On August 22, Qeeka Home (01739.HK, Jia.com’s domestic operator) announced its 2022 interim results, reporting total revenue of RMB 432 million and gross profit of RMB 245 million for the first half of 2022, with gross margin remaining flat at 57% compared to the same period last year and an adjusted net loss attributable to the parent company of RMB 20.68 million. During the reporting period, the company maintained adequate cash reserves, with RMB 720 million in monetary funds as of June 30, 2022.
According to Qeeka Home’s interim results for 2022, revenue from SaaS and marketing services decreased by 14.6% to RMB 240 million in the first half of the reporting year, while the number of active paying merchants decreased by 4% year on year to 5,451, but increased by 29% when compared to the first half of 2020, just as the pandemic was taking hold. Consumer expectations for home improvement were momentarily impacted by pandemic prevention measures, with the number of sales leads decreasing by 11% to 344,034 in the first half of the year, but increasing by 4% compared to the same period in 2020. In the first half of the year, the conversion rate of sales leads to recommended users grew to 85%, up from 75%.
The pandemic had a significant influence on the interior design and construction industry in the second quarter, temporarily suppressing customer demand and limiting business activities. Against this backdrop, Qeeka Home’s business was unavoidably impacted by external causes; nonetheless, business fundamentals remained strong, and the firm’s SaaS-enabled solutions worked as an industry “stabiliser,” allowing it and its partners to succeed.
The overall gross profit margin for Qeeka Home stayed at 56.7%, essentially unchanged from 56.6% in the same time last year. The firm’s major revenue engine, SaaS and Extended Service Business, maintained a constant level of 91.1%, up 3.6 percentage points from 87.5% in the same time last year. The gross profit margin remained consistently high, showing that the pandemic had no meaningful influence on Qeeka Home’s core business profitability. The business model of the company remained sound.
Qeeka Home’s cash reserves remained healthy despite the pressure. Qeeka Home has RMB 720 million in cash or cash equivalents on hand as of June 30, 2022, a 26.4% increase over the same period last year. The adequate cash flow reserve offered great support for the company to stay on track with its core strategy while actively exploring and planning new ventures. In the first half of 2022, Qeeka Home continued to aggressively grow into new and unique companies such as smart home, soft furnishings, and new retail to mitigate the company’s negative impact from the economic environment and the pandemic.
Domestic interior refurbishment projects moved slowly due to the influence of macro policy regulation on the upstream real estate business, with slower return of capital, a longer accounting time, and an increased risk of bad debts. Revenue for the first half of the year was RMB 145 million, a 19% decrease from the same period the previous year. The interior design and construction industry, which was badly impacted by pandemic protection efforts, recorded revenue of RMB 23 million, an 11% decrease from the same period last year, due to delays in the delivery and acceptance of various projects.
According to analysts, the interior design and construction business is under pressure from a variety of external reasons. Although Qeeka Home’s performance has been impacted, the specific impact remains within an acceptable range. Overall performance remains strong, and all businesses have returned to stability, confirming the company’s outstanding risk management.
As a digital ecosystem that empowers and connects consumers, merchants, and manufacturers of home improvement items and supplies, all Qeeka Home stakeholders have been affected to varied degrees by the epidemic.
Qeeka Home has introduced the Ivy Program, a set of empowerment efforts for the platform’s merchants to strengthen their operational capabilities and reputation among shoppers, assisting them to minimise expenses and generate revenues in an uncertain climate. According to Qeeka Home’s 2022 interim results, average revenue per sales lead generated by SaaS and marketing services fell 4.7% to RMB 697 in the first half of 2022, down from RMB 731 in the first half of 2021. Concessions and aid granted to merchants have played a significant part in facilitating the industry’s recovery during a generally challenging period. In terms of supply chain services, the pandemic caused a prolonged logistics disruption in the Company’s supply chain. As a result, the company’s revenue fell to RMB 15.83 million in the first half of 2022. Meanwhile, Qeeka Home’s platform sourced home improvement goods and materials from upstream building material producers and factories using a collective procurement approach, which assisted partner merchants in lowering prices and increasing efficiency while maintaining material quality.
During the same time period, in addition to the Qijia Bao consumer protection plan, Qeeka Home has raised the bar of merchant audits, rigorously examining their qualifications and increasing the platform’s overall service quality. The company also improved the shopping experience by sharing quality original content and real home improvement cases via multiple channels such as short video platforms, social media networks, and recommendation engines, where they provided home improvement advice and assisted shoppers in avoiding pitfalls, increasing their trust in the platform. The impact of external variables such as the pandemic is only temporary for the interior design and construction business, and the problems it is currently experiencing will soon pass. Despite the problems, there will be new opportunities. In the long run, the industry has tremendous growth potential, and customer confidence will gradually recover. As a result, Qeeka Home’s business is projected to return to normalcy and eventually begin growing.
- Qeeka Home (1739.HK) announces RMB 432 million in revenue for 1H of 2022, with enough cash flow and excellent company fundamentals
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