Didi IPO Filing Shows Rebound From Pandemic Lows, Mobility Market Potential

The parade of listings from platform companies, and digital disruptors aiming and streamlining everyday activities, continues. To that end, Didi Chuxing Technology Co. filed its F-1 (under its official name, Xiaoju Kuaizhi Inc.) with the SEC to go public in the U.S., with American depositary shares.

Digging into the filing, the data show that through the trailing 12 months that ended in March 2021, the company had 493 million annual active users, with 15 million annual active drivers and 41 million average daily transactions over the same period.

Management said in the filing that “the new mobility paradigm is expected to significantly increase the already massive mobility market opportunity.” Mobility, according to the filing, represents a $6.7 trillion opportunity, where share mobility and electric vehicle penetration, respectively, stand at only 2 percent and 1 percent. Along with that low penetration, the global mobility market is expected to grow to as much as $16.4 trillion by 2040, and shared mobility is expected to be nearly 24 percent of the tally.

“We believe China is the best starting place for realizing our vision for mobility,” Didi said in the filing. “China’s massive and urbanizing population presents opportunities for new mobility services. This will accelerate the rapid development of shared mobility and transform urban living.”

The firm said that for the entire year 2020, Didi logged 141.7 billion Chinese yuan in sales, down 8.5 percent from the previous year. The decline is not a surprise in the wake of the pandemic. The consolidated top line is the U.S. equivalent of $20.4 billion in revenues. Uber, by way of comparison, logged $11.1 billion in sales, down 14.6 percent year on year. For 2020, Didi said that it lost 13.7 billion yuan, which translates into a loss of $2.1 billion. Uber lost $4.9 billion from operations over the same period.

Slight (Net) Profit

But turning to the first-quarter results, the loss from operations narrowed to $1 billion (USD), as sales grew by more than 100 percent year on year. The company showed a net profit of 196 million yuan in the latest period (the equivalent of $30 million). Did said in its filing that more than 93 percent of its platform sales were derived from China.

There are significant contrasts between Didi and Uber (which owns a 12.8 percent stake in Didi). While Uber has been building out its platform into a range of services adjacent to, and cross-pollinating with, ride-hailing (freight, for example) — and while they both have food delivery offerings (Didi’s food delivery is a feature of international sales) — Didi seems focused on mobility and its home base market of China.

The company does note that “the digitalization of China’s intra-city freight industry is still in early stages.” Intra-city freight was US$161 billion in 2020, the company said, and the online platform penetration rate was only 4.9 percent. There also is a massive opportunity for fresh food and grocery (a $1.8 trillion industry) to shift online in China. “In 2020, only 20.9 percent of total fresh food and grocery spend was transacted online,” said the company, a tally that is expected to grow to more than 45 percent by 2025.

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