Peer-to-peer car-sharing company Turo files to go public

Peer-to-peer car-sharing startup Turo has released its filing to become a publicly traded company in the United States, a process the company began confidentially in August. The S-1 document filed Monday with the U.S. Securities and Exchange Commission does not include terms for its offering…

Turo, which was founded in 2010 and has been compared to Airbnb for cars, allows private car owners to rent out their vehicles through the startup’s website or app. The company boasts 85,000 active hosts and 160,000 active vehicle listings in over 7,500 cities as of September 30, 2021. Car owners get the chance to offset ownership costs, and users get the benefit of affordable short-term rentals at a time when rental car prices are increasing due to pandemic-induced supply chain issues. Challenges in the traditional car rental industry have certainly allowed Turo to gain some market share, despite steep competition, but that popularity has come with a cost at times, a reading of the risk factors portion of the S-1 shows.

Quick financial breakdown

First let’s take a look at the financials.

In 2020, Turo generated net revenue of $149.9 million in 2020, a 6% growth from the previous year, according to the S-1. Net losses were $97.1 million in 2020, a slight improvement from the $98.6 million in net losses it had in 2019.

Turo points to a couple of drivers of its revenue growth, notably a digital tool called the Turo Risk Score. This feature, which launched in April 2020, dynamically adjusts the fees that Turo charges guests to complete a booking. Turo said this tool, along with hosts increasing the prices for vehicles that they charge to guests, contributed to its increased net revenue.

In 2021, sales and losses skyrocketed.

Turo says it generated $330.5 million in net revenue in the first nine months of 2021, a whopping 207% increase from $107.8 million for the same period in 2020. Its net losses also expanded as well. Turo reported a net loss of $129.3 million for the nine months ended September 30, 2021, compared to $51.7 million for the same period in 2020.

The reason? Turo notes in its S-1 that revenue increased as the number of days booked rose along with gross booking value per day.

Scanning the S-1, it also appears that Turo tried to do more with less in 2020 and has since turned the financial faucet back on this year. The company tightened its spending in 2020 with operating expenses dropping from $133.9 million in 2019 to $95.8 million in 2020.

The first nine months of 2021 tell a different story. The company’s operating expenses in the first nine months of the year were $124.01 million compared to $71.6 million during the same period last year. Turo also says it hit adjusted EBITDA — a modified profitability metric  — of $69.8 million in the first nine months of 2021. It achieved that in spite of that $129 million net loss because of a $174.7 million change in the fair value of redeemable convertible preferred stock warrant liability.

Risk factors

Risk factors facing the company include the obvious “what if people don’t use Turo” and “we face competition” from similar apps and traditional car rental companies. But a few others stick out.

For one, Turo notes that the COVID-19 pandemic added volatility to…

 

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