Carousell expects to double revenue this year, losses in line with targets: CEO

Carousell celebrated its seventh anniversary this past weekend, but its recent financial report shows that the Singapore-based classified ads company is some distance away from profitability.

But CEO Quek Siu Rui says he is “very happy” with the result. “For the first year [of monetization], we have built a good foundation… we are very optimistic about continuing a very fast-growing trajectory especially in our revenue stream,” he told Tech in Asia last week on the sidelines of Carouselland, the company’s inaugural flagship event.

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

Quek expects revenue numbers to double in 2019. “If we maintain similar levels of growth, it’ll be very positive… doubling that – I feel it’s something we’ll do.”

If it does reach its goal, its revenue should reach around US$14 million, given that it hit US$7 million last year.

Carousell may be in the red at US$25 million, but this was in line with internal targets.“We are financially disciplined as an organization,” Quek stresses. He adds that at its current levels of funding, the company is well-capitalized for the next couple of years.

“We prioritize growing the network first. It’s much more of the network economics and network value than an immediate multiple revenue today.” Quek says. To naysayers, he says that people need to view Carousell for its potential to become the classifieds leader in Southeast Asia.

As for how it will invest the capital, Carousell is looking into developing its search and discovery platforms as well as including AI features. It’s planning to increase personalization on the app and build up its payments and shipping capabilities as well.

The Southeast Asia opportunity

Startups have to tread a fine line between cutting losses and turning a profit, or investing heavily to cut through the competition.

But with two-thirds of 640 million people in Southeast Asia just coming online, the region is too massive an opportunity to miss. Carousell’s acquisition of OLX Group’s operations in the Philippine arm has accelerated its growth in the country, and it’s now seeking to fast-track growth its other markets in neighboring countries, such as Malaysia and Indonesia.

Quek is confident that betting on Southeast Asia will pay off when – and if – Carousell eventually becomes a market leader in the region. OLX has been running online marketplaces since 2006, so its experience will certainly give Carousell a boost. “They’ve been in cars and property much longer than we have,” Quek points out. It’s an advantage that he thinks will help to supercharge Carousell’s growth in those verticals.

“Once you secure dominance in the market, 50% to 60% EBITDA margins for leadership positions… is very common,” Quek says. The higher the EBITDA margins, the lower a company’s operating expenses in relation to total revenue.

The CEO isn’t losing sight of his goal to build an “enduring” company – a synonym he uses for “profitable” – at some point. Singapore and Hong Kong, Carousell’s key-revenue generating markets, could hit profitability in the next two to three years, but it’s less clear when that might happen for the group as a whole.

“We may consciously decide that it’s much more important to prioritize growth and impact rather than near-term profitability as a group and miss out on a massive opportunity in Southeast Asia,” explains Quek.

A maturing marketplace

Forging ahead