Didi: Domestic business is well understood, and we need to tell a good story about profits and the "starry sea" overseas

On the evening of March 18, $DiDi(DIDIY.US) announced its Q4 2024 financial report, and here are the key points:

1. In terms of core operational data, in Q4 2024, DiDi's domestic mobility achieved a GTV of 78.4 billion, a year-on-year increase of 9.3%, slightly accelerating by 1.5 percentage points compared to the previous quarter, reflecting that DiDi's leading position in the domestic ride-hailing industry is further solidified. On a quarter-on-quarter basis, this quarter's domestic GTV grew by 0.3%, which is historically a relatively off-peak season for Q4 compared to Q3, and this quarter's growth against the trend is the first since 2021.

Breaking down price and volume, **the order volume for domestic mobility disclosed by DiDi itself (including ride-hailing, carpooling, and chauffeur services)increased by 10.8% year-on-year,slightly up from 10.6% in the previous quarter, indicating thatthe growth of domestic business volume has become relatively stable. Since the Ministry of Transport stopped publishing monthly ride-hailing order data after October, it is no longer possible to compare DiDi's order growth rate with the industry average. However, in terms of App MAU data,from the end of 2024 to the beginning of 2025, the monthly active users of the DiDi App and its subsidiary Huaxiaozhu App showed a significant upward trend, while other platforms did not exhibit similar significant changes. This also seems to indicate that DiDi's leading position and market share in the domestic market have increased.

2. From a revenue perspective, DiDi's domestic mobility segment generated revenue of 47.4 billion this quarter, a year-on-year increase of 5.6%, slightly accelerating compared to the previous quarter, but still lagging behind the GTV growth rate by about 9%. This indicates that the proportion of subsidies to consumers from DiDi is still increasing year-on-year.

Meanwhile, DiDi's domestic platform sales growth continues to significantly outperform GTV and revenue growth, at 23% this quarter, slightly down from 24% in the previous quarter. It can be inferred that the average share of driver commissions as a proportion of GTV should be declining year-on-year. The reasons may include an increase in the proportion of revenue recognized from net income; the situation of abundant ride-hailing supply and intensified competition among drivers is also one of the contributing factors.

3. The overseas business continues to maintain relatively stronger growth, with GTV increasing by 16% year-on-year this quarter. At first glance, this is a significant slowdown compared to the previous 30%-50% growth rates, but it is mainly affected by adverse exchange rate conditions. Excluding exchange rate factors, the GTV growth rate of international business still reached 32%, showing no significant slowdown.

Breaking down price and volume, the order volume growth rate for overseas business remains at 30%, slightly down from 33% in the previous quarter. The main reason is that the average transaction value has decreased by nearly 11% year-on-year (down 10% year-on-year in the previous quarter), but as mentioned above, this is mainly due to exchange rate effects.

The year-on-year revenue growth rate for overseas business is 35% to 3.01 billion, which has increased compared to the previous quarter's growth rate, continuing to outperform GTV growth. The platform revenue for overseas business increased by 22% to 2.39 billion. **

There is a significant difference in the scale and growth rate of revenue from overseas operations and platform revenue, mainly because the revenue from overseas operations includes financial and other non-performance-related businesses, while platform revenue does not. This indirectly indicates that Didi's financial income growth overseas is quite strong.

4. In terms of profit indicators, Didi's adjusted EBITA profit for the domestic segment this quarter is 2.18 billion, a decrease of about 310 million compared to the previous quarter. The proportion of Adj. EBITA profit to GTV slightly decreased from 3.2% in the previous quarter to 2.8%. Although the fourth quarter is a seasonal off-peak period, the slight decline in profit margins is somewhat reasonable, it is clearly not good news for investors who expect Didi's profit margins to continue improving.

According to estimates from Dolphin Research (due to the inclusion of many assumptions, only the trend changes are observed), although the platform take rate increased by 0.7 percentage points this quarter, the subsidies given to consumers as a percentage of GTV increased by 1.3 percentage points, thus the net monetization rate of the platform's final process still declined quarter-on-quarter. This is consistent with the decline in the domestic business's adjusted EBITA profit margin.

