Karooooo (KARO) Q3 2026 Earnings Call Transcript

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DATE

Jan. 21, 2026 at 8 a.m. ET

CALL PARTICIPANTS

• Founder and Group CEO — Zak Calisto
• Chief Financial Officer — Hoeshin Goy
• Chief Strategy and Marketing Officer — Carmen Calisto
• VP of Investor Relations and Strategic Finance — Paul Bieber

TAKEAWAYS

• Annual Recurring Revenue (ARR) -- ZAR 5,106 million, up 22%, and $298 million USD, up 28%, with acceleration noted compared to previous quarters.
• Total Revenue -- ZAR 1,410 million, up 22%, reflecting broad-based demand and customer expansion.
• Subscription Revenue -- ZAR 1,239 million, up 20%, driving 97% of Cortrak revenue, with strong performance across all geographies.
• Operating Profit -- ZAR 369 million, a 14% increase, with a reported Cortrak operating profit margin of 28%.
• Adjusted Free Cash Flow -- ZAR 239 million for the quarter, up 28%, and ZAR 597 million year-to-date, up 37%.
• Net Cash Position -- ZAR 531 million in net cash and cash equivalents at quarter-end, supporting capital allocation flexibility.
• Total Subscribers -- Approximately 2.6 million, up 16%, with a record net addition of 111,478 subscribers for the quarter.
• Commercial Customer ARR Retention Rate -- 95%, evidencing stable customer engagement and product stickiness.
• Subscription Gross Margin -- 73%, sustaining attractive unit economics amid higher investment.
• LTV to CAC Ratio -- Above 9x, indicating continued efficient customer acquisition.
• Sales and Marketing Expenses -- Increased 47% year over year, as part of planned capacity and distribution investments.
• Cartrack Segment Results -- Cartrack subscription revenue up 20% to ZAR 1,236 million; South Africa up 21%, Southeast Asia and Middle East up 14%, Europe up 24%.
• South Africa Metrics -- 1.9 million subscribers, up 16%; average revenue per user (ARPU) up 7% to ZAR 162 as of November 2025.
• Southeast Asia and Middle East Metrics -- 318,000 subscribers, up 20%; 15% of total subscription revenue; regional ARPU below South Africa, with ARPUs expected to decline as mix shifts.
• Europe Metrics -- 223,000 subscribers, up 16%; region comprises 10% of subscription revenue, with ongoing OEM partnership integration efforts.
• Karooooo Logistics -- Delivery-as-a-Service revenue of ZAR 135 million, up 24% (31% in USD), with a 7% operating profit margin.
• Dividend Declared -- $38.6 million total paid in August, equivalent to $1.35 per share.
• Fiscal 2026 outlook update (fiscal year ending Feb. 28, 2026) -- Cartrack subscription revenue revised upward to ZAR 4,785 million–ZAR 4,900 million (18%–21% growth target); operating profit margin outlook set for 27%–30% (prior 26%–31%).
• Share Issuance and Dilution -- "Essentially unchanged share count," and no stock-based compensation, minimizing dilution.

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RISKS

• CFO Hoeshin Goy stated, "the appreciation of the South African rand has created a currency translation headwind on our reported revenue, constraining the flow-through of our strong performance." No foreign currency hedging is employed, introducing variability to reported results due to exchange rates.
• Carmen Calisto noted, "A strengthening ZAR negatively impacted reported Q3 Cortrak subscription revenue growth."
• Management described being "people constrained," and indicated the ongoing need to build sales capability to support growth goals.
• Operating profit margins are presently pressured by "significant and planned upfront investment in sales and marketing," described as temporary but causing some profit compression in IFRS results.

SUMMARY

Karooooo (NASDAQ:KARO) reported record growth across core metrics, highlighted by accelerating ARR and all-time-high net subscriber additions. Management raised its Cartrack subscription revenue outlook for fiscal year ending Feb. 28, 2026, and indicated continued strong customer retention and ARPU growth in key regions. Geographic expansion momentum was reinforced by 20% subscriber growth in Southeast Asia and Middle East, and ongoing ARPU gains in South Africa, driven by cross-selling and video adoption. The company emphasized its cash generative model, absence of equity dilution, and sustained high unit economics, despite significantly increased investment in distribution and sales capacity.

• CEO Zak Calisto described cross-selling AI-powered video and "cartrack tag" in South Africa as in the "early stages," implying further ARPU and adoption upside in the next year.
• Recruitment and retention of key staff, particularly in Asia, are cited as current focus areas, with 70% headcount growth in that region largely occurring in current and coming quarters.
• OEM data integration in Europe is underway, though management flagged operational challenges due to incomplete telemetry data from manufacturers' devices, impacting immediate results.
• Dividend payments are prioritized secondary to growth investments, as management clarified that returning excess capital occurs only when organic opportunities are insufficient.

