US Stock IPO Preview | Weiba: The "Customized Shuttle Service Platform" from Hangzhou Faces a 70% Revenue Decline Amid Business Transformation Pains

In 2024, the mobile travel sector is experiencing a capital surge, with multiple companies embarking on the path to go public. Companies such as Ruqi Mobility, Pony.ai, and WeRide are among them.

As 2025 begins, the one-stop customized charter bus industry is also making its way to the capital market. Recently, WEBUS INTERNATIONAL LIMITED (hereinafter referred to as "Microbus"), the substantial controlling shareholder of Zhejiang Youba Technology Co., Ltd. from Hangzhou, Zhejiang, updated its prospectus with the U.S. Securities and Exchange Commission (SEC), with the stock code WETO, planning to IPO on the NASDAQ in the United States. It secretly filed with the SEC on September 23, 2022, and publicly disclosed the prospectus on February 10, 2023.

There are reports claiming that this company, which started with "customized buses," may be rewriting the rules of the global travel game. What is its fundamental situation?

Revenue Plummets by About 70%, Focusing on "Small but Beautiful" Growth

The prospectus shows that Microbus adopts a "Mobility as a Service" (MaaS) business model, identifying and solving inefficiencies related to inflexible or low-quality mobility solutions for customers worldwide through the company's comprehensive digital platform in various scenarios. The company provides customized commuter bus services, charter and bus services, and group travel services for customers' business and leisure travel.

Microbus has a rich and diverse online channel, including an app, official website, WeChat, and Alipay mini-programs. These online channels make it convenient for users to book and inquire about services anytime and anywhere. At the same time, Microbus has connected with the three major online travel agency platforms in China: Ctrip, Fliggy, and Tongcheng, and has established a certified partnership with Xiaohongshu. Through cooperation with these platforms, Microbus can better promote its services and attract more users.

In addition to online channels, Microbus's offline channels are also extensive. Strategic business cooperation with over 50 cities and counties in Zhejiang Province allows Microbus to penetrate various regions and provide convenient travel services for local residents. Travel agencies, the online bus booking platform gotobus, and service desks set up at transportation hubs such as Hangzhou High-Speed Railway Station and airports also provide users with more booking and consultation channels.

Microbus has over 11,000 deployable vehicles in China, providing strong service assurance. Whether for intra-city or inter-city travel, Microbus can quickly allocate vehicles to meet user needs. Overseas, about 8,000 drivers provide charter services, allowing Microbus's service range to cover the globe.

In the past fiscal year 2023 and fiscal year 2024 (with the fiscal year ending on June 30 each year, hereinafter referred to as the reporting period), Microbus's revenues were RMB 154 million and RMB 46 million, respectively, representing a 70% decrease in revenue, with corresponding net losses of RMB 17.6308 million and RMB 4.0556 million, highlighting ongoing losses.

From a business perspective, during the reporting period, the revenue from package tours was RMB 81.0387 million and RMB 33.3919 million, a year-on-year decline of 58.8%, mainly due to the decrease in the domestic market; the revenue from customized charter and bus services was RMB 63.6542 million and RMB 10.7306 million, a year-on-year decline of 83.1%; the revenue from commuter bus services was RMB 9.5071 million and RMB 1.8539 million, a year-on-year decline of 80.5%. The business has shrunk across the board, especially the significant decline in package tour services, which account for more than 50% of revenue, has led to a noticeable drop in the company's overall revenue. In addition, the contraction of the main business is attributed to the shrinking scale of domestic market operations. The company stated that in order to optimize long-term financial indicators and adjust brand positioning for commercial considerations, we have adjusted our business strategy to focus more on overseas markets and provide package tour services with higher gross margins.

It is encouraging to note that the gross margin for package tours has risen significantly, at 4.1% and 14.5%, respectively; while the gross margin for customized charter services has increased even more significantly, rising from 5.4% in the 2023 fiscal year to 20.6% in the 2024 fiscal year. The increase in gross margin has driven the improvement in the company's profitability.

In addition to the improvement in profitability, the reduction in expenses has also led to a narrowing of losses for the minibus service. During the reporting period, the company's total operating expenses were RMB 27.4525 million and RMB 13.8978 million, a year-on-year decline of 49.38%, with sales and marketing expenses down 49% to RMB 7.4683 million; general and administrative expenses down 51% to RMB 5.0985 million; and research and development expenses down 46% to RMB 1.3898 million.

The effect of cost reduction is undoubtedly significant, with the company's net cash flow turning positive in the 2024 fiscal year at RMB 55,000, compared to a negative RMB 4.759 million in the 2023 fiscal year. Cash and cash equivalents during the period were RMB 2.1511 million and RMB 2.7809 million, showing slight growth.

By sacrificing business scale and focusing on "small but beautiful" growth, how long can the growth of the minibus service continue?

Optimistic Outlook but Competitive Pressure Remains

From the perspective of industry development support, the industry in which the minibus service operates currently presents both "opportunities and challenges."

In recent years, the private group market has shown strong growth momentum and is expected to maintain a high growth rate in the coming years. As China's outbound tourism market continues to expand and the middle-to-high-end consumer group continues to rise, private groups are increasingly favored for their personalized and high-quality service characteristics. According to the "2023 Annual Tourism Consumption Report," private car travel accounted for 24% of the total number of tourism product bookings, with private car travel revenue reaching RMB 1.18 trillion in 2023, and it is expected to increase to RMB 1.45 trillion by 2028

In addition, in the overseas market, in 2023, the estimated market size for overseas Chinese chartered private group tours is approximately USD 8.7 billion. With the continuous growth of demand for outbound travel among Chinese tourists, the demand for travel products that provide Chinese language services has also increased. Therefore, the overseas Chinese chartered private group tour market is expected to maintain rapid growth in the coming years, with the market size expected to reach approximately USD 18.1 billion by 2028.

For Weiba, this represents one side of "opportunity," and it is also clearly the main reason for its low-price strategy to capture market share in customized charter and group travel.

However, delving into its prospectus, the "challenges" faced by Weiba in a fiercely competitive market landscape are also quite evident.

Specifically, there are about hundreds of online shared mobility service platforms in China, and the overall online shared mobility service market presents a highly competitive and fragmented landscape. According to previous disclosures in the prospectus, as of the first half of 2022, Weiba ranked second in the market, while the total revenue of the top five online collective mobility service platforms was only RMB 232.6 million, which highlights the high degree of fragmentation in this market.

Additionally, in the U.S. market, Weiba also faces competition from established local rivals. The American long-distance bus supplier Greyhound, which has been in operation for over 100 years, was acquired by the German transportation application platform FlixMobility in October 2021, allowing FlixMobility to further penetrate the U.S. market.

Thus, Weiba has indicated in its risk warnings that the company needs to compete with a large number of companies of varying sizes, including divisions or subsidiaries of large companies that may have more financial resources and a larger customer base than the company. If these competitive pressures lead to a loss of market share or a decline in profit margins for the company's products, the company's business, financial condition, and operating performance may be significantly adversely affected.

In summary, Weiba's choice to reduce revenue scale and focus on profit improvement has beautified its financial data. However, the transformation pains behind the sharp reduction in business scale and the competitive pressures in the industry will still leave investors concerned about its growth