The 'food delivery war' didn't burn, Didi quietly made a fortune.
China's ride-hailing leader $DiDi(DIDIY.US) released its first quarterly earnings report for 2025 on the evening of June 5. Overall, growth performance was stable and within expectations, while profitability was notably impressive, exceeding expectations with improving margins in both domestic and overseas operations. Below are the key takeaways:
1. Steady Growth, Strong Profits: Key metrics showed a 10% YoY increase in GTV and an 8.5% rise in total revenue, aligning with sell-side expectations. Growth remained in the high single digits to around 10%, which, while not high in absolute terms, is relatively stable.
Profitability stood out, with domestic adjusted EBITA hitting a record high of over 3.1 billion yuan, up by about 1 billion from the previous quarter and significantly surpassing sell-side expectations. Meanwhile, overseas losses narrowed sharply to under 200 million yuan from over 700 million in the prior quarter, reflecting broad-based profit improvement.
2. Stable Domestic Volume, Slight Price Decline: Domestic GTV reached 78 billion yuan, up 9% YoY, matching expectations. Order volume grew 10%, but average fare dipped 0.9%, suggesting 'low prices' remain a key trend.
3. Rising Take Rate Drives Profit Beat: With domestic GTV up 9%, platform revenue (net of driver shares) surged 24% YoY, while financial revenue (net of subsidies/taxes) rose 7.8%. The gap highlights higher platform take rates as the core reason for profit outperformance, offset slightly by increased consumer subsidies.
4. Overseas Growth & Loss Reduction: Nominal overseas GTV grew 13% YoY (28% FX-neutral), with orders up 23.5%. Losses narrowed to 180 million yuan, easing concerns about expanding deficits.
5. Margin Expansion: Domestic adj. EBITA margin hit a record 4% of GTV (vs. ~3% in 2024), while overseas loss ratio fell below 1%. Group adj. EBITA nearly doubled QoQ to 2.95 billion yuan, reversing last quarter's 'bomb' trend.
6. Cost Control: Gross margin rose 1.7pp YoY, with operating expenses up just 4% (mainly marketing/management).
Dolphin Research View:
With China's ride-hailing market maturing, growth stability shifts focus to profits. This quarter's record domestic margins and overseas loss reduction should drive positive market reaction vs. last quarter's slump.
As we've stressed, Didi's core narrative lies in rebalancing value chain splits (driver-passenger-platform) to unlock profits, not growth. Short-term, the 'food delivery war' distracting rivals (e.g., Meituan, Alibaba's Amap) gives Didi a 'quietly thriving' window to solidify share and margins.
Valuation-wise, 15x PE (assuming 11 billion yuan net profit) is neutral for ~10% growth. Upside catalysts include net cash (25% of market cap) and overseas potential. However, without autonomous driving breakthroughs or overseas profits, Didi remains a range-bound trade ($3-$6 historically).
...to be continued
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