INDUSTRY GLOSSARY

• ARR (Annual Recurring Revenue): The value of contracted subscription revenue normalized to a one-year period, reflecting future recurring sales.
• LTV to CAC Ratio: The ratio of customer lifetime value to customer acquisition cost, used to gauge efficiency and profitability of new customer acquisition.
• ARPU (Average Revenue Per User): Calculated average recurring revenue received per subscriber or user, typically per month.
• OEM: Original Equipment Manufacturer; in this context, vehicle manufacturers whose systems are being integrated into Karooooo’s platform.
• Cortrak: Karooooo’s large-scale fleet software-as-a-service segment focused on subscription revenues from connected vehicle solutions.

Full Conference Call Transcript

Paul Bieber: Hello and welcome to Karooooo's Q3 FY 2026 Earnings Call. On behalf of Karooooo, we would like to thank you for joining us today. I am Paul Bieber, VP of Investor Relations and Strategic Finance. We are joined today by Zak Calisto, Founder and Group CEO; Hoeshin Goy, Chief Financial Officer. -- and Carmen Calisto, Chief Strategy and Marketing Officer. I would like to remind everyone that some of the statements that we make today regarding our business, operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to several risks and uncertainties. Our actual results could differ materially.

Please refer to the safe harbor statement in our Form 20-F, including the Risk Factors in the 6-K that we filed yesterday. We undertake no obligation to update any forward-looking statements. During this call, we will present both IFRS and non-IFRS financial measures A reconciliation of non-IFRS to IFRS measures is included in the 6-K that we filed with the SEC yesterday. Our comments will refer to year-over-year comparison unless we state otherwise. I will now pass the call over to Carmen.

Carmen Calisto: Thanks, Paul. Welcome to Karooooo's Q3 FY 2026 Financial Results Presentation. Karooooo delivered outstanding results this quarter, highlighted by accelerating ARR growth, strong subscriber momentum with record net additions and continued robust profitability. We also made progress towards an important milestone and ended the quarter on the verge of USD 300 million in ARR. We achieved these results even as we made significant and planned upfront investments in sales and marketing to drive future recurring revenue and earnings. These achievements underscore our ability to scale efficiently while delivering meaningful view to our customers and shareholders. Before diving into the details, we would like to provide a quick introduction to Karooooo.

We operate a SaaS platform for connected vehicles and mobile assets that enables businesses to enhance operational efficiency, reduce costs, improve safety and customer service and ensure compliance. We help businesses simplify decision-making to optimize their physical operations. We serve a large underpenetrated market with strong sustained demand driven by digital transformation, a constant need to improve operational efficiency and an increasing focus on safety and compliance. We are a founder-led business with a strong financial profile, a 2-decade proven track record of execution excellence and a cultural focus on disciplined capital allocation and operational efficiency. Our platform supports approximately 2.6 million subscribers across more than 125,000 businesses spanning a diverse set of industries.

Importantly, our financial model is anchored by accelerating ARR growth, high-margin subscription revenue, exceptional commercial ARR retention and powerful unit economics. In Q3, our ARR increased 22% to ZAR 5,106 million, and on a U.S. dollar basis, increased 28% to USD 298 million., Our commercial customer ARR retention rate remained at 95% and subscription revenue accounted for 97% of Cortrak revenue. We continue to scale our proprietary data assets now generating more than 275 billion data points monthly, which we leverage to deliver impactful insights and value to our customers.

Finally, our LTV to CAC remains above 9x and underpinned by strong retention, disciplined capital allocation and efficient distribution, which are embedded in our vertically integrated business model and company culture. During today's presentation, we will review both of Karooooo's operating segments, Cortrak and Career Logistics. Katra is our SaaS operations management platform. Cortrak operates at scale and has a very attractive financial profile. Contract's operating momentum is the primary driver of Karooooo's growth and strong financial performance. In Q3, Cortrak delivered exceptional results highlighted by accelerating subscription revenue growth in South Africa.

These results reflect the early returns from the strategic investments we have made in expanding our sales capacity in recent quarters and selling video and [indiscernible] tag to our existing customers in South Africa. The results also underscore the continued growth potential in South Africa. In Q3, [indiscernible] generated approximately ZAR 1.2 billion in subscription revenue, an increase of 20% or 27% on a U.S. dollar basis, A strengthening ZAR negatively impacted reported Q3 Cortrak subscription revenue growth. Year-to-date, Cortrak subscription revenue has increased 20% to 15% in FY 2025, a material acceleration, Cortrak operating profit margin was a healthy 28% in Q3.

Karooooo Logistics is our rapidly growing delivery as a service offering that empowers large enterprise customers to scale their e-commerce and logistics operations. Karooooo Logistics continues to demonstrate strong growth and operating momentum while delivering real value to our enterprise customers. We report Karooooo Logistics separately as its delivery as a service financial profile differs from Cortrak SaaS financial profile. Karooooo Logistics is strategically important to us as it empowers our customers to scale their e-commerce and logistics operations through a capital-light model while driving high [indiscernible] customer retention. We continue to profitably scale the Karooooo Logistics business.

