Qeeka Home (1739.HK) reports 1H 2022 revenue of RMB 432 million, with sufficient cash flow and solid business fundamentals

SHANGHAI, Sept. 7, 2022 /PRNewswire/ -- On August 22, Qeeka Home (01739.HK, domestic operator of Jia.com) announced its interim results for 2022, reporting total revenue of RMB 432 million and gross profit of RMB 245 million for the first half of 2022, with gross margin remaining flat at 57% compared to the same period last year and an adjusted net loss of RMB 20.68 million attributable to the parent company. The company had sufficient cash reserves during the reporting period, with RMB 720 million in monetary funds as of June 30, 2022.

The interior design and construction industry was greatly impacted by the pandemic in the second quarter, with user demand temporarily suppressed and business activities restricted. Against this backdrop, Qeeka Home's business was inevitably impacted by external factors, nevertheless business fundamentals remained solid while the firm's SaaS-enabled solutions acted as an industry "stabilizer", enabling it and its partners to prevail.

Stable performance despite multiple shocks, backed by streamlined operations  

Qeeka Home's interim results for 2022 showed that revenue from SaaS and marketing services decreased by 14.6% to RMB 240 million in the first half of the reporting year, while the number of active paying merchants decreased by 4% YoY to 5,451, nevertheless had increased by 29% compared to the first half of 2020 just as the pandemic was taking hold. Consumer expectations in terms of home improvement were temporarily affected by pandemic prevention measures, with the number of sales leads having decreased by 11% to 344,034 in the first half of the year, yet, up 4% compared to the same period in 2020. The conversion rate of sales leads to recommended users increased to 85% in the first half of the year, up from 82% a year earlier. The company's streamlined operations are cited as the key reason for the improved performance.

Qeeka Home's overall gross profit margin remained at 56.7%, basically unchanged from 56.6% in the same period last year. The margin of the SaaS and Extended Service Business, the firm's core revenue driver, maintained a stable level at 91.1%, up 3.6 percentage points from 87.5% in the same period last year. Gross profit margin remained at a consistently high level, indicating that the pandemic did not have a material impact on the profitability of Qeeka Home's core business. The Company's business model remained healthy.

Due to the impact of macro policy regulation over the upstream real estate industry, domestic interior refurbishing projects progressed slowly, with slower return of funds, a longer accounting period and increased risk of bad debts. Revenue for the first half of the year stood at RMB 145 million, down 19% compared to the same period last year. The interior design and construction business, negatively affected by pandemic prevention measures, reported revenue of RMB 23 million, down 11% compared to the same period last year, as the delivery and acceptance of several projects were delayed.

Despite the pressure, Qeeka Home's cash reserves remained strong. As of June 30, 2022, Qeeka Home had cash or cash equivalents on hand of RMB 720 million, an increase of 26.4% from the same period last year. The sufficient cash flow reserve provided strong backing for the company to remain on course in terms of its core strategy while actively exploring and planning new businesses. In the first half of 2022, Qeeka Home still aggressively expanded into some new and novel businesses including smart home, soft furnishings and new retail to hedge against the adverse impact on the company due to the economic environment and the pandemic.

Analysts commented that the interior design and construction industry is under pressure as a result of multiple external factors. Although Qeeka Home's performance has been affected to a certain extent, the specific impact is still within an acceptable range. Overall performance remains robust and all businesses have returned to stability, demonstrating the company's excellent management of risk.

Qeeka Home does its best to stabilize its fundamentals and ride through the rough patches in concert with its partners 

As a digital ecosystem that empowers and connects users, merchants and makers of home improvement goods and materials, all of Qeeka Home's stakeholders have been affected by the pandemic to varying degrees.

To stabilize the industry and merchants, Qeeka Home has launched the Ivy Program, a series of empowerment initiatives for the platform's merchants to improve their operational capabilities and reputation among shoppers, helping them reduce costs and increase revenues in an environment full of uncertainties. Qeeka Home's 2022 interim results reported a 4.7% decrease in average revenue per sales lead generated by SaaS and marketing services to RMB 697 in the first half of 2022 from RMB 731 in the first half of 2021. In a generally difficult period for the industry, concessions and assistance provided to merchants has played an important role in facilitating the recovery of the industry.

In terms of the supply chain service business, the Company's supply chain suffered a prolonged logistics disruption due to the pandemic. As a result, revenue from the business declined to RMB 15.83 million in the first half of 2022. Meanwhile, Qeeka Home's platform sourced home improvement goods and materials from upstream building material manufacturers and factories through the model of collective procurement, which helped partner merchants reduce costs and increase efficiency while ensuring the quality of materials.

In the same period, in addition to the Qijia Bao consumer protection plan, Qeeka Home has further raised the threshold of merchant auditing, strictly checking their qualifications and improving the overall service quality of the platform. The company also enhanced the shopping experience by sharing quality original content and real home improvement cases through multiple channels including short video platforms, social media networks and recommendation engines, where they dispensed home improvement advice and helped shoppers avoid pitfalls, enhancing their trust in the platform.

For the interior design and construction industry, the impact of external factors such as the pandemic is temporary, and the difficulties it is facing currently will soon be over. There will be new opportunities despite the challenges. In the long run, the industry still has great potential for growth, while consumer confidence will gradually recover. For this reason Qeeka Home's business is expected to soon get back on track and gradually resume growth.

"In the future, we will further strengthen our core business, improve our core competencies and leverage our advantageous resources, and make every effort to stabilize the fundamentals of our business," said Mr. Deng Huajin, Chairman and CEO of Qeeka Home. "We will continue to streamline operations, optimize our overall operational efficiency, and work with our partners to cope with difficulties and challenges. At the same time, we will adapt to changes and adjust our business strategies in a timely manner, to actively seek potential business opportunities in the home improvement sector and explore new growth points."

About Qeeka Home 

Qeeka Home (01739.HK, domestic operator of Jia.com) is one of the largest SaaS enabled solution platforms in Interior Design & Construction (IDC) Industry in China. The company provides marketing service, supply chain service and other innovative value-added services to thousands of IDC service providers through the SaaS platform. Qeeka also operates several well-known IDC brands in China and provides consumers with capital protection and independent inspection services. Qeeka Home was founded in 2007 and listed on the main board of HKSE on 2018.

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