Carousell bets on ad dollars; may fundraise in next 2 years

Singapore

CLINCHING advertising dollars will be a core focus for Carousell this year, and the online marketplace operator is willing to dish out more cash on talent to drive growth, chief executive Quek Siu Rui told reporters on Friday.

Mr Quek was speaking on the sidelines of Carouselland, the online marketplace operator's retail fair at the Marina Bay Sands Expo, held in conjunction with its seventh anniversary.

"Direct media ads and programmatic advertising are definitely going to be (part of) a huge scale-up in revenue stream for us. When you look at Carousell, we are actually a very attractive advertising ecosystem and premium publisher, just because of the real stickiness of the app," he said.

Citing that each Singapore user spends an average of 13 minutes daily on Carousell, he added: "All these present very attractive targeting opportunities for advertisers who want to have their brand come up when someone is thinking about buying or selling something."

Carousell generated US$7 million in revenue for 2018, of which direct media services and programmatic advertising collectively accounted for US$4.17 million, The Business Times reported on Thursday. Its topline grew four times from the previous year.

Meanwhile, the startup, which is valued at over US$550 million, registered a loss of US$25 million in 2018. This is narrower than the year-ago loss of US$29.8 million.

Notably, Carousell's bottomline was hit by the US$17.5 million in staff costs, 2.5 times its topline for the year. This cost could be even higher in 2019, given its recent and planned hires in pursuit of monetisation.

Last month, for instance, Carousell hired JJ Eastwood, the former Asia-Pacific managing director of Rakuten Marketing, to lead its advertising sales and operations.

The startup also added over 100 employees in the Philippines in April, when it acquired a loss-making unit of classifieds giant OLX for US$34 million in stock.

The acquisition was part of a US$56 million funding deal with OLX, a unit of tech giant Naspers. Carousell now has over 400 employees globally.

If staff costs go up, Carousell may need fresh funds sooner. The startup used US$22 million of net cash flows for operations in 2018. It had US$55.4 million in cash as at end-2018, suggesting a runway of about two years, if the burn rate is unchanged. When asked if Carousell may seek fresh funding within the next two years, Mr Quek said: "I think quite possibly, just because we see so many growth possibilities ahead.

"But as a company, we are always financially disciplined. We build our business plan and financial model around our current view of what we can do in our portfolio markets," he said. Carousell's "endgame" is to secure a leadership position in South-east Asia's classifieds space, and not to burn cash for its own sake, he added.

When asked if Carousell may look to achieve a valuation of at least US$1 billion with its next round of funding, he said: "We find it more productive to focus on what we can do for... our users, than obsessing about the target of when we can reach unicorn status."