In Q3, Karooooo Logistics' delivery as a service revenue reached ZAR 135 million, an increase of 24% or 31% on a U.S. dollar basis. Given Karooooo Logistics' robust revenue growth, we are very excited about the long-term growth opportunity. In Q3, Karooooo delivered strong consolidated financial results. Total revenue increased 22% to ZAR 1,410 million. Subscription revenue increased 20% to ZAR 1,239 million Operating profit increased 14% to ZAR 369 million and total subscribers increased 16% to approximately 2.6 million. [indiscernible] 20% subscription revenue growth and 28% operating profit margin were the primary drivers of our strong financial performance in Q3. Q3 continued our track record of delivering profitable growth at scale.

In Q3, we were a Rule of 60 company when adding our Cortrak subscription revenue growth of 20% and our cartrack adjusted EBITDA margin of 45%. We note that our EBITDA margin does not include any stock-based compensation add-back. Before detailing our Q3 performance, it is important to underscore just how differentiated our financial model has in the context of the broader SaaS universe. We believe we are among the select few SaaS companies operating at a rule of 50 plus based on calendar year 2026 Gap Street estimates. Within a SaaS universe of approximately 140 companies there are less than 10 companies operating at this level, and Karooooo is the only small cap company.

Our financial profile is incredibly rare in public markets, especially among small-cap companies, being part of this elite group reflects our unwavering commitment to disciplined and profitable growth. In addition, with an essentially unchanged share count over the last several years and no stock-based compensation growth in free cash flow directly translates into higher per share value given the absence of dilution. This is a key point of differentiation relative to many SaaS peers that fund growth for significant equity issuance and SBC. Now let's discuss our Q3 financial and operational highlights. In Q3, SaaS ARR accelerated to 22% compared to Q2 FY 2026 growth of 20% and ARR growth in U.S. dollars accelerated to 28%, reaching $298 million.

Car track subscription revenue growth increased 20%, underpinned by 21% growth in South Africa. The 21% growth rate in South Africa represents a significant acceleration compared to FY 2026 Q2 growth of 18% and 14% in Q3 of the prior fiscal year. Contracts total subscribers increased 16% to approximately 2.6 million, driven by healthy growth across all regions. Notably, CarTrack delivered record subscriber net additions of 111,000 in Q3. Also, year-to-date net subscriber additions increased 30% in Asia. Cartracks operating profit margin remained healthy at 28% despite a 47% increase in sales and marketing expenses in Q3. We were a rule of 60 company in Q3, and our balance sheet remains strong and unleveraged.

We ended the quarter with net cash and cash equivalents of ZAR 531 million. Our healthy subscription growth margin, efficient customer acquisition and attractive commercial customer ARR retention rate continued to drive our healthy unit economics. In Q3, our subscription gross margin was 73%, our LTV to CAC ratio remained above 9x, and our commercial customer ARR retention rate was 95%. Our unit economics remain healthy despite the significant increase in sales and marketing expenses during Q3. It is also noteworthy that we accelerated our subscription revenue growth from 14% in Q3 last year to 20% this quarter while maintaining our strong unit economics.

We remain committed to profitable growth and strong unit economics as we pursue the expansive growth opportunity ahead of us. We ended Q3 with approximately 1.9 million subscribers in South Africa, an increase of 16% and Q3 subscription revenue growth was 21%, a significant acceleration compared to Q2 FY 2026 growth of 18% and 14% in Q3 of the prior fiscal year. South Africa represented 72% of total [indiscernible] subscription revenue. The pace of growth reflects our strategy to drive [indiscernible] subscription revenue growth through a balanced combination of subscriber additions and selling video and contract tag to our existing customers. South African subscriber and subscription revenue growth is a clear signal that our strategy is driving results.

This accelerated growth reflects our deliberate strategy to cement our leadership position in South Africa by simultaneously growing our customer base and selling video and contract tag to customers in South Africa. Average revenue per user or ARPU in South Africa increased 7% to ZAR 162 November 2025 compared to November 2024. We are committed to continue building our distribution capabilities to service the demand for our products from both new and existing customers and we are confident that our investment in sales capacity this year will have a positive impact on Cartrack subscriber growth in FY 2027. We are optimistic about the market opportunity in South Africa and believe there is a long runway to drive strong subscription growth.

We ended Q3 with approximately 318,000 subscribers in Southeast Asia and the Middle East an increase of 20% with most of the subscribers in Southeast Asia. Year-to-date, net subscriber additions in the region increased 30%. And Southeast Asia and the Middle East comprised 15% of total subscription revenue, and Southeast Asia and the Middle East subscription revenue growth increased 14%. And -- the pace of subscription revenue growth in the region reflects an increase in subscribers from lower ARPU countries combined with the translation impact of the strengthening ZAR. As the second largest contributor to group revenue, Southeast Asia continues to present the most compelling growth opportunity for our group in the medium to long term.

