NEWS WRAP: Dada’s loss narrows as it cleans house
The intra-city delivery arm of JD.com said its revenue rose slightly in last year’s fourth quarter, as it seeks to get back on track after a recent accounting scandal
By Teri Yu
Dada Nexus Ltd. (DADA.US), the intra-city on-demand delivery arm of Chinese e-commerce company JD.com (JD.US; 9618.HK), reported on Monday that its revenue rose slightly in the fourth quarter, as strong growth for the smaller of its two core businesses offset a slump at its larger JDDJ service.
The company’s revenue rose 2.7% year-on-year to 2.76 billion yuan in the final three months of last year. Revenue from its Dada Now intracity delivery service jumped 36.3% in the quarter to 1.2 billion yuan as it recorded strong order growth. But its JDDJ service, which accounts for the majority of its revenue, suffered a revenue decline of 14% to 1.55 billion yuan, reflecting falling demand from the many third-party local merchants using the platform to deliver goods.
The company’s fourth-quarter non-GAAP net loss, which excludes employee stock-based compensation and other items, narrowed to 159 million yuan from 179 million yuan a year earlier.
On an annual basis, Dada’s revenue increased 12.2% year-on-year to 10.5 billion yuan, while its net loss narrowed slightly to 1.96 billion yuan from just over 2 billion yuan in 2022.
In January, the company disclosed that it uncovered questionable revenue and costs during a routine internal audit, sparking a 46% plunge in its stock price. It disclosed two months later that an independent review found an overstatement of 568 million yuan in revenue and 576 million yuan in costs related to online advertising and marketing services covering the fourth quarter of 2022 and the first three quarters of 2023.
On its earnings call, the company highlighted that its latest results reflect corrections and neither its bottom line nor cash flow was affected by the fabricated transactions. The U.S. securities regulator has yet to disclose what kind of punishment Dada will face for the fraud, and numerous law firms are also preparing to file class action lawsuits against the company.
The company’s stock price closed 9.52% higher in Monday trade in New York before the after-market announcement. But it fell 3.2% in after-market trading.
Dada Nexus was formed in 2016 through the merger of Dada, an intra-city delivery company, and JDDJ, an affiliate of JD.com that offers similar services. It was listed in 2020 and JD.com is its majority owner with 52% of the stock. Dada also counts U.S. retailing giant Walmart (WMT.US) as its minority shareholder with a 9% interest.
The company went through a management reshuffle in December last year that saw two JD.com veterans, Shan Su and Bing Fu, appointed as chairman and interim president, respectively, signaling further control from JD.com on the company’s business strategy.
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