A Glimpse Into the Future - From Didi's 1st Annual Report After Delisting

Industrials Author: Zhisheng Wang, Yiran Xing Jul 26, 2023 04:43 PM (GMT+8)

In China's sharing economy market, Didi is undoubtedly a famous and representative company. Didi used to be the first mobile transportation company to be listed on the New York Stock Exchange (NYSE). However, it was subsequently overshadowed and delisted after a series of events. Recently, it released its first annual report after being delisted. It is noteworthy that Didi managed to generate a revenue of CNY 140.8 billion.


Introduction of Didi

Founded in 2012, Didi Global Inc. (Chinese:滴滴全球股份有限公司, hereinafter referred to as "Didi"), headquartered in Beijing, is one of the world’s leading mobile transportation platforms and the largest ride-hailing platform in China. Didi provides over 550 million users in Asia Pacific, Latin America and Russia, with diversified services such as ride-hailing, taxi hailing, chauffeur, food delivery services, auto solutions, intra-city freight, financial services, etc.

Currently, Didi's revenue consists of three major segments, namely China Mobility, International, and Other Initiative. The revenue and share of the three major segments in the last three years are as follows:

In 2020, Didi's total revenue was CNY 141.7 billion, with revenue from China Mobility, International and Other Initiative amounting to CNY 133.6 billion, CNY 2.3 billion and CNY 5.8 billion; accounting for 94.3%, 1.6% and 4.1% of total revenue, respectively.

In 2021, Didi's total revenue was CNY 173.83 billion, with revenue from China Mobility, International and Other Initiative amounting to CNY 160.52 billion, CNY 3.62 billion and CNY 9.68 billion; accounting for 92.3%, 2.1% and 5.6% of the total revenue, respectively.

In 2022, Didi's total revenue was CNY 140.8 billion, with revenue from China Mobility, International and Other Initiative amounting to CNY 125.9 billion, CNY 5.9 billion and CNY 9.0 billion; accounting for 89.4%, 4.2% and 6.4% of the total revenue, respectively.

This demonstrates that Didi's internationalization strategy is accelerating over time, as is evidenced by the continually rising share of overseas sales in overall revenue.

Didi's Delisting from NYSE

On June 30, 2021, Didi listed on the New York Stock Exchange (NYSE), becoming the first Chinese mobile transportation company to list in the United States. Its market capitalization once reached USD 87 billion, surpassing Baidu and setting the highest record for Chinese tech companies raising capital in the U.S. Consequently, it overtook Alibaba as the Chinese company's largest IPO in the United States.

On July 2, 2021, the Cyberspace Administration of China conducted a network security review of the Didi apps and suspended new user registrations in China during the review period. Subsequently, the Cyberspace Administration of China issued a notification that 26 apps operated by Didi in China were collecting personal information in violation of relevant Chinese laws and regulations, and notified the app stores to take down the aforementioned applications.

On December 3, 2021, the company announced its intention to delist from the NYSE. Didi stated that the aforementioned suspension of program downgrades and new user registrations since the third quarter of 2021 has had an adverse impact on total transaction volume. If the aforementioned situation were to persist, it could have a material adverse impact on the company's business, and that it would not be able to complete its cybersecurity review and rectification without delisting from the NYSE.

On April 16, 2022, Didi announced that it would hold an extraordinary general meeting (EGM) on May 23 to vote on delisting. The final voting results showed that the delisting from the NYSE was agreed. In response, the official website of the United States Securities and Exchange Commission (SEC) released a message on the same day, in the form of a question-and-answer session with the head of the relevant departments of the SEC, saying that the delisting of Didi is a special case, unrelated to other listed Chinese stocks in the United States, and does not affect the regulatory cooperation process between China and the United States.

On June 2, 2022, Didi formally filed a delisting application form with the SEC. According to the regulations, 10 days after the submission of the application document, the delisting decision of Didi officially takes effect.

Interpretation of Didi's First Annual Report After Delisting

1. Analysis of the Revenue

On April 29, 2023, Didi released its 2022 annual report on the official website, which was the first annual report delivered after delisting from the NYSE in June 2022. The annual report shows that in 2022, Didi achieved an operating revenue of CNY 140.8 billion, down 19% year-on-year; net loss was CNY 23.8 billion, narrowing 52% from the same period last year. Among the three major business segments of Didi, China Mobility, International and Other Initiatives accounted for 89%, 4% and 7% of the total revenue, respectively. Among them, the revenue of China Mobility, which accounted for nearly 90% of Didi's revenue, dropped from CNY 160.5 billion in 2021 to CNY 125.9 billion in 2022, a decrease of 22%.