Southeast Asia is a vast under-penetrated market for sophisticated fleet management and video-based solutions, and we are well positioned to capitalize on the opportunity. We ended Q3 with approximately 223,000 subscribers in Europe, an increase of 16%. European subscription revenue increased 24% and Europe comprised 10% of our total subscription revenue. We continue to expand our customer base and drive our distribution capabilities in the region. We have partnered with leading OEMs to provide easy access to our platform seamlessly integrating their connected vehicle data to our platform through APIs. We expect these partnerships to contribute to our results in the medium to long term.

In addition, we are experiencing encouraging demand for our proprietary compliance technology in the region as customers seek to simplify compliance with evolving legislation and enforcement. In Q3, Karooooo Logistics continued to build scale and delivered revenue of ZAR 135 million, an increase of 24% and a 7% operating profit margin. Growth in e-commerce orders drove Karooooo Logistics' revenue growth. Karooooo supports our strong financial performance by immersing our platform into large customers' operations, contributing to strong customer retention. Karooooo Logistics also enables us to learn about the operational and logistics challenges confronting our large customers.

We see a large opportunity for Karooooo Logistics going forward as large businesses seek to increase their e-commerce offerings and optimize their logistics capabilities through a capital-light model. In Q3, we continue to make progress with our FY 2026 priorities. First, we continue to strengthen our leadership position in South Africa by driving the adoption of video solutions and cartrack tag within our existing customer base. The early results are promising with South African ARPU increasing 7% as of November 2025 compared to November 2024, highlighting growing customer engagement and product uptake. In addition, we expect our ongoing investment in distribution capacity to create durable growth benefits that extend beyond the current financial year.

Second, we continue to expand our distribution footprint in Asia and Europe, and we are seeing success in expanding our teams in the regions. Finally, we continue to work with our customers globally to drive broader engagement with our platform and to capture the growing demand for video capabilities, including AI video. We are very excited about the momentum we are experiencing with our video solutions in the market, including AI video. Capital allocation is a fundamental part of our disciplined culture rooted in a 20-year culture of profitable growth at scale and prudent financial management, key drivers of long-term shareholder value.

Our capital allocation framework is unchanged and prioritizes Organic growth and innovation, our paramount priority is investing in organic growth and product innovation given our strong unit economics sustained profitability and large market opportunity. Returning capital to shareholders. At current growth rates, our business generates significant excess cash -- with our strong balance sheet and net cash position, we aim to return surplus capital to shareholders when we cannot efficiently invest it for growth, primarily through an annual dividend -- as to avoid doubt, management prioritizes growth over dividends. Strategic M&A.

We take a prudent and strategic approach to M&A we view M&A as a tool to accelerate time to market in key geographies, expand our product portfolio or strengthen our competitive position. However, given our compelling organic growth customer-centric culture and attractive unit economics, we set a high bar for any potential acquisitions. Ultimately, we see it as our responsibility to allocate capital thoughtfully, always with the goal of maximizing long-term shareholder returns. I will now hand it over to Hoeshin, who will discuss our Q3 financial performance.

Hoeshin Goy: Thank you, Carmen. I will now discuss Karooooo's financial performance for quarter 3 FY 2026. Please note, my comments will refer to year-over-year comparisons unless we state otherwise. Our proven and profitable SaaS business model continued to deliver strong results in quarter 3. Karooooo's total subscription revenue increased 20% to ZAR 1,239 million operating profit increased 14% to ZAR 369 million and earnings per share increased 11% to ZAR 8.55. Earnings growth remained robust despite significant and planned upfront investment in sales and marketing to drive future revenue and earnings. In other words, these investments are fully expensed as incurred while the associated recurring revenue benefits are expected to realize over time.

We will now focus on cartrack's financial performance, which is fueled by SaaS revenue momentum. In quarter 3, CarTrack revenue increased 21% to ZAR 1,275 million, and cartrack subscription revenue increased 20% to ZAR 1,236 million. Subscription revenue comprised 97% of CarTrak's total revenue. Quarter 3 ARR growth accelerated to 22%, reaching ZAR 5,106 million. In U.S. dollar, ARR growth accelerated to 28%, reaching $298 million. As you can see from the trend of the charts, cartrack has a proven track record of scaling in varying macroeconomic conditions -- given our consistent execution, resilient subscription revenue model and attractive historic retention rates. In quarter 3, subscribers increased 16% to approximately $2.6 million.

Subscription revenue increased by 20% to ZAR 1,236 million and operating profit increased 14% to ZAR 359 million. Cartrack experienced record customer acquisition in quarter 3 with net subscriber additions of 111,478 subscribers. The record net subscriber additions reflects our strategic investment in sales capacity and success selling video and car tract tech. Total subscriber growth increased 16% in quarter 3, underpinned by record subscriber net additions. Importantly, South Africa subscriber growth also increased 16%, underscoring the growth potential in the region. Quarter 3 SaaS ARR accelerated to 22% compared to quarter 2 growth of 20% and quarter 3 FY 2025 growth of 14%. In U.S. dollar, Quarter 3 SaaS ARR increased 28%, reaching $298 million.

