SoftBank-backed Cars24’s revenue shrinks 13% to $371 Mn in FY21

Online used car marketplace Cars24 had entered the club of unicorns towards the end of the last fiscal year after raising $200 million in its Series E round. The company continued its fundraising spree, raising nearly $760 million in two successive rounds in the ongoing calendar year.

While back to back funding rounds in 2021 and participation of SoftBank in its last round are indicators that Cars24 will scale at a fast pace in the current fiscal (FY22), the company’s scale saw a dip of 12.6% in FY21 mostly due to the pandemic, according to its regulatory filings analysed by Fintrackr.

Cars24’s Singapore based holding entity controls six subsidiaries of the company across India, Australia, UAE and Thailand. The operating revenue of this entity has declined by 12.6% to $371.3 million [Rs 2,717.9 crore] during FY21 from $424.7 million [Rs 3108.8 crore] in FY20. 

The sale of used or pre-owned vehicles (to use the industry term) is the largest revenue generator for Cars24, accounting for 97% of the operating revenue of the company. Sales from this vertical have gone down by 13.7% YoY to nearly $360 million during FY21.

The used car trading platform also provides financing services to its customers. This business did well on its slow base, with income from interest on loans and ancillary financial services growing around 93% YoY to $2.7 million during FY21.

Other operating income including commission and service income accounted for 2.32% of annual revenue, growing 38.04% YoY to $8.6 million during FY21. Non-operating revenue including return on financial assets added $4.6 million to the company’s coffers.

When it comes to costs, the purchase of used vehicles is the single largest cost incurred by Cars24, accounting for 84% of annual costs during FY21. These purchases contracted by 14% to $339.7 million in FY21 from $395.04 million in FY20.

Employee benefit expenses came in second, making up 7.7% of annual costs. These expenses remained fairly stable at $31.05 million and also included share-based payments of $ 2.7 million during FY21.

Cars24 cut back its marketing and sales promotions efforts during the fiscal year affected by Covid-19 and as a result, these were reduced by 44.6%, from $20 million in FY20 to $11.07 million in FY21. 

The company also spent $2.3 million and $3.5 million on IT & Communication and customer care expenses respectively during FY21.

Overall, the scale of the operations has contracted due to the pandemic and annual costs of the company have gone down by 14.2% to $404.8 million [Rs 2963.14 crore] in FY21 from $471.62 million [Rs 3452.26 crore] during FY20. Cars24 spent $1.09 to earn a single dollar of revenue in FY21.

Due to the austerity measures taken by the management, the company has managed to reduce its losses by 29% to $28.87 million [Rs 211.3 crore] during FY21 while the EBITDA margin has improved by 201 BPS to 6.61%. While the company has managed to bring down losses, its balance sheet carries accumulated losses of $144.03 million [Rs 1054.3 crore] as of 31 March 2021.

Cars24’s revenue has declined and this was expected as the company’s operations faced disruption for several months in FY21 due to the pandemic. With the money it raised this year, the company certainly has enough dry powder to grow at a fast pace in the ongoing fiscal year (FY22). 

Competition for the Gurugram-based Cras24 has also increased multifold in the past couple of years. And, its rivals CarDekho and Spinny are also well capitalised. Tiger Global-backed Spinny had cornered $283 million whereas CarDekho also raised $250 million in a pre-IPO round.