Morning Report: Carvana’s IPO Packs Quick Revenue Growth, Persistently Expanding Losses

As 2017’s IPO crop continues to develop, we are seeing some notable entrants to the mix. Most recently, Carvana filed to go public. The firm’s documentation lists a placeholder $100 million IPO amount, giving little indication of how much capital it may look to raise or what valuation it may seek.

According to Crunchbase, the Phoenix, Arizona company raised $300 million to-date across three rounds, including a $160 million Series C in August.

Carvana, dubbed “Amazon of Cars” in some media reports, has displayed incredibly quick revenue growth. The following chart is illustrative:

Please excuse the Word ‘97 artwork; we didn’t create it.

Regardless of how pretty or not the image is, the startup has certainly shown the sort of growth venture investors covet. It’s chart is the very definition of up and to the right. So too, however, are the company’s persistent losses.

In S-1 filings, companies list their quarterly results. This gives investors a look into the seasonality — or lack thereof — of the business and also gives more in-the-weeds looks at profitability, variables costs, and sequential revenue growth itself.

While reading Carvana’s S-1 this morning, however, something caught my eye: The company has lost more every quarter listed than in the preceding quarter. As the firm’s revenues have shown nothing but growth in the last 12 listed quarters, so too has its lack of profitability.

I highlight this to underscore what investors are being asked to buy into here: a company that is still immature in its path to profitability to the point that it has yet to manage falling losses on a dollar basis.

(Declining raw dollar losses, and not merely falling losses on a basis calculated relative to top line, in the face of expanding revenue, was a hallmark of the initial, positive response to the Twilio S-1.)

For fun, here are Carvana’s net losses (quarters ending at listed date):

• March 31, 2014: $2.09 million.
• June 30, 2014: $2.79 million.
• September 30, 2014: $4.26 million.
• December 31, 2014: $6.09 million.
• March 31, 2015: $6.76 million.
• June 30, 2015: $7.65 million.
• September 30, 2015: $9.27 million.
• December 31, 2015: $13.09 million.
• March 31, 2016: $17.33 million.
• June 30, 2016: $18.11 million.
• September 30, 2016: $21.96 million.
• December 31, 2016: $35.69 million.

Charted, that looks like this:

If Carvana finds open arms among public investors, then there really is no excuse to not go public.

Today in the Crunchbase Daily:

IPOs accelerate with Cloudera, Carvana filings

• Two more venture-backed companies have publicly filed for IPOs. Enterprise software unicorn Cloudera filed to raise up to $200 million in a New York Stock Exchange offering. The Silicon Valley company posted a net loss of $187 million last year on $261 million in revenue. Used car marketplace Carvana also threw its hat into the IPO ring, filing to raise $100 million. The Phoenix-based company sold $365 million worth of cars last year and posted a net loss of $93 million.

Robinhood said to raise round at $1.3B valuation

• Free stock-trading brokerage Robinhood is close to completing a large new fundraise that values the four-year-old company around $1.3 billion, according to a TechCrunch report citing unnamed sources. DST Global, the investment vehicle of Russian tech billionaire Yuri Milner, is said to be leading the round.

Grab buys Kudo for payments techGrab, the ride-hailing app popular in Southeast

• Grab, the ride-hailing app popular in Southeast Asia, has acquired a fellow Indonesia-based company, Kudo, a provider of online payments technology. Terms for the purchase were not disclosed, though some media reports pegged the price as greater than $100 million.

From a Cb friend: Google Cloud’s Machine Learning CompetitionWe’re looking for the most promising

• We’re looking for the most promising early stage startups using machine learning. Apply today to win prizes like a $1M in investment from top venture firms, $1M in GCP credit, technical support from Google engineers and visibility for your company.