Nasdaq-listed Zoomcar reported its December quarter earnings earlier this month. The car-rental firm experienced a decline in net revenue, dropping by 18.8% to $2.42 million (approximately ₹20 crore) in the third quarter of the current financial year. This contrasts with the $2.98 million (approximately ₹24.7 crore) recorded in the same period of the previous year.

However, the company booked a gross profit of $0.3 million (around ₹2.4 crore) against a loss of around $0.3 million (around ₹2.4 crore) in the same quarter last year.

To know more about the company’s results, we sat down with founder and CEO Greg Moran.

The Listing

The company went public during the October-December period. The company began trading on the NASDAQ on December 29. So we asked Moran about the whole process and how has the transition been from a private company to a publicly listed company.

“I think there’s not a whole lot that’s different. I think one big point that does have some distinction is that with a lot of formal communication from a disclosure standpoint and filing, standpoint has to be put out in a very particular matter as a public company,” Moran said.

He added that apart from that the day-to-day of the business and other aspects of building a business remain the same. Talking about the decision to list in US markets, Moran told Benzinga India: “Zoomcar has always been a Delaware C-Corp US company. So Zoomcar Inc. has always been the parent company for our operations in India, Southeast Asia, broader MENA (Middle East and North Africa) region as well. So it’s always been structured that way, from an umbrella lens.

“So I think in many ways it always made sense to have that parent company listed in the U.S. I think the U.S. capital markets are obviously the premier capital market destination globally, so you can’t really beat the depth and breadth of the U.S. capital markets and as a company now with a global footprint operating in three countries and having the ambition to be in 15-20 countries over the next few years so certainly it made sense to be on a more global exchange.”

Results Overview

“We are very excited about where we are right now as a company, we have focused on the last several quarters on profitability efficiency and to that end I think we had a very successful quarter,” Moran said about the company’s performance during the December quarter.

“We announced earlier this month that we hit record gross profit, record contribution profit. So at an overall sort of booking level, we were at an all-time high there. Over multiple quarters, we were able to take a very sizable per-booking loss of $20 plus and transition that to something closer to $10 profit per booking.” Moran added.

Moran said that the company was able to do this through streamlining headcount costs, incentives, pricing and a better mix of bookings.

Talking about the outlook going forward, Moran said that the company is looking at a 70% to 100% Jump in revenue between $17 to $20 million for this coming year. “And then looking at hitting on a consolidated adjusted EBITDA with an annualized run rate of between $2 and $4 million in the calendar year 2024,” he added.

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Moderation In Revenue

The company saw a moderation in its revenue during the quarter. Talking about the reason that led to that Moran said, “I think for us, the the indexation was on profitability. And so we were focusing on the mix and the quality of bookings there and streamlining that. And so that was the primary objective and so we were very strongly achieving that objective from last quarter. And now as we achieve that baseline focus of margin profile, you know, we can kind of return to hitting significant scale.”

He adds that the company has incredible room to grow, especially considering that the target market is huge. “The addressable market for what we’re doing here is massive, I mean, we’re not even 1% Not even close to 1% penetrated against the addressable market. So I think that the demand story here is, you know, close to infinite,” Moran said.

The Way To Profitability

When asked about how the company plans to further expand margin and its path towards EBITDA and net level positivity, Moran said, “We’ve had kind of record gross profit contribution profit last quarter, and that forms the basis for our broader profitability story. So in the steady state EBITDA profile in this business, we have a strong conviction that that number is somewhere in that 25 to 30% range, based on kind of the bottom-up numbers that we see on a week-in week-out basis.

“And so that’s also kind of a benchmark and triangulated against other consumer leading consumer marketplaces, like an Airbnb etc., I think ultimately that 25%-30%, it would be kind of where things triangulate over a longer period.

“I think for Zoomcar right now, what we’re really focused on for 2024 is plowing back the incremental contribution profit gross profit per booking and reinvesting that into the host side, reinvesting it into the awareness consideration there, which ultimately translates to more bookings and more revenue and from a consolidated EBITDA perspective, ultimately, since you’re already very profitable at booking level it’s just about adding booking scale.”

India And Beyond

“India is still 95% of our business. The way we see it is that India is probably about 40% of the addressable market. So yeah, I see India will probably always be at least half of our overall revenue mix. So this is why we’re operationally headquartered in Bangalore, and that’s why we don’t emphasize changing our operational headquarters from Bangalore at any point,” Moran said.

“If you look at the top four countries India, Indonesia, Brazil, Mexico, those are you know, that’s probably 75 to 80% of the addressable market. So I would expect over a longer term, over three, four or five years, I would expect the revenues in each of these countries to broadly match the market opportunity and match the relative mix.

So we’re in three countries now. Indonesia, Egypt, and of course India. Indonesia is a massive market opportunity in itself. As you probably know, it’s 300 million people. Probably the second largest addressable market out there after India. If you look at the other markets that are very large and compelling. You have some markets in Latin America like Brazil and Mexico. So I think Latin America is something that we would certainly look out to the back end of this year. But it’s something where the three countries that we’re in today have massive scope for scale, and I think particularly Indonesia is something which is going to get a lot more focus as we continue to move through this year,” he added.

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