Q1 2026 Karooooo Ltd Earnings Call
This meeting is being recorded.
Unknown Executive: Hello, and welcome to Carew's Q1 FY 2026 earnings call. On behalf of Carew, we would like to thank you for joining us today.
Paul Bieber: I'm Paul Bieber, VP of Investor Relations and Strategic Finance.
Paul Bieber: We are joined today by Zach Calisto, Founder and Group CEO, Hoe Goy, Chief Financial Officer, and Carmen Calisto, Chief Strategy and Marketing Officer. I would like to remind everyone that some of the forward-looking. Such statements are based on current expectations and assumptions. They are subject to several risks and uncertainties. Our actual results could differ materially. Please refer to the Safe Harvest Statements in our Form 20-F, including the risk factors and the 6-K that we filed yesterday. We undertake no obligation to update any forward-looking statements. During this call, we will present both IFRS and non-IFRS financial measures.
Hush inquires Chief Financial Officer.
In Carmichael is a chief strategy and marketing officer.
I would like to remind everyone that some of the statements that we make today regarding how business operations and financial performance may be considered for looking.
Such statements are based on current expectations and assumptions. They are subject to several risks and uncertainties.
Our actual results could differ materially, please refer to the safe Harvest statements, in our form 20f, including the risk factors, and the 6K that we filed yesterday.
We undertake no obligation to update any 4 looking statements.
Paul Bieber: A reconciliation of non-IFRS to IFRS measures is included in the 6K that we filed with the SEC yesterday. Our comments will refer to year-over-year comparisons unless we state otherwise.
During this call, we will present both IFRS and non-ifrs financial measures. A Reconciliation of non-ifrs to IFRS measures is included in the 6K that we filed with the FCC yesterday.
Carmen Calisto: I will now pass the presentation over to Carmen. Welcome to Carew's Q1 FY26 financial results presentation. For those new to Carew, we operate a SaaS platform for connected vehicles and mobile assets that enables businesses to enhance operational efficiency, reduce costs, improve safety, and ensure compliance. We help businesses simplify decision-making to optimize their physical operations. We serve a large, underpenetrated market with strong, sustained demand driven by digital transformation, a constant need to improve operational efficiency, and an increasing focus on safety and compliance. We are a founder-led business with a strong financial profile, a proven track record of execution excellence, and cultural focus on disciplined capital allocation and operational efficiency.
Our comments will refer to year-over-year comparisons, unless we say to otherwise,
Carman: I will now pass the presentation over to his Carman.
Welcome to koors, q1 FY 26, Financial results presentation for those new to Kuru. We operate to South platform for connected vehicles, and mobile assets, that enables businesses to enhance, operational efficiency, reduce costs, improve safety, and ensure compliance. We help businesses simplify decision-making to optimize their physical operations.
Carmen Calisto: Our platform supports more than 2.4 million subscribers across more than 125,000 businesses in South Africa, Southeast Asia and Europe, spanning industries such as logistics, mining, agriculture, construction, retail and the public sector. Our financial model is anchored by attractive growth, high margin subscription revenue, exceptional commercial ARR retention, and powerful unit economics. Our Q1 FY26 Annual Recurring Revenue, or ARR, increased 18% to $4.574 million, and on a U.S. dollar basis, ARR increased 24% to $254 million U.S. Subscription revenue accounted for 98% of car track revenue, and our commercial customer ARR retention rate remains at 95%. We continue to scale our proprietary data assets, now generating over 220 billion data points monthly, which we leverage to deliver impactful insights and value to our customers.
Carman: We serve a large underpenetrated Market with strong sustained, demand driven by digital transformation. A constant need to improve operational efficiency, and an increasing focus on safety and compliance. We are a Founder lead business with a strong financial profile. A proven track record of execution, excellence and cultural focus on discipline Capital, allocation, and operational efficiency. Our platform supports more than 2.4 million subscribers across more than 125,000 businesses. In South Africa, southeast Asia, and Europe, spanning Industries, such as Logistics, mining agriculture, construction retail. And the public sector.
Carman: Our financial model is anchored by attractive growth high margin, subscription Revenue, exceptional commercial ARR, retention and Powerful. Unity economics.
Carman: Our q1 fy2 annual recurring revenue or ARR increased 18% to 4.574 million Zar and on a US dollar basis ARR increased 24% to 254 million us, subscription Revenue, accounted for 98% of contract revenue, and our commercial customer ARR retention rates remained at 95%.
Carmen Calisto: Finally, our LTV to CAC remained above nine times, enabled by strong retention, disciplined capital allocation, and efficient distribution, which are embedded in our vertically integrated business model and company culture.
Carman: we continue to scale our proprietary data asset now generating over 220 billion data points monthly, which we leveraged to deliver impactful insights and value to our customers
Carmen Calisto: During our presentation, we will review both of Carew's operating segments, CarTrack and Carew Logistics. Kartrack is our operations management SaaS platform. Kartrack operates at scale and has a very attractive financial profile. Kartrack's operating momentum is the primary driver of Karoo's growth and strong financial performance. In Q1, CarTrack delivered strong results highlighted by accelerating subscription revenue growth across all regions. These results reflect the early returns from the strategic investments we've made in expanding our sales capacity in recent quarters. In Q1, CarTrack generated $1.1 billion in subscription revenue, an increase of 19% or 24% on a U.S.
finally our LTV to CAC remained above 9 times enabled by strong retention discipline Capital, allocation and efficient distribution which are embedded in our vertically integrated business model and Company culture,
Carmen Calisto: dollar basis. Notably, CarTrack's subscription revenue accelerated this quarter. CarTrack's operating profit margin was a healthy 30%.
