From a quirky naming mishap to a 72.72% YTD return, Karooooo has become a standout performer in the SaaS space. With a strong financial foundation, the closure of non-core operations, and continued growth in its connected vehicle and logistics businesses, Karooooo is capturing the attention of investors. Expert perspectives from Elchonon Goldfein at EasyAssetManagement.
While the quirky tale of how Karooooo ended up with five Os in its name — thanks to a domain name hiccup — might draw a smile, what’s truly impressive is the company’s performance this year. Boasting a remarkable 72.72% return year-to-date (YTD) , Karooooo’s shares are trading at approximately 80,000.00 ZAC at the time of writing. This outstanding growth has investors taking notice, with many wondering if this Software as a service (SaaS) powerhouse deserves a place in their portfolios.
Although Karooooo's self-description as "a leading provider of an on-the-ground operations cloud" might sound a bit contradictory, its financial performance is less ambiguous. Operating through its flagship brands, Cartrack and Karooooo Logistics, the group reported revenues surpassing R1.1 billion in the most recent quarter, while maintaining robust gross and operating margins of 70% and 27% respectively. Adjusted profits soared to R227 million, translating to an adjusted basic and diluted earnings per share of R7.35.
Cartrack: Dominating the Connected Vehicle Market
Karooooo's powerhouse subsidiary, Cartrack, has served as the cornerstone of the group’s financial success. Contributing an impressive 91% of Karooooo’s total revenue, Cartrack continues to be the engine driving the company's growth.
Cartrack showcases its strength in generating recurring revenue, supported by an impressive 95% retention rate among corporate clients. This high level of customer loyalty highlights the company's compelling value proposition and consistent service delivery.
Furthermore, its 74% gross profit margin emphasises the scalability and operational efficiency of its subscription-based model.
At the core of Cartrack’s success is its robust SaaS platform, which delivers cutting-edge data analytics solutions tailored to the needs of its diverse clientele. Cartrack’s offerings span a wide range of connected vehicle services, including fleet management, stolen vehicle recovery, insurance telematics, streamlined reporting services, and business intelligence insights.
As the business scales, the value of its services is poised to grow further, driven by increasing data points and more precise industry-specific benchmarking on metrics such as fuel consumption, idling, and fleet performance.
Karooooo Logistics: Driving Value Beyond Cartrack
While Cartrack is the dominant revenue generator, Karooooo Logistics has established itself as a significant contributor, accounting for approximately 9% of Karooooo’s total revenue. Karooooo Logistics, (which is 74.8% owned by Karoooo) provides B2B services connecting customers with a network of vetted third-party drivers and couriers.
Despite being “a structurally lower margin business than Cartrack,” Karooooo Logistics posted impressive results, delivering R101 million in revenue and R9 million in operating profit in Q2 2025 contributing around R0.18 to the consolidated EPS of R7.35. The company attributes this growth to the expanding ecommerce business with customers moving away from online marketplaces wanting to maintain control of their customer bases.
The Road Ahead
Karooooo’s performance in a challenging high-interest-rate environment highlights its resilience and strategic acumen. As interest rates begin to decline, consumer demand is expected to rise, leading to increased vehicle usage, fuelling the demand for Karooooo’s connected vehicle solutions and logistics services. Although the company has seen somewhat muted quarter on quarter growth, it is trading at a higher P/E than some its JSE-listed IT/tech peers (approx. 29), potentially reflecting market optimism regarding Karooooo’s ability to sustain growth and maintain strong margins.
This article is brought to you by EasyAssetManagement. EasyAssetManagement holds positions in Karooooo, an important constituent of our EasyETFs Balanced Actively Managed ETF.
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