Shi Zifu, Harbor Business Watch
In the sub-field of matching in the same city, flash delivery is usually regarded as a leading participant in the industry. However, this market is highly competitive, and only the well-known SF City, JD.COM Hours and Dada Seconds are not small rivals.
On October 4th, Flash (FLX.US) was successfully listed on NASDAQ, with an issue price of US$ 16.5 /ADS and a total fundraising of US$ 66 million. As of 9: 38 EDT on October 8th, the stock price of Flash dropped to about US$ 15. According to Tianyancha, the domestic operation entity of Flash is Beijing Tongcheng Bing Technology Co., Ltd..
01
Achieve profitability in 2023.
Official website introduced that Flash Delivery is a one-to-one express delivery platform in the same city’s instant delivery industry, providing personal and corporate customers with special express delivery services on demand. The brand of Flash Delivery is FlashEx or Flash Delivery, which means instant delivery.
According to the data of iResearch, in terms of revenue in 2023, Flash is the largest independent on-demand express service provider in China. In 2023, the market share of Flash in China’s independent on-demand express service is about 33.9%.
Different from the delivery service provider that adopts the order consolidation mode, Flash initiated and always focused on the special delivery mode of on-demand delivery. For each order, Flash will assign a special Flash-Rider to pick up the order and deliver it to the recipient without merging multiple orders or changing hands on the route.
As of June 30, 2024, Flash has about 2.7 million registered riders, and its service coverage has been extended to 295 cities in China.
From 2021-2023 and January-June 2024 (hereinafter referred to as the reporting period), Flash Delivery fulfilled 158.6 million, 213.4 million, 270.7 million and 138.1 million orders respectively; In the current period, the company realized revenue of RMB 3,039.8 million, RMB 4,002.7 million, RMB 4,528.8 million and RMB 2,284.5 million respectively, and realized gross profit of RMB 189 million, RMB 259 million, RMB 395 million and RMB 257 million respectively, with gross profit margins of 6.2%, RMB 6.5%, RMB 8.7% and RMB 11.3 respectively.
It is not difficult to understand the reason for the increase in revenue, which is related to the increase in the company’s orders in the current period. In terms of net profit, flash delivery generated a net loss of 291 million yuan and 180.4 million yuan in 2021 and 2022 respectively, and realized a net profit of 110 million yuan (US$ 15.205 million) and 124 million yuan (1702.0) in 2023 and January-June 2024 respectively.
For the realization of profit in 2023, the flash payment is attributed to the increase of other income caused by the increase of government subsidies. In 2023, other income from flash delivery was 74.3 million yuan (US$ 10.2 million), compared with 9.2 million yuan in the same period in 2022.
In the revenue composition of Flash-Riders, the salary and incentive paid to Flash-Riders are the biggest components of the company’s revenue cost. During the reporting period, it was 2.751 billion yuan, 3.614 billion yuan, 3.975 billion yuan and 1.951 billion yuan respectively, accounting for 90.5%, 90.3%, 87.8% and 85.4% of the total income of the current period respectively.
In addition, the attention of the outside world is high. During the reporting period, the average income of a single order delivered by flash was 19.2 yuan, 18.8 yuan, 16.7 yuan and 16.5 yuan respectively, showing an obvious downward trend. Although the order volume is rising, the continuous decline of single income is still likely to affect the overall operating performance of the company.
02
Downgrading various fees, more than 8,000 complaints.
The operating expenses of flash delivery include sales and marketing expenses, general and management expenses and research and development expenses. In the total cost, sales and marketing expenses account for the vast majority.
According to the prospectus, the sales and marketing expenses of flash delivery mainly include: advertising and marketing expenses, staff costs related to sales and marketing functions, rent and depreciation, and advertising expenses mainly include endorsement fees and advertising fees. During the reporting period, the sales and marketing expenses of flash delivery were 272 million yuan, 240 million yuan, 188 million yuan and 89.738 million yuan respectively, accounting for 8.9%, 6.0%, 4.2% and 3.9% of the corresponding income respectively.
General and administrative expenses of flash delivery mainly include: salaries and related costs of employees engaged in general company functions, professional fees and other general company expenses, as well as expenses related to the use of facilities and equipment. During the reporting period, the company’s general and administrative expenses were 113 million yuan, 103 million yuan, 105 million yuan and 45.505 million yuan respectively, accounting for 3.7%, 2.6%, 2.3% and 2.0% of the corresponding income respectively.
In addition, R&D expenses mainly include: staff costs, rent and depreciation related to R&D functions, and other expenses related to R&D functions. During the reporting period, the R&D expenses of Flash were 105 million yuan, 119 million yuan, 90.847 million yuan and 41.306 million yuan, respectively, accounting for 3.4%, 3.0%, 2.0% and 1.8% of the revenue in the corresponding period.
In the first half of 2024, Flash reduced the sales and marketing expenses, general and administrative expenses, and research and development expenses, by 8.56%, 13.17% and 18.6% respectively compared with the previous year. Some market participants told Harbor Business Watch that it is not ruled out that this year is facing fierce market competition and the consumption environment is weak. In order to improve profitability and IPO, Flash delivery has carried out all-round cost control.
