CL8 Faces Cash Crunch as It Prepares to Sell Operating Entities

Robust Subscriber Growth Drives Revenue Gains

CL8 Holdings Limited (ASX:CL8), operating the Carly Car Subscription service, has delivered a solid performance in the March 2025 quarter, reporting a 15% increase in customer receipts and a 24% rise in subscription revenue compared to the same period last year. This growth was underpinned by an expanding consumer subscriber base, a broadening corporate clientele, and a notable uptick in electric vehicle subscriptions, fueled by the company's EV Trial initiative.

Cost Efficiency Amid Expansion

Despite the subscriber growth, CL8 achieved substantial cost efficiencies, cutting staff costs by 44% and slashing advertising and marketing expenses by 45% year-on-year, and 41% quarter-on-quarter. These savings were largely attributed to a strategic headcount reduction and optimized digital marketing campaigns, alongside strong referral channels from both consumer and corporate customers.

Fleet Management and Asset Light Strategy

The company’s asset-light fleet now constitutes 35% of the total fleet, slightly up from 34% in the previous quarter, reflecting automotive dealers and manufacturers’ growing interest in vehicle subscription monetisation. During the quarter, CL8 disposed of $495,000 worth of vehicles as part of a fleet review aimed at aligning assets with customer demand and utilisation patterns.

Corporate Governance and Strategic Sale

At the 2024 Annual General Meeting held on April 16, shareholders approved the sale of CL8’s operating entities to CarBar Holdings Pty Limited. The binding sale agreement is nearing finalisation, with settlement anticipated on May 1, 2025. This transaction is expected to materially reduce fixed operational expenses and improve the company’s cash flow position moving forward.

Cash Position and Funding Outlook

CL8 ended the quarter with a cash balance of $166,000, down $334,000 from the prior quarter. The company’s net operating cash outflow was $628,000 for the quarter. While the current cash runway is limited to approximately 0.3 quarters, management is confident that the sale of operating entities will alleviate funding pressures by significantly lowering ongoing expenses. The company also maintains access to asset finance facilities totaling $9.125 million, primarily secured against vehicle assets.

Looking Ahead

With subscriber growth momentum intact and a strategic sale poised to reshape its cost structure, CL8 Holdings is navigating a pivotal transition. The coming months will be critical to monitor how the company leverages its improved financial footing to sustain growth in the competitive car subscription market.