This marked the fourth consecutive quarter of ARR growth acceleration. We believe the acceleration in ARR growth reflects the underlying momentum in the business and signal that our strategic initiatives are gaining momentum. Cartrack continued to grow its subscription revenue across geographies, highlighted by an acceleration in South Africa. South Africa subscription revenue growth accelerated to 21% compared to quarter 2 growth of 18% and quarter 3 FY 2025 growth of 14%. The accelerations indicates that our efforts to cement our leadership decision are driving measurable results. Europe subscription revenue growth increased 24% and 19% on a constant currency basis. Asia and the Middle East subscription revenue growth increased 14% and 18% on a constant currency basis.

Asia and the Middle East reported subscription revenue growth reflects an increase in subscriber from lower ARPU countries in the region, combined with the translation impact of a strengthening South African rand. Healthy growth across regions reflects our strong execution and provide a solid foundation for continued growth. Peru adjusted earnings per share increased 11% to ZAR 8.54. Cartracks earnings per share contribution increased 11% to ZAR 8.35. Karooooo Logistics earnings per share contribution increased 25% to ZAR 0.20. Adjusted earnings per share growth reflects significant planned investment in sales capacity and customer acquisition, evidenced by the 47% increase in sales and marketing expense by Karooooo in quarter 3.

Our upfront sales and marketing costs are not aligned with the lifetime value of customer recurring revenue and related earnings in our financial statements. Importantly, our powerful unit economics remain intact and our balance sheet remains strong as we invest in sales capacity. On a year-to-date basis, our adjusted free cash flow increased 37% to ZAR 597 million underscoring the strength of our operating model. Quarter 3 adjusted free cash flow increased 28% to ZAR 239 million. As we pursue accelerated growth we expect free cash flow to reflect our investment to drive growth, while quarterly fluctuations may occur due to working capital dynamics and growth-oriented investment, we remain confident in our ability to consistently generate meaningful free cash flow.

Karooooo's consistent free cash flow generation powers our disciplined capital allocation strategy and position us well for future growth. Our balance sheet reflects our track record of durable growth at scale, profitability and cash generation. our net cash on hand plus cash in bank fixed deposit was ZAR 531 million. Debtors collection days remain healthy at 31 days and are within our historical now. In August, we paid a total cash dividend of approximately $38.6 million to our shareholders, which equates to a dividend of $1.35 per share. We believe that our ability to generate healthy cash flow is sustainable given our energy business model, coupled with our track record of consistent execution.

We believe Karooooo remains strongly positioned for growth as we operate in an expanding and largely underpenetrated market, fueled by robust and sustained customer demand. This demand is driven by heightened focus on digitalization, lead to improved operational efficiencies and reduce costs and an increasing attention to safety in physical operations. Year-to-date in FY 2026, we have accelerated Tatra subscription revenue growth by expanding our distribution footprint in existing markets, driving broader platform adoptions and capitalizing on growing demand for video solutions, including AI videos. We are encouraged by our positive performance evidenced by CarTrack Quarter 3 subscription revenue growth of 20% and ARR growth of 22%.

Kazak delivered a 29% operating profit margin, reflecting strong execution while investing in sales and marketing capacity to support future growth. While we have delivered strong year-to-date results, the appreciation of the South African rand has created a currency translation headwind on our reported revenue, constraining the flow-through of our strong performance to our FY 2026 outlook. We do not hedge our foreign currency exposure. So fluctuation in exchange rates may create some variability in our reported results despite our underlying operating momentum. Given our momentum year-to-date, we are increasing our FY 2026 cartrack subscription revenue outlook to between ZAR 4,785 million and ZAR 4,900 million, implying growth between 18% and 21%.

As compared to our previous outlook of 4,700 million, and ZAR 4,900 million, implying growth between 16% and 21%. We are also revising our FY 2026 cartrack operating profit margin outlook to between 27% and 30%. And as compared with our previous outlook of 26% and 31%. Our FY 2026 Karooooo adjusted earnings per share outlook remained unchanged at 32.5 to 35.5. As we work towards closing the financial year, we are executing on 2 fronts: expanding our sales capacity to drive new customer acquisition, and strengthening our relationship with current customers through increased adoption of video and tartrate. While the business is accelerating, we remain people constrained and will continue to build the sales capability to meet these goals.

At this stage, we believe the right strategy for the long-term health of the business is to lean into driving adoption of video and cartrack tech with our existing customer base to further cement our leadership decision in South Africa. With that said, we are also confident that our investment in sales capacity this year will have positive impact on subscriber growth in FY 2027. In closing, Karooooo delivered an outstanding result this quarter highlighted by accelerating ARR growth, strong subscriber momentum with record net additions and continued robust profitability. We also made progress towards an important milestone and ended the quarter approaching USD 300 million in ARR.

