BingEx Q3 2024 Earnings Report

BingEx EPS Results

• Actual EPS: $0.12
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

BingEx Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

BingEx Announcement Details

• Quarter: Q3 2024
• Date: 11/27/2024
• Time: Before Market Opens
• Conference Call Date: Wednesday, November 27, 2024
• Conference Call Time: 7:00AM ET

BingEx (NASDAQ:FLX), through its subsidiaries, provides on-demand courier services under the FlashEx brand name in the People's Republic of China. The company offers Flash-Riders as service providers. It serves individual and business customers, including local retailers, restaurants, and logistics players through its mobile platform and website. The company was incorporated in 2014 and is headquartered in Beijing, the People's Republic of China.

BingEx Q3 2024 Earnings Call Transcript

Key Takeaways

• Gross profit grew 20.9% year-over-year to RMB130.1 million with gross margin expanding 2.3 percentage points to 11.3% despite a slight revenue decline.
• Non-GAAP net income surged 64.8% year-over-year to RMB57.6 million, lifting non-GAAP net margin to 5.0% from 2.9%.
• Order completion rate reached 87% across 400+ categories, with safety-sensitive orders accounting for over 70% of total volume.
• Registered users topped 90 million (up 27% year-over-year) and average intra-city delivery time was 27 minutes, underscoring strong user engagement.
• Expanded its 1-to-1 dedicated delivery model to 295 cities and boosted operational efficiency through proprietary big-data algorithms and dynamic scaling.

Presentation

[Operator]

Good day, and welcome to BingEx 2024 Q3 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Helen Wu from The Piacente Group. Please go ahead.

[Helen Wu, Managing Director at The Piacente Group]

Thank you, Operator. During today's call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations of today. Actual events or results could differ materially from what was mentioned in today's earnings release and in the discussion due to a number of risks and uncertainties, including what was mentioned in our most recent filing with the SEC. The non-GAAP financial measures we provide are for comparison purposes only. The definition of these measures and a reconciliation table are available in the news release we issued earlier today. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on the BingEx IR website at ir.ishansong.com.

[Helen Wu, Managing Director at The Piacente Group]

Joining us today from BingEx Senior Management are Mr. Adam Xue, Founder/Chairman of the Board and Chief Executive Officer; Mr. Hong Jianyu, Co-Founder, Director and Executive President, and Mr. Luke Tang, Chief Financial Officer. I will now turn the call over to Mr. Adam Xue.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

Thank you, Helen. This is Adam speaking. Hello, everyone, and welcome to BingEx 2024 Q3 Earnings Conference. We are thrilled to share our financial results and business development with you for the first time as a publicly listed company. 2024 marks a decade of growth and innovation for BingEx since our founding in 2014. Over the past 10 years, we have remained committed to our unique one-to-one delivery model, providing seamless point-to-point services to meet users' needs. We believe that every order represents the trust and confidence our users place in us, and every delivery builds a meaningful connection. Our success is driven by our relentless pursuit of service excellence, care for our dedicated Flash riders, and steadfast commitment to social responsibility. As we expand our market presence, our brand value grows even stronger. We submitted our initial listing application in mid-2021.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

Over the next two years, we focused on enhancing our business operations and data protection capabilities to meet the newly introduced listing regulations and comply with policies and review requirements. This exciting chapter in our company's story provided us with valuable market insights and a great opportunity to thoroughly review and refine our business operations and processes. Our listing process provided invaluable insights into the responsibilities and expectations associated with operating as a public company. Staying true to our mission, we remained committed to addressing users' needs, fine-tuning service processes, and optimizing operational efficiency. Thanks to those efforts and the unwavering dedication of all BingEx employees, the company has achieved steady growth with great improvements in profitability. Today, BingEx is a household name, widely recognized as a go-to brand for on-demand dedicated delivery service. In October 2024, BingEx successfully went public on NASDAQ, raising over $60 million.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

This landmark achievement not only stands as a testament to our past success but also marks the next chapter in our growth story. Today, we are pleased to announce that in the Q3 of 2024, the company delivered a strong and resilient...