Carmen Calisto: Karooo Logistics is our rapidly growing delivery as a service offering that empowers large enterprise customers to scale their e-commerce and logistics operations. Karoo Logistics is showing strong growth and operating momentum and driving real value for our enterprise customers. We report Karoo logistics separately as the delivery of the service offering differs from CarTrack SaaS financial profiles. Karoo Logistics is strategically important to us as it empowers our customers to scale their e-commerce and logistics operations through a capital-like model while driving high contract customer retention. We continue to profitably scale the Karoo Logistics business. In Q1, Karoo Logistics' delivery of the service revenue reached $121 million, an increase of 20% or 26% on a U.S.
During our presentation, we will review both of ku's, operating segments, kartra and Kuru Logistics. Kartra is our operations management. Surf platform, kartra operates at scale and has a very attractive Financial profile contracts. Operating momentum is the primary driver of ku's, growth and strong financial performance in q1 contract, delivered strong results, highlighted by accelerating subscription Revenue growth across all regions these results. Reflect the early returns from the Strategic Investments. We've made in expanding our sales capacity. In recent quarters in q1 contract. Generated 1.1 billion are in subscription revenue and increase of 19% or 24% on a US dollar basis, notably kartra subscription Revenue accelerated. This quarter contracts operating profit margin was a healthy 30%.
Carman: Kuru Logistics is all rapidly growing delivery as a service offering that empowers large Enterprise customers to scale their e-commerce and Logistics operations. Kuru Logistics is showing strong growth and operating momentum and driving real value. For our Enterprise customers. We report Kuru Logistics separately as the delivery of the service offering differs from kartra SAS Financial profile.
Carmen Calisto: dollar basis. Given Karoo Logistics' robust revenue growth, we are very excited about the long-term growth opportunity. In Q1, Karooo delivered total revenue of 1.277 million Tsar, an increase of 18%. Subscription revenue of 1.141 million Tsar, an increase of 18%. Earnings per share of 8.55 Tsar, an increase of 19%. And total subscribers of approximately 2.4 million, an increase of 17%. Kartrack's subscription revenue growth of 19% and operating profit margin of 30% underpinned our stellar financial performance in Q1. It's noteworthy that Kartrack's operating profit margin was stable at 30% despite the increased investment in sales capacity and infrastructure to drive accelerating growth.
Carman: Reached the 121 millionaire an increase of 20% or 26% on a US dollar basis. Given Kuru Logistics is robust, Revenue growth. We are very excited about the long-term growth opportunity.
Carman: In q1 Kuru delivered, total revenue of 1.277 million Zar, an increase of 18% subscription revenue of 1.141 million Zar. An increase of 18% earnings per share of 8.55 Zar an increase of 19% and total subscribers of approximately 2.4 million. An increase of 17%
Carmen Calisto: Q1 continued our track record of delivering profitable growth at scale. In Q1, we were a Rule of 60 company when adding our car track subscription revenue growth of 19% and our car track adjusted EBITDA margin of 46%.
Carman: Kartra subscription Revenue growth of 19% and operating profit margin of 30% underpinned, our seller financial performance, in q1, its noteworthy that car tracks. Operating profit margin was stable at 30%, despite the increase investment in sales capacity and infrastructure to drive accelerating growth.
Carmen Calisto: Before detailing our Q1 financial and operational accomplishments, we want to take a moment to underscore our distinctive financial profile, something that is exceptionally rare in the public markets, particularly among small cap companies. We believe we're among a select few SAAS companies operating at a rule of 50 plus based on calendar year 2025 Gap Street. Within a SaaS universe of approximately 160 companies, we believe we are the only small cap company operating at this level. Being part of this elite group reflects our unwavering commitment to disciplined and profitable growth.
Carman: Q1 continued, our track record of delivering profitable growth at scale in q1. We were a rule of 60 company when adding our car track subscription, Revenue growth of 19% and our contract adjusted evitar margin of 46%.
Carman: Before detailing our q1 financial and operational accomplishments, we want to take a moment to underscore our distinctive Financial profile. Something that is exceptionally rare. In the public markets, particularly among small cap companies. We believe we are among a select few South companies, operating at a rule of 50 plus based on calendar year, 2025 Gap Street estimates within a SAS Universe of approximately 160 companies. We believe we are the only small cap company operating at this level.
Carmen Calisto: Moving on to our Q1 financial and operational highlights. In Q1, SaaS ARR accelerated to 18% compared to Q4 FY25's growth of 17%. On a US dollar basis, Q1 SaaS ARR accelerated to 24% compared to Q4 FY25's growth of 21%. Cartrack subscription revenue growth accelerated to 19% compared to Q4 FY25's growth of 16%. On a US dollar basis, Cartrack's subscription revenue accelerated to 24% compared to Q4's growth of 20%. Katrak's total subscribers increased 17%, highlighted by stable growth in South Africa and an acceleration of growth in Southeast Asia to 22%. We also delivered record Q1 Net Subscriber Edition.
Carman: Being part of this Elite group, reflects our unwavering commitment to disciplined and profitable growth. Moving on to our q1 financial and operational highlights in q1. SAS are accelerated to 18% compared to Q4 fy2 growth of 17% on a US dollar basis, q1 SAS are accelerated to 24% compared to Q4 fy22 growth of 21%.
Carman: Car track subscription Revenue, growth accelerated to 19%. Compared to Q4 fy2 of 16% on a US dollar basis. Kartra subscription Revenue accelerated to 24%, compared to q4's growth of 20%.
Carmen Calisto: Q1 Average Revenue Per User or ARPU increased 2% in ZAR or 6% on a USD basis as we started to deliver on our aim to increase ARPU in South Africa in FY26. Kartrek's operating profit margin was a healthy 30% and benefited from disciplined expense management and modest ARPU growth. Karooo earnings per share of 8.55 increased 19%. We remained a rule of 60 company and our balance sheet remained strong and unleveraged. We ended the quarter with net cash and cash equivalents of 1.103 million Tsar. Our healthy subscription growth margin, efficient customer acquisition, and attractive commercial customer ARR retention rates continue to drive our healthy unit economy.
Carman: Contracts total subscribers increased 17% highlighted by stable growth in South Africa and an acceleration of growth in Southeast Asia to 22%. We also delivered record q1 net subscriber Editions.
