Boqii Holding Limited, a prominent pet-focused platform in China, recently released its fiscal year 2024 first-half earnings report. Despite facing a notable decrease in revenue, the company has shown resilience in its private label business and improved operational efficiencies.
Boqii reported a 34% year-on-year decline in revenue, reaching RMB389.4 million. Although this decrease is concerning, it is crucial to note that the company’s gross profit margin remained fairly stable. This indicates that Boqii has managed to balance its costs effectively, even in a challenging market.
Despite the overall revenue decline, Boqii’s private label business has demonstrated growth and resilience. The company’s gross merchandise value (GMV) for private labels increased by 2.1% to RMB212.9 million. Moreover, both the gross margin and post-fulfillment margin for private labels improved, with the gross margin standing at 20% and post-fulfillment margin increasing by 170 basis points to 11.2%. These positive developments underline Boqii’s ability to leverage its private label products and deliver value to its customers.
Boqii has made significant progress in controlling costs and improving operational efficiency. Notably, the company achieved success in logistics and customer acquisition. Customer acquisition cost decreased by an impressive 46% year-over-year to RMB2.8. Additionally, Boqii experienced an increase in purchase frequency, with customers now making 1.34 purchases per year. This indicates enhanced customer loyalty and engagement.
Boqii reported a net loss of RMB37.7 million for the first half of fiscal year 2024, with a non-GAAP net loss of RMB34.2 million. While this outcome is not ideal, it is important to recognize that Boqii maintains a stable financial position. The company possesses sufficient cash to support its operations and invest in new initiatives.
Previously facing the risk of delisting, Boqii successfully resolved this concern by transferring from NYSE to NYSE America. This move indicates the company’s commitment to compliance and its strategic positioning within the pet industry. Boqii’s management remains optimistic about the growth potential of the pet industry in China and the company’s ability to thrive within this market.
Boqii Holding Limited’s first-half results for fiscal year 2024 reflect the challenges posed by the economic environment. However, the company’s strategic adjustments and emphasis on high-margin private labels have helped mitigate some of the impacts. As the pet industry in China continues to grow, Boqii is well-positioned to capitalize on this trend and deliver sustainable returns to its shareholders. Through cost control, operational efficiency, and an unwavering focus on delivering value to pet parents and brand partners, Boqii is paving the way for long-term success in an evolving market.
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