Turo, the venture-backed peer-to-peer car rental service, said fourth quarter and full year financial performance this week in an updated IPO filing. The company first filed an S-1 to go public in early 2022, later updating the document quarterly in preparation for a potential offering. TechCrunch covers its regular financial announcements as they provide insight into when a deeply funded startup with a historic billion-dollar valuation will finally decide to pull the trigger and go public.
In 2019, Turo raised a $250 million series led by IAC, which gave it a $1.25 billion post-money valuation according to PitchBook. Crunchbase measures Turo’s total funding to date around the $500 million mark.
The company put capital to good use, posting rapid revenue growth from 2019, positive operating income from 2021 and net profit from 2022.
However, Turo’s growth rate has slowed in recent years, making an IPO timeline difficult to estimate. the company wouldn’t be making regular S-1/A filings if an IPO wasn’t a top priority—indeed, no other venture-backed company is running a similar playbook to my knowledge, which is a shame—but with tech valuations down from their 2021 season highs, choosing the right time to go public is not an easy task.
Just ask Reddit, which has been trying to go public for years before filing this year, and the army of billion-dollar startups blocking the private market exits.
How did Touro do in 2023?
Turo posted revenue of $879.8 million last year, up 18% from the previous year. The company’s overall revenue scale is impressive, but its growth rate has slowed dramatically over the past two years. In 2021, Turo’s growth rebounded impressively from the woes caused by the 2020 pandemic, growing 213% that year to $469 million. However, triple-digit growth was short-lived at the car rental company, which saw its revenue growth slow to 59% in 2022, when it recorded total revenue worth $746.6 million.
While Turo’s annual growth rate has cratered in recent years, it had a bit of good news for investors in its new filing. TechCrunch estimates its Q3 2022 to Q3 2023 growth rate was 13.6%, while its Q4 to Q4 growth over the same time frame was a slightly stronger 14.3% . While both figures are below its full-year growth rate, its revenue growth even slightly in the fourth quarter could help it argue to public market investors that its slowdown is not necessarily irreversible.
Still, 18% growth isn’t so low that Turo can’t go public, especially since it’s profitable, though it may face investor concern about declines there as well. Its gross margins carried forward slightly last year, falling from 54.3% in 2022 to 51.4% in 2023.
Partly as a result of this gross margin decline, Turo’s calendar 2023 profitability lagged its 2022 results. It posted its smallest operating profit since 2020 last year ($13.7 million, down from $46.6 million in 2021 ) and the lowest net profit since 2021 ($15.6 million, down from $154.7 million in 2022). Unadjusted earnings at tech companies going public are rare enough to make Turo stand out from the pack, though how much value potential public shareholders will add to its profitability in light of its slowing growth is an open question. open question.
Why not go public now?
With net income and growth and revenue approaching $900 million and a business model that remains in the black, Turo is big enough to go public, and at a valuation of just over $1 billion, it won’t struggle. exceeding its final private value.
So why not go public now? Perhaps the company is waiting for its growth to pick up again, or simply for the technology and technology revenue multiples to increase so it can raise even more cash with less dilution. Or perhaps, because it appears to be sustaining itself from its operations, it is waiting until investor appetites for tech IPOs return.
There’s reason to be cautious, even if the constantly updated S-1 shows it remains willing. One of its public underwriters, Getaround, has seen its value crater since it floated in a SPAC-led combination. (To be fair, though, many SPAC-based combinations don’t perform well.)
While we wait, however, there were several other notable nuggets in Turo’s updated S-1 worth mentioning:
- EVs: In its S-1/A filing for the third quarter of 2023, Turo wrote that “electric vehicles accounted for 8% of Turo vehicle registrations.” That figure rose to 9% in its most recent filing, implying that the share of electric vehicles on Turo’s platform is expanding at a remarkable clip.
- Slowing down supply growth: In its S-1/A filing for the third quarter of 2023, Turo said there were “approximately 350,000 active vehicle listings in [its] platform, up 16% year-on-year.” In its most recent filing, those figures rose to 360,000 and 12%. More cars, slower growth.
- Rising interest income impacts Turo’s adjusted EBITDA: Interest income at Turo has increased with rising interest rates, rising from $5.3 million in 2022 to $18.3 million in 2023. However, the company notes, adjusted EBITDA “does not reflect other income and (expenses ), net, which includes cash interest income,” meaning its adjusted profitability took a hit due to the company’s rising interest income. We’ve seen this at other companies, to be clear.
Recall that the largest investors in Turo include IAC, with 39.2 million shares, G Squared, a venture capital fund with 16.2 million shares, August Capital with 10.3 million shares and Canaan Partners with 9.3 millions.
More when she decides to start her roadshow and price her shares.