Carman: q1 average, revenue per user, or arpu increased 2% in czar or 6% on a US dollar basis as we started to deliver on our end to increase rpu, in South Africa, in fy2
Carman: Contracts, operating profit margin was a healthy 30% and benefited from disciplined expense management and modest RPO growth.
Carman: Kuru earnings per share of 8.55 increased 19%. We remained a rule of 60 company. And our balance sheet, remains strong and unleveraged. We ended the quarter with net cash and cash. Equivalents of 1.13 million are
Carmen Calisto: In Q1, our subscription gross margin was 74%, our LTV to CAC ratio remained above 9 times, and our commercial customer ARR retention rate was 95%. We are also experiencing attractive ARR growth with our retained customers. It's noteworthy that we accelerated our subscription revenue growth in Q1 while maintaining healthy unit economics. We are excited about our massive TAM and remain committed to profitable growth as we pursue the expansive growth opportunity ahead of us. We ended Q1 with approximately 1.8 million subscribers in South Africa, an increase of 16%. South Africa's subscription revenue comprised 70% of our total subscription revenue, and South Africa's subscription revenue growth accelerated to 16%.
Carman: our healthy subscription growth margins. Efficient customer acquisition and attractive. Commercial customer Ari retention rate. Continue to drive our healthy Unity economics in q1. Our subscription gross margin was 74% our LTV to CAC ratio remained above 9 times, and our commercial customer ARR. Retention rate was 95%.
We are also experiencing attractive ARR. Growth with our retained customers.
Carman: It's noteworthy that we accelerated our subscription Revenue growth in q1 while maintaining healthy Unity economics. We are excited about our massive term and remain committed to profitable growth. As we pursue the expansive growth opportunity ahead of us.
Carmen Calisto: We are encouraged by the strong teams that we are building in South Africa to accelerate organic growth, broaden our customer base, and increase subscription sales to existing customers in the region. We continue to see a compelling market opportunity in South Africa, driven by ongoing digital transformation, rising demand for video solutions, and the market-expanding impact of CarTrackTag. With a trusted brand and an experienced team, we continue to see a compelling market opportunity in South Africa. We ended Q1 with approximately 290,000 subscribers in Southeast Asia and the Middle East, with most of the subscribers in Southeast Asia.
Carman: We ended q1 with approximately 1.8 million subscribers in South Africa, an increase of 16% South Africa, subscription Revenue, comprise 70% of our total, subscription revenue, and South Africa's subscription Revenue. Growth accelerated to 16%
Carman: South Africa driven by ongoing digital transformation. Rising demand for video Solutions and the market expanding impact of contract tag with a trusted brand and an experienced team. We continue to see a compelling Market opportunity in South Africa.
Carmen Calisto: Southeast Asia and the Middle East subscriber growth accelerated to 22% and is now 17% of our total subscription revenue. Southeast Asia continues to present the largest growth opportunity over the medium to long term and is our fastest growing region. In Q1, Southeast Asia and the Middle East subscription revenue growth accelerated to 30%.
Carman: We ended q1 with approximately 290,000 subscribers in Southeast, Asia. And the Middle East with most of the subscribers in Southeast, Asia, southeast, Asia, and the Middle East subscriber growth accelerated to 22% and is now 17% of our total subscription Revenue.
Carmen Calisto: We aim to increase our sales headcount by 70% by February 2026 compared to February 2025. Our differentiated SaaS platform, growing brand equity built on superior customer service, service delivery and distribution, and attractive regional macro trends should provide us with a solid foundation to drive continued growth and expansion in the region for many years to come. We believe Southeast Asia is a vast and underpenetrated market for sophisticated fleet management and video-based solutions, and we are excited about the vast growth for Runway Ahead. We ended Q1 with approximately 210,000 subscribers in Europe, an increase of 20%. Europe is now 10% of our total subscription revenue and European subscription revenue growth accelerated to 22%.
Southeast Asia continues to present the largest growth opportunity over the medium to long term. And is our fastest growing region. In q1, Southeast Asia in the Middle East subscription, Revenue, growth accelerated to 30%
Carman: We aim to increase our sales, headcount by 70% by February 2026, compared to February 2025.
Carman: Our differentiated sass platforms, growing brand Equity built on Superior customer service, service delivery and distribution and attractive Regional macro Trends, should provide us with a solid foundation to drive continued growth and expansion in the region for many years to come.
Carman: We Believe southeast Asia is a vast and underpenetrated market for sophisticated Fleet Management and video-based solutions and we are excited about the vast growth for Runway ahead.
Carmen Calisto: On a constant currency basis, European subscription revenue growth accelerated to 20%. We have partnered with leading OEMs to provide easy access to our platform, seamlessly integrating their connected vehicle data to our platforms through APIs. We expect these partnerships to contribute to our results in the medium to long term. In addition, we are experiencing encouraging demand for our proprietary compliance technology in the area as customers seek to simplify compliance with evolving legislation and enforcement. We continue to accelerate our organic growth, expand our customer base, and increase subscription sales to existing customers in the region. In Q1, Karoo Logistics continued to build scale and delivered revenue of 121 million ZAR, an increase of 20% and an 8% operating profit margin.
Carman: We ended q1 with approximately 210,000 subscribers in Europe. An increase of 20%. Europe is now 10% of our total subscription revenue and European subscription. Revenue growth accelerated to 22% on a constant currency basis, European subscription, Revenue growth accelerated to 20%
we have partnered with leading oems to provide easy access to our platforms seamlessly integrating their connected vehicle data to our platforms through apis. We expect these Partnerships to contribute to our results in the medium to long term. In addition, we are experiencing encouraging demand for our proprietary compliance technology in the area, as customers seek to simplify compliance with, evolving legislation and enforcement.
Carman: We continue to accelerate our organic growth, expand our customer base and increase subscription sales to existing customers in the region.
