Carousell posts $7m revenue and $25m loss in 2018 as monetization efforts continue

Popular classifieds app Carousell posted US$7 million in revenue for the financial year of 2018, a fourfold increase from 2017, its latest financial statement reveals. The company’s losses for the year were US$24.96 million, down 16.2% from the year before.

The seven-year old business started out in Singapore as a general marketplace. But Carousell only began its monetization efforts in the last two years, launching online advertisements and features like premium visibility as well as moving into high-value categories like cars and real estate. Its platform boasts over 200 million listings to date.

Carousell co-founders Marcus Tan (L), Lucas Ngoo (M), and Quek Siu Rui (R) / Photo credit: Carousell

If its monetization efforts have paid off, they haven’t fully translated. Carousell’s revenue is modest, given its over US$550 million valuation. Tech in Asia got in touch with the company for this story, but it declined to comment.

Singapore and Hong Kong are key revenue-generating markets for Carousell, accounting for 12.1% and 9.6% share respectively. However, CEO Quek Siu Rui has said that his aim is to cement the company’s foothold in Southeast Asia.

Carousell’s consumer-to-consumer model pits it against Shopee, which was among the top five most-downloaded marketplace apps globally, according to a report by App Annie.

Revenue growth was driven mainly by media sales, direct media services, partnerships and subscriptions, in line with its monetization efforts. Revenue from direct media services went up from US$0.93 million to US$2.5 million and accounted for the majority of Carousell’s revenue stream in 2018.

Right now, Carousell’s revenue has not caught up with its valuation. The average classifieds marketplace is generally worth about 10x revenue, assuming it’s profitable, says Lim Der Shing, an angel investor and founder of JobsCentral. Carousell’s valuation is 79x of its 2018 revenue.

The 10x revenue multiple cited by Lim seems reasonable if we look at similar marketplaces in the region. ASEAN-focused digital automotive portal iCar Asia has a multiple of 6.7x revenue, while Frontier Digital Ventures (FDV), another operator of classifieds in emerging markets, has a multiple of about 5x revenue. Both companies are not yet profitable.

FDV, which is listed on the Australian Stock Exchange, focuses on classified listings across the property and automotive sectors as well as the general marketplace. Its offerings resemble Carousell’s, given the latter’s aggressive push into high-value services like real estate and cars in recent years.

Lim thinks Carousell would need to grow another four times this year to US$28 million, then double again, in order to justify the valuation. “That will give them about US$56 million revenue and probably [make them] nicely profitable.”

Photo credit: Carousell

Carousell ended the business year with US$6.95 million in cash and cash equivalents – down from US$7.62 million in 2017 – and US$55.4 million in cash and short-term deposits. US$6.1 million in liabilities are due within the year.