We achieved this result even as we make significant and plan upfront investment in sales and marketing to drive future recurring revenues and earnings. These achievements underscore our ability to scale efficiently while delivering meaningful value to our customers and shareholders. The underlying acceleration in the business reflects the strength of our operating model and early traction from strategic investment in sales capacity and customer acquisition. As we continue to enhance our distribution footprint, we expect our ongoing investment in distribution capacity to create durable advantage that extend beyond the current financial year. with continued execution, disciplined investment and growing regional momentum, we believe that we are well positioned to deliver profitable and durable long-term growth.

Finally, we remain firmly committed to thoughtful capital allocation, strong unit economics and our vertically integrated and open operating culture. With that, I will turn the presentation over to Zak Calisto for Q&A.

Isaias Jose Calisto: Good evening or good morning to everybody. Thank you very much, Rishi. I'll start off by reading the questions. I've got -- the first question is from it's just simply labeled as investor. I'm not quite sure that is. How are we doing the 70% increase in head count in Asia. Currently, at the end of Q3, we were at around 40%, but a lot of that hires coming in, in January and February. So do you believe we will end up with that 70% that we initially targeted for the year.

And a lot of it really is happening this Q4 simply because a lot of -- in these countries, a lot of the people are willing only to change in January. So it's all going according to plan. When will our investment in sales and marketing stabilize? I think to answer that, it's really about how efficient is our sales and marketing. And as we keep our strong unit economics, and our sales and marketing strategy is working, and we're stable, we will continue to increase that given the -- as a large addressable market. So hopefully, I've answered you in a different way. Who own study is the 35% owner of New Zealand?

When I initially started the business in 2004, our first employee was actually under bid. -- and Joan de bet owns 30% of the business in New Zealand and immigrated from South Africa to New Zealand approximately 9 years ago. I might be wrong with the number of years, but approximately. We now go over to Joshua Reilly from Nidar. ARPU was up nicely again in the quarter and even more so for the business in South Africa, up 7% year-on-year. how far along in the cross-selling canned cycle, would you say we are in South Africa?

Joshua, I would say that we're in the early stages and we are hoping that in the next financial year will get even stronger momentum. And then the next question, net new subscribers were record in the quarter with strength across all geographies. Now I do see half of the market and you win today relative to your sales execution in key markets. We've increased our sales and marketing substantially this year. as we had set out in the beginning of the year? And are we getting huge productivity? Our unit economics remain very strong. And we believe that we're really performing in the key markets. In some markets, we outperform in budgets.

Others we are a bit lagging, but overall, it's going good into plan. Then the next question from Telenet William Blair. -- drivers of acceleration, how do you think about the uplift from pure capacity versus scale in productivity from recent high reps. Now this supports your view durable 20% growth prospects. -- given momentum in both subscriber and cross-selling. Delen in the outlook that we gave in the beginning of the year, we expect it to house and we basically have the outlook that our subscription revenue would be around these ranges. We're actually on the upping of the range we gave. And our peso believe that we've got good momentum and it will continue with the momentum.

And our hiring recruitment retention of key staff, I think we're doing pretty well this year. And I believe in get better at it. Next question from Scott Ross. Can you address adoption trends for AI camera penetration rates per region competitive landscape impact of 7% ARPU increase in the current quarter? We've really focused a lot of this in our South African operation. We moved into new offices approximately 18 months ago. We've got the space to hire to build out the infrastructure. we're busy building out the infrastructure in most other countries to be able to build out the call centers required to be -- to really execute on this.

And the adoption of Cannes is strong at this point in time. But we certainly believe it's early days in adoption and will only get stronger over time. The competitive landscape, we feel very comfortable to compete with our peers, and I believe we'll continue to get stronger in this space. A question from Cornils Maari. Is there any way to roll out to logistics to Europe or Southeast Asia? Or are those market saturated? I think it's very early days when we're talking long term of the e-commerce space and what our large enterprises customers require -- and I don't believe the market is saturated. I believe the market is only going to grow bigger.

And we are developing our technology in order to be able to go into Europe and Southeast Asia. -- and to compete efficiently. It must be said that we don't necessarily need to roll out the driver network in every geography. We've done that in South Africa, but it's more for us to learn. What our platform allows us to do is we can integrate with various and multiple e-commerce service providers that have rolled out fleets. And all we do is we become the aggregator to be able to -- our customers to be able to use any of the service providers that can service them.

So the model when we go outside of Africa, it might be slightly different. And as we develop the South African market, we also might change our current model despite it's working very well, but we are learning every day. And the market is changing every day. A question from Alex Cole from Raymond Changes. What drove the strong pickup in South Africa subscriber growth versus plan? I think the subscriber growth is going in accordance with plan. and the cross-selling is going in accordance with planned. And I think it's really just about increasing our footprint and our ability to execute. Where do you stand on sales in versus your specific geo plant Southeast Asia and Europe?

