China’s largest ride-hailing service, Didi Chuxing, officially filed for a U.S. initial public offering Thursday with an odd inclusion for its sector: actual profit.
Didi did not state a targeted amount to raise, nor name which exchange it intends to trade on, information that could come with updated filings with the Securities and Exchange Commission. It expects to list under the ticker symbol DIDI.
The company — which filed under a parent company’s name, Xiaoju Kuaizhi Inc. — did reveal that it turned a profit in the first quarter after years of large losses, with financial records showing GAAP net income of 5.49 billion rembini ($837 million) on revenue of RMB 42.16 billion ($6.44 billion), up from a loss of RMB 3.97 billion on sales of RMB 20.47 billion the year before.
The profit stemmed from Didi investments that added more than RMB 12 billion to the bottom line in the quarter, “primarily due to the deconsolidation of Chengxin Technology Inc., or Chengxin, the entity engaged in the community group buying business, from which we recognized an unrealized gain of RMB 9.1 billion,” the company stated. Prior to that, Didi reported annual losses of RMB 10.6 billion, 9.7 billion and 15 billion in the past three full years.
U.S. counterparts Uber Technologies Inc.
UBER,
+0.83%
and Lyft Inc.
LYFT,
+0.51%
have not produced a quarterly profit since going public in 2019. In their most recent quarters, which mirrored the time period of Didi’s first quarter, Uber reported a loss of $108 million — its smallest quarterly loss as a public company — on sales of $2.9 billion, while Lyft lost $427 million on sales of $609 million. Uber did report a quarterly profit before going public, in the first quarter of 2018, as a result of a revaluing of its investment in Didi.
Uber will enjoy a potential bounty from the offering, though, as it currently owns about 12.8% of Didi as the result of Uber exiting China and selling its subsidiary there to Didi. The complicated transaction resulted in Didi owning shares of Uber — which it sold in late 2020 — and Uber holding the second-largest equity stake in Didi ahead of its planned IPO.
The largest stake is held by Softbank Group Corp.’s
9984,
-0.63%
Vision Fund, which owns 21.5% of the equity ahead of IPO. Chinese tech giant Tencent Holdings Ltd.
700,
-0.41%
owns 6.8% of the equity, slightly lower than the 7% owned by Chief Executive Will Wei Cheng, who founded the company with Didi’s president, Jean Qing Liu.
“I still remember that wintery night in Beijing in 2012,” Cheng wrote in a founders’ letter in Thursday’s filing. “It was snowing hard. My jacket was no match for the wind. I wasn’t alone. There was a long line of freezing people, ahead of and behind me, all waiting with growing frustration for a taxi to take them home. This was a common experience for me since, like most Beijingers, I never had a driver’s license. This night was different for me. Unlike the other people in line, I was not frustrated because I had a plan. We launched DiDi that year with the simple goal of making it easier for people to hail a taxi. By the end of that year, DiDi was already helping 100,000 people a day, including myself, to get home and out of the cold more easily.”
