8:56 am, October 10, 2023
Online marketplace Carwow’s losses after tax increased 121% to £29.4m last year despite revenues increasing.
Accounts just filed for the disruptor show it boosted revenues to £39.9m during the year, up from £36.6m the previous year.
Its losses came as a result of ‘increased investment’ in its new car and used car offerings, said the firm in its annual report just filed at Companies House.
Carwow says its performance is assessed against ‘revenue and gross profit metrics’. Gross profit for the year was up £3.5m to £39.6m and it now operates in the UK, Germany and Spain.
The firm says consumer confidence has been hit by the fallout from the war in Ukraine, increased energy prices and interest rates as well as rising inflation.
Carwow said: ‘After a strong first quarter for the business, the economic landscape changed significantly. Despite this, revenues grew in all markets and the 2022 results reflect higher group revenues of £39.9m.’
Carwow said it invested in scaling its used Sell My Car business during the year with increased product investment and a brand marketing campaign which was ‘largely funded by media for equity’. The firm said this did not impact cashflow but the costs of the campaign were reflected in its profit and loss account.
As a result, the Sell My Car business accounted for a ‘significant proportion’ of the group’s revenues. The firm’s expansion into used cars came at a critical time with new car supply dwindling during the year.
Carwow added: ‘The group also continued to invest in the core business ahead of the return of new car supply.
‘The return of new car supply is starting to show fruition in all of our markets and is reflected in our 2023 Q1 trading results which are well ahead of forecasts and prior years.’
However, the firm said it was forced to make ‘structural changes’ to its workforce at the end of 2022 due to the economic uncertainty and despite these changes it still increased its losses.
Cash and cash equivalents also fell during the year to £17.4m from £26.2m the year before.
The UK accounted for the largest proportion of income with £25.3m bought in here, while Germany added £11.9m and Spain £2.7m.
Carwow is well known for its popular YouTube channel, fronted by Mat Watson, which is now the most watched car channel in the world. It had 7.8m subscribers at the end of 2022.
Looking ahead, the firm said it has reviewed its budgets for 2023 and is confident in its ‘liquid resources and medium term plans’ in the ‘context of a continued challenging economic environment’.
Carwow said: ‘The growth in the Sell My Car business has diversified the commercial product offering and allows the group to hedge against potential slow unwind of new car supply in the UK.
‘The directors have also performed a downside scenario analysis which, while considered highly unlikely, demonstrates that the group will have sufficient cash resources to operate as a going concern for a period of at least one year.’
Founder James Hind recently stepped down from the day-to-day running of Carwow and handed the CEO role to John Veichmanis. The new boss recently appeared on the Car Dealer Podcast and spoke about the firm’s growth plans.
Speaking about its latest accounts, Veichmanis said: ‘2022 was a year of turbulence for the whole automotive industry due to well-documented global factors, and Carwow was not immune from those headwinds.
‘We also made a number of significant planned investments to broaden our offering with both customers and partners; these include the development of our hugely popular Sell My Car service and extensive investments into our OEM media product. The impact of those decisions has been transformational and has set us up for a bumper 2023.
‘Year-to-date, Carwow has seen a dramatic upturn in revenues and profitability. We are currently forecasting 2023 revenues to exceed £50m.
‘Our cash position remains strong, and we continue to make strategic investments to accelerate the sustainable growth of the business in all our markets.’
Carwow employed 374 as of the end of 2022 while the highest paid director received £189k.