The adjusted EBITA loss for overseas operations this quarter is 710 million, with a loss rate (relative to GTV) reaching 2.8%. Although the loss rate has expanded compared to the first three quarters of this year, based on last year's experience, the fourth quarter appears to be a seasonal high point for expense spending. Compared to the loss rate of 5.1% in the same period last year, the loss rate is still narrowing. Other innovative businesses also showed a significant expansion in year-end losses, with a loss of 1.15 billion this quarter. However, compared to last year's fourth quarter, the loss has also narrowed.

Due to the significant expansion of losses in overseas and new businesses, Didi's overall adjusted EBITA this quarter is 320 million, which is less than the 1.74 billion from the previous quarter. However, it is important to pay special attention to whether the expansion of losses in overseas and innovative businesses this quarter is merely due to seasonal fluctuations or indicates a trend of increasing investment and losses.

6. From the perspective of costs and expenses, the reason for the decline in profit margins is mainly due to the absolute amount and proportion of four operating expenses increasing compared to the previous quarter (this quarter's revenue has decreased quarter-on-quarter) , with the proportion rising by 1.4 percentage points.

Even considering that the fourth quarter is a major season for expense spending, from a year-on-year perspective, marketing and management expenses have also seen significant increases. It seems that after stabilizing its position in the domestic market, Didi no longer emphasizes cost control too much and may be returning to an investment expansion cycle.

Dolphin Research's Viewpoint:

Overall, the information conveyed by Didi's performance this time has both positive and negative aspects. The positive side is that the growth margins of operational indicators such as GTV and order volume in the domestic business during the seasonal off-peak period have improved, and the App MAU data shows that Didi's user base has seen significant growth compared to its peers recently, reflecting that Didi's leading position in the domestic business is becoming increasingly stable. As it gradually shakes off the previous regulatory impacts, Didi's absolute leading position in the domestic market seems to feel the pressure from competitors is becoming more controllable. Meanwhile, overseas operations continue to maintain over 30% business growth while stabilizing profits in the domestic market, achieving steady and rapid expansion However, the drawback is that the domestic ride-hailing business is already quite mature, and the nearly pure tool-like nature of ride-hailing limits its growth potential. As the absolute leader in the domestic market (with a market share possibly between 70% and 80%), Didi does not have much logic to discuss market share improvement, and the growth prospects of its domestic business do not have much room for imagination. Therefore, the main focus is on profit release. This time, the domestic business's profit margin declined quarter-on-quarter (although it can be explained as a seasonal off-peak), and the losses from overseas and innovative businesses significantly expanded quarter-on-quarter (although they decreased year-on-year), which did not meet the market's expectations for incremental profits.

Looking ahead, the company expects that in the fiscal year 2025, the adjusted EBITA of the domestic business will reach 12 billion, which is an upward adjustment from the guidance given earlier this year. The international business has not yet provided a specific timeline for turning losses into profits. Similarly, there has been no upward adjustment in the expected profit guidance that the market anticipated. This is the biggest issue with this financial report.

From a valuation perspective, Didi's stock price currently faces a significant bottleneck at around $5, making it difficult to break through upwards. Looking at the domestic business's adjusted EBITA profit of 12 billion, it corresponds to a valuation multiple of about 15x based on the current market capitalization (and this is based on non-GAAP EBITA; if calculated according to GAAP net profit, the valuation would be even higher). Moreover, this does not take into account the losses of several billion from overseas and innovative businesses. It is evident that Didi's valuation is relatively high compared to its peers.

If Didi wants to further attract investors' attention and drive its market capitalization up, it needs to effectively communicate the profit release of its domestic business or the vast potential of its overseas business (either exceeding expected scale growth or quickly turning losses into profits, both are acceptable).

The following are key performance charts and comments:

1. Didi's leading position in the domestic market is becoming increasingly clear, while overseas continues to show strong growth.

In terms of core operational data, in the fourth quarter of 2024, Didi's domestic mobility achieved a GTV of 78.4 billion, a year-on-year increase of 9.3%, slightly accelerating by 1.5 percentage points compared to the previous quarter, reflecting that Didi's leading position in the domestic ride-hailing industry is further solidified. On a quarter-on-quarter basis, this quarter's domestic GTV grew by 0.3%, which is historically a relatively off-peak season for Q4 compared to Q3; this quarter's growth against the trend is the first since 2021, also demonstrating the enhancement of Didi's leading position in the domestic market. However, the overall growth potential of the domestic ride-hailing market is limited, and as the absolute leader, Didi has limited room to increase its market share. The subsequent growth center of the domestic business is likely to maintain around 10% (before revolutionary changes such as autonomous driving occur).

