Southeast Asia’s largest and most profitable online used car platform, Carro, has reported remarkable achievements in terms of profitability for the first quarter of the fiscal year 2024. Despite a seasonally weaker quarter due to regional holidays, the company exceeded its profitability targets and achieved its highest EBITDA of over US$4 million for the month of June.
Key highlights from Carro’s Q1 FY2024 performance include:
- Gross Profit Margins Growth: Carro’s Gross Profit Margins for Q1 FY2024 surged to 14%, a significant improvement from the 9% Gross Profit Margins achieved in FY2023.
- Strong EBITDA Performance: Carro’s EBITDA is now operating at an annualized run-rate of over US$50 million, marking a substantial increase compared to the previous fiscal year’s performance. This impressive growth is more than 10 times the EBITDA achieved for the entire FY2023.
- Focus on Fundamentals and Resilience: The company’s success is attributed to its strategic focus on fundamentals and its commitment to delivering value without resorting to subsidy wars. This approach has led to four consecutive quarters of positive EBITDA.
- Expansion and Diversification: Carro’s strategic decision to enter new markets, including Japan, is expected to drive even stronger growth in the coming years. The company’s solid cash flows and absence of operational burn have facilitated its expansion plans.
- Ancillary Income Streams: Carro’s ancillary attachment rates are increasing, driven by the focus on its platform flywheel. Ancillaries now contribute nearly 60% of the company’s gross profit, ensuring a diversified income stream.
- Successful Partnerships: Carro’s partnerships in the insure-tech space, including collaborations with ZA Tech and MSIG, have led to significant growth in Gross Written Premium, which has nearly doubled year-over-year.
Aaron Tan, co-founder and CEO of Carro, emphasized the company’s commitment to executing its digital ecosystem-led business model and creating a fundamentally stronger and more resilient business. He noted that the investment from Jardine C&C will further drive earnings growth, particularly in aftersales services.
“Our focus on fundamentals and our reluctance to enter into subsidy wars has enabled us to deliver four quarters of positive EBITDA. The strong execution of our digital ecosystem-led business model has made our business fundamentally stronger and more resilient, with significant ‘sticky’ recurring ancillary income streams. Ancillary attachment rates are going up as we focus more on our platform flywheel. The investment from Jardine C&C will help us drive even more earnings growth, particularly from aftersales. Our insure-tech partnerships with ZA Tech and MSIG are bearing fruits, with Gross Written Premium growing nearly 100% year-over-year.”
Aaron Tan, co-founder and CEO of Carro
Ernest Chew, Chief Financial Officer of Carro, highlighted the impressive profitability metrics across the board. He emphasized that Carro’s marketplace business, contributing nearly 85% of revenues, has doubled its gross profit margins over the past year. The various segments of Carro’s business, including mobility, aftersales, financing, and insurance, have all demonstrated robust year-over-year growth.
“Carro has bucked the industry trend and performed well in the first quarter with profitability metrics up across the board. Our first quarter EBITDA is already more than 3 times of our entire last financial year and we continue to be EBITDA positive in all core markets. Ancillaries continue to represent nearly 60% of our gross profit, so we’re under no pressure to sell more just to meet profitability targets. Our marketplace business, which contributes nearly 85% of our revenues, has doubled gross profit margins over the last 12 months. Gross profit for mobility grew nearly 200%, aftersales grew over 150%, whilst financing and insurance grew about 50% each year-over-year. We expect explosive earnings growth in the near term. We are one of very few profitable tech start-ups, not just in Asia, but globally as well.”
Ernest Chew, Chief Financial Officer of Carro
