Karooooo Ltd.

Hello and welcome to Carew's Q2 FY2027 Financial Results presentation. On behalf of Carew, we would like to thank you for joining us today. I'm Paul Bieber, VP of Investor Relations and Strategic Finance. We are joined today by Zach Calisto, Founder and Group CEO, Hoe Shin 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. They are subject to several risks and uncertainties. Our actual results could differ materially. Please refer to the Safe Harbor Statement in our Form 20F including the risk factors and the 6K 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 6K that we filed with the SEC yesterday. Our comments may refer to year-over-year comparisons unless we state otherwise. I will now pass the call over to Carmen.

Thanks, Paul. Q2 was another quarter of acceleration. CarTrack subscription revenue accelerated to 20% from 19% in the prior quarter despite FX headwinds. Importantly, CarTrack's constant currency subscription revenue growth increased 23% in Q2 compared to 21% in Q1 with constant currency growth acceleration across all regions. Notably, South Africa's subscription revenue growth accelerated to 25% compared to 24% in Q1 and Asia Constant Currency subscription revenue growth also accelerated to 25% compared to 17% in Q1. The acceleration demonstrates that our investments and sales capacity continue to drive tangible results as we balance new customer acquisition with building our cross-sell capabilities. ARR increased 22% in Constant Currency. Reported ARR growth was 19% reflecting a strengthening czar and 30% in US dollars. In Q2, subscriber growth increased 18% as net subscriber additions increased 34%, a record for the second quarter as we continue to realize the benefits of our recent investments in sales capacity and capitalize on sales momentum with video solutions and car track tags. Our strong execution once again translated into record quarterly Karu operating profit of 422 million ZAR despite foreign exchange headwinds, reflecting our ability to accelerate revenue growth while maintaining healthy profitability. Earnings per share also increased 18% in Q2. As we look forward to the rest of the fiscal year, we reiterate our FY2027 outlook. Before diving into the details, here is a quick introduction to Karoo. We provide an operational intelligence platform for connected vehicles and mobile assets, helping businesses simplify decision-making and optimize their physical operations. We serve an expanding, largely under-penetrated physical AI market driven by digital transformation and the need for greater efficiency, safety, and compliance. We are a founder-led business with a two-decade track record of disciplined execution and capital allocation. Our platform supports approximately 2.9 million subscribers across more than 125,000 businesses in diverse industries. Our financial model is anchored by accelerating high margin subscription revenue, which was 98% of CarTrack revenue in Q2. Commercial customer ARR retention remained at 95% and lifetime value to CAC remains above 9 times. We also now process more than 345 billion valuable data points monthly, a proprietary data asset that continues to scale and enables us to deliver value to our customers. During today's presentation, we will review both of Carew's operating segments, CarTrack and Carew Logistics. CarTrack is our operational intelligence platform, CarTrack operates at scale and has a very attractive financial profile. CarTrack's operating momentum is the primary driver of Karoo's growth and strong financial performance. CarTrack delivered exceptional Q2 results with acceleration across regions that reflect the returns from the strategic investments we have made in expanding our sales capacity and selling video and CarTrack tag to existing and new customers. In Q2, Cartrack delivered approximately 1.42 billion ZAR in subscription revenue, an increase of 20% or 31% on a US dollar basis. The 20% growth reflects an acceleration compared to 19% in Q1, despite a strengthening ZAR that negatively impacted reported Cartrack subscription revenue in Q2. Cartrack constant currency subscription revenue growth accelerated to 23% in Q2 compared to 21% in the prior quarter. CarTrack's operating profit margin was a healthy 28% in Q2. Karoo Logistics is our rapidly growing delivery as a service offering, which helps large enterprise customers scale their Q-commerce or quick commerce operations. We report it separately because its financial profile differs from CarTrack's subscription model. It is strategically important for us because it enables customers to grow with a capital-light model and deepens their relationship with us, supporting higher retention. In Q2, Karoo Logistics' delivery-as-a-service revenue was 189 million ZAR, an increase of 36% or 49% on a US dollar basis. Karoo Logistics' operating margin was 6% and reflects investments to ensure drive availability and expansion into our network. In Q2, Karu delivered strong consolidated financial