[Operator]

Please continue to stand by. Your conference will resume shortly.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

Has been committed to meeting users' most urgent delivery needs since inception. Over the past decade, we have adhered and refined our one-to-one delivery model, avoiding joint orders to ensure that each Flash rider serves a single user from pickup to delivery. This exclusive point-to-point approach enhances services' efficiency and reliability, with a personalized delivery experience tailored to each user's unique requirements. As of September 2024, BingEx's high-quality 24/7 services have expanded to 295 cities nationwide. Our one-to-one delivery model guarantees minimal transit time, direct point-to-point delivery, and no mixed orders, effectively preventing the risk of errors, contamination, or item loss. It also ensures enhanced security and reliability for critical deliveries. Our service is particularly advantageous for categories with high demands around timeliness, safety, and customer experience, such as food, cakes, documents, and fresh flowers.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

In the third quarter, we further strengthened our fulfillment capabilities and achieved an order completion rate of 87% across more than 400 categories. This outstanding performance reinforces our brand's competitive edge and solidifies our market leadership. Notably, items requiring stringent safety measures accounted for over 70% of total orders, highlighting users' confidence in BingEx's distinctive distinctive service model. At BingEx, we prioritize user experience and service quality by minimizing response times, accelerating pickup and delivery speed, optimizing rider routes, and refining service details. We strive to consistently exceed user expectations. Research shows that as younger and middle-aged generations increasingly drive consumption spending, delivery demands are evolving rapidly. Users are increasingly dependent on delivery services, with speed and quality and quality emerging as a key factor influencing individual users' choices in the on-demand delivery market.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

Also, driven by the rise of the experience economy, consumers now place emotional value on service experiences across various sectors. On-demand delivery is no exception. Beyond meeting users' functional needs, delivering emotional value through services is being increasingly important. As of September 2024, our total registered users exceeded 90 million, representing a 27% year-over-year increase. In terms of service quality, we have achieved an average delivery time of 27 minutes for intercity deliveries. This exceptional service has earned us widespread acclaim and strong customer loyalty, making BingEx the preferred choice for urgent delivery needs. BingEx is committed to deliver high-quality services not only to individual users but also to business users. Our one-to-one service model has constantly been validated by business owners across different sectors, with broad expansion across various different scenarios.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

With the rapid growth of instant retail, BingEx has forged strong partnerships with business owners in premium dining, home appliances, and 3C electronics, among other sectors. Our services empower these partners to deliver high-value products and enhance experiences to their customers. In the premium restaurant sector, BingEx's fast and precise delivery services enable food enthusiasts to enjoy their meal properly. This enhances the dining experience, helping restaurants attract more customers and build greater brand recognition. In the home appliance and 3C electronics sectors, BingEx's dedicated riders ensure the safe, the speed and secure delivery of electronic and household products, building trust between customers and merchants. Additionally, BingEx is actively partnering with emerging new retail platforms to establish a comprehensive ecosystem for the instant delivery industry, bringing customers a safer and faster shopping experiences.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

Looking ahead, BingEx will continue to focus on user needs, enhance personalized service experiences, expand category coverage, and explore additional collaborative opportunities with commercial partners. BingEx invests deeply in technology to fuel our growth. Over the past decade, we have built a unique big data algorithm model based on our accumulated delivery data. Leveraging this model, we have developed a dynamic intelligent scaling system that balances supply and demand between orders and rider capacity. This has optimized resource allocation, significantly boosted rider efficiency, and enhanced our user experience. We have also upgraded our order matching system, maximizing efficiency and accuracy across the dispatch process. This advancement not only elevates user experience but also consistently improves our operational performance. BingEx's success relies on our dedicated Flash riders. Over the past decade, we have built a large and highly skilled rider team, with approximately 2.74 million registered riders as of September 2024.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

Each of our riders exclusively serves a single user with each delivery, upholding our commitment to safety and timely service. Our personized, personalized approach honors our service pledge while conveying warmth and care, ensuring that each delivery is thoughtful, precise, and punctual. Consequently, our Flash riders have earned the trust and respect from our users. Our unique one-to-one service model has attracted a growing number of riders across every corner of our 295 cities served, bringing them closer to users and significantly reducing pickup times. As order volume rises and our matching system precision continues to improve, our riders' incomes are also increasing. This has created a self-reinforcing flywheel effect. Shorter pickup times lead to enhanced service quality, which in turn drives a steady increase in order volume. As a result, BingEx has developed an increasingly robust scale effect, further strengthening our competitive advantage.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

At BingEx, we firmly believe that the rider experience is as crucial as the user experience. We deeply value our riders as partners and essential contributors to the company's success. To ensure that our riders enjoy stable income, a strong sense of belonging, and personal fulfillment in the work, we created a dedicated flagship rider care and support team. We also established 11 riders' homes across 10 cities nationwide. These pit stops, or warm homes, serve as rest areas and emotional havens for our riders, conveying conveying our care for their physical and mental well-being. Furthermore, we have introduced a series of tailored support initiatives, including regular training sessions designed to enhance riders' social recognition and professional pride, empowering them to become carriers of good deeds and spread positive energy.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

