Here's our initial take on Karooooo's (KARO -4.23%) fiscal 2026 first-quarter financial report.
Key Metrics
| Metric | Q1 2025 | Q1 2026 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | ZAR1.08 billion | ZAR1.28 billion | +18% | Beat |
| Earnings per share (adjusted) | ZAR7.17 | ZAR8.55 | +19% | Beat |
| Gross margin | 73% | 72% | -1 pp | n/a |
| Cartrack Subscribers | 2.05 million | 2.4 million | +17% | n/a |
Cartrack Racks Up Subscriber Gains
Karooooo beat analyst expectations across the board with its Q1 results. Overall revenue jumped 18% year over year to 1.28 billion South African rand (ZAR), fueled by a 17% jump in Cartrack subscribers. The company ended the quarter with just under 2.4 million subscribers for its Cartrack service.
Cartrack subscription revenue rose by 18.5% to ZAR1.14 billion, while Cartrack annualized recurring revenue surged by 18.3% to ZAR4.58 billion. Average revenue per user edged up by 1.9% to ZAR162. In Southeast Asia, the company's fastest-growing region, Cartrack subscription revenue soared by 30%.
Karooooo reported strong results on the profitability front as well. Gross margin was a healthy 72%, down slightly from the prior-year period, while operating margin rose slightly to 30%. Adjusted earnings per share came in at ZAR8.55, up 19%.
Looking ahead to the rest of fiscal 2026, Karooooo expects to generate Cartrack subscription revenue between ZAR4.7 billion and ZAR4.9 billion. Operating margin is expected between 26% and 31%, and adjusted EPS should come in between ZAR32.50 and ZAR35.50.
Immediate Market Reaction
Shares of Karooooo were up slightly in after-hours trading on Tuesday, having gained around 1.5% an hour after market close. While the company soundly beat expectations, it kept its full-year guidance unchanged. Going into Tuesday's earnings report, Karooooo stock was up about 12% year to date.
What to Watch
Karooooo is aiming to accelerate Cartrack subscription revenue growth this year through expanding its distribution network within its existing markets as well as by tapping into demand for video solutions. The company is also making investments in AI and customer experience.
Despite the plans to accelerate subscription growth, Karooooo left its full-year guidance unchanged. Economic uncertainty hasn't impacted the company's growth rate so far, but it may be opting for conservatism in its outlook given the economic backdrop.