results. Total revenue increased 22% to 1,640 million ZAR, subscription revenue increased 20% to 1,418 million ZAR, operating profit increased 19% to a record 422 million ZAR, and subscriber growth increased 18% to approximately 2.9 million subscribers. CarTrack's 20% subscription revenue growth and 28% operating profit margin were the primary drivers of Carew's strong financial performance in Q2. Q2 continued our track record of profitable growth at scale. In Q2, CarTrack's 20% subscription revenue growth and 46% adjusted EBITDA margin made us a Rule of 60 company with no stock-based compensation add-back. It is important to underscore just how differentiated our financial model has become. We believe we are among a select few companies operating at a rule of 50+, based on calendar year 2027 Gap Street estimates. Within a universe of approximately 170 companies, Karoo is the only small to mid-cap company operating at this combined level of growth and profitability. With an essentially unchanged share count and no stock-based compensation, Growth in free cash flow translates directly into higher per share value. Our rare financial profile reflects our unwavering commitment to profitable growth. Now, let's discuss our Q2 financial and operational highlights. In Q2, ARR increased 19% despite foreign exchange headwinds, and constant currency ARR increased 22%. ARR in US dollars increased 30%, reaching $354 million. Karchak's subscription revenue growth accelerated to 20% despite FX headwinds. Constant currency growth accelerated across regions highlighted by South Africa's subscription revenue growth accelerating to 25% and Asia Constant Currency subscription revenue growth also accelerating to 25%. Cartrack subscription revenue growth increased 31% in US dollars and 23% in Constant Currency. Cartrack total subscribers increased 18%, reaching approximately 2.9 million. CarTrackNet subscriber additions increased 34% to 94,516, a record for the second quarter. Despite FX headwinds, Karoo delivered record quarterly operating profit of 422 million ZAR. Growth-oriented investments moderated in Q2 as consolidated sales and marketing expenses increased 16% compared to 33% in Q1. We were a Rule of 60 company in Q2 with subscription revenue growth of 20% and an adjusted EBITDA margin of 46%. Our balance sheet remains strong and unleveraged and reflects the $1.50 per share dividend payment in July and the investments in inventory classified as PPE including memory to support our current accelerated subscription revenue growth. Our healthy subscription gross margin, efficient customer acquisition and attractive commercial customer ARR retention rate continue to drive our healthy unit economics. In Q2, our subscription growth margin was 71%, our LTV to CAC ratio remained above 9 times, and our commercial customer ARR retention rate was 95%. Our unit economics remain healthy, and we remain committed to profitable growth as we pursue the expansive physical AI growth opportunity ahead. Q2 subscriber growth increased 18% and reached approximately 2.2 million subscribers in South Africa. South Africa net subscriber additions increased 20% to 65,997 as we realized the benefits of our recent investments in sales capacity and capitalized on strong demand for the car track tag and video solutions. Importantly, South Africa's subscription revenue growth accelerated to 25%. This represents the seventh consecutive quarter of subscription revenue growth acceleration in South Africa. The pace of growth reflects our deliberate strategy to cement our leadership position in South Africa through a balanced combination of subscriber additions and selling video and car track tag to our existing and new customers in South Africa. Despite some macroeconomic stress in the South African economy, we continue to see a compelling market opportunity in South Africa and are excited about the potential ahead. Q2 subscriber growth increased 21% and reached 367,000 subscribers in Southeast Asia and the Middle East, with most of the subscribers in Southeast Asia. Q2 subscription revenue growth accelerated to 12% compared to 6% in Q1 and increased 25% on a constant currency basis. The pace of reported subscription revenue growth in the region reflects foreign exchange headwinds. As the second largest contributor to group revenue, Southeast Asia continues to present the most compelling growth opportunity for the group in the medium to long term. We plan to continue with a strong, yet prudent drive to increase sales and marketing in Southeast Asia, and we anticipate our investments to have a positive impact on subscriber growth in the region. 