For high-performance riders, we offer career advancement opportunities, inviting them to join the BingEx team and continue to the company's growth firsthand. Also, since 2018, we have celebrated Flash Riders' Day each November 23, providing our riders with various benefits and activities to express our sincere gratitude and recognition for their hard work and dedication. As a pioneer of the on-demand dedicated delivery industry, BingEx has adhered to its core service philosophy of delivering with kindness. Since our inception in 2014, now as a publicly listed company, we have an even more profound understanding of the responsibility we carry. We will remain dedicated to our founding mission of acting with altruism, constantly delivering exceptional service experiences to our users while embracing our social responsibilities and creating long-term value. As we embark on this new chapter, BingEx will continue to enhance and solidify our one-to-one delivery service model.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

To that end, we will increase our technology investments, expand our city penetration, and diversify our service offerings. By increasing order density and optimizing operational efficiency, we aim to strengthen BingEx's flywheel effect, driving the company's growth and the on-demand dedicated delivery industry's sustainable development. Now, I'd like to hand the call over to our CFO, Luke, who will share our financial performance for this quarter. Thank you.

[Luke Tang, CFO at BingEx]

Thank you, Adam. Hello, everyone. This is Luke. For a closer look at our financial results, we encourage you to refer to our earnings release issued earlier today. As a reminder, all amounts are in RMB unless otherwise noted. We are pleased to deliver a strong and resilient set of results in our first earnings report following our IPO, thanks to our unwavering commitment to disciplined cost management.

[Luke Tang, CFO at BingEx]

In this Q3, gross profit grew by 20.9% year-over-year, with gross margin improving by 2.3 percentage points. Additionally, our non-GAAP net income surged by 64.8% from the same period of last year, with non-GAAP net profit margin rising by 2.1 percentage points to 5%. I will now provide an overview of our financial results for the third quarter of 2024. Total revenues for the quarter reached CNY 1.15 billion, compared with CNY 1.19 billion in the same period of 2023. The slight year-over-year decline was primarily driven by a decrease in ASP as we strategically expanded our presence in lower-tier cities and deepened partnerships with business users.

[Luke Tang, CFO at BingEx]

Our cost of revenues decreased by 5.7% year-over-year to CNY 102 billion in the Q3, primarily due to the decrease in FlashEx riders' remuneration and the incentives to fulfill orders. As a result, our gross profit rose to CNY 130 million, up 20.9% year-over-year.

[Luke Tang, CFO at BingEx]

Our gross profit margin in the Q3 was 11.3%, up from 9% in the same period of 2023. Turning to operating expenses, our total operating expenses decreased by 7.8% year-over-year to CNY 84.2 million in the Q3. Selling and marketing expenses were CNY 43.9 million, remaining flattish year-over-year. General and administrative expenses decreased significantly by 33% year-over-year to CNY 80.1 million, mainly due to lower staff costs and the professional service fees. Research and development expenses were CNY 22.2 million, representing a 6.8% increase year-over-year. In the Q3, we delivered income from operations of CNY 46.2 million, a significant increase of 178% year-over-year, mainly benefiting from gross profit margin expansion and improved operational efficiency. Other income was CNY 5.8 million in the Q3, compared with CNY 11.8 million in the same period of 2023. The decrease was primarily due to a lower amount of government grants.

[Luke Tang, CFO at BingEx]

Our net income was CNY 23.8 million in the Q3, compared with CNY 35 million in the same period of 2022, 2023. The decrease was mainly due to CNY 33.8 million of losses from fair value measurements of long-term investments in the Q3. Excluding the impact of the changes in fair value of long-term investments, our net income for the quarter amounted to CNY 57.6 million. Let's now take a look at our non-GAAP net income, which reached CNY 57.6 million, representing a year-over-year surge of 65.8%, attributable to our operational efficiency improvement. Non-GAAP net rose to 5% in Q3, up from 2.9% in the same period of 2023. We maintained a healthy and strong balance sheet with cash and the cash equivalents totaling CNY 517 million as of September 30, 2024.

[Luke Tang, CFO at BingEx]

As we approach the year-end of 2024, we remain committed to further optimizing our cost efficiency, solidifying our market leadership, and creating long-term value for our shareholders and stakeholders. That concludes our prepared remarks. We would like to open the floor to your questions. Operator, please go ahead.

[Operator]

Thank you. If you wish to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. To withdraw your question, please press star one and one again. We will take our first question. Hello, Operator. Your first question comes from the line of Zi Jie Zhu from Deutsche Bank. Please go ahead. Your line is open.

