Karooooo reaffirms FY27 outlook with EPS growth of 21% y/y at midpoint

Karooooo Ltd. (NASDAQ: KARO) has reaffirmed its outlook for fiscal year 2027 (FY27), projecting earnings per share (EPS) growth of 21% year-over-year at the midpoint of its guidance range. This follows the company’s strong performance in FY2026, where it delivered record subscription revenue, operating income, and adjusted EPS in line with its full-year outlook.

For FY2026, Karooooo reported a 19% increase in Cartrack subscription revenue, with South African ARR growth accelerating to 23%. The company’s adjusted EPS rose 3% year-over-year to ZAR32.55, or USD2.05 in U.S. dollar equivalent. Additionally, adjusted free cash flow surged 90% to ZAR809 million, reflecting the company’s ability to scale efficiently and generate value for customers.

Looking ahead, Karooooo anticipates continued growth in FY2027, with Cartrack subscription revenue expected to accelerate. The company plans to balance subscriber growth with increased adoption of its Video and Cartrack-Tag offerings. Management also highlighted improved sales efficiency and AI adoption to support strong EPS growth.

Despite a projected contraction in gross profit margins for FY2027, Karooooo remains confident in its ability to deliver durable, profitable growth across its geographies. The company’s outlook assumes current foreign exchange rates and includes a slowdown in hiring as it focuses on optimizing sales force efficiency.

Karooooo also declared a dividend of USD1.50 per share, an increase of 20% year-over-year, underscoring its commitment to returning value to shareholders. The company’s strong operating cash flow and disciplined capital allocation strategy further support its growth objectives.

In summary, Karooooo’s FY2027 outlook reflects its confidence in maintaining its leadership position in the enterprise mobility SaaS market while navigating macroeconomic and operational challenges.