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 physical AI opportunity in Southeast Asia. Q2 subscriber growth increased 13% and reached 245,000 in Europe. Q2 subscription revenue growth was 4% and 14% on a constant currency basis. The pace of reported subscription revenue growth in the region reflects foreign exchange headwinds. We continue to expand our customer base and drive our distribution capabilities in the region. In Q2, Karoo Logistics continued to build scale and delivered revenue of 189 million ZAR, an increase of 36% and a 6% operating profit margin. Q-commerce orders, a type of e-commerce focused on ultra-fast delivery, drove the exceptional performance. Q2 operating profit margin reflects costs associated with ensuring driver availability and network expansion. Karoo Logistics supports our strong financial performance by immersing our platform into large customers' operations, contributing to strong customer retention. Karoo Logistics also enables us to learn about the operational and logistics challenges confronting our customers. In Q2, we continued to make progress with our FY2027 priorities. First, we made progress cementing our leadership position in South Africa, our largest market, as evidenced by our 25% subscription revenue growth in the region. Our accelerating growth reflects the planned subscriber growth and the adoption of car-track tag and video solutions. Second, we moderated our investments in sales and marketing in Q2 as evidenced by the 16% increase in sales and marketing expenses in Q2 compared to 33% in Q1 and 37% in FY2026. Despite this moderation and foreign exchange headwinds, subscription revenue growth accelerated once again in Q2. We remain committed to optimizing our recent investments and sales capacity and growing our distribution footprint at a more moderate pace in FY2027. Third, we are embracing AI across the organization to enhance our platform, improve efficiency and accelerate the pace of execution. Before handing the call over to Hoe Shin to discuss our financial results in more detail, we'd like to highlight the ROI our platform delivers to customers. Our success is built on delivering tangible value and ROI to customers. For one customer in Singapore's construction sector, deploying our operational intelligence platform delivered a 25% improvement in on-time delivery, a 23% increase in fuel efficiency, and 100% driver accountability. The customer combined real-time fleet visibility and fuel intelligence with geofencing alerts to coordinate efficient loading, driver identification, and targeted coaching. It then added CarTrack AI Vision for intelligent driver monitoring. Alongside these operational improvements, the customer reduced speeding by 43%, harsh driving events by 31%, phone usage by 65%, and driver fatigue by 33%. Our operational intelligence platform goes beyond vehicle tracking. It helps customers reduce costs, operate more efficiently, Improve Safety and Better Serve Customers. With that said, I will now pass the call over to Hoe Shin.

Thank you, Carmen. I will now discuss Karoo's financial performance for Q2 FY2027. Please note, my comments may refer to year-over-year comparisons unless we state otherwise. Q2 extended CarTrack's track record of durable and profitable growth at scale, driven by consistent executions, our resilient subscription revenue model, and Attractive Historic Retention Race. In Q2, subscriber increased 18% to approximately 2.9 million. Subscription revenue increased 20% to RM1,450 million and operating profit was a quarterly record at RM411 million. CarTrack experienced strong customer acquisitions in Q2 with net subscriber additions of 94,516 subscribers and increase of 34%. This represents record net subscriber additions for the second quarter. We delivered record net subscriber additions while successfully cross-selling car track tech and video to new and existing customer. We note that when we cross-sell car track tech or video to an existing customer, it does not contribute to an incremental subscriber in our subscriber count. Subscription revenue momentums remain the engine behind CarTrack's strong financial performance. In Q2, CarTrack's subscription revenue growth accelerated to 20% despite foreign currency headwinds and reached RM1,415 million. CarTrack's subscription revenue growth was 31% in US dollars and 23% in constant currency. Subscription revenue comprised 98% of CarTrack's total revenue. ARR increased 19% despite foreign currency headwinds and reached RM5,708 million. ARR increased 30% in USD and 22% in constant currency. Our proven and profitable subscription revenue model continued to deliver strong consolidated growth. In Q2, Karoo's total subscription revenue increased 20% to RM1,418 million. Operating Profit increased 19% to a quarterly record of RM422 million as we moderate our investment in sales and marketing. Earnings per share increased 18% and adjusted earnings per share increased 12% to RM9.28. Earnings growth moderated due to higher tax rate and finance expense. Prior year adjusted earnings per share excluded the effect of secondary offering costs and there were no such costs in current year. Quarter 2 subscriber growth increased 18% to approximately 2.9 million subscribers. South Africa subscriber growth increased 18% and Asia subscriber growth