In the earning call, Samuel Sjöström, Head of Strategy at Kinnevik, explained that Quikr discovered that certain dealers and vendors within their managed rentals and car segments had placed fictitious or misrepresented transactions on its platform. The direct effect of this was twofold.
“Firstly, the value of revenue generated in these categories may be overstated. And secondly, there is a risk that some receivables may not be entirely recoverable. As a response, the company has reduced its footprint in the concerned segments as managing its overall cost base. Quikr has also strengthened its internal operational controls and is pursuing legal actions against those responsible,” said Sjöström, in the earnings call.
He said going forward Quikr's other business segments, such as blue-collar jobs, used goods, classifieds and real-estate sales have historically accounted for a majority of revenue and continue to see growth and occupy strong positions in the respective markets.
“While we are very disappointed with what has been uncovered and its effect on the value of our investment, we believe that the measures that have been taken and are being taken are both forceful and proportionate, and their clear intention is to leave us with a healthier but somewhat smaller company,” said Sjöström.
Kinnevik CEO Georgi Ganev said in the earnings call that the Quikr has laid off a lot of their workforce, basically, half of the workforce in order to become profitable faster and not dependent on funding. “Which is, of course, something that we appreciate. So we sit now with a smaller company, but we also think it's much healthier. And we will, of course, focus on those remaining verticals and to continue to grow them going forward,” said Ganev. “So of course, we are very disappointed in what we have found at Quikr, but we remain confident that we will actually get out in a way that is somewhat more positive than what you see today for our shareholders,” said Ganev.
Founded in 2008, Quikr had left a memorable footprint in over 1000 cities. Late last year, Pranay Chulet, founder and CEO of Quikr, had said in an interview that the company was gearing up for a public market offering in 2021, joining a list of few top internet ventures in the country that are aiming to go public in the coming years.
Quikr has raised a total of $424.2 million in funding over 12 rounds from investors such as Tiger Global Management, Kinnevik, Trifecta Capital Advisors and InnoVen Capital, according to data platform Crunchbase.
It has also made a few big acquisitions in the past. In 2016, it bought Commonfloor for an all-stock deal of $200 million, followed by RealtyCompass, a real estate listings platform. It also bought HDFC RED and HDFC Realty, the listing and brokerage businesses of HDFC, for around $60 million.