Carmen Calisto: Karoo Logistics supports our strong financial performance by immersing our platform into large customers' operations, contributing to strong customer retention. Karoo Logistics also enables us to learn about the operational and logistics challenges confronting our large customers. We see a large opportunity for Karoo Logistics going forward as large businesses seek to increase their e-commerce offerings and optimize their logistics capabilities through a capital light model.
Carman: In q1, Kuru Logistics, continue to build scale and delivered revenue of 121 million Zar, an increase of 20% and an 8% operating profit margin Kuru Logistics supports our strong financial performance. By immersing our platform into large customers operations, contributing to strong customer return.
Carman: Attention Kuru Logistics. Also enables us to learn about the operational and Logistics challenges, confronting our large customers.
Carmen Calisto: In Q1, we made good progress with our FY26 priorities. First, we've begun strengthening our leadership position in South Africa by selling our video solutions and car track tag to our existing customer base. This initiative has demonstrated early traction as reflected in a 2% ARPU increase in Q1. However, the dynamics on the ground are more nuanced. While video and bundled car track tags are positively contributing to ARPU expansion, sales momentum with standalone car track tags, which carry a lower revenue per subscriber, is partially offsetting the ARPU uplift. We remain confident in our long-term ability to grow ARPU in South Africa, though reaching our 10% ARPU growth target for FY26 may take a little longer than initially expected as we continue to build our internal capabilities.
Carman: We see a large opportunity for Kuru Logistics going forward as large businesses seek to increase their e-commerce offerings and optimize their Logistics capabilities through a capital, like model.
Carman: In q1, we made good progress with our fy2. Priorities, first, we've begun, strengthening our leadership position in South Africa. By selling our videos and contract, tagged our existing customer base,
Carmen Calisto: Longer term, we believe there is potential to increase South African ARPU by significantly more than 10%.
Carmen Calisto: Second, we continue to expand our distribution footprint in Asia and Europe. We are seeing success in expanding our teams in the region. Finally, we continue to work with our customers globally to drive broader engagement with our platform and to capture the growing demand for video capabilities, including AI video.
Carman: This initiative has demonstrated early traction as reflected in a 2% are per increase in q1. However, the Dynamics on the ground are more nuanced. While video and bundled contract tags are positively contributing, to arpu expansion sales, momentum with Standalone contract tags, which carry a lower Revenue per subscriber is partially offsetting the RPO uplift. We remain confident in our long-term ability to grow our Prue in South Africa though. Reaching our 10% IPO growth Target for fy2. May take a little longer than initially expected. As we continue to build our internal capabilities longer term. We believe there is potential to increase South African. I proof by significantly more than 10%
Second, we continue to expand our distribution footprint in Asia and Europe. We are seeing success in expanding, our teams in the region.
Carmen Calisto: Capital Allocation is a fundamental part of our culture and we aim to remain disciplined with our capital allocation strategy, rooted in a 20-year culture of profitable growth at scale and prudent financial management. Key Drivers of Long-Term Shareholder Value Our Capital Allocation Framework is unchanged and prioritizes Organic growth and innovation. Our paramount priority is investing in organic growth and product innovation, given our strong unit economics, sustained profitability and large market opportunities. Returning Capital to Shareholders At current growth rates, our business generates significant excess cash. With our strong balance sheet and net cash position, we aim to return surplus capital to shareholders when we cannot efficiently invest it for growth, primarily through an annual dividend.
Carman: Finally, we continue to work with our customers globally, to drive broader engagement with our platform, and, to capture the growing demand for video capabilities, including AI video Capital location is a fundamental part of our culture and we aim to remain disciplined with our Capital, allocation strategy rooted in a 20-year culture of profitable growth at scale and prudent financial management. Key drivers of long-term shareholder value.
Carman: Given our strong Unity economics, sustained profitability and large Market opportunity.
Carmen Calisto: As to avoid doubts, management prioritizes growth over dividends.
Carmen Calisto: Strategic M&A. We take a prudent and strategic approach to M&A. We view M&A as a tool to accelerate time to market in key geographies, expand our product portfolio, or strengthen our competitive position. However, given our compelling organic growth profile, customer-centric culture, and attractive unit economics, we set a high bar for any potential acquisition. M&A opportunities must offer clear, strategic value or optionality to meet our criteria. Ultimately, we see it as our responsibility to allocate capital thoughtfully, always with the goal of maximizing long-term shareholder returns.
Carman: Returning Capital to shareholders at current growth rates, our business generate significant excess cash with our strong balance sheet, and net cash position. We aim to return Surplus Capital to shareholders when we cannot efficiently invested for growth. Primarily through an annual dividend as to avoid doubt management. Prioritizes growth, over dividends
Carman: Strategic m&a, we take a prudent and strategic approach to m&a. We view m&a as a tool to accelerate time to Market. In key geographies, expand our product portfolio or strengthen our competitive positions. However, given our compelling organic growth profile, customer Centric culture and attractive, unique economics. We set a high bar for any potential Acquisitions m&a, opportunities must offer, clear strategic value or optionality to meet our criteria.
Houshin: I will now hand over to Houshin who will discuss how Q1 financial performance Thank you Carmen. I will now discuss Karoo's financial performance for Quarter 1 FY 2026. Please note, my comment will refer to year-over-year comparisons unless we state otherwise. Our proven and profitable SaaS business model continues to deliver strong results in Q1. Karoo's total subscription revenue increased 18% to R1,141 million. On USD basis, Karoo's subscription revenue increased 24%.
ultimately, we see it as our responsibility to allocate Capital, Ford fully always with the goal of maximizing long-term shareholder returns
Hushin: I will now hand over to hushin who will discuss our q1 financial performance.
