On August 21st, Beijing time, Dada Group released its Q2 2024 performance report. According to the financial report, Dada Group's revenue in the second quarter was 2.3499 billion yuan, a year-on-year decrease of 9.51%. This was mainly due to a decrease in online advertising and marketing service revenue, as well as a reduction in delivery service and other revenue caused by the free delivery fee plan for orders over 29 yuan, resulting in a 43.5% decrease in JD's instant delivery business revenue. However, Dada's second quarter revenue increased by 46.6%, mainly due to an increase in the number of same city delivery service orders. It is reported that Dada Group achieved a net loss of 286.2 million yuan in the second quarter, an increase of 80.3% year-on-year.
At the same time, Dada Group also announced that the board of directors has elected Guo Qing as a director and member of the compensation committee, and replaced Dan Su as the chairman of the board, effective from August 20, 2024. According to the information, Guo Qing has been serving as an advisor to JD Group and Dada Group since April 2024. He was previously a member of the S-team, the highest decision-making body within Meituan. Meanwhile, Dan Su will continue to serve as a director of the company and a member of the board nomination and corporate governance committee. In addition, Dada's interim president Fu Bing resigned from his position as interim president of the company due to personal reasons, effective from August 20, 2024. At the same time, the board of directors is actively evaluating the company's leadership structure based on long-term development plans.
On the morning of August 21st, Dada Daily reported a price of $1.32 per share, with a stock price decline of 3.65% and a total market value of $349.2 million.
High growth of non supermarket instant delivery
Focus on catering key customers
According to a previous report by Southern Metropolis Daily reporters, in May of this year, JD's instant retail business (integrating the original instant retail brands JD Houleda and JD Daojia) was fully upgraded to JD's instant delivery service. In August, Dada Express was renamed Dada's instant delivery service. Driven by the continuous increase in merchant penetration rate, Dada Express maintained high-speed growth, achieving business revenue of 2.6 billion yuan in the first half of the year, a year-on-year increase of 51%. Dada's total completed orders in the first half of the year reached 1.23 billion, a year-on-year increase of 15%, and its market share further expanded. Among them, the delivery volume of orders in the second quarter increased by 21% year-on-year to 679 million yuan, and the total revenue increased by 23% year-on-year to 3 billion yuan.
According to statistics, in terms of network coverage, Dada Express has covered more than 2600 cities and counties across the country, with an annual active rider count of nearly 1.3 million and a cumulative registered rider count of tens of millions. Dada's Chief Financial Officer, Jun Mao, stated, "In the second quarter, our chain merchant business saw an overall revenue growth of nearly 50% year-on-year, with a net revenue growth of nearly 80% for catering chain merchants and a more than doubled number of new stores compared to the same period last year. For key customers in the catering industry, such as Yum China, we continue to increase penetration rates, resulting in more than double the number of orders and revenue in this subcategory." "From the perspective of business development trends, the demand for on-demand delivery services in the catering, beverage, supermarket, and other industries is still growing rapidly. The catering key customer business is the top priority this year
According to the financial report, in the second quarter, with the launch of the "Instant Delivery Zone" on the core position of the JD App homepage, excluding the impact of business adjustments, the daily exposure users in the JD App field increased by over 70% year-on-year, and the exposure conversion rate continued to improve, driving the daily payment users to increase by over 110% year-on-year. During the same period, the penetration rate of JD's instant messaging service among JD users continued to increase month on month: excluding the impact of business adjustments, the year-on-year growth rate of high-frequency instant messaging users in the JD App field exceeded 110% in the second quarter. The online order volume of instant delivery in the JD App field has increased by over 100% year-on-year.
Since the beginning of this year, we have fully embraced the JD ecosystem and promoted user experience upgrades. JD's Mi Send has maintained rapid growth in GMV and user base on JD's application channels. Our competitive advantage lies in the richness of supply side products and the great integration with JD on the demand side, which will drive us to increase market share in the growth of the on-demand retail industry
In the second quarter, JD.com continued to expand and deeply cultivate all product categories, improving supply coverage, especially achieving large-scale store expansion in convenience stores and 3C digital. According to the financial report, as of the end of the second quarter, the number of JD's instant delivery stores increased by nearly 70% year-on-year. In August, the service coverage of the "Instant Delivery Zone" has expanded from the first 39 cities to the whole country. It is worth mentioning that in May, the homepage of JD's instant messaging channel launched a "One Yuan Big Brand" section. According to statistics, the 7-day repurchase rate of users who purchased products in this area is 6 percentage points higher than the overall repurchase rate of JD's instant messaging channel.
