Why did Carsome lay off 10% of staff? We dig into its finances for clues

Emmanuel Samarathisa also contributed to this report.

When Carsome announced last week that it was laying off 10% of staff as well as forgoing leadership pay for the rest of 2022, it might have come as a surprise to some.

Malaysia’s first tech unicorn has raised a total of US$567 million in disclosed funding, including a massive US$290 million haul announced in January 2022, according to Tech in Asia’s database. It counts several blue-chip names among its backers such as Gobi Partners, Asia Partners, and Catcha Group.

Lately, Carsome still appeared to go from strength to strength. It poached senior executives from AirAsia parent Capital A, made a number of acquisitions (including a US$200 million deal to acquire iCar Asia and take it private), and gained an elusive digital banking license in Malaysia as part of a consortium.

Just in August, Carsome announced that it had reached 18,000 cars sold monthly across its four core markets to celebrate its seventh anniversary.

Photo credit: Carsome

It even filed for a dual listing in Singapore and the US earlier this year, though that has been scrapped for the moment.

But a look at Carsome’s financial statements for its 2021 financial year hints that the company’s approach to growth may have caught up with it.

In a statement provided to Tech in Asia, Carsome Group says that “we have made decisive changes in organizational design, commercial policy, as well as branding strategy to accelerate our group-wide profitability plan in the next few quarters.”

The company adds that it is “supported by our strong financial resources and the full backing of our shareholders as well as banking partners,” and remains “on target to break even in group-level EBITDA” in the next few quarters.

Big revenue but thin margins

In his email to staff, Carsome co-founder and CEO Eric Cheng attributed the layoffs to the global economic slowdown, which many other tech firms have been grappling with this year.

See also: Tracking layoffs across Asia’s startup ecosystem (Updated)

Cheng also notes that the company’s top priority is “accelerating our group profitability plan and [achieving] positive EBITDA within the next few quarters.”

Last month, Tech in Asia reviewed Carsome’s financial statements for the financial year ending December 31, 2021, in which we highlighted that its revenue doubled to US$656 million compared to the previous year, while its net cash used in operating activities stood at negative US$114 million.

Hefty acquisitions

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