Secondhand goods marketplace Carousell expects to “healthily” reduce its losses this year, putting it on track to profitability, the firm’s CEO told CNBC.
“This year, we continue to expect revenue to grow healthily. And I think in a very promising sign, we actually are going to be healthily reducing our losses this year as well,” said Quek Siu Rui, co-founder and CEO of Carousell said Monday, adding that the firm is “on track” with its plan to profitability.
In 2022, the Singapore-based company posted $82.5 million in revenue, a 67% jump from the year before, according to regulatory filings. However, losses in 2022 widened 57% year-on-year with higher expenses.
The Singapore-based firm was founded in 2012 as an online classified advertisements marketplace where users can list and sell their used goods for money.
“We acknowledge that the recommerce opportunity is a really big one. We are actually investing to grow these different initiatives and strategies,” Quek said on CNBC’s “Squawk Box Asia,” referring to the sale of previously owned goods, whether used or brand new.
Research shows that the global circular economy — which seeks to reduce waste and promote recycling and reusing — could generate $4.5 trillion in additional economic output by 2030.
Southeast Asia expansion
From automobiles to fashion, Carousell has been aggressively expanding its presence across Southeast Asia.
In 2019, it agreed to merge with Telenor Group’s classifieds firm 701Search, which operates marketplaces Mudah in Malaysia, Chợ Tốt in Vietnam, and OneKyat in Myanmar. In the same year, Carousell acquired OLX Philippines — which claimed to be the largest online classifieds site in The Philippines.
It also bought online automotive platform OneShift in 2018 and authenticated sneakers and streetwear marketplace Ox Street in 2021, and launched the Ox Luxe service which allows users to buy, sell, and consign pre-owned luxury items such as handbags and watches.
Last year, Carousell acquired Singapore-based second-hand fashion retailer Refash and Indonesian electronics recommerce platform Laku6 to bolster its expansion into the fashion and electronics markets.
“We feel confident that we can actually continue to generate healthy growth towards this very meaningful direction of recommerce growth,” Quek told CNBC.
“[With the] support of our investors, we are actually very well capitalized to execute on these strategies. So we feel very confident about our capital position.”
Cost cutting
In December, Carousell announced it was letting go of about 10% of its headcount — or approximately 110 positions. Quek, in a note to employees, admitted that he was “too optimistic” about the Covid recovery and underestimated the impact of growing his team too quickly.
Carousell last raised $100 million in a September 2021 funding round, taking its valuation to $1.1 billion. Media reports last year said the company dropped SPAC merger talks with U.S.-headquartered private equity firm L Catterton amid market volatility.
A SPAC, or special purpose acquisition company, is a shell company that raises capital in an IPO and uses the cash to merge with a private company in order to take it public.
Challenging macroeconomic conditions such as high interest rates and soaring inflation have caused companies to cancel or delay their IPO plans.