Carro aims to treble earnings ahead of potential IPO
[SINGAPORE] Car marketplace and automotive services platform Carro aims to boost its profitability and will seek a final round of fundraising to help it grow, before seeking an initial public offering (IPO).
Its chief executive officer Aaron Tan wants Carro to be much more profitable first, aiming for earnings before interest, taxes, depreciation and amortisation (Ebitda) to hit around S$130 million as a precursor to an IPO, which means roughly tripling it from its current level.
'Once we get to (that level) I do like to think that we can potentially list with a good tailwind because of scarcity. Name me another high-growth tech company that is profitable, Ebitda positive and sizeable?' said Tan.
Investors often use Ebitda as a measure of how well a business is doing operationally.
Carro does not publish its full financial results, but has released highlights from its past audited figures. It achieved positive Ebitda in 2020, with its first profitable year in 2022.
According to preliminary figures from Tan, Carro's Ebitda for the financial year ended March 2025 was 'around S$40 million', near FY2024's S$43 million.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Listing the reasons
Speaking to The Business Times, he said that the company will close a final round of funding in 2025 before it seeks an IPO.
'We are concluding another round that I expect will close before August... and that is probably our last race, from a pre-IPO standpoint. We are profitable so we technically don't need to raise more funds… hence (the upcoming round) should be our last,' he said.
He did not elaborate on the amount involved or the investors taking part, but added: 'I can only say that (the amount raised) is up versus the previous round. So we count that as a blessing given the current state of the markets.'
Carro's most recent funding round in December 2024 was for an undisclosed amount with South Korean venture capital firm Woori Venture Partners.
The funds will be used to expand its operations within South-east Asia, with a focus on Indonesia, where parent company Woori Financial Group maintains a significant presence.
Carro's largest disclosed funding to date was a Series C round in 2021 of S$360 million led by SoftBank Vision Fund. It marked the startup as the first automotive marketplace unicorn in South-east Asia.
According to Tan, the company is now valued at 'well over' US$1 billion.
Despite that, an IPO is not the immediate future.
'I can only say that there are no investors in our capitalisation table that expect us to list this year, given what's happening in the markets over the last 12 months,' he said when asked about the timing of an IPO.
As to where Carro's IPO will take place, Tan said: 'We will do what is in the best interest of our shareholders. All options are open… be it SGX (Singapore Exchange), a US stock exchange, even Hong Kong is a possibility.'
Previous Singapore-headquartered unicorns have chosen US listings: Sea is listed on the New York Stock Exchange, while Grab is listed on Nasdaq.
More expansion
The company has continued the momentum it established in 2024.
For the financial year ended Mar 31, 2024, Ebitda increased to S$43 million from around S$4 million in the previous corresponding period. Similarly, gross profit was up 49 per cent at S$143 million, while operating losses narrowed by 92 per cent to US$7 million. Revenue was around S$1 billion.
While the full audited figures are to be confirmed, Tan told BT that in the latest financial year ended March 2025, revenue increased by around 15 per cent, while gross profit grew more than 20 per cent.
'My plan is to double Ebitda to more than S$80 million by the end of March 2026,' he said, served by both organic and inorganic growth.
A number of mergers and acquisitions will take place in the next three to six months, which includes the expansion to another Asia-Pacific (Apac) market.
He declined to name the new market, but said: 'We will go wherever there is market demand for our products or services. But we are laser-focused on Apac markets versus say, the Middle East or the US. Because we know Asia and thereby have the right to win.'
Carro has long relied on acquisitions to boost market share.
In 2024, Carro expanded to Japan and Hong Kong, meaning it is now present in a total of seven markets, in addition to Singapore, Malaysia, Indonesia, Thailand and Taiwan. It established a presence in Hong Kong through the acquisition of used car platform Beyond Cars.
Part of the reason is that the organic growth of used car sales has been slower than Tan anticipated.
According to him, on average, the company transacts 6,000 to 7,000 used cars in Singapore a year, which gives it a market share of about 10 per cent. Across its various markets, it sells more than 100,000 cars a year.
'I expected us to be far bigger than where we are today (in used car sales)… I learnt that it is a lot faster to buy versus to build a company from scratch.'
But Carro has also focused on growing its recurring revenue rather than just used car sales.
'The biggest shift in the tech world is 'quality of revenues' – we shouldn't be going for bad growth or growth at all costs,' said Tan. In fact, used car sales now account for 'very little' of Carro's revenue.