I think we are on track with all the mining across all regions. Given the magnitude of sales iron plants in Southeast Asia, do you expect subscriber growth to pick up from 20%, 21% level? Or is this a good durable rate? We certainly -- our ambition is certainly to pick that 20%, 21% and to compound on that -- but it's like everything. We -- it's all about the execution, but we feel positive that we're going to have a very strong FY '27 in the region. A question from the [indiscernible]. It seems there are -- there has been an increase in subscriptions in South Africa quarter-on-quarter.

How has the shift from used vehicle sales to new vehicle and South Africa impacted subscriptions that does not impact our business. We get -- our customer acquisition is based on customers that have got vehicles. Now the only time when a new vehicle comes into play, it might be when our customers, they basically trade in or sell their vehicles and buy new vehicles. So the impact of new vehicle sales has got an impact on our business, but it's an insignificant impact at this point in time. Is the used vehicle market in states still under pressure given the affordable new vehicles entering the market? We don't really specialize in that.

So and that's whether the market is under pressure or not. We don't really look at that. We will more -- we are focused on the services we provide. And does a stronger new vehicle market have a more positive impact on the subscriptions? Not necessarily. Another question from Scott from Roth. Can you provide an update on asset tracking sales connections in South Africa, the ongoing rollout employment and plans for additional markets. At the moment, we don't plan any additional markets. The rollout is going put into plan, but we are looking at expanding into Europe cautiously.

So we are adding our annual discussions now in February where we're going to approve the rollout plan or not approve the rollout plan. But fundamentally, there's a huge opportunity to go outside our key markets in Europe that we're currently in. But at the same time, there's also a huge opportunity to grow within the markets and to cement our leadership in the markets we are already operating. Another question from Belle from Regal. How are you thinking about growth versus margin trade-off?

I think in the bottom line in the way we look at it, there's actually the IFRS, will you see a bit of a compression in operating profit margins because of the increase in sales and marketing -- but I think that's really a temporary thing and the minute you stop allocating money to the site marketing, then you just get this huge margin expansion. And the reality is all these upfront costs of getting customers, these customers stay with us for a very long time. So there's a huge alignment of these expenses against future revenue.

So we're more focused on the long term of the business as opposed to 1 quarter or 1 financial year we're looking at it rather from perspective of what value all we bringing to our shareholders over the 5 years. So we look at it a little bit different. Impressive ability to accelerate growth to extend or with a minimal margin impact that has got to do a lot with the way we run the business and economies of scale. How does this validate both completion and overall opportunity, opportunity for healthy leverage as the impact from upfront investments continue to discount. I think I've probably answered that latter part of your question. Another question from Dannecker.

Here is the double down on strategy clearly working. Any areas you feel confident you could step up investment further. I think fundamentally, it's -- our unit economics continues to be very, very strong. So we -- while we -- I mean right now busy approving our budget for the FY '27. We probably are going to push to continue with the current trend we've got and to continue investing in our footprint in the markets we're in and to continue to grow and accelerate the top line. But we've got to conclude our budgets, and we just got to get more the approval before that happens. And a question from [indiscernible].

How does the Volkswagen AM integration tangibly accelerate your European growth compared to your traditional sales-led expansion? It's -- it's in a simple way, it allows us to get vehicles onto the platform rather quickly. The real challenge we have is that the OEM telemetry devices on most occasions, do not talk to what our customers do. So you get a lot of data, but it doesn't help our customers because the data that they require and the data points that are needed to be collected you typically cannot get it off the OEM devices. So we're getting -- closing close to the OEMs in making sure this relationship works and only the practicalities of using these devices.

And I believe over time, this will be sorted out. But the good thing is we've integrated with most of the providers in Europe and in Gestao that's all been integrated. So we've got a great platform. We're in the game but there's a lot of operational issues and data points that we are unable to collect through the OEM to limited devices. More questions. question coming from Colin Smith from or Africa Partners. In November, you announced a partnership with Volkswagen is our case. I think we've answered that question. Colin the -- there are another question from Colin Smith from all African partners.

Does the materially strong South African rand over the last year at any positive or negative impact on the underlying operations? The positive impact is probably in the production of our [indiscernible] equipment. But fundamentally, that becomes a very small part of the business. The biggest -- the positive impact is if you report in dollars, then obviously, that's a very strong impact. or however report, then it's a negative impact in terms of subscription. So our operations outside South Africa or a negative -- they are negatively impacted towards our revenue. So our revenue in rands as we reported in U.S. dollars would have been up because we report in rands, the lower they've been negatively impacted.

Next question also from Colin Smith. -- in existing subscriber chooses to add video Cortec does the sanitary 6-month contract reset? The answer to that is complex, but I think the best way to look at that is that the 36-month contract we signed is nearly not material to us. What's more material to us is how long will that customer stay with us as opposed to the 36-month contract. And what we find with customers they don't really -- we know the contract we sign it, but it sort of goes into the bottom draw. It's more -- can we keep the customer and can we keep the vehicle on the platform while the customer still owns it.