Breaking down price and volume, in terms of order volume, the domestic travel order volume disclosed by Didi itself (including ride-hailing, carpooling, chauffeur services, etc.) increased by 10.8% year-on-year, which is nearly unchanged from the previous quarter's 10.6%, indicating that the growth of domestic business volume has entered a stable platform stage According to Dolphin Research's understanding, the Ministry of Transport has not continued to publish monthly ride-hailing order data since October, so we can no longer intuitively compare Didi's order growth rate with the industry's overall performance. However, based on third-party research on user-side App MAU data, from the end of 2024 to the beginning of 2025, both Didi's own App and its subsidiary Huaxiaozhu App have shown a significant upward trend in monthly active users, while other platforms have not experienced such notable changes. This seems to further validate Didi's leading position or market share in the domestic market.

From a pricing perspective, Didi's average transaction value for domestic business continues to decline year-on-year, decreasing by 1.4% this season. Currently, under the prevailing environment, the trend of exchanging price for volume has not yet reversed. In terms of product structure, the increase in the proportion of Didi's discounted rides, carpooling, and Huaxiaozhu will also lead to a decline in the overall average transaction value from the revenue structure perspective. However, as the average transaction value gradually enters a low base period, the year-on-year decline in price is gradually narrowing, and there is hope for a gradual stabilization in the future.

Overseas business continues to maintain relatively stronger growth, with GTV increasing by 16% year-on-year this season. At first glance, this is a significant slowdown compared to the previous 30%-50% growth rate, but it is mainly affected by adverse exchange rate conditions. Excluding exchange rate factors, the GTV growth rate for international business still reaches 32%, showing no significant slowdown.

Looking at the price and volume separately, the order volume growth rate for overseas business remains at 30%, slightly down from 33% in the previous quarter. This is mainly due to a nearly 11% year-on-year decline in average transaction value (down 10% year-on-year in the previous quarter), but as mentioned above, this is mainly influenced by exchange rates.

2. Supply > Demand, Increased Subsidies on the Consumer Side, Reduced Commissions on the Supply Side

From a revenue perspective, Didi's domestic mobility segment generated revenue of 47.4 billion yuan this season, a year-on-year increase of 5.6%, slightly accelerating compared to the GTV trend from the previous season, but still lagging behind the GTV growth rate by about 9%. Dolphin Research believes that the continuous underperformance of revenue growth compared to GTV growth may be due to an increased proportion of businesses such as chauffeur services and ride-sharing, which recognize revenue based on net income (thus having a lower absolute value); On the other hand, based on Didi's domestic self-operated business revenue recognition criteria of "revenue = GTV - consumer incentives - taxes, etc.", it can still be considered that the proportion of subsidies Didi provides to consumers is still increasing year-on-year.

Conversely, another situation that has continued for some time is that Didi's domestic platform sales growth continues to significantly outpace GTV and revenue growth, with this quarter at 23%, slightly slowing from 24% in the previous quarter. According to the calculation of "platform sales = GTV - driver share/incentives - taxes, etc.", it can be inferred that the average proportion of driver share in GTV is still declining year-on-year. One reason may include the increase in the proportion of revenue recognized based on net income. Additionally, the fact that there is an oversupply of ride-hailing services and intensified competition among drivers is also true.

According to the company's disclosed platform sales/GTV calculation, the overall monetization rate of domestic business platforms this quarter is 21.3%, which has increased by 0.7 percentage points compared to the previous quarter. This indicator has been continuously improving year-on-year for four consecutive quarters this year.

As for overseas business, the year-on-year revenue growth rate is 35% to 3.01 billion, which has increased rather than decreased compared to the previous quarter, continuing to outperform GTV growth. However, the platform revenue (platform sales) of overseas business has increased by 22% to 2.39 billion year-on-year.