Hushin: Thank you K. I will now discuss. Coos financial performance for quarter 1. FY 2026, please note my command will refer to year-over-year comparisons unless we State otherwise
Hushin: Our proven and profitable says business model. Continue to deliver strong results in quarter 1,
Houshin: Operating Profit increased 17% to RM352M and Adjusted Earning Per Share increased 19% to RM8.55 We will now focus on CarTrack's financial performance, which is fuelled by sales revenue momentum. In Q1, CarTrack's revenue increased 18% to R$1,156m, and CarTrack's subscription revenue increased 19% to R$1,138m. Subscription revenue comprises 98% of CarTrack's total revenue. Quarter 1 ARR increased 18% and 24% in rent and U.S. dollar respectively. Our ARR growth is slightly lower than car track subscription revenue growth due to several factors including the impact of FX, timing and rounding. As you can see from the trend of the charts, CarTrack has a proven track record of scaling in varying macroeconomic conditions given our consistent execution, resilient subscription revenue model, and attractive historic retention rate.
Hushin: Coos total, subscription Revenue, increase 18% to 1,141 million, Rand on US, dollar, basis, Kuru, subscription, Revenue increased 24%,
Hushin: Operating profit increased 17% to 352 million Rand and adjusted earning per share. Increased 19% to 8 Grand and 555 cents.
Hushin: We will now focus on car tracks financial performance, which is fueled by sales revenue. Momentum. In quarter, 1 car tracks Revenue, increase 18% to 1,156 million, Rand, and car track subscription Revenue. Increased 19% to 1,138 million Rand,
Hushin: Subscription Revenue comprised 98% of car tracks, total revenue.
Hushin: Quarter 1, ARR increased 18% and 24% in rent and US dollar respectively.
Our ARR growth is slightly lower than car track subscription Revenue growth due to several factors including the impact of FX timing and rounding.
Houshin: In Quarter 1, Kartrack experienced healthy customer acquisition. Quarter 1 subscriber increased 17% to approximately 2.4 million. Subscription revenue increased 19% to 1,138 million rand and operating profit increased 19% to a record 342 million rand. CarTrack Experience Solid Customer Acquisition with Record Quarter 1 Net Subscriber Addition of $84,000 and Increase of 11% As car tracks continue to grow in subscription revenue across geographies, and subscription revenue growth accelerated across all regions, South Africa's subscription revenue growth accelerated to 16%, Asia and Middle East subscription revenue growth accelerated to 30%, and Europe's subscription revenue growth accelerated to 22%. The acceleration across regions reflects our execution track records and provides a solid foundation for continued growth.
As you can see from the trend of the charts car track has a proven track record of scaling in varying macroeconomic conditions, given our consistent execution, resilient subscription, Revenue model and attractive historic retention rates.
Hushin: In quarter, 1 car track experience, healthy, customer acquisition quarter 1, subscriber increased 17% to approximately 2.4 million.
Hushin: Subscription Revenue, increased 19% to 1,138. Million RAM and operating profit increased 19% to a record 342 million V.
Hushin: Car track experience, solid customer acquisition with record quarter 1, net subscriber edition of 84,000 and increase of 11%.
Hushin: Car tracks continued to grow is subscription Revenue. Across geographies and subscription Revenue. Growth accelerated across all regions, South Africa, subscription Revenue, growth accelerated to 16% Asia, and Middle East subscription, Revenue, growth accelerated to 30% and Europe subscription. Revenue, growth accelerated to 22%
Houshin: In Q1, total subscriber growth of 17% remained healthy while SAS ARR accelerated to 18% compared to 17% in Q4 FY2025. We believe the acceleration in SAS ARR reflects the underlying momentum in the business and signals that our strategic initiatives are gaining traction. Karoo's earning per share increased 19% to RM8.55 in Q1. Earning per share benefited from subscription revenue growth. In Quarter 1, Castrax's earning per share contribution increased 20% to $0.0837. Karoo's logistic earning per share contribution was $0.18 despite the increased investment in driver training and quality control to support growth. In Quarter 1, we resume our significant free cash flow generation.
Hushin: The acceleration across regions reflects our execution track records and provides a solid foundation for continued growth.
Hushin: In quarter 1, total subscriber growth of 17% remain healthy. While SAS are accelerated to 18% compared to 17% in quarter 4 FY. 2025
Hushin: We believe the acceleration in SAS ARR, reflects the underlying momentum in the business and signals that our strategic initiative are gaining traction.
Hushin: Coos earning per share increased 19% to 8 Grand and 555 cents in quarter 1. Earning per share benefited from subscription Revenue growth.
Hushin: In quarter, 1, car tracks, earning per share, contribution increased, 20% to 8 Grand and 37 cents.
Houshin: Free cash flow was R338 million and benefited from disciplined working capital management. The free cash flow generated is in line with Karoo Discipline Capital Allocation Strategy and supports our future growth. Our balance sheet reflects our track record of growth at scale, profitability and cash generation. Our net cash on hand plus cash in bank fixed deposits was R1,103 million. Debtors collection days remain extremely healthy at 27 days and are within our historical norm.
Hushin: In quarter 1, we resume. Our significant free cash flow, generation free, cash flow was 338 million. Rand and benefited from discipline working Capital Management. The free cash flow generated is in line with KU discipline Capital, allocation strategy, and supports our future growth.
Houshin: We are paying a total cash dividend of approximately $38.6 million to our shareholders in August 2025. That is a dividend of $1.25 per share. We believe that our ability to generate healthy cash flow is sustainable given our NUT business model coupled with our track record of consistent execution and success. In FY 2026, we aim to accelerate car track subscription revenue growth by further expanding our distribution footprint in the existing market, driving broader platform adoptions, and capitalizing on growing demand for our AI video solution. We are encouraged by our positive momentum in Quarter 1 FY 2026, where subscription revenue accelerated to 19%, signalling that our strategic initiatives are gaining traction.
Hushin: Our balance sheet, reflects our track record of growth at scale, profitably and cash, Generations. Our net cash on hand plus cash in Bank. Fixed deposits was 1103 million rand's collection days remain extremely healthy at 27 days and are within our historical Norm
Hushin: We are paying a total cash dividend of approximately 38.6, million to our shareholders in August 2025, that is a dividend of $1.25 per share.
