Quikr no longer a unicorn, Swedish investor pares valuation by 45%

Scandinavian firm refers to exaggerated revenue resulting from fraudulent transactions that rocked the company.

Online classifieds marketplace Quikr is no longer a unicorn, or a start-up valued at more than $1 billion. In its year-end report, major shareholder Kinnevik, a Swedish investment firm, devalued Quikr by 45 per cent, referring to the exaggerated revenue resulting from fraudulent transactions that rocked the company. Quikr is now valued at about $577 million, a significant drop for the Bengaluru-based startup.

“Our assessed fair value of our Quikr investment is lowered by SEK 764 million, or 45 per cent, reflecting the impact of fraudulent transactions as well as a reduced footprint and amended revenue recognition principles,” said Kinnevik this month, in its presentation of the fourth quarter and full-year 2019. “The valuation is established using forward looking net revenue multiples, moving away from the DCF (discounted cash flow) method applied in previous quarters to solely reflect near-term projected financial performance in our net asset value statement.”

Quikr has a slew of online businesses covering real estate, discover and bookings, jobs search, used-goods buying and selling, and home services. The drop in valuation comes at a time, when the company had to suffer crores of losses due to internal employee fraud and as reported, the firm had to lay off hundreds of employees across the organisation late last year.

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.