Notwithstanding the decrease in revenue, the company has managed to substantially reduce its deficits. According to historical data, Didi incurred a significant financial loss in the year 2021, amounting to a net loss of CNY 49.3 billion. By contrast, the net loss incurred in 2022 exhibited a 52% reduction from the previous year. The significant rise in the loss of Didi in 2021 was primarily influenced by its investment activities. The loss incurred by Didi on the investment front was primarily attributed to the fair value alteration of Orange Heart investment. In the third quarter of the year, Didi recorded a net investment loss of CNY 20.8 billion, which resulted in the widening of its annual net loss margin. Following the identification of the aforementioned losses in the year 2021, a notable reduction in losses was observed by the organization in the subsequent year of 2022.

In terms of business segments, in 2022, among Didi's three main businesses, revenue from the China Mobility and Other Initiatives declined, while revenue from the International business increased. Specifically, the International business increased by 62%, from CNY 3.6 billion in 2021 to CNY 5.9 billion in 2022. Other Initiative revenue dropped from CNY 9.7 billion in 2021 to CNY 9.0 billion in 2022, a decrease of 7%. Meanwhile, for the 12 months ending March 31, 2023, Didi had about 587 million annual active users and 23 million annual active drivers worldwide. Among these, China Mobility had 411 million annual active users and 19 million annual active drivers.

According to global authoritative consulting firm Longbridge Dolphin Research, Didi's market share in China was about 80% in 2022, a slight retreat from its peak share of over 90%, but still a significant advantage. Two significant factors contributing to Didi's sustained market dominance following its exit are the ameliorating market conditions in the post-pandemic era and the platform's provision of high-quality services.

2. Analysis of Development Trend

From the industry trend, it is probable that Didi will continue to focus on international business and driverless technology in the future.

Didi's international business, as the only growth segment among the three major businesses in 2022, is one of the key strategies for the company's development. Didi's internationalization began in investment mode, having invested in Lyft, Grab, Ola, 99 and other companies. Its own involvement in international business began in 2018 and continued to ramp up in 2020. According to CIC data, the shared travel market size in Latin America, Europe, the Middle East and Africa, and Asia-Pacific (excluding China and India) has reached USD 41 billion in 2020 and is expected to reach USD 117 billion by 2025, with a compound annual growth rate of 23.2%.

In 2022, Didi launched operations in 16 countries, including the United States, India, Japan, Australia, etc. International travel and takeaway finished 6.6 million orders per day on average in 2023. Currently, Didi has launched a shared motorcycle service "Moto" in several countries, such as Latin America and Egypt, and has also implemented food delivery and financial services.

Autonomous driving is the next battleground for Didi. Didi announced its first future service concept vehicle, DiDi Neuron, on April 13, 2023, along with its progress in technology, hardware, mass production and new business exploration. Meanwhile, Didi’s autonomous trucking division KargoBot and Shaanxi Heavy-duty Truck have formed a strategic partnership to accelerate the production of 100 L4 autonomous trucks. KargoBot made its debut at the Shanghai International Automobile Industry Exhibition and will be based on the Shaanxi Truck X6000 platform and will be capable of unmanned operations. A hybrid unmanned mode enhances safety and reduces energy consumption. This mass production model is expected to be officially delivered and put into service in the fourth quarter of 2023.

In May 2023, DiDi Autonomous Driving, the self-driving technology arm of DiDi Global, has deepened its partnership with GAC AION New Energy Automobile Co., Ltd. ("GAC AION"), subsidiary of Guangzhou Automobile Group ("GAC Group"), to set up a joint venture to mass produce electric Robotaxi under a joint project named "AIDI", a milestone for L4 Autonomous Driving EVs' mass production and commercial operation. This joint venture was the industry’s first in China between an automobile company and an autonomous driving company to push forward self-driving EVs' mass production. The two parties will collaborate to create an advanced L4 self-driving system that caters to passengers’ requirements and delivers a superior riding experience. The initial model is set to be launched in 2025 on DiDi’s shared mobility platform, as part of a comprehensive mixed dispatching system.

Furthermore, the diversification of Didi's business helps reduce risks to some extent. Didi is not only actively involved in the mobile transportation business, but it is also continually expanding into other areas such as bike-sharing, freight transportation, autonomous driving, financial services, overseas travel and take-out.

