Used Car segment drives record first-half revenues for iCar Asia

iCar Asia ASX ICQ record first half revenue 2018
iCar Asia has reported record first half revenues, driven by its Used Car business division.

Automotive portal network iCar Asia (ASX: ICQ) has reported a record $5 million revenue for the first half of 2018, underpinned by strong year-on-year growth in all key operating areas.

The revenue compares to $4.48 million recorded for the previous corresponding period and represents a 12% increase across the company’s key South East Asian markets of Malaysia, Thailand and Indonesia.

The positive result has been attributed to iCar’s strong online classified segment which continued to grow rapidly, boosted by equally-strong audience metrics (up 67% year-on-year to 11.7 million), leads (up 21% year-on-year to 794,206) and listings (up 1% year-on-year to 448,826).

Business from the company’s Used Cars segment – including classifieds, brokerage and auctions, which account for 66% of total revenues – was the biggest contributor to iCar’s half-yearly success, increasing 35% to $3.1 million compared to $2.3 million in the first half of 2017.

Revenues for the New Cars segment – including advertising, events and dealers, and accounting for the remaining 33% of total revenues – were predominantly affected by the retiming of industry events such as the iCar-operated DRIVE auto fair, rescheduled from May to July due to the Malaysian general elections.

As a result of the retiming, iCar said it expects to record a “largest ever year-on-year quarter three revenue growth in excess of 50%”.

New Car media spend in Malaysia and Indonesia was also affected due to the earlier Muslim New Year occurring in June.

Improved EBITDA margins

iCar’s operating expenses decreased 2% in the first half of 2018 to $10.7 million, largely a result of a 34% decrease in discretionary marketing expenses compared to the previous corresponding period.

The company said market optimisation continued to deliver “great operational results at lower budgets”, with increases in mostly non-cash (share-based) employment incentives offsetting some of the savings.

As a result of cost management measures and revenue growth, iCar’s earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 12% for the first half of 2018 to $5.73 million, compared to $6.5 million in the previous corresponding period.

iCar’s Malaysian business is expected to become run-rate EBITDA positive in September, three months ahead of earlier predictions.

Progress remains on track for the company’s Thailand operations to become run-rate EBITDA break-even by year end, with iCar, as a whole, forecast to become run-rate EBITDA break-even by the end of 2019.

Operating highlights

According to company figures, approximately 12 million people visit an iCar Asia website every month to research, buy or sell a vehicle and these audience numbers continued to grow during the reporting period.

In Malaysia, iCar’s average monthly audience grew 34% year-on-year in the first half of 2018, which drove a leads growth of 50%. iCar defines leads as unique online visitors expressing an interest to buy or sell.

In May, prices across key classified products in the Malaysian space increased by an average 16% and immediately after the price increase, paid accounts were down 8% year-on-year.

In Thailand, iCar’s average monthly audience grew year-on-year at 60% during the period, with leads increasing at 16% year-on-year.

Despite prices across key classified products for the Thailand business increasing by an average of 39%, the Used Car business in that region recorded 23% more dealer accounts year-on-year in June.

Indonesia also showed strong audience growth, with average monthly figures growing at 51% year-on-year and leads increasing by 33%.

In May, iCar increased prices across key classified products in Indonesia by an average of 82%, with dealer accounts increasing at 3% year-on-year in June.

Online auction platform

Earlier this month, iCar Asia launched the CarlistBid.my auction platform into the Malaysian market, connecting car sellers to dealers in a safe and trusted environment.

The company said the platform – which achieved A$0.72 million worth of sales within a four-month test period – complements its core business and adds a “compelling fast and convenient option” for private users and fleet owners to sell their vehicles to an existing network of dealers.

iCar currently operates the largest database of sellers and buyers in Malaysia, hosting more than 3,000 automotive dealers and over 3 million unique visitors and potential sellers each month.

Managing director Hamish Stone said the auction function will position iCar for continued growth and increased diversification during the second half of 2018.

“Adding new car and auctions to our existing business will allow us to take further advantage of our market leadership position across the largest automotive markets in Malaysia, Thailand and Indonesia,” he said.

At midday, shares in iCar Asia were steady at $0.27.

Imelda Cotton has over 20 years experience as a journalist and communications professional. She has spent the bulk of her career in the resources sector, having also worked directly with oil and gas majors and as a journalist covering a vast array of ASX listed companies within the resources, energy, science and health sectors.