Rainforest reaches for the canopy with 46% revenue growth

Rainforest, a Singapore-based ecommerce roll-up firm, posted strong revenue growth for the second year running, according to its most recent set of audited financials.

In its financial year ending December 2023, revenue increased nearly 46% to US$54.7 million compared to the previous year. It had posted a 9x jump in revenue in 2022.

Rainforest’s revenue boost is notable, considering the ecommerce roll-up sector has been grappling with challenges such as a funding slowdown and rising interest rates. Even the segment’s pioneer, Thrasio, went bankrupt in February (but has since emerged from it).

Total expenses for Rainforest also grew but at a slower rate than revenue. This led to the company’s net loss narrowing by 54% to US$4.6 million.

Acquisitions reap returns

JJ Chai, co-founder of Rainforest, tells Tech in Asia that the company’s revenue increased as the brands it has acquired have continued to grow by expanding their product offerings and entering new markets. Some have also begun selling in new channels such as Target and Babylist, a marketplace for baby products.

Lilly’s Love, which Rainforest acquired in December 2021, has grown by 3x in top line and EBITDA since acquisition, reveals Chai. The brand creates toy organizers and other essential children’s gear.

Other brands in Rainforest’s portfolio such as Babbleroo and Comfy Bumpy have expanded their product lines with support from the ecommerce roll-up firm.

(From left) Rainforest co-founders Per-Ola Röst, JJ Chai, and Jason Tan / Photo credit: Rainforest

The company was co-founded in 2021 by Chai, Jason Tan, and Per-Ola Röst. The three previously held executive positions at companies like Ovo, Fave, and Airbnb.

So far, Rainforest has acquired 17 brands, mostly in the mom and babycare category. Generally, these brands have more than US$5 million in revenue and over US$500,000 in annual EBITDA when they are acquired.

Net profit rolls in

Ecommerce roll-up companies buy out online brands that have similar offerings and bring them under one umbrella. These aggregators rely heavily on borrowing money to fund their purchases.

This enables them to grow rapidly, but it also increases their debt levels and financial risk. Rising interest rates have pushed many aggregators, including Thrasio, to the brink of collapse.

Rainforest team / Photo credit: Rainforest

Selective acquisitions to continue