Since platform sales only include businesses related to offline fulfillment such as food delivery and ride-hailing, their growth is more closely related to GTV growth. Moreover, the revenue of overseas business also includes financial and other non-fulfillment-related businesses, so both the absolute revenue and growth rate are higher than platform sales, which also indirectly indicates that Didi's financial income growth overseas is quite strong.

IV. Significant Expansion of Losses in Overseas and Innovative Businesses: Is it Seasonal Variation or a Trend Reversal?

In terms of profit indicators, Didi's adjusted EBITA profit for the domestic segment this quarter is 2.18 billion, a decrease of about 310 million compared to the previous quarter. The Adj. EBITA profit as a proportion of GTV has slightly decreased from 3.2% in the previous quarter to 2.8%. Although the fourth quarter is a seasonal off-peak period, a slight decline in profit margins on a quarter-on-quarter basis is somewhat reasonable, but it is clearly not good news for investors who expect Didi's profit margins to continue improving.

According to calculations by Dolphin Research (due to the inclusion of many assumptions, we only observe the trend of changes and do not provide specific numbers), although the Platform take rate (disclosed by the company) for this quarter increased by 0.7 percentage points quarter-on-quarter, the subsidies given to consumers accounted for an increase of 1.3 percentage points of GTV. The net monetization rate of the platform's final process still declined quarter-on-quarter. This is consistent with the decline in the adjusted EBITA profit margin of domestic operations.

The adjusted EBITA loss for overseas operations this quarter was 710 million, with a loss rate (relative to GTV) reaching 2.8%. Although this represents an expansion compared to the loss rate in the first three quarters of this year, based on last year's experience, the fourth quarter appears to be a seasonal peak for expense spending, in other words, a low point for profits. Compared to the loss rate of 5.1% in the same period last year, the loss rate is still narrowing.

Other innovative businesses also showed a significant expansion in losses this quarter, with a loss of 1.15 billion. However, compared to last year's fourth quarter, the loss is still narrowing.

Due to the significant expansion of losses in overseas and new businesses, Didi's overall adjusted EBITA for this quarter was 320 million, which is less than one-fifth of last quarter's 1.74 billion. It is important to pay special attention to whether the expansion of losses in overseas and innovative businesses this quarter is merely due to seasonal fluctuations or indicates a trend of increased investment and losses.

V. Significant increase in expenses at year-end, is it time to return to an investment cycle?

What are the reasons for the quarter-on-quarter decline in profits from the perspective of costs and expenses this quarter?

Firstly, Didi's gross profit margin this quarter shrank by 0.8 percentage points from last quarter's 19% to 18.2%. This reflects a quarter-on-quarter decline in the net performance rate of domestic operations (after excluding driver costs and consumer subsidies). However, compared to this, the impact of the decline in gross profit margin is not as significant as that of expenses.

In terms of expenses, the absolute amounts and revenue proportions of the four operating expenses have increased compared to last quarter (this quarter's revenue has declined quarter-on-quarter), with the proportion of the four operating expenses to revenue rising by 1.4 percentage points compared to last quarter.

Considering that the fourth quarter is a major season for expense spending, even from a year-on-year perspective, marketing and management expenses have also seen significant increases. It seems that after solidifying its position in the domestic market, Didi is no longer overly focused on controlling expenses and may be returning to an investment expansion cycle

Dolphin Research's past analysis of [Didi Chuxing]:

Financial Report Commentary

November 29, 2024 Financial Report Commentary: Didi: Domestic has "laid flat," overseas is not fast enough

August 23, 2024 Financial Report Commentary: Squeezing profits, does Didi also have a sunset glow?

May 30, 2024 Financial Report Commentary: Didi: Finally regained the dignity of making money

March 25, 2024 Financial Report Commentary: The root cause is exposed, does "old" Didi only have "to get by"?

November 13, 2023 Financial Report Commentary: Didi: Shedding the wolf nature, can we return to the "good times"?

September 11, 2023 Financial Report Commentary: Didi: Can we return to the golden age?

July 11, 2023 Financial Report Commentary: Up 10%, has Didi really turned around?

In-depth Research

July 1, 2021: 700 billion Didi: Is it worth it or not?

June 24, 2021: Unpacking Didi's travel "ideal country" | Dolphin Research Risk Disclosure and Disclaimer for this article: Dolphin Research Disclaimer and General Disclosure