Cartrack saw a 20% increase in subscription revenue in Q2, generating approximately ZAR 1.2 billion. Operating profit margin was a healthy 29%. Karooooo Logistics, the delivery-as-a-service offering, showed strong growth, with revenue reaching ZAR 139 million.
Karooooo Logistics Delivery-as-a-Service revenue increased 38% in Q2 to ZAR 139 million. Karooooo Logistics plays a strategic role in scaling e-commerce and logistics operations for enterprise customers. Q2 financial results were strong, with total revenue reaching ZAR 1,344 million.
With a 20% increase in Cartrack subscription revenue and a 29% operating profit margin in Q2, the company continues to deliver profitable growth. SaaS ARR accelerated to 20%, and total subscribers increased by 15%. The company remains a rule of 60 company in terms of financial performance.
Cartrack’s financial profile is rare, operating at a rule of 50 plus level among SaaS companies. With no stock-based compensation and stable share count, the company focuses on disciplined and profitable growth. Q2 saw accelerated growth in subscription revenue and total subscribers, particularly in South Africa, Europe, and Asia.
Subscription revenue growth accelerated to 20% in Q2, up from 15% the previous year. South Africa subscription revenue growth reached 18%. The company aims to build strong teams for organic growth and product adoption in the region. Southeast Asia shows significant growth potential, with plans to increase sales and marketing efforts.
Subscription revenue growth is driven by video and Cartrack tag adoption by existing customers. The company is focused on expanding distribution capabilities to meet demand. Southeast Asia and the Middle East show strong growth, with plans to increase sales headcount by 70% by February 2026. Europe saw a 27% increase in subscription revenue.
Europe, comprising 10% of total subscription revenue, experienced a 27% revenue growth in Q2. The company is expanding its customer base and distribution capabilities in the region. Partnerships with leading OEMs are providing seamless integration of connected vehicle data to the platform, enhancing service offerings. Karooooo Logistics reported revenue of ZAR 139 million in Q2, a 38% increase with an 8% operating profit margin. Growth in e-commerce orders drove the acceleration in revenue. Karooooo Logistics supports financial performance by integrating its platform into large customers’ operations, contributing to strong customer retention.
Karooooo continues to strengthen its leadership position in South Africa by selling video solutions and Cartrack tags to existing customers. They are expanding their distribution footprint in Asia and Europe, driving broader engagement with their platform globally. The company prioritizes organic growth and innovation in its capital allocation strategy.
Karooooo’s total subscription revenue increased 20% to ZAR 1,182 million in Q2, with an 18% increase in operating profit and 13% increase in adjusted earnings per share. Cartrack’s revenue also increased by 20% to ZAR 1,204 million, with subscription revenue comprising 98% of total revenue. The company experienced healthy customer acquisition and subscriber growth.
Quarter 2 saw Cartrack’s SaaS ARR accelerate to 20%, reflecting momentum in the business and strategic initiatives gaining traction. The company experienced solid customer acquisition with a healthy net subscriber addition. Cartrack continued to grow subscription revenue across regions, with accelerated growth in South Africa, Europe, Asia, and the Middle East.
Year-to-date, adjusted free cash flow for Karooooo increased 44% to ZAR 358 million, showing the strength of their operating model. Despite quarterly fluctuations due to working capital movements and growth-oriented investment, the company remains confident in generating meaningful free cash flow consistently. Karooooo’s disciplined capital allocation strategy positions them well for future growth. Cartrack reports a strong financial position with ZAR 393 million in net cash and healthy debtors collection days at 31 days. They paid a dividend of $38.6 million in August and believe in sustainable cash flow generation. The company is poised for growth in a growing market driven by digitalization and safety concerns.
Cartrack has seen a 20% growth in subscription revenue in Q2 of FY 2026, with a year-to-date growth of 19%. Operating profit margin stands at 29%, reflecting strong execution. Continued investment in sales and marketing will support future growth, aligning with their growth ambitions for the year.
Cartrack’s FY 2026 outlook remains unchanged, excluding the cost of secondary offering. The company’s business acceleration reflects the strength of their operating model and strategic investments in sales capacity and customer acquisition. With disciplined investment, they aim for profitable long-term growth and believe they are well-positioned for success.
Cartrack’s growth in ARPU by 4% across geographies aligns with their expectations for the year. Building teams to handle onboarding new customers and cross-selling products is key to driving adoption and growth. The company is pleased with the progress made and aims to build teams faster to meet increasing demand.
Cartrack’s focus on building teams in South Africa has been successful, supporting impressive subscription revenue growth. Plans to leverage AI technology to allocate jobs and streamline operations are in place for future efficiency. The company continues to recruit and train teams to drive customer acquisition and cross-selling efforts, with a long-term growth trajectory in mind. Cartrack CEO discusses sales strategy and growth plans, highlighting current sales coming mainly from existing customer base. Building teams and distribution remains a focus for future growth.
Gross margin impacted by video sales mix shift, with cost of sales rising higher than subscriptions, bringing margin down from historical 74% to 72%. Unit economics remain stable despite increased costs.
Sales force productivity improving gradually, with new reps still in learning curve compared to seasoned salespeople. Focus on cross-selling impacting subscriber growth, as company prioritizes subscription revenue growth.
Operating expenses related to expansion and headcount set to persist for foreseeable future. Company prioritizes disciplined capital allocation and strong unit economics for sustainable growth.
Market penetration estimates vary by region, with South Africa at 35%, Europe at 20-25%, and Asia below 10%. Growth opportunities include customer acquisition, new SaaS features, and additional products like Cartrack tag and video hardware.
AI potential in scaling go-to-market efforts discussed, with CEO noting AI as a hyped term. Company continues to focus on building teams and leveraging technology for future growth. AI technology has potential but can be risky when it fails, causing more harm than good. Some markets prefer human interaction over speaking to machines. The Motley Fool offers insights on investment opportunities with companies like Nvidia, Apple, and Netflix, highlighting impressive returns. Join Stock Advisor for more “Double Down” alerts.
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