remained robust at 21%. Asia is our fastest growing region in terms of subscriber growth. Quarter 2 subscriber growth of 18% represent an acceleration compared to FY2026 growth of 16%. In Q2, CarTrack's constant currency subscription revenue growth accelerated across all regions. South Africa's subscription revenue growth accelerated to 25% compared to 24% in Q1. Asia and Middle East subscription revenue growth accelerated to 12% and 25% on a constant currency basis compared to 6% and 17% on a constant currency basis in Q1. Subscription revenue growth accelerated despite an increase in subscribers from lower APU countries. Europe's subscription revenue growth was 4% and 14% on a constant currency basis compared to 7% and 13% on a constant currency basis in Q1, accelerating growth across regions, reflects our strong executions and provide a solid foundation for continued durable growth. In Q2, ARR increased 19%, reaching RM5,708 million. ARR growth was 30% in USD and 22% in constant currencies. This reflects the underlying momentum in the business and signals that our strategic initiatives are gaining traction. Karu's EPS increased 18% to RM9.28 and adjusted EPS increased 12% compared to Q2 FY2026. CarTrack's EPS contribution increased 13% to RM9.08 and Karu Logistic EPS contribution was RM0.20. Q2 Free Cash Flow was RM41 million and primarily reflects an increase in trade and other receivables due to increased subscription revenue and investment in in-vehicle IoT devices to support growth. Given our accelerated growth, we increased our investment in in-vehicle IoT devices for both current and future use, including memory, to create a buffer against rising RAM and memory prices. Our first half free cash flow reflects a R966 million investment in these IoT devices. We expect more robust free cash flow generation in the second half of the year. 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 cash flow to support growth and dividends. We have 2 decades track record of financial discipline and strong fee cash flow generation that powers our discipline capital allocation strategy and healthy return on invested capital and position as well for future growth. During the quarter, we increase our bank shop term working capital facilities as we make upfront investment in both in-vehicle IoT devices and IoT devices for future use to maintain our current momentum. The significant and ongoing increase in memory chips also contributed to the increased level of IoT devices for future use. This investment increased 86% to R966 million during the first half of the year. As a result, bank overdrafts are now considered part of our financing arrangements rather than cash management and will be classified within financing activities in the statement of cash flows. Our balance sheet reflects our track record of durable growth at sale, profitability and cash generation. Our cash and cash equivalent balances as at the end of Q2 was RM649 million. The decrease was mainly due to dividends of RM752 million paid in July 2026. As we hold our cash reserve in USD, the strengthening of the South African also reduced the rent value of our cash balances. Debtors' collection days remain healthy at 33 days and are within our historical norm. Year-to-date, we have delivered record net subscriber addition and healthy retention, driving 22% CarTrack constant currency subscription revenue growth. We believe we are on track to accelerate CarTrack subscription revenue growth in FY2027 as we realize the benefit of our recent investment in sales capacity. We aim to drive our growth by balancing subscriber growth with the increased adoptions of video and car track tech. We also believe increased sales efficiencies coupled with realizing other efficiencies in the business due to scale and leveraging AI will support strong earnings per share expansion. With that said, we reiterate our FY2027 outlook that implies accelerating constant currency subscription revenue growth at the midpoint and healthy earnings per share growth. We expect to benefit in the second half from continued revenue momentum, continued sales and marketing efficiencies, and a moderately lower tax rate. In closing, we delivered strong Q2 results with constant currency growth accelerating across regions and notable strength in South Africa and Asia. We also delivered record quarterly operating profit despite foreign currency headwinds. Q2 free cash flow reflects investment in growth, including memory, and we expect cash flow to strengthen over the coming quarters as we continue to deliver value to our shareholders. These results reflect the strength of our operating model and the returns on our sales capacity investment. As we look ahead to the rest of FY2027, We are well-positioned to accelerate growth and deliver meaningful earnings per share expansions, while remaining committed to disciplined capital allocation and long-term value creation. With that, I will turn the presentation over to Zach Calisto for Q&A.