Analysis of the Status Quo of China's Ride-hailing Market

Nearly a year after Didi's delisting, China's ride-hailing market has changed significantly. New rising ride-hailing platforms, such as Caocao Chuxing, T3 Chuxing, etc., have received financing to accelerate the pace of seizing the market. Platforms, led by Gaode, have seized the market due to their large user base, thus attracting Huawei, Tencent, and other market giants to join the market. Some small and medium-sized capacity platforms or leasing companies that hold vehicles are also making efforts to compete for market share.


According to the Online Taxi-Hailing Regulatory Information Interactive Platform, as of March 31, 2023, a total of 307 online taxi-hailing companies nationwide have obtained their operation licenses, an increase of 4 companies; a total of 5,229,000 online taxi-hailing driver licenses and 2,250,000 vehicle transport licenses were issued around the country, up 1.0% and 2.7%, respectively, from the previous year. The Online Taxi-Hailing Regulatory Information Interactive Platform received a total of 716 million orders in March, up 9.7% from a year earlier.

Data from China Internet Network Information Center shows that in the first half of 2021, online ride-hailing services have covered more than 400 cities nationwide, with a total order volume of more than 4.31 billion units, and the overall transaction scale of ride-hailing services is expected to achieve further improvement in the future. Foresight Industry Research Institute believes that the average annual compound growth rate of China's ride-hailing service is expected to reach 12% in 2021-2026, and the overall transaction value is expected to exceed CNY 600 billion by 2026.


According to data disclosed by the Ministry of Transportation of the People's Republic of China on January 12, 2023, the top 10 platforms in terms of order volume in the online taxi-hailing market, in descending order compliance rate (meaning the percentage of orders for which both drivers and vehicles are licensed), are Ruqi Chuxing, Canyon Chuxing, Hedao Chuxing, T3 Chuxing, Wanshun Chuxing, Shouqi Chuxing, Caocao Chuxing, Didi Chuxing, Meituan Chuxing, and Huaxiaozhu Chuxing.

According to data analyzed by Econo, the overall order volume of China's ride-hailing market reached 508 million units in November 2022, down 11.4% from the previous year. Among them, the order volume of Didi reached 371.54 million units, T3 Chuxing 51.37 million units, Caocao Chuxing 24.33 million units, followed by Meituan Chuxing, Xiangdao Chuxing, Wanshun Jiaoche, Huaxiaozhu Chuxing. Based solely on the analysis of market order volume, Didi appears to be the leading ride-hailing platform, followed by T3 Chuxing and Caocao Chuxing, which occupy the second and third positions in the industry, respectively. Despite the existing gap in performance, the newcomers from the previous year have demonstrated a strong commitment to catching up and securing funding.

Comparison of the Two Leading Mobile Transportation Enterprises in China and the U.S.: Uber Vs Didi

The rivalry between Didi and Uber was originated in 2015. During that period, the domestic mobile transportation industry was nearing its end as Uber made a significant entry into the Chinese market. As a leading overseas ride-hailing service provider, Uber aimed to establish a strong presence in China and proposed that Didi accept a 40% investment share to facilitate the incorporation process. Following a subsidy conflict, Didi fully integrated Uber China's operations and established a cross-shareholding agreement with Uber. Prior to Didi's initial public offering, Uber held a 12.8% stake in Didi. However, Didi has since divested all of its Uber shares, resulting in a profitable investment return of USD 400 million. According to the existing data, the comparison between Didi and Uber can be delineated as follows.

From the perspective of revenue, in 2022, Uber's revenue was CNY 224.1 billion, up 82.6% year-on-year; Didi achieved operating revenue of CNY 140.8 billion in the same year, a decrease of 19% from the same period last year. In this dimension, Uber's revenue is ahead of that of Didi.

Regarding the revenue composition, Didi's revenue is primarily categorized into three segments, namely China Mobility, International, and Other Initiatives. Notably, China Mobility has consistently accounted for approximately 90% of the company's revenue. However, this is a different case for Uber. The primary sources of revenue for Uber are its ride-hailing service, delivery, freight businesses, its ATG and other technology ventures. It is noteworthy that the proportion of revenue generated by Uber's delivery segment has exhibited a steady upward trend in recent years. This trend has been particularly pronounced in the aftermath of the pandemic, with the delivery segment accounting for 35% of Uber's revenue in 2020, 60% in Q1 2021, and 47.8% in Q1 2023.