[Zi Jie Zhu, VP Risk Management Solutions FICC at Deutsche Bank]

Hi. Hi. Good evening, Adam and Luke. Zi Jie Zhu, she's from Deutsche Bank. Big congratulations on successful listing and very resilient performance in a challenging environment. So my first question is about macro and also industry competition. We noticed that the year-on-year growth rate of order volume slightly moderated in the Q3 compared with the first half of this year. My understanding is that it might be a mixed result of weak macro as well as industry competition. So could management share some of your observations on these two fronts? For example, what is new and what has been changing?

[Zi Jie Zhu, VP Risk Management Solutions FICC at Deutsche Bank]

My second question is about cost efficiency. Very impressed on your cost control and operating leverage over the past few quarters. So could management elaborate a little bit more on the measures that you've been that you've taken and how should we think about the potential upside in cost efficiency in the future? Thank you.

[Helen Wu, Managing Director at The Piacente Group]

Operator, can you hear us?

[Operator]

Please continue to stand by. We seem to have some technical sound issues. Please stand by.

[Helen Wu, Managing Director at The Piacente Group]

Hello, Operator.

[Operator]

Excuse me. This is the operator. You are able to be heard?

[Helen Wu, Managing Director at The Piacente Group]

Hello, Operator. Can you hear us? Hi.

[Operator]

Hello. This is the operator. Yes, you can be heard from the speaker line. Are you able to hear me?

[Helen Wu, Managing Director at The Piacente Group]

Yes, we do. Yes. Give me a second.

[Operator]

Jessie Zhu, please continue to stand by. I may need you to repeat your questions. Please stand by.

[Zi Jie Zhu, VP Risk Management Solutions FICC at Deutsche Bank]

Sure. Sure.

[Helen Wu, Managing Director at The Piacente Group]

Operator, can you hear us now? The main line?

[Operator]

I can hear you. Can you confirm that you can hear me?

[Helen Wu, Managing Director at The Piacente Group]

Yes, we do. So we'll go ahead with the Q&A.

[Operator]

Okay.

[Helen Wu, Managing Director at The Piacente Group]

Sorry.

[Operator]

Yes. So we have Jessie Zhu's line open from Deutsche Bank. Jessie Zhu, please ask your questions.

[Zi Jie Zhu, VP Risk Management Solutions FICC at Deutsche Bank]

Sure. Thank you. Can you hear me?

[Luke Tang, CFO at BingEx]

Yes, very well.

[Zi Jie Zhu, VP Risk Management Solutions FICC at Deutsche Bank]

Great. Good evening, Xue Zong and Tang Zong. Big congratulations on successful listing and very resilient performance in the challenging environment. I have two questions. The first question is about macro and industry competition. We noticed that the year-on-year growth rate of order volume slightly moderated in the Q3 compared with the first half of this year. My understanding is that it might be a mixed result of weak macro as well as competition. So could management share some of your observations on these two fronts? For example, what is new, what has been changing? My second question is about cost efficiency. We are actually very impressed on your cost control and operating leverage over the past few quarters. Could management elaborate a little bit more on the measures that you've taken and how should we think about the potential upside in cost efficiency in the future? Thank you.

[Luke Tang, CFO at BingEx]

Ya.Thank you, Zi Jie Zhu, and thanks to you for your questions. This is Luke Tang, and I will answer your questions about the Q3 revenue growth and macro environment, and I will hand over the questions about the industry competition and the cost efficiency to Adam Xue. Now, let me answer your first questions about the revenue growth. We can see that there was a slight decline in the Q3 revenue, which was primarily due to jobs in the SP, and this decrease was mainly driven by a growing proportion of business users and the customer's interest and also the company's efforts to expand the penetration in lower-tier cities. We also provided business users with relatively more subsidies compared to individual users, which had a short-term impact on revenue.

[Luke Tang, CFO at BingEx]

However, from a long-term perspective, our goal is to have more business users to experience the FlashEx's unique one-to-one dedicated delivery model and see how it can help them to improve service quality, strengthen their brand, and attract more customers. This is, in turn, enhanced the thickness of these business users to our platform. And about the macro environment, I should say that we did see a lot of efforts and a series of effective policies have led to a moderate recovery in the new retail industry over the past few months. And we also see that as the younger and middle-aged customers become the main drivers of spending, the overall delivery preferences are evolving. This was a clear increase in demand for time efficiency in the on-demand delivery service industry and a growing reliance on these offerings.

