From The Motley Fool · Motley Fool Transcribing · · 2m
Karooooo Q2 2027 Earnings Report
Karooooo reports record Q2 operating profit and accelerated subscription growth amid strategic investments.
In brief
Karooooo reports record Q2 operating profit and accelerated subscription growth amid strategic investments. Karooooo achieved record Q2 operating profit of ZAR 422 million with 20% subscription revenue growth and 94,516 net subscriber additions. Originally reported by The Motley Fool.
Q2 Earnings Results
Karooooo reported record quarterly operating profit of ZAR 422 million, a 19% increase despite foreign exchange headwinds.
Subscription Revenue Growth
Subscription revenue increased 20% to ZAR 1,418 million, representing 98% of total Cartrack revenue.
Net Subscriber Additions
Net subscriber additions reached 94,516, a record for the second quarter and a 34% increase from the previous quarter.
Total Subscribers
Total subscribers reached 2,899,210, reflecting an 18% increase driven by video solutions and Cartrack Tag adoption.
Annualized Recurring Revenue
Annualized Recurring Revenue (ARR) increased 22% to ZAR 5,708 million, with a 30% U.S. dollar increase.
Operating Profit Margin
Cartrack operating profit margin remained at 28%, a slight decrease from 29% in the prior year.
Logistics Revenue
Karooooo Logistics revenue reached ZAR 189 million, a 36% increase driven by quick-commerce delivery services.
Gross Margin
Subscription gross margin remained at 71%, slightly down from 72% in the prior-year period.
LTV to CAC Ratio
LTV to CAC ratio remained above nine times, supporting disciplined customer acquisition strategies.
Inventory Investment
Inventory investment reached ZAR 966 million for the first half of the year, an 86% increase to buffer against RAM and memory price rises.
Free Cash Flow
Free cash flow was ZAR 41 million for the quarter, impacted by investments in in-vehicle IoT devices.
Cash Reserves
Cash and cash equivalents decreased to ZAR 649 million after a ZAR 752 million dividend payment.
South Africa Growth
South Africa subscription revenue grew 25%, marking the seventh consecutive quarter of acceleration in the region.
Asia Growth
Asia constant currency subscription revenue grew 25% compared to 17% in the first quarter.
Q2 Guidance
FY 2027 subscription revenue guidance is ZAR 5,700 million to ZAR 6,000 million, implying 18% to 24% growth.
What's Next
Karooooo expects free cash flow to strengthen in the second half of FY 2027 following heavy upfront investments in hardware inventory.
The short version
Karooooo achieved record Q2 operating profit of ZAR 422 million with 20% subscription revenue growth and 94,516 net subscriber additions.
