Karooooo Ltd (NASDAQ:KARO) stock plunges 12.94% (As on October 15, 11:32:46 AM UTC-4, Source: Google Finance) after the company announced a 20% increase in quarterly subscription revenue to ZAR1,180 million for its Cartrack business in the second quarter of fiscal year 2026 ended August 31, 2025, compared to ZAR983 million in the same period last year. The company’s subscriber base grew 15% year-over-year to 2.5 million subscribers, up from 2.1 million in Q2 2025. Cartrack’s SaaS annualized recurring revenue reached ZAR4,806 million as of August 31, 2025, representing a 20% increase from ZAR3,990 million a year earlier. The company’s operating profit increased 18% to ZAR356 million.

Further, for the half-year period, Karooooo’s subscription revenue grew 19% to ZAR2,323 million compared to ZAR1,950 million in the first half of fiscal 2025. The company’s Karooooo Logistics segment saw revenue increase 38% to ZAR139 million, which the company attributed to growth in e-commerce orders. Despite paying a cash dividend of USD38.6 million to shareholders, representing a current dividend yield of 2.38%, Karooooo maintained a net cash and cash equivalents balance of ZAR393 million as of August 31, 2025.

Meanwhile, Karooooo’s operating expenses increased 17% to ZAR563 million (Q2 2025: ZAR481 million). Cartrack, Karooooo’s wholly-owned subsidiary, accounted for ZAR531 million (Q2 2025: ZAR459 million) in operating expenses including investments in infrastructure and headcount to support territorial expansion and distribution growth. Karooooo Logistics accounted for ZAR32 million (Q2 2025: ZAR22 million) of total operating expenses as we continued to invest prudently to scale Karooooo Logistics. Cartrack’s sales and marketing expenses increased 34% to ZAR210 million (Q2 2025: ZAR157 million). The company is optimistic that the strategic investment in customer acquisition, including sales headcount, is already yielding the desired results and positions the company well for continued organic growth. As the company begin to realise the benefits of this investment, the company continues working to produce further gains in new sales headcount efficiency in the coming periods. The customer lifetime value (LTV) to customer acquisition costs (CAC) ratio continues to exceed 9 times and underpins the disciplined approach to growth and customer acquisition.

KARO in the second quarter of FY26 has reported the adjusted earnings per share of 47 cents, beating the analysts’ estimates for the adjusted earnings per share of 46 cents, according to the Zacks Consensus Estimate. For the quarter ended August 31, 2025, Karooooo posted total revenue of ZAR1.18 billion, below the consensus estimate of ZAR1.3 billion.