Delivery Platform Dada Stays in the Red Even as Pandemic Proves a Boon
JD.com-backed delivery platform Dada Group said its losses narrowed last year as a jump in demand during the coronavirus outbreak saw revenue nearly double.
The Shanghai-based company reported revenue of 5.74 billion yuan ($881 million) for 2020, up 85% from the year before, according to its financial report released Monday. The report also showed that the number of items it delivered over the period hit 1.1 billion, up 46%, while its number of active users hit 413 million by the end of the year, up 69%.
However, profits remain elusive, with the company losing just over 2 billion yuan over the period, compared with a 2.4 billion yuan loss the year before. The spike in revenue was offset by skyrocketing operational and marketing expenses, which saw the company’s total spend increase 55% to about 7.6 billion yuan.
The company’s Nasdaq-listed shares closed up 11% on Tuesday. The company’s stock price has more than doubled from its June IPO.
Founded in 2014, Dada initially focused on short-haul local courier services. In 2016, it acquired JD.com’s JDDJ unit, one of China’s early grocery-delivery specialists. Both its intra-city courier and grocery services saw strong revenue growth last year.
The courier unit, which uses the Dada Now brand, raked in 3.43 billion yuan last year, up 72%. JDDJ was a beneficiary from the pandemic, as people either unable or reluctant to head out of their homes turned to ordering daily necessities online. It contributed 2.3 billion yuan to Dada’s total revenue last year, mostly from commission fees on orders, with the value of goods sold via its platform doubling to 25.3 billion yuan.
JDDJ also saw income from marketing and promotional campaigns on its platform more than quadruple over the year.
The rapid growth of competition in the grocery-buying space, which has seen the likes of Alibaba, Meituan and Pinduoduo piling in, hasn’t dented Dada’s business, founder and CEO Kuai Jiaqi said on an earnings call. Kuai said that in some of the most fiercely fought-over patches, such as Central China’s Hunan province and its virus-stricken neighbor Hubei, the company saw a triple-digit expansion.
Dada is one of the primary partners of JD.com’s delivery arm JD Logistics, according to the prospectus the latter recently filed for its Hong Kong IPO, delivering items the “last mile” to their final destination at peak hours. The company made 1.5 billion yuan from this partnership in the first three quarters last year. JD.com is Dada’s biggest shareholder with a 46.5% stake.
Contact reporter Anniek Bao (firstname.lastname@example.org) and editor Joshua Dummer (email@example.com)
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