Hushin: We believe that our ability to generate healthy cash flow is sustainable. Given our energy business model, coupled with our track record of consistent, execution and success.
Hushin: In FY 2026, we aim to accelerate car track subscription Revenue growth by further expanding our distribution footprint in existing Market.
Hushin: Driving broader platform adoptions and capitalizing on growing demand for our AI video Solutions.
Houshin: With continued investment in sales, marketing and infrastructure, we believe we are well positioned to achieve our FY 2026 growth ambitions.
Hushin: We are encouraged by our positive momentum. In quarter 1, FY 2026, where subscription Revenue accelerated to 19% signaling that our strategic initiative are gaining tractions.
Houshin: Accordingly, we are reaffirming our previously provided FY 2026 outlook. A frequent question we receive from investors focus on the trade-off between growth and margin profile. Our FY 2026 Outlooks details a range of growth and margin outcomes as we aim to accelerate our growth this year. Equally important, we believe it's insightful to examine how our financial model could perform in a zero growth environment with stable customer retention. It is important to recognise that our current financial statements reflect the substantial upfront customer acquisition costs that appear in our sales and marketing expense line. While these costs are expensed immediately under IFRS, they support the acquisition of customers that typically remain with us for many years.
Hushin: We've continued investment in sales, marketing and infrastructure. We believe we are well, positioned to achieve our FY 2026 growth Ambitions accordingly. We are reaffirming our previously provided FY 2026 Outlook,
A frequent question, we received from investors focused on the trade-off between growth and margin profile.
Hushin: Our FY 2026 outlooks details, a range of growth and margin outcomes as we aim to accelerate our growth this year.
Hushin: Equally important, we believe is insightful to examine how our financial model could perform in a zero growth environment with stable customer retention.
Hushin: It is important to recognize that our current financial statements, reflects the substantial upfront, customer acquisition cost that appear in our sales and marketing expense line.
Houshin: The timing differential creates a meaningful mismatch between when we incurred customer acquisition cost and when we recognised the full revenue benefit, or the lifetime value of our long-duration customer relationship. Currently, our LTV to CAG is more than 9 times. In a hypothetical no-growth scenario, with consistent ARR retention patterns, we believe we would have the flexibility to significantly reduce our sales and marketing expenditures. This level could potentially drive our operating profit margins higher to approximately 38%, a substantial improvement from current levels as growth-oriented marketing expenses are eliminated. In addition, the approximately 38% operating profit margin could potentially improve as it does not account for the potential additional benefit accrued from reduced depreciation and expansion expense in a non-growth environment.
Hushin: While these calls are expense immediately under IFRS, they support the acquisition of customer that typically remain with us for many years.
Hushin: the timing, differential creates a meaningful mismatch between when we incurred customer acquisition cost and when we recognize the full Revenue benefit or the lifetime value of our long duration, customer relationships,
Hushin: Currently, our LTV to C is more than 9 times.
In the hypothetical no growth scenario with consistent, our retention patterns, we believe we would have the flexibility to significantly reduce our sales and marketing expenditure.
Hushin: This level could potentially Drive our operating profit margins higher to approximately 38%. A substantial improvement from current levels as growth oriented marketing expense are eliminated,
Houshin: For additional context, our margin profile incorporates growth-related costs to increase our footprint and customer acquisition. Further, in a no growth scenario, depreciation would decline slightly, providing a further potential margin expansion opportunity.
Hushin: In addition, the approximately 38% operating profit margin could potentially improve as it does not account for the potential additional benefit acrew from reduced depreciation and expansion expense in a non growth environment.
Hushin: For additional context, our margin profile. Incorporates growth related cost to increase our footprint and customer acquisition.
Houshin: In closing, the underlying acceleration in the business reflects the strength of our operating model and early traction from strategic investment in sales capacity and customer acquisition. We have made deliberate choice to invest to enhance our distribution footprint and we are beginning to see those efforts materialize. With continued execution, disciplined investment, and growing regional performance, we believe that we are well-positioned to deliver consistent and profitable long-term growth.
Hushin: Further in a non growth scenario, depreciation would decline slightly providing a further potential margin expansion opportunities.
Hushin: In closing, the underlying acceleration in the business, reflects the strength of our operating model and early traction, from Strategic investment in sales capacity, and customer acquisition.
Hushin: We have made deliberate choice, to invest to enhance our distribution footprint and we are beginning to see those efforts materialize.
Zach Calisto: With that, I will turn the presentation over to Zach Calisto for Q&A. Hello. Thanks, Houshine.
Hushin: We've continued execution, discipline investment and growing Regional performance. We believe that we are well, positioned to deliver consistent and profitable long-term growth.
Hushin: With that, I will turn the presentation over to Zach Callisto for Q&A.
Zach Calisto: Sorry, I was having problems with my phone. Thank you very much. I'll just go to the questions that we have.
Zach Calisto: And the first question is... From Joshua at Needham. Hi Joshua. If we look at the subscriber growth in South Africa, it was very consistent in the first quarter.
Zach Callisto: Hello and thanks Sushin. Sorry I was having problems with my phone. Uh thank you very much. I'll just go through the questions that we have.
um, the first question is,
Zach Callisto: From Joshua at Neen.
Zach Callisto: Hi Joshua.
Zach Calisto: Any colour on the trajectory of the consumer growth for the balance of the year relative to the commercial subscriber growth? I think in South Africa we're having really good traction both with commercial and consumer customer growth and I believe that will continue for the rest of the year. So I'm not certain I'm giving you the answer that you're actually asking, but I think fundamentally we're having very good traction on both consumer and commercial customers.
Speaker Change: If we look at the subscriber growth in South Africa, it was very consistent in the first quarter. Any color on the trajectory of the consumer code for the balance of the Year, relative to the commercial subscriber growth,
Zach Calisto: Another question from Joshua.
