Carro Aims to Treble Earnings Ahead of Potential IPO
Car marketplace and automotive services platform Carro is gearing up to enhance its profitability as it prepares for a final round of fundraising. This strategic move is designed to bolster the company’s growth before pursuing an initial public offering (IPO).
Chief Executive Officer Aaron Tan has expressed a clear vision for the company’s financial goals. He aims to increase the earnings before interest, taxes, depreciation, and amortisation (Ebitda) to about S$130 million as a critical milestone prior to launching an IPO. This target requires tripling the current Ebitda level.
“Once we reach that level, I believe we can list with a positive outlook due to scarcity,” Tan stated. The notion of scarcity is significant in Tan’s strategy, highlighting Carro as a distinctive high-growth tech company that is both profitable and Ebitda positive at a sizeable scale.
Investors typically look at Ebitda as a key indicator of a company’s operational performance. Although Carro does not disclose its complete financial results, it has shared significant highlights from previous audited reports. The company achieved positive Ebitda in 2020 and reported its first profitable year in 2022. Preliminary figures indicate that for the financial year ending March 2025, Carro’s Ebitda stood at around S$40 million, slightly below the S$43 million mark of FY2024.
Tan disclosed that Carro will complete a final round of funding in 2025 before seeking an IPO. “We are finalizing another round expected to close by August, and it will likely be our last from a pre-IPO standpoint,” he elaborated. Notably, he mentioned that the amount raised is higher compared to previous rounds, viewing this as a positive development given the challenging market conditions.
Carro’s most recent funding round in December 2024 involved an undisclosed amount in collaboration with South Korean venture capital firm Woori Venture Partners. The newly acquired funds will fuel operational expansion in South-east Asia, focusing specifically on Indonesia, where Woori Financial Group holds a prominent presence.
The company’s largest disclosed funding to date was in 2021, during a Series C round amounting to S$360 million led by SoftBank Vision Fund. This remarkable achievement established Carro as the first automotive marketplace unicorn in South-east Asia. According to Tan, the company’s current valuation exceeds US$1 billion.
Despite these impressive milestones, an IPO is not imminent. Tan noted, “No investors expect us to list this year due to recent market dynamics.” The location for the prospective IPO remains undecided, as Tan assures that decisions will be made in the shareholders’ best interests, with possibilities including the Singapore Exchange (SGX), a US stock exchange, or even Hong Kong.
Continuing its momentum established in 2024, Carro reported significant financial improvements for the year ended March 31, 2024. Ebitda increased to S$43 million from S$4 million the previous year, with gross profit rising by 49% to S$143 million. Operating losses narrowed by 92% to US$7 million, while revenue reached approximately S$1 billion. For the financial year ending March 2025, preliminary figures suggest a 15% increase in revenue and over a 20% growth in gross profit.
Future goals include doubling Ebitda to more than S$80 million by the end of March 2026, driven by a combination of organic and inorganic growth. Tan foresees several mergers and acquisitions occurring within the next three to six months, including expansion into another Asia-Pacific market. While the specific market remains undisclosed, Tan assured that it would align with market demand within the Apac region.
Carro has leveraged acquisitions to significantly boost its market presence. Notably, in 2024, the company expanded into Japan and Hong Kong, now operating in a total of seven markets, alongside Singapore, Malaysia, Indonesia, Thailand, and Taiwan. A strategic acquisition of Hong Kong’s used car platform Beyond Cars marked this expansion.
The strategy comes in response to slower-than-expected organic growth in used car sales. Currently, Carro transacts 6,000 to 7,000 used cars annually in Singapore, representing about a 10% market share. Across all markets, the company sells over 100,000 cars yearly. “I anticipated being larger in used car sales, but it’s faster to acquire than build from scratch,” reflected Tan.
This shift highlights Carro’s focus on strengthening its recurring revenue streams. Tan aptly pointed out that the current tech landscape prioritizes “quality of revenues” over “bad growth or growth at all costs.” Consequently, used car sales now form a minor component of Carro’s revenue. Over 85% of the revenue is generated from recurring streams, including automotive services, financing, and insurance provided through subsidiaries such as Genie Financial Services.
“If we were to shut down used car sales tomorrow, the impact would be minimal as revenues and profits would continue flowing,” Tan affirmed.