Compared to other categories, the supermarket category is more mature and stable. In this category, we have noticed that retail models such as membership warehouses and convenience stores are becoming increasingly attractive to consumers. Therefore, we are actively considering cooperating with these merchants. In recent years, the growth rate of non supermarket categories has been higher than that of supermarkets, mainly due to the increasing penetration rate of on-demand retail in these industries and the evolution of consumer mentality. For example, our emerging categories such as flowers and beverages grew rapidly in the second quarter, thanks to expanding supply and a series of holiday marketing activities, which resonated well with consumers. As consumers increasingly value the convenience of all categories and businesses prioritize on-demand retail channels, every category on JD.com has enormous growth potential in the future
Frequent changes in the management team
JD's instant delivery GMV and revenue growth are under pressure
In terms of cost expenditures, the financial report shows that Dada Group's total costs and expenses in the second quarter were 2.667 billion yuan, compared to 2.8041 billion yuan in the same period last year, a year-on-year decrease of 4.9%. Among them, sales and marketing expenses, general and administrative expenses, and research and development expenses have all decreased year-on-year, respectively due to a reduction in promotional activities launched on the JD Express platform, a decrease in intangible asset amortization from the acquisition transaction of JD Home (predecessor of JD Express) in 2016, and a decrease in research and development personnel costs. The operating and support costs increased year-on-year, mainly due to an increase in the number of orders for same city delivery services provided to various chain merchants, resulting in an increase in rider costs. However, the decrease in online advertising and marketing service costs partially offset this growth.
Regarding the conversion of advertising and marketing, Mao Jun explained that previously, the advertising revenue of JD. com's instant messaging service mainly came from the independent JD Home app. However, since the beginning of this year, JD. com's instant messaging service has accelerated its integration with the JD ecosystem and strategically shifted towards JD application channels. The shift in channel focus has temporarily affected advertising profitability. Despite a significant increase in traffic and GMV through the JD App channel, we remain focused on user share and penetration. There is still room for improvement in the complexity of location-based technology, advertising, products, and marketing solutions within the JD App channel, which requires further refinement and merchant education. However, in the long run, we are confident in the advertising profitability potential of on-demand retail within the JD App channel
Due to previous internal audit issues, frequent changes in the management team have raised concerns about the sustainability of the company's strategy. Southern Metropolis Daily reporters reported that in March of this year, Dada announced that it had found in its regular internal audit process that some of its financial statements for 2022 and 2023 had exaggerated revenue from online advertising and marketing services, as well as operating and support costs. The relevant employees have been dealt with, and the company will further standardize corporate governance and internal processes in the future. Former company president and director He Huijian has resigned after the independent review was largely completed, and Fu Bing, who was leading Dada Express's business at the time, has become the interim president of the company. According to the latest announcement, Fu Bing has resigned as the interim president of the company due to personal reasons, effective from August 20, 2024.
In response to a question from investors about executive changes, Mao Jun said in a conference call, "Guo Qing has become the chairman of the company's board of directors, providing high-level strategic planning and consulting for the company. The strategies of JD and Dada have never changed. JD has always been committed to providing users with high-quality products and on-demand retail shopping experiences with instant delivery. At the same time, Dada will continue to focus on providing customers with stable and efficient on-demand delivery services
Due to the decrease in revenue exceeding the decrease in costs, Dada Group recorded a net loss of 286.2 million yuan in the second quarter, compared to a net loss of 158.7 million yuan in the same period last year, with the loss expanding year-on-year. Mao Jun candidly stated, "Since the beginning of this year, we have carefully considered business reviews and adjustments. The company has actively streamlined its business, focusing on core businesses and channels, while terminating some inefficient operations in the channels. This has posed a challenge to the GMV and revenue growth of JD Express in the short term. However, we have seen some effective results, as the increase in order volume from JD App partially offsets the impact of business streamlining by fully integrating into the JD ecosystem. We expect these adjustments to pave the way for long-term sustainable high growth and high-quality growth." "We have confidence in the industry's potential and competitive advantages, and are optimistic about achieving breakeven and long-term profitability