Speaker Change: Um, I think in South Africa, we having a really good traction, both with commercial and consumer customer growth and I believe that will continue for the rest of the year. So I'm not certain, I'm giving you the answer that you actually asking, but I think fundamentally having very good traction on both both consumer and Commercial customers.
Zach Calisto: If we were to look at your Southeast Asia markets, are you seeing any impact to subscriber growth in these regions from the United States state of impact, as these are key sentiments of United States manufacturing, or is it the local economic growth driving trends or adoption? Joshua, in my opinion, I don't believe that the tariff environment that the whole world is talking about is impacting our business at this point in time. And I think our growth in Southeast Asia is just because we're addressing the market and we're increasing our footprint. And fundamentally, I don't believe that will have an impact on us, but it might in the future, but I can't see it.
Another question from Joshua.
Zach Calisto: Now, another question from Joshua.
Speaker Change: If we were to look at your southeast Asia markets, are you seeing any impact to subscriber growth in these regions from the United States, that have impact as these are key? Sentiments of the United States? Manufacturing or is it the Local Economic growth driving change or adoption? Um, Joshua. In my opinion. I don't believe that, um, the, the, the Tariff, um, environment that the whole world is talking about is impacting our business at this point in time. And I think our growth in South southeast Asia. Is just, of course, we addressing the market and we increasing our footprint and fundamentally, I don't believe, uh, that will have an impact on us, but it might in the future but I can't see it.
Zach Calisto: How should we think about the cost cell of video and contract tech relative to expectations and subsequent impact on to ARR growth and R2 growth for the balance of the fiscal year? We were hoping, Joshua, that we could actually increase our R2 this year by around 6%, which would equate to about a 10% increase in South Africa. I think we've made good progress in Q1 and we are getting momentum on this and we might miss that 10% initial outlook, but I believe we are building the teams, we are building the muscle to be able to execute on this.
Speaker Change: Uh yeah. Another question from Joshua.
Speaker Change: Um, how should we think about the cross sell of video and contract tax relative to your expectations and subsequent impact on total, which would equate to about a 10% increase in South Africa? Um, I think we've made good progress in q1, and we are getting momentum on this and we might miss that 10% initial
Zach Calisto: Another question from Joshua. These are my, oh, it's not a question. These are my questions.
Speaker Change: Uh Outlook but I believe we are building the teams. We are building the muscle to be able to execute on this.
Speaker Change: Another question from Joshua.
Zach Calisto: Thank you. Okay, sorry, Joshua.
Zach Calisto: A question from.
Zach Calisto: Jeniffer Please explain why you have chosen expansion in Southeast Asia rather than Africa, which I would suspect as less competition. I think we've expanded into Africa, mostly on the back to support our South African customers, and we believe that the market opportunity in Southeast Asia is far larger than in Africa.
Speaker Change: This it's not a question. These are my questions, thank you. Okay, sorry Joshua. Um a question from perga
Speaker Change: Please explain why you have chosen expansion in Southeast Asia, rather than Africa, which are, uh, which I would suspect as, as less competition.
Speaker Change: Um, I think we've expanded into Africa mostly on the back to support our South African customers.
Zach Calisto: A question from Dylan Becker.
Speaker Change: And uh, we believe that the market opportunity in Southeast Asia is far larger than in Africa.
Zach Calisto: Hi Dylan. On the accelerating subscription revenue, can you give us color on the mix between subscriber growth and cross-selling initiatives? I think we are getting the cross-selling initiatives, but you're probably the best way to look at it. That's given us an uplift of 2%. We're hoping that that will rise by Q4 to higher levels. And it's mostly new subscribers with an element of cross-selling. And I believe this cross-selling is going to pick up momentum as we build the muscle to execute. Further, early validation of success as customers look to land more multi-product and what can mean for broader stickiness retention throughout the platform.
Question from Dylan, Becker. All right, Dylan.
Speaker Change: On the accelerating subscription Revenue. Can you give us color on the mix between subscriber, goat and cost seller initiatives? Um, I think we are getting the car selling initiatives but you probably the best way to look at it. That's given us an uplift of 2%. Uh, we hoping that it will that Will Rise by Q4 to higher levels, uh, and it's mostly new subscribers within element of cross-selling. And I believe this cross-selling is going to pick up momentum as we get, as we build the muscle to execute,
Zach Calisto: I think fundamentally our customers we got, if you look at our retention rates, they are relatively high compared to our peers, so I do believe we've got a significant stickiness and I think what it really means for us is that if we don't add this extra level of service, then we might lose customers.
Zach Calisto: So it really is not really about improving retention, it's more about keeping our retention rate.
Speaker Change: And further, early validation of success, as customers look to land more multi-product and what can mean for, broadest thickness, retention throughout the platform. Um, I think fundamentally our customers, we got, if you look at our retention rates, they are relatively High compared to RPS. So I do believe we've got a significant thickness. And I think what it really means for us is that if we don't add this extra level of service, then we might lose customers. So, it really is not really about improving retention. It's more about keeping our retention rates.
Zach Calisto: Another question from Dylan Becker.
Speaker Change: Uh, another question from Dylan, Becker.
Zach Calisto: Update on high-end capacity plans, what does the typical RAM process look like for reps, and how it can contribute to sustain levels of elevated subscription growth. Fundamentally, Dylan, as we increase the number of sales staff, in a perfect world, you should have a correlation of one. And that is that if you increase your sales force by 50% or by 100%, then you should get 100% more net sales. And that would then tickle off into a lower percentage in your subscriber, in your base subscriber growth. So in Asia, typically, if you're able to increase your sales people by 70%, we then should get a subscriber growth of about 28% this year.
Zach Calisto: And that's what we're working towards.
Zach Calisto: Another question from Dylan Becker. Impressive data mode.
