The Almost-Unicorn Wait for PropertyGuru’s IPO Exit

However, the Vietnamese market is expected to contribute 29-33% of the group’s revenue in 2019 and 2020.

With the considerable capital from KKR, PropertyGuru bought out its Vietnamese counterpart, Batdongsan.com.vn, giving it a 69% market share and the market leader position. The acquisition is a saving grace, as out of all the other markets in Southeast Asia, Vietnam has the most growth potential. It accounted for 21% of the company’s overall pro forma revenue for 2018.

In Singapore too, which is considered PropertyGuru’s stronghold, the company has a 72% market share. The city-state’s number two player—Singapore Press Holding-owned SRX and STProperty—has only a 10% market share, while 99.co holds 9%, according to data from web analytics service provider SimilarWeb cited by PropertyGuru.

The company’s adjusted revenue for its financial year that ended on 31 December 2018 was S$71.5 million ($52.6 million), from S$55.4 million ($40.7 million) in 2017.

In 2018, S$40.8 million ($30 million) or 57% of the total revenue was from its Singapore business. In the same year, the year that PropertyGuru claimed it was profitable and cash-flow positive, it incurred a full-year net loss after tax of S$3.8 million ($2.8 million).

The enemy of my enemy is my friend

Despite its dominance in Singapore, PropertyGuru chose to hike the price of its subscription services twice—a 64% increase in September 2017 and another 24% this September. It was a move to boost its earning figures to ready the company for an IPO. But it was done at the expense of its subscribers, the property agents, while also giving the competition a chance to possibly muscle their way to a bigger market share.

Sumeet Singh, head of research for IPOs and Placements at Aequitas Research who publishes on Smartkarma, is doubtful that PropertyGuru will be able to achieve the revenue growth rate it’s aiming for in 2020, given that the move to hike prices is not sustainable.

“The quantum of [price] increase has already moderated from [about] 60% in 2017 to [about] 20% in 2019. Thus, the next price increase will probably be even smaller, which, coupled with the lack of growth in agent numbers, implies that the revenue growth from this segment will continue to taper-off.”

That hike in subscription prices might not be the only blow to its revenue growth.

The up-and-coming rival

The up-and-coming rival
99.co was established by serial entrepreneur Darius Cheung and is backed by Facebook co-founder Eduardo Saverin. Other shareholders in the startup are Sequoia Capital, Allianz X, MindWorks Ventures, East Ventures, and 500 Startups. [Image via 99.co/Facebook]

A day after PropertyGuru launched its IPO, its Australian rival REA Group formed a joint venture with Singapore-based property listing startup 99.co. The JV claims to create the largest online property listing platform in Indonesia and will be a strong contender to PropertyGuru’s market leader position in the little red dot.

Based on SimilarWeb’s data, the merger will give 99.co and REA Group a combined market share of 37% in Indonesia—close to PropertyGuru’s 49%.