And that's what we measure. And we're more reliant on customer service and customer retention than actually trying to enforce a 36-month contract. And that's been our policy since they 1 of starting the business. We take a much more pragmatic way of looking at the business as opposed to trying to get our customers to stick to their agreement when we know the gain the customer is going to stay with us for very long. Next question from Colin. Is the current share price at level that management may consider share buyback? -- on the reality of doing a share buyback in the marketplace as a listed entity, it's very complex.

And I think at this point in time, we are just not trying to second-guess the market. We will just continue being focused on growth of the business and the quality of the asset. We're not -- we'll try to do that about 2 years ago, and it's really, really difficult all the SEC rules around that. meta very complex to do that. And if we do that, we might as well just delist. I have another question from [indiscernible]. Once the ARPU interact only driven by Cantor also general price hikes that is driven by the Cameron ag. And what's our ARPU in Southeast Asia this quarter? How much dilution are you expecting?

We've always said over time, Southeast Asia market will matter the ARPU of South Africa. And that is as countries like Philippines and Indonesia, and Thailand start to become a bigger portion of the business, these are typically lower ARPU countries compared to New Zealand or the UAE or Singapore. So that over time, we believe that the Southeast Asia [indiscernible] warmer South Africa. So we do believe ARPUs will decrease as the business gets bigger, but that we knew from outset. And we've consistently told the market that. A question from Matthew at conference. What portion of sales are coming from existing customers, new cater customers -- can you describe examples of use cases for seeing for TAG.

And I'm not going to go through the presentation now that our users to take is it's basically really, it allows us to track -- to track equipment or vehicles outside the GSM network. And for that, there's lots of use cases. There's no shortage of these cases where that requirement is needed. And what proportion of sales are coming from existing customers. The -- this well to look at that is that your net adds, which we present that's typically new customers.

And when you sell into existing customers, typically, what happens is when you do a fleet very pure fleet owners if they got 70 vehicles down into 10 vehicles or if they got 12 vehicles in 3 case typically fleet owners to the full fleet. So typically, when you are selling in the future to these fleet owners, it's really because they've sold vehicles and they've got new vehicles. And that would be basically not showing on net additions. So your net additions is typically most of that business is new customers. And then your churn business, a lot of that is really customers selling vehicles and buying new vehicles. I hope that explains and answers your question.

Are there any regulatory or other technical issues with rolling out tag to other markets beyond South Africa, Southeast Asia and Europe? I'm not come with all the markets, but all the markets we're basically rolling out, no. But once again, I say that I'm not familiar with all the markets and all the regulation and typically, every country has got its own regulation. Let me just see if there's any more questions. Williams. How much you expect in the improved South African macro conditions to accelerate fundamental performance going forward. [indiscernible] is done well in South Africa in really tough times and in good terms.

And I think us staying well now is really on our ability to scale, our ability to add more people or new building the infrastructure we're developing. And I think the fact that the economic environment is looking good, gives us a tower wind. But I think mono is not because of the economic situation right now, I think it's really just because of our ability to execute in the way we've been building teams. Matthew from conference. Looking at the South Africa subscribers over the next 5 years, what proportion do you think could be could be interested in Catacora analytics. Matt, to be honest with you, I cannot answer that because whatever I say I might be wrong.

So I prefer not to answer that. Next question from Max Sure. Is the subscriber growth in South Africa diluting ARPU growth -- on a group level, it remains rather 4% compared to the target of 6%. The target of 6% would be at February 2026 as a to be at year-end. And I think we might be lagging slowly -- slightly what we expected, but we're largely on track. A question from [indiscernible] . What would you do diffi you were to a private company and not the public on here? What would be the difference in your strategies, there would be actually no difference in our strategy. we are focused on building a business.

We're not building a business so that we can pipe on it, and we can sell it. We build in the business One, in terms of my succession planning. Mark family is a majority shareholder. We intend to stay that way. And we fundamentally are looking long term and at the business on a long-term perspective. So we're running the business as with its private or whether it's a public company, our Modelo branding remains the same. A question from Prashant [indiscernible]. Can you share a little more color on your bullishness for subcagon ARPU growth in South Africa? What are the distributions tavern growth? -- on net check such an online news record retailers, payers.

Okay, the question -- answer to that present, we're not seeing anything different to what we've been doing over the last year and that is continuously improvements, whether it's our technology, whether it's our software platform, whether it's the training of the people, -- so frankly, there's no changes. It's just doing the same thing but consistently improving with what we've done in the past. And we've got a 20-year track record of continuously improving on the past June. Another question from GB. You say you've got another question, but I don't see it. So I'm not quite sure [indiscernible]. Okay. Typically, what is the cost of your subscription as a percentage of the annual revenue for your customer?

Typically, what is the cost of your subscription as a percentage of annual revenue for your customers? GB, I don't really understand the question. I apologize for that. And with that, I answered all the questions. I want to thank everybody for attending, and I look forward to speaking to everyone in 3 months time again. Thank you. Bye-bye.

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