In terms of market coverage, Didi's primary focus is on the Chinese market, whereas Uber operates more as a global platform. Presently, Uber's services are available in excess of 10,000 cities and towns spanning over 80 countries worldwide. Notably, Latin America, Asia Pacific, Europe, the Middle East, and Africa collectively account for 41% of Uber's revenue. Furthermore, Uber's delivery service has been implemented globally, encompassing over 40 nations. The current state of Uber's globalization efforts reveals that the company is in its initial stages, yet its business development has reached a level of relative maturity. As per the Didi prospectus, it can be inferred that the existing revenue streams of Didi have proliferated to encompass 16 nations. In the context of internationalization, the decline remains a significant obstacle. As Didi continues to expand its presence in international markets, the disparity between Drip and Uber is likely to gradually diminish.

Uber's diversification of businesses has resulted in a high degree of resistance and resilience during the pandemic. According to Uber's Q1 2023 earnings report, the company's gross bookings experienced a 19% year-over-year increase, amounting to USD 31.4 billion. Additionally, the revenue of the company also witnessed a 29% growth, reaching USD 8.8 billion. In terms of financial performance, the Mobility business witnessed a 40% year-over-year increase in bookings, while the Delivery business experienced an 8% increase, marking a reversal of seven consecutive quarters of decelerating growth. However, the Freight business observed a 23% year-over-year decline in bookings.

Another big advantage for Uber is the ongoing optimization of its operational technology. Uber has implemented the use of artificial intelligence to forecast ride and delivery times with a high degree of precision. Additionally, the company has leveraged this technology to expedite driver pickups by enhancing the reliability and cost-effectiveness of document processing. According to Uber executives, the utilization of extensive data models to enhance user experience and efficiency throughout the platform is still in its nascent phase, and further efforts are required.

Analysis of Didi's Future Prospects

By the time 2023 rolls around, Didi has long gone passed its most hazardous phase. From 2019 to 2022, when Didi's market share declined to about 80%, from the time it attained 90% of China's taxi market share to the time it experienced the delisting event. However, according to the data, Didi's dominance over China's travel sector has remained solid despite a slight drop in market share and the rise of a number of other travel businesses. How long can Didi take the lead in the mobile transportation industry? Where will it head to in the future? These are likely questions without a clear-cut solution. However, depending on the status quo of the market and the market leader Uber's success, the following suggestions can be mentioned.

First, to actively encourage the diversification of businesses. The case of Uber suggests that the corporation holds a significant portion of the ride-hailing market, as well as a substantial portion of the food delivery market in terms of revenue. According to the Uber's CEO, Dara Khosrowshahi, "In general, the momentum of consumer spending appears to be robust. Individuals are allocating their financial resources towards quality experiences, with food delivery being a component of this trend." Furthermore, Uber disclosed a strategic alliance with Thames Clipper in the beginning of 2022 to introduce Uber Boat, which is among the initial hybrid high-velocity passenger ferries in the United Kingdom. The U.S. ride-hailing market saw Uber's market share increase from 66 percent in early 2020 to 76 percent in March 2023, as per data released by research firm YipitData. The implementation of diversification strategies in a business has the potential to alleviate the risks that organizations may face as a result of market saturation in a specific segment and environmental disturbances.

Secondly, to expedite the international business process. Given its status as the sole expanding sector among the three primary business segments, and in light of the swift progress being made in autonomous vehicle technology, the internationalization strategy can be served as a "hidden asset" in the company's ongoing efforts to broaden its market dominance. According to Liu Qing, the President of Didi, the Latin American market is an important overseas market of Didi, with a workforce of 1,200 employees, constituting 10% of the company's global personnel. This underscores the significance of international commerce.

Third, to facilitate platform integration. Based on interviews conducted with multiple ride-sharing drivers, it has been observed that there exist fragmented platforms within the realm of online ride-hailing services, which may result in passengers' pressing requirements being unfulfilled at times. In certain instances, when diverse passengers utilize a particular taxi software, a driver registered on said software may be situated at a considerable distance from the passenger. However, drivers affiliated with alternative taxi software may be in closer proximity to the passenger's location. Hence, the consolidation of various taxi software onto a single platform could potentially address the issue of limited accessibility to taxis for passengers, while also providing a solution for drivers who face challenges with distant orders.