LatAm Autos Limited (ASX:LAA) Co-founder and Executive Chairman, Tim Handley discusses the company’s key milestones and growth expectations LatAm Autos Limited
(ASX:LAA) is the leading online marketplace for cars in Latin America. We have operations in six markets. The big ones being Mexico and Argentina as well as Peru, Ecuador, Panama and Bolivia and they’re all Spanish-speaking markets, which is very important. We get a lot of synergies from having one single language across the region. And we’re able to really attract a big part of the marketing budgets of the large auto manufacturers.
Overall, online advertising represents less than 10 per cent of the total advertising in the autos vertical, in Latin America. Which obviously is much different compared to Australia, where it’s more like 60 or 70 per cent. If you add up all the populations of all of our countries, the size of our addressable market is actually 10 times larger than Australia. And the business model of online classifieds itself has been very well executed in Australia. So I think a lot of people will have familiarity with what we’re trying to do. Essentially we’re quite similar to the business model of Carsales in Australia, Autotrader in the UK, Autotrader in the US etc.
Latin America itself is a very exciting region. It’s one of the fastest growing Internet markets in the world and we’re positioned as the leader, in that particular segment. The online auto classified sector in Latin America is in quite an early stage. Less than 10 per cent of all advertising in total is done online. So there’s a huge migration of this offline advertising spend, to the online sector. Now this is expected to occur much quicker than I think what happened in Australia, for example. The use of Smartphones is a big differential compared to say, the mid-2000s in Australia, which makes the Internet much more accessible for users in emerging markets.
It’s one of the fastest growing Internet regions in the world and there’s been a lot of investment, a lot of focus from international investors, in the Latin American region. So we’re positioned to the forefront of that. We have a regional business model, which gives us a lot of synergies from a technology, marketing and operations point of view. We have seasoned professionals, our management team I think is a very big advantage.
Essentially we are a Latin American company. The only two Australians in the company are myself and our CFO, and our Board of Directors, which is really important in operating in emerging markets, to have that local connection. Our CEO, George has been in the sector for 15 years in the jobs vertical, as well as the autos vertical. And over the next few years, we’re in the pole position to really monetise our business effectively.
In 2015, we grew our revenues 10 per cent year-on-year. The first year of operations was really a tale of two halves. The first half was focused definitely on integrating our businesses, because we actually acquired the leading autos marketplace in each market. And we combined them into a regional platform. So that first half was focused on integrating technology, the management team, the commercial strategy. Whereas the second half was focused purely on performance, and you can see that in our results. Our second half revenues were 39 per cent higher than our first half revenues, in Australian dollars, which I think is the highlight of the result. And we’re expecting very strong revenue growth in 2016.
We’re expecting the company to be breakeven by 2018. So that gives us two strong years of investment in marketing technology, really focused on market share gains.So our strategy is to be in a dominant position in each of our markets. We’re currently the leader on a number of metrics in each of our markets. But to get the network effects and to own the most part of the ecosystem of the buying and selling process for cars, we need we think two years to do that of investment.
In total we raised $20.2 million in November last year. That capital is allocated for just acceleration of our existing strategy. So we’re very well funded at this point in time. We have capital in place, we have the team, we have the technology and 2016 is a big year for the company I think, from an execution point of view.
Definitely by this time next year, we’ll be I think a big part of the whole ecosystem of buying and selling cars, in Latin America. We have a very specific target on dealers as a customer base, being a very high priority. They’re the professionals in the sector; they value a lot our premium service. We’re offering a product that has never been offered before. And I think once you gain their trust and their custom in a sort of dominant way owning that market, we definitely can step out into new revenue streams, such as finance, insurance, payment systems. Additional revenue streams aren’t currently factored into our 2016 budget.
So putting all that into what we expect, I think revenue growth should be strong as well as very strong market share growth, as well.
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