Carsome doubles revenue in FY21, though losses widen

Malaysian used-car unicorn Carsome has posted US$656 million in revenue for the financial year ending (FYE) December 31, 2021. That’s double the previous year’s figure, according to its latest regulatory filings available on VentureCap Insights.

Carsome co-founder and group CEO Eric Cheng / Photo credit: Carsome

Losses, however, widened by over 7x to US$138.6 million. But a Carsome spokesperson tells Tech in Asia that a sizable chunk of its expenses came from fair value adjustments that are non-cash expenses and are unrelated to the business’ operating performance.

The firm’s fair value loss on redeemable convertible preference shares, for one, totaled US$49 million.

“The operating EBITDA of FY 2021 – excluding fair value adjustments, non-cash items, and non-operational corporate cost – was in line with the previous year’s EBITDA margin,” says the spokesperson.

This is Carsome’s first financial statement since becoming a unicorn. In September 2021, the company raised US$170 million from Asia Partners, Gobi Partners, and 500 Southeast Asia, among other investors, bumping up its valuation to US$1.3 billion.

This fundraise was reflected in its significantly higher pile of cash and cash equivalents, which amounted to US$340.4 million – over 10x higher from the previous corresponding period.

In January 2022, the company raised another US$290 million, and it’s now eyeing a US IPO.

Thin margins

Carsome’s revenue growth came despite the impact of Covid-19 containment measures, which dampened demand for travel in Southeast Asia. For instance, the pandemic’s impact on the automobile industry was estimated to have slashed Thailand’s vehicle output by almost half to a little over 1.1 million units in 2020, according to research firm IHS Markit.

A Carsome spokesperson shares that the firm’s wholesale unit posted a 190% rise in revenue from a year ago and that its retail unit jumped 20x in the same period. The company said its business in all markets demonstrated “strong growth,” with revenue in Thailand and Indonesia soaring 332% and 226%, respectively.

The company does not disclose revenue breakdowns by geography in its financial statements. It did announce recently that it sold 18,000 vehicles per month across its four core markets: Malaysia, Singapore, Indonesia, and Thailand.

Revenues, however, are just one part of the story in the thin-margin used-car business. After subtracting the acquisition costs of vehicles sold (i.e., cost of goods sold), Carsome has a gross profit of US$36.6 million, which is just 5.6% of its revenue figures.

This is par for the course in the industry: Close competitor Carro’s gross profit margin for FYE 2020 was 10%. Compare that with an industry like logistics, which typically has higher margins. Ninja Van, for instance, posted a 61.6% gross profit margin for FYE 2021.

Zooming into profitability