[Luke Tang, CFO at BingEx]

Furthermore, business users are focusing on the customer experience, making delivery speed and service quality just as important as product quality. And now I will hand over the remaining questions to Adam Xue.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

Okay. Thank you, Luke, and thank you, Jessie, for your question. This is Adam speaking. And then I will talk about the competition. Well, competition within the industry has always been constant. We believe that healthy competition encourages all service providers to prioritize users, strengthen their operations, refine their processes, and improve efficiency. This not only enhances the experiences for individual users but also helps business users achieve and even exceed their service standards. Within the broader instant delivery industry, there are many subsectors, each with its own space and potential for growth, as well as unique advantages for different service providers. This is high-growth industry with continuous new entrants.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

We believe that competition in the industry may intensify in the future, but this will not change the company's first move of advantage, brand strength, and service excellence. BingEx's one-to-one delivery model effectively meets users' specific needs for time leniency, safety, and reliability. Our differentiated high-quality service addresses key pain points that the order merge model cannot. More importantly, our one-to-one dedicated service, wherein each order is handled by a single rider with no other stop along the way, offers greater efficiency and personalization beyond fulfilling basic delivery needs. This dedicated service adds emotional value to the user's experience throughout the delivery process. Today, FlashEx has become a household name and a synonym for the intercity instant delivery industry. Looking ahead, we will continue to upgrade our order matching system to enhance efficiency and accuracy, further improving service quality.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

At the same time, we will expand service scenarios and steadily grow FlashEx's market share. And then I will talk about the potential upside in cost efficiency in the future. First, FlashEx maintains a relatively healthy cost structure with a stable proportion of fixed costs. As the company expands, we can achieve growth in a highly cost-effective manner. On the cost side, as the number of orders increases, it will become easier to meet riders' basic income needs, making room to reduce the spending-to-revenue ratio for riders. This will ultimately improve gross margin. Regarding expenses, since the FlashEx brand enjoys strong recognition, we can largely rely on word of mouth and organic traffic growth, allowing us to control market promotion costs. In the long run, we believe further profitability improvement will primarily be driven by revenue growth rather than cost savings, as we always prioritize service quality.

[Adam Xue, Founder, Chairman, and CEO at BingEx]

Thank you. And Operator, we are ready for the next question.

[Operator]

Thank you. We will take our next question. Your next question comes from the line of Saifan Jiang from CICC. Please go ahead. Your line is open.

[Saifan Jiang, Analyst at CICC]

Thank you, management team, for taking my question. And congratulations on successful listing. I'm Saifan Jiang from CICC. My question is about the unit economy. I want to ask I would like to ask about what are the changes of the unit economy and rider remuneration in the Q3 of 2024, and what will be the outlook for the future? Thank you.

[Luke Tang, CFO at BingEx]

Yeah. Thank you, Saifan. And this is Luke. I will answer your questions about the UE. And you know that the company's overall UE model performs very well, and our UE model has a healthy cost structure. The the the main proportion of our cost is rider's remuneration and incentives.

[Luke Tang, CFO at BingEx]

So we do see the cost of revenue structure has been continuously optimized. And you can see that the proportion as a percentage of revenue also gradually decreased, which expanded the company's GP. And also, you can you can see that the lower proportion of the revenue channeled into marketing also can help us to leverage our expenses and the cost structure. And also, thanks to the unique business model and robust brand recognition model, we our marketing expenses are mainly used for the brand building and rather than the user subsidy. So so in turn, we can see that the expenses, especially the selling and marketing expenses, are relatively stable. And we can also see that the general and administrative expenses and R&D expenses slightly decreased. And we also see that there's some positive marketing expansion potentials for us, but we are very conservative to any chances for that.

[Luke Tang, CFO at BingEx]

So for time being, we do like to stick with the one-on-one or the dedicated business model and to expand the business scale and to use the scale economic scale ability to leverage our whole market. So for the time being, we can see that the leverage shows a great trend, and the company and the platform also earned the profit. And we also see the eight consecutive profitable quarters. So we do see this business or this industry is a profitable business, and we also will stick with such industry. Yeah. This is the strategy for now. I hope this can help you understand our recent thinking. So hope it can help. Yeah. Thank you.

[Operator]

Thank you. And that concludes the question and answer session. I will now turn the call over to Helen Wu for closing remarks.

[Helen Wu, Managing Director at The Piacente Group]

Thank you once again for joining BingEx's Q3 2024 Financial Results and Business Update Conference Call today. If you have any further questions, please contact the IR team at BingEx or Piacente Financial Communication. Thank you, and have a great day.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Adam Xue, Founder, Chairman, and CEO
• Luke Tang, CFO

Analysts

• Saifan Jiang, Analyst at CICC
• Zi Jie Zhu, VP Risk Management Solutions FICC at Deutsche Bank
• Helen Wu, Managing Director at The Piacente Group