Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Yeahka Ltd (YHEKF, Financial) maintained market leadership in one-stop payment services, reinforcing its foundation for high-quality growth.
- The company made significant strides in international expansion, winning over 200 global brands and covering more than 20,000 stores.
- Yeahka Ltd (YHEKF) integrated large language models for revenue-generating and cost-optimizing purposes, reducing selling and administrative expenses by over 10% year-over-year.
- The company's ESG efforts were recognized internationally, including being ranked first in its industry in China by S&P Global's 2024 Sustainability Yearbook.
- Gross profit margin increased from 17.7% in the first half of 2023 to 19% in the same period this year, driven by a higher proportion of nonpayment revenue.
Negative Points
- Revenue decreased by 23.5% from RMB 2.1 billion in the first half of 2023 to RMB 1.6 billion in the same period of 2024 due to macroeconomic volatility.
- The company proactively eliminated customers and projects with lower profitability, impacting overall revenue.
- Net loss in the first half of 2024 was RMB 15.6 million, although it decreased by 39.6% year-over-year.
- The macroeconomic environment in China led to a temporary decline in payment GPV, affecting the company's financial performance.
- The company faces challenges in maintaining its fee rate amid a competitive landscape and macroeconomic uncertainties.
Q & A Highlights
Q: What is the impact of the macro environment on the payment business?
A: The macroeconomic volatility in China has led to a decrease in average transaction value, impacting the payment business. However, Yeahka maintained a high transaction count of about 60 million per day and a stable fee rate of 12.3 bps, demonstrating market share and leadership. The company believes that regulations will create a healthier environment for capable service providers.
Q: What is the future strategy for local services?
A: Yeahka is focusing on higher-quality and more profitable customers, phasing out less profitable ones. The company is increasing upfront fees to ensure project profitability and has seen a 35% increase in the number of stores served for key accounts. This strategy has led to increased gross margins and reduced net loss, laying a foundation for sustainable growth.
Q: What are the latest updates on the overseas business?
A: Yeahka's overseas business has shown remarkable progress, with GPV in Singapore growing over 50% year-on-year. The company has won new global brands and expanded its product offerings. The overseas market offers attractive economics and higher willingness to pay, and Yeahka's one-stop services are well-received by merchants.
Q: What is the fee rate trend and competition landscape for the payment business in the second half?
A: Yeahka expects the fee rate to remain stable at low teens despite macroeconomic challenges. The company believes that the market will consolidate towards top service providers offering full-suite, one-stop solutions. AI will be a key differentiator in both revenue generation and cost reduction.
Q: What is the midterm strategy for the overseas payment business, including target markets and focuses?
A: Yeahka aims to leverage its existing products and experience in China to other regions, focusing on local customers and providing one-stop services. The company is setting up infrastructure to offer comprehensive solutions, including digital and marketing services, to merchants overseas.
Q: How much revenue and GMV are contributed from overseas, and what is the expected optimal percentage of contribution in the future?
A: Yeahka is currently deriving revenue from multiple countries and sees significant growth opportunities in overseas markets. The company expects a meaningful contribution to its business model from these markets, which offer attractive economics and higher margins.
Q: Why has the number of employees continued to reduce, and how much more operating costs can be reduced in the second half?
A: The reduction in employees is mainly due to the increased use of AI, which has replaced manual labor in areas like content generation and customer servicing. This has led to cost savings and improved customer experience. Yeahka expects further cost reductions as AI adoption continues.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
