 41% to ZAR7.17 (Q1 2024: ZAR5.09).

Cartrack grew revenue by 15% to ZAR981 million (Q1 2024: ZAR853 million) and subscription revenue by 15% to a record ZAR960 million in Q1 2025 (Q1 2024: ZAR834 million). Subscription revenue equated to 98% of total revenue. Cartrack achieved strong customer acquisition in the quarter, building on its solid track record of growing at scale.

Karooooo Logistics grew revenue by 63% to ZAR101 million (Q1 2024: ZAR62 million). Karooooo Logistics focuses on delivery-as-a-service (“DaaS”) for our large enterprise customers wishing to scale and digitalise their e-commerce operations without investing unnecessarily in additional assets by connecting them into an elastic fleet of third-party delivery drivers.

Karooooo's leading Operations Cloud now drives the digital transformation of over 124,000 commercial clients. The company consistently demonstrates high implementation success and maintains a 95% commercial customer retention rate across businesses of various sizes, industries and geographic locations.

As Karooooo retains its cash reserves in USD, Karooooo declared a dividend of USD1.08 payable in August 2024.

Full earnings: www.karooooo.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20240718438519/en/

ir@karooooo.com

Source: Karooooo

FAQ

What was Karooooo's (KARO) subscriber growth in Q1 2025?

Karooooo's Cartrack subscribers increased 17% year-over-year to 2,047,442 in Q1 2025, with net subscriber additions growing 88% to 75,910.

How much did Karooooo's (KARO) earnings per share grow in Q1 2025?

Karooooo's earnings per share grew by 41% to ZAR7.17 in Q1 2025, compared to ZAR5.09 in Q1 2024.

What was Karooooo's (KARO) revenue growth for Q1 2025?

Karooooo's Cartrack revenue grew 15% to ZAR981 million in Q1 2025, with subscription revenue also increasing 15% to ZAR960 million.

What dividend did Karooooo (KARO) declare for August 2024?

Karooooo declared a dividend of USD1.08 payable in August 2024.