Recurring revenue streams are more than 85 per cent of the company's top line, said Tan. These come from automotive servicing, financing and insurance offered through subsidiaries that include Genie Financial Services.
'So tomorrow, if I shut down the used car sales, it doesn't really matter, to be very frank. The revenues and the profits will keep coming in.'
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
an hour ago
- Straits Times
South Korea's Lee, Trump agree to work towards swift trade deal, Lee's office says
FILE PHOTO: U.S. President Donald Trump speaks during a swearing-in ceremony for the new U.S. ambassador to China, former U.S. Senator David Perdue, at the White House in Washington, D.C., U.S., May 7, 2025. REUTERS/Leah Millis/File Photo FILE PHOTO: South Korean President Lee Jae-myung speaks during a ceremony to mark the 70th Memorial Day at the Seoul National Cemetery in Seoul, South Korea, 06 June 2025. JEON HEON-KYUN/Pool via REUTERS/File Photo SEOUL - U.S. President Donald Trump and South Korea's new president Lee Jae-myung agreed to work toward a swift trade deal in their first phone call since Lee was elected, Lee's office said on Friday. "The two presidents resolved to make an effort to reach a satisfactory agreement on tariff consultations as soon as possible, that both countries can be satisfied with. To this end, they decided to encourage working-level negotiations to yield tangible results," Lee's office said in a statement. Trump spoke with Lee, invited Lee to a summit in the U.S., and they plan to meet soon, according to a White House official. The two leaders also swapped stories from the campaign trail, including sharing stories of assassination attempts and political difficulties, and agreed that strong leadership will emerge as they overcome difficulties, Lee's office said. Lee survived a knife attack and underwent surgery when he was stabbed in the neck by a man during an event last year. Trump and Lee also talked of their golf skills and agreed to play golf when possible, Lee's office said, while Lee mentioned that he was gifted a hat with Trump's signature on it. Lee was elected on June 3 after the U.S. ally's former leader, Yoon Suk Yeol, was impeached and ousted. Lee's term began on Wednesday. The future of South Korea's export-oriented economy will hinge on what kind of deal he can strike, with all of his country's key sectors from chips to autos and shipbuilding heavily exposed to global trade. He said on the eve of the elections that "the most pressing matter is trade negotiations with the United States." REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
2 hours ago
- Business Times
Kwan Im Thong Hood Cho Temple buys three floors in Robinson Road for S$55.8 million
[SINGAPORE] The top two levels of the 12-storey freehold office building at 108 Robinson Road as well as its eighth floor, are being sold for S$55.8 million. The total strata area is about 14,252 square feet (sq ft). Last month, an option to purchase the three office floors was granted to and exercised by four trustees of Kwan Im Thong Hood Cho Temple. This is a charitable organisation that provides a place of worship on Waterloo Street for Buddhists; it also makes donations to various worthy causes as determined by the trustees, according to Level 12 of 108 Robinson Road has fetched S$18.7 million, which works out to S$3,950 per square foot (psf) on the strata area of 4,736 sq ft. Levels 11 and 8, with a strata area of 4,758 sq ft each, are being sold at S$3,921 psf and S$3,875 psf, respectively. The absolute price for level 11 is S$18.66 million and that for level 8, S$18.4 million. The three levels are being sold by PGIM Real Estate (PGIM RE), which began strata sales in 108 Robinson Road last year, after an extensive revamp of the asset in mid-2023. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up PGIM RE acquired the property, formerly known as Finexis Building, in April 2021 for US$107 million as part of its expansion plans into Asia. PGIM RE is the real estate investment arm of PGIM, the global asset management business of US-based Prudential Financial. The building, located in Singapore's central business district, comprises a retail podium on the first two levels, and office floors from levels 3 to 12. The building is subdivided into 11 strata units. Offices on Levels 3 to 12 have one strata title per floor. Most of these 10 office floors have a strata area of 4,700-plus sq ft each, but Levels 3 and 4 are slightly smaller, at 4,349 sq ft and 4,628 sq ft, respectively. With the recent sale of levels 8, 11 and 12, all that is left in the building are the 6,727 sq ft duplex retail unit on the first two levels and the office floor on level 3. The building does not have any car park, but is located near three MRT stations: Telok Ayer, Shenton Way and Tanjong Pagar. On Apr 25, the Urban Redevelopment Authority released data showing that its price index of office space in Singapore's central region dipped 0.2 per cent quarter on quarter in Q1 2025, after having slipped 0.7 per cent in the fourth quarter of 2024. For the whole of 2024, the price index appreciated by 1.8 per cent. In early May, The Business Times reported that the late tycoon SP Tao's family is selling its space on the top two levels of the 29-storey SGX Centre 2 in Shenton Way for a total of S$39.5 million. This works out to about S$2,629 psf for the total strata area of about 15,026 sq ft. SGX Centre – comprising a two-tower 29-storey office building and podium – is on a site with 99-year leasehold tenure from November 1995, leaving about 69.5 years on its lease. The sale of the Tao family's space involves two transactions at SGX Centre 2. The whole of level 29, nearly 10,215 sq ft, is changing hands at S$26.85 million; about 4,811 sq ft on part of level 28 has fetched S$12.65 million.
