Boqii Holding Limited (NYSE: BQ), a leading pet-focused platform in China, reported its fiscal year 2024 first half earnings with a notable decrease in revenue but showed resilience in its private label business and improved operational efficiencies. Despite a 34% year-on-year decline in revenue to RMB389.4 million (RMB 1 = $0.14), the company's gross profit margin remained fairly stable, and it saw an increase in gross margins and post-fulfillment margins for its private label products. Boqii's management expressed confidence in the pet industry's growth potential in China and the company's strategic position within the market.
Key Takeaways
- Boqii's revenue for the first half of fiscal 2024 was RMB389.4 million, a decrease of 34% year-over-year.
- The gross profit margin decreased slightly by 100 basis points to 20%.
- The company's private label GMV increased by 2.1% to RMB212.9 million.
- Gross margin and post fulfillment margins for private labels improved, with gross margin at 20% and post fulfillment margin up by 170 basis points to 11.2%.
- Customer acquisition cost decreased by 46% year-over-year to RMB2.8.
- Purchase frequency increased from 1.32 to 1.34 times per year for both new and existing customers.
- Net loss for the period was RMB37.7 million, and non-GAAP net loss was RMB34.2 million.
- Boqii resolved its delisting risk by transferring from NYSE to NYSE America.
Company Outlook
- Management remains optimistic about the growth of China's pet industry and Boqii's strategic positioning.
- The company will continue to focus on enhancing its market position, brand profile, user stickiness, and product offerings.
- Boqii is working towards establishing a well-rounded ecosystem to deliver value to pet parents and brand partners.
Bearish Highlights
- Revenue suffered due to volatile consumer sentiment and consumption downgrades in China.
- There was a net loss and non-GAAP net loss reported for the first half of fiscal year 2024.
Bullish Highlights
- Private label business showed growth and resilience amidst market challenges.
- The company made progress in cost control and operational efficiency, particularly in logistics and customer acquisition.
- Boqii's financial position remains stable with sufficient cash to support operations and new initiatives.
Misses
- Overall revenue and total cash and cash equivalents saw a significant decrease compared to the previous year.
- The increase in general and administrative expenses was mainly due to an increase in share-based compensation expenses.
Q&A Highlights
- The company addressed concerns regarding its previous delisting risk, confirming its resolution and compliance with NYSE America.
- Management discussed operational expense trends, noting improvements in logistics and marketing efficiency and an expected continuation of this trend.
In conclusion, Boqii's fiscal year 2024 first half results reflected a challenging economic environment, but the company's strategic adjustments and focus on high-margin private labels have helped to mitigate some of the impacts. With the pet industry in China poised for growth, Boqii is positioning itself to capitalize on this trend and deliver sustainable returns to shareholders.
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