Karooooo's shares declined 3.0% following earnings as investors focused on the cautious outlook, notably the guidance for gross profit margin contraction in FY '27 despite solid ARR growth and free cash flow improvements.

• Annual Recurring Revenue (ARR) increased 18% to ZAR 5,179 million (38% in USD terms), with subscription revenue growth accelerating to 19% despite foreign exchange headwinds.
• Adjusted free cash flow nearly doubled, rising 90% to ZAR 809 million, highlighting scalable cash generation.
• Cartrack segment continued as the primary growth driver, with a 19% subscription revenue increase and a healthy 28% operating profit margin.
• Karooooo Logistics showed strong momentum with 29% revenue growth, reflecting potential in the delivery-as-a-service segment.
• Management signaled margin pressure ahead, forecasting a contracting gross profit margin for FY '27 alongside EPS growth, suggesting cost pressures and a cautious outlook that tempered enthusiasm.