NaaS Technology Inc. Q2 FY2024 earnings call

• Kathy Wang announced that in June 2024, NaaS achieved its first positive average month profit and aims to carry profitability into the third and fourth quarters of 2024. The company has focused on strengthening core business, reducing costs, and optimizing staff and management efficiency.
• Alex Wu highlighted the development of AI and digital technologies, such as enhanced deep learning, V2X, and 3D vision technologies for autonomous charging. The NEF platform is driving transformation in the charging station construction sector. In Q2, revenue grew 89% y-o-y, gross profit grew 59% y-o-y, and the gross margin of charging services reached its highest level in the past four quarters. Operational expenses were reduced relative to revenue, and the proportion of orders with positive NCR surged to 70%.

In the second quarter of 2024, NaaS' revenue was RMB91.7 million, up 89% year-over-year. The core charging services segment contributed RMB44.8 million to revenue, a 73% increase compared to the same period last year, accounting for approximately 48.85% of Q2 revenue. Revenue from energy solutions was RMB44 million, up 105% year-over-year, making up about 47.98% of Q2 revenue. Revenue from new initiatives was RMB2.9 million, up 139% year-over-year, representing around 3.16% of Q2 revenue.

• NaaS aims to carry the profitability into the third and fourth quarters of 2024. The company remains dedicated to financial discipline, innovation, and progress. It is exploring the replication of the successful partnership model in other regions, with an initiative already underway in Changsha.

Q: How are you able to meaningfully elevate your margin level and how do you expect a quarterly net profit breakeven going ahead? And as NaaS continues to enjoy fast revenue growth and scale up, can you share more color on your revenue drivers in the next two years?

A: Alex Wu stated that margin improvement was achieved through revenue growth, optimized operations, and expense control. Revenue in Q2 2024 grew 89% y-o-y with strong growth across segments. For revenue drivers in the next two years, charging services grow due to expanding charging network coverage, energy solutions grow with improved AI capabilities in site selection, EPC, and site operations, and AI capabilities are monetized through hardware sales and software subscription fees.

Q: As we were through the improving financial numbers, can you share with us more details on the operating metrics, such as the gross take rate and net take rate?

A: Alex Wu explained that gross take rate (GTR) reached an all-time high due to algorithm bringing traffic to CPOs and more long-tail CPOs joining. Net take rate (NTR) is driven by improving sales and marketing efficiency with advanced algorithms, resulting in a 30% quarter-over-quarter increase in net addition of VIP members and profitable orders at 70% of all orders.

Q: Recently, RoboTaxi has become very popular in China. How do you see your position in the new autonomous driving area?

A: Alex Wu noted that NaaS is well-positioned due to partnerships with OEMs, access to smart EV operating systems, and autonomous charging robots designed for autonomous driving scenarios. AI algorithms can optimize charging operations for RoboTaxi, and the company is at the forefront of empowering charging infrastructure for the autonomous driving era.

Q: You have been partnering up with a lot of EV makers. Could you share more updates on the latest development and how could such benefits benefit us?

A: Alex Wu said in Q2, NaaS further improved partnerships with OEMs, embedded the platform into EVs with JI YUE, and has partnerships with most major OEMs, building services in over 150 EV models. Benefits include revenue from collaborations, brand awareness, technology collaboration, and participation in government initiatives to build a better user experience for EV drivers through partnerships.