Business Times
2 hours ago
- Business Times
UBS faces tough new Swiss banking sector rules
[BERN] The Swiss government on Friday (Jun 6) proposed stricter rules for UBS following its takeover of Credit Suisse, which could make it hold US$26 billion more in core capital, confirming some of the bank's worst fears about incoming new regulations. The key proposal, which the bank would have six to eight years to prepare for after it became law, is that UBS must fully capitalise its foreign units, confirming what many analysts, lawmakers and executives had been expecting. The government said its capital requirement proposal would allow UBS to reduce its holding of Additional Tier 1 (AT1) bonds by US$8 billion. Today, UBS must only 60 per cent capitalise its foreign units and can cover some of the capital with AT1 debt. UBS executives say the additional capital burden will put the Zurich-based bank at a disadvantage to rivals and undermine the competitiveness of Switzerland as a financial centre. Shares in the bank rose after the government unveiled the proposals on Friday afternoon, climbing by more than 6 per cent. Such was the shock in Switzerland over the 2023 collapse of Credit Suisse that top politicians led by Finance Minister Karin Keller-Sutter vowed to introduce more robust rules that would protect taxpayers and prevent another meltdown in future. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Keller-Sutter now holds Switzerland's rotating one-year presidency and Friday's announcement will start a long period of political wrangling over the measures, which the governing federal council called 'targeted and proportionate.' 'They strengthen trust in the financial centre, which, in the view of the federal council, is central to its stability and competitiveness,' the council said in a statement. A parliamentary inquiry last year noted that since UBS bought Credit Suisse for US$3.65 billion in March 2023, it has had a balance sheet bigger than the Swiss economy, and urged the government to take the foreign units into account. The federal council said it would present drafts on the proposals for consultations with stakeholders in the second half of 2025. Finance Ministry officials say laws requiring parliamentary approval will not enter force before 2028. Separate measures known as ordinances that can be issued directly by the government could apply from the start of 2027. A six to eight-year transition period looked appropriate for UBS to meet new rules on capitalising foreign units from when they come into force, the government said. That could give the bank until the mid-2030s to comply. UBS's shares have lagged European peers in anticipation of the tougher rules and sources inside the bank have warned the new regulations could make it an appealing takeover target. Under the Swiss proposals, UBS' Common Equity Tier 1 (CET1) capital ratio could end up somewhat higher than those of global rivals, the government said. UBS's CET1 ratio of 14.3 per cent could rise up to 17 per cent, above rivals like JPMorgan at 15.8 per cent, Morgan Stanley at 15.7 per cent, and 15.3 per cent at Goldman Sachs, it said. Shares in UBS rose more than 60 per cent in the 12 months following its acquisition of Credit Suisse. But the stock has since sharply underperformed; UBS shares have lost about 5 per cent in the past year, while a top European banking index climbed 37 per cent. Analysts say the new regulations could trigger a rejig of UBS's business model, which now focuses on growth in the United States and Asia. To take the edge off the rules, the bank may be tempted to sell some assets, banking experts say. The Swiss government also set out piecemeal reforms to bolster the market regulator FINMA, which was heavily criticised for its response to the Credit Suisse collapse. These include measures aimed at holding bankers to account, giving the regulator the power to impose fines and making it easier to restrain pay and claw back bonuses. Still, the proposals come years after the European Union introduced similar measures in the wake of the 2007-2009 financial crisis. The government also proposed making it easier for banks to access liquidity from the Swiss National Bank. Barriers to transferring collateral to the SNB will also be removed. REUTERS