Speaker Change: Capacity update on I incapacity plans what does a typical RAM process look like for reps and I can contribute to sustained levels of elevated subscription growth fundamentally uh Dylan. Um as we increase the number of sales staff in a perfect world, you should have a correlation of 1. And that is that if you increase your sales force by 50%, or by 100%, then you should get 100% more net sales and uh that would then trickle off into a lower percentage in your subscriber. Uh uh you know so on your base subscriber growth. So in Asia, typically, if you are able to increase your your sales people by 70%, we then should get a subscript subscriber growth of about 28% this year and that's what we're working towards.
Dylan Becker: Another question from Dylan, Becker.
Zach Calisto: As this continues to grow and expand and you continue to go deeper with customers with more products, how do you think about the ability to continue innovating, developing new products and driving even deeper value insights for customers? Dylan, that's fundamentally what we've been doing for years. The more data we have, the more information we can give our customers. And clearly what we are offering today is much better than it was five years ago and substantially better than ten years ago. And I believe in five years time, we'll be in a much better position than we're currently in as well.
Speaker Change: Uh, in terms of data mode, has this continues to grow and expand. And you continue to go deeper with customers with more products. How do you think about the ability to continue innovating in the developing new products and driving even deeper value? Insights for customers uh Dylan. Um that's fundamentally what we've been doing for years. The more data we have the more uh, the more information,
We can give our customers. And clearly, what we are offering today is much better than it was 5 years ago and substantially better than 10 years ago. And I believe in 5 years time, we'll be in a much better position than we currently in as well.
Zach Calisto: The next question from Alex from Raymond James.
Zach Calisto: Hi, Alex. Can you talk about how the Southeast Asia hiring plans are trending here today so far relatively to the 70% growth target. Alex, we're very much on target with our hiring plans. In some countries, we're a little bit behind. In other countries, we're ahead. So overall, I think we're on target.
Speaker Change: Uh, the next question from Alex, from Raymond James. Hi Alex.
Zach Calisto: Are you expecting any change in productivity six to 12 months following these hiring efforts versus the past year? We certainly are. Otherwise, we wouldn't be doing it. And I believe we'll be able to deliver.
Zach Calisto: Another question from Alex.
Speaker Change: Can you talk about the other southeast Asia? Our implants are trending here today so far, relatively to the 70% growth Target. Uh, Alex is very much on target with our implants, um, in some countries. We're a little bit behind in other countries, we ahead. So, overall, I think we are on target. Are you expecting any change in productivity, uh, 6 to 12 months following? This, I efforts versus the pasture. Uh, we certainly are, otherwise, we wouldn't be doing it. And I believe, we'll be able to deliver.
Zach Calisto: How will the growth in ARPU from cross-selling video asset tags analytics impact the LTE bit margins for the car track business? Fundamentally, the way we do our pricing is very much based on an operating profit margin. And we believe this ARPU that we increase in ARPU is not to increase productivity, profitability margins, it will just increase our profits and increase our revenue.
Speaker Change: Another question from Alex.
Speaker Change: How will the growth in our food? From cross-selling video asset tax analytics impact the LTE even margins for the contract business. Um, fundamentally the way we do our pricing is very much based on an operating profit margin
Zach Calisto: But if you want to have an impact on the margins, it will just increase the ARPU in the ARPU, but with that comes additional cost, cost of sales and the OPEX expenses.
Speaker Change: And we believe this all food that we increase in our food is not to increase productivity. Uh uh uh profitability margins. It will just increase our profits and increase our Revenue, but it won't have an impact on the margins. It will just increase the R2 and the RV. But you with that comes additional uh, cost cost of sales and Opex expenses.
Zach Calisto: All Africa Partners. Would you like to increase the company's ownership of Karoo Logistics? And if so, is there a route to doing so? Our agreement, our shareholders agreement, we have the option to increase our shareholding. And that option comes into place in February 2026. And we'll evaluate it in 2026. And if we don't do it in April 2026, we will keep on evaluating it.
Speaker Change: Uh,
Speaker Change: all African Partners. Would you like to increase the company's ownership of career Logistics? And if so, is there a route to doing so, uh, our agreement, our shareholders agreement that we have the option to increase, uh, our, uh, to increase our shareholding. And that option comes into place in February 2026 and we will evaluate it in 2026, and if we don't do it in every 26, we will keep on evaluating it.
Zach Calisto: A question from Jakov Schleider, Isaac, can you please give us some color around the opportunity in Asia? You mentioned the press release, you are going to headcount there by 70%. Can you talk about the ramp-up process?
Zach Calisto: Jakov, I think I've covered this question.
A question from Yakov slider. Isaac can you please give us some color around the opportunity in Asia, you mentioned the press release. You are okay. Grand Theft County by 70%. Can you talk about the ramp up process? Uh Jakob I think I've covered this question.
Zach Calisto: Roy Campbell from Morgan Stanley.
Zach Calisto: How is the car track performance rollout in South Africa progressing? Roy, the the tag is phenomenal progress. It really is a game changer for us in the marketplace and we keep we really are getting lots of traction with the car track tag and we believe it's early days in the bigger in the bigger picture so we're very excited about this product. It's working real really well at the stage and I believe it's going to be a game changer.
Zach Calisto: Another question from Roy. The effective tax rate is quite low. Can you please detail the reasons and how this looks for the balance of the year? Roy, I haven't got the answer quite at my end. But fundamentally, we are benefiting from entities that are now becoming profitable and which have tax losses.
Speaker Change: Really, really well at the stage and I believe it's going to be a game changer.
Speaker Change: Another question from Roy.
Speaker Change: The effective tax rate is quite low, can you please detail the reasons and how this looks for the balance of the year. Uh, Roy. I haven't got the answer quite at my age but fundamentally we all benefiting from uh, uh uh, from entities that are now becoming uh, profitable and which are tax losses.
Zach Calisto: I think those are the questions.
um,
Zach Calisto: Thank you very much for everybody for joining us today. Thank you. Bye-bye. Goodbye.
Speaker Change: I think those are the questions. Thank you very much for everybody for joining us today. Thank you. Bye, bye.