The global scramble for memory chips has reached a South African tracking company. Karooooo, which owns Cartrack and is listed in New York and Johannesburg, reported results on 19 October for the quarter to 31 August that show it buying hardware far ahead of demand and borrowing to do it.
Devices held for future use rose 92% in six months. Uninstalled telematics devices climbed from R214.5 million in February to R456.7 million, and upfront spending on devices rose 86% to R966 million for the half year. In the company's own words, the purchases are there to "provide a buffer against ongoing significant increases in RAM and memory prices", a line attributed to group chief executive Zak Calisto.
What it costs
The bill shows up in cash. Free cash flow for the six months fell to R100 million from R358 million a year earlier, even though operating profit rose 18% to R832 million. The bank overdraft climbed from R407.7 million in February to R714.6 million, cash fell from R1,153.9 million to R648.5 million, and the company increased short-term facilities with Capitec and Standard Bank to R900 million. Launch Base Africa calculates that the group has moved from about R298 million of net cash in February to roughly R490 million of net debt.
The business underneath is growing
Cartrack ended August with 2,899,210 subscribers, up 18%, after adding 94,516 in the quarter, which the company calls a record for a second quarter. Subscription revenue rose 20% in rand and 23% in constant currency.
The squeeze is not local. Launch Base Africa cites Bloomberg Intelligence putting data centres at about half of global DRAM consumption in 2025, against 32% five years earlier, and IDC reporting DRAM spot prices more than ten times their January 2025 level in some cases. Goldman Sachs expects shortfalls to run into the second half of 2027. Karooooo's management has said it would raise prices if memory costs keep climbing.