Flash accounts payable mainly refer to the remuneration payable to Flash-Riders. By the end of 2022, 2023 and the end of the first half of 2024, the accounts payable for flash were 356.1 million yuan, 339.8 million yuan and 314.6 million yuan respectively. In the same period, the company’s cash and cash equivalents were 622 million yuan, 699 million yuan and 712 million yuan respectively.
In 2021 and 2022, the net cash used in flash business activities was 194.9 million yuan and 86.8 million yuan respectively, and in 2023, the net cash provided by flash business activities was 45.7 million yuan.
In the first half of 2024, the net cash provided by Flash business activities was 20.7 million yuan (US$ 2.8 million). Flash mentioned that the company’s main source of liquidity was equity financing income. In March, April and May, 2021, the company obtained 747.8 million RMB from D2 financing. As of June 30, 2024, Flash had cash and cash equivalents of 711.7 million yuan (US$ 97.9 million).
Flash delivery mentioned in the prospectus that the company does not employ any lightning riders, and provides special express service for individual and corporate customers by relying on Flash-Riders. The company usually regards such lightning riders as independent contractors.
In this context, there are also many consumer complaints about flash delivery. As of October 8, the keyword "flash delivery" was searched on the black cat complaint platform, with a total of 8,128 complaints, and 5,744 complaints have been completed. In the last 30 days, there were 213 complaints, with an average of 7.1 complaints per day. Consumer complaints focus on time delay, overlord clauses, arbitrary deduction of service fees, unreasonable punishment of riders, and unauthorized cancellation of orders.
03
Valuation has shrunk dramatically, how to break through the competition in the Red Sea?
Tianyancha shows that at the beginning of its establishment in March 2014, Flash received millions of RMB angel round financing from Jingwei Venture Capital; In June of the same year, the company also received millions of dollars in Series A financing from Jingwei Venture Capital and CDH Investment. In July and August, 2015, Flash completed $50 million in Series B financing and Series B+ financing respectively, with investors including Jiuding Investment, Light Source Growth Fund and Tiantu Investment.
In February and June of 2017, Flash completed the C and C+ rounds of financing respectively, and the transaction amount of both rounds was USD 50 million. In August, 2017, August, 2018 and March, 2021, Flash completed the D, D+ and D++ rounds of financing respectively, among which the investors in the D+ round of financing included Haisong Capital, Wuyue Capital, Yuanxing Capital, Haina Asia Venture Capital, Shunwei Capital, Changbai Xing Capital, Shunliang Investment, Hearst Capital and Light Source Venture Capital, with a transaction amount of 60 million.
The investors in the flash D++ financing include Shunzhi Capital, Wuyue Capital, Haina Asia Venture Capital Fund, Tiantu Investment, Haisong Capital, AlphaSquare Group, Qiyuan Investment Axiom Asia Private Capital, Qian Shan Capital and Zhongcai Capital, and the transaction amount reached 125 million US dollars.
However, in the instant delivery market, flash delivery faces a lot of market competition.
In the field of traditional logistics and distribution, SF Express’s SF Express delivery, running errands, and helping to buy services, with an average of one hour in the whole city; JD.COM’s instant retail business is aimed at consumers’ JD.COM Hours, and in May 2024, JD.COM Hours and other brands were upgraded to "JD.COM Seconds Delivery"; Dada Group’s Dada seconds to send help, help to send, run errands, 1 hour; Hungry? Hummingbird, its real-time logistics platform, also provides consumers with comprehensive life services such as home catering service, supermarket service, help buy and help deliver.
In addition, after the completion of the D++ round of financing in March 2021, the valuation of flash delivery reached 2 billion US dollars (equivalent to about 14 billion yuan). According to the Hurun Global Unicorn List in 2024, the flash valuation is about 7 billion yuan, down about 40% from 2021. Up to now, the flash market value is about $1.078 billion.
According to the Research Report on Instant Distribution Industry in China released by iResearch, the scale of the instant distribution industry will be about 341 billion yuan in 2023, and it is estimated that the scale of the industry will exceed 810 billion yuan in 2028.
Mo Daiqing, director and senior analyst of the online retail department of the E-commerce Research Center of NetEconomy & Society, pointed out that the competition in the instant delivery market is becoming more and more fierce. For example, Dada Group and SF Express have been successfully listed in the same city, and the rookie also announced to upgrade its express delivery service in the same city and launched the "half-day service". Backed by giants such as JD.COM, SF Express and Ali, they have strong financial support and business resources. In addition, there are some new "showstopper". For example, last year, the cargo Lala announced the online errands business; Didi also launched Didi errands service; Gaode Map announced that it has cooperated with a number of instant delivery companies to provide errands through its platform; Tik Tok, Aauto Quicker, Oriental Selection, etc. are also accelerating the trial of instant retail.
Although it has been successfully listed, on the one hand, its profitability is under great pressure, and on the other hand, how to successfully break through in the Red Sea industry has also been tested.