How Long Can This Pattern Of High Growth And High Losses Be Spared?

A lot of high growth and high loss mode is letting traffic daddy Tencent keep under pressure.

On the surface of the high losses brought by high growth, the latest financial reports are brilliant. However, a careful study of its earnings shows that problems such as the cost income rate, the decline in average monthly growth rate and the substantial increase in passenger costs will still be a stumbling block.

More than GMV4716 billion yuan in 2018, the annual net loss of 10 billion 217 million yuan, an increase of 1845.69% over the previous year.

Under the non US general accounting standards (NON-GAAP), the operating losses in 2018 were 3 billion 958 million 300 thousand yuan.

In addition, the total Q4 revenue in 2018 was 5 billion 653 million 900 thousand yuan, an increase of 379% over the same period last year.

Over the same period, a lot of business losses were 2 billion 640 million 900 thousand yuan, 790 million yuan in the previous quarter, and 234% in the annulus growth rate.

The cost of Q4 revenue in 2018 was 1 billion 424 million yuan, up 281% from the same period last year, and the growth rate was 84%.

The high growth rate of GMV is mainly due to the number of active buyers, the average customer orders and the growth of each price.

First, the number of buyers per year reached 418 million, up 71% from the same period last year, and the growth rate was 8%, a 33 million increase in the current quarter, exceeding the Jingdong 305 million.

From the perspective of single active buyers, the average annual orders for active buyers increased from 17.6 to 26.3 in 2017 to 2018.

In terms of unit price, the price per unit increased slightly from 2017 to 2018, from 32.8 yuan / single to 42.8 yuan / single, only for Jingdong unit price 1/15 and Taobao unit price 1/3.

The gap with Jingdong and Taobao is still relatively large.

In addition, the annual cost of future active users is forecasted. On the quantity of orders, the coincidence degree between Taobao and many users and products is getting higher and higher. With the penetration of Taobao in the three or four tier cities and the competition of other electronic business platforms, the volume of orders is getting closer. The price of customers can not be packaged or distributed to Jingdong as a result of the "Gang group" mode, and it can not be collected in the same business. The room price can be increased less than Jingdong or less than Taobao, and the price of similar products is only 60% -90% of Taobao's price.

High marketing and market costs eat high camp revenue for a few years ago, an electronic business platform, continue to increase investment in marketing and market costs, in exchange for high growth in revenue is understandable.

But in 2018, Q4 marketing and marketing expenses were 6 billion, non-GAAP 5 billion 800 million.

Marketing and market costs almost cost all income, and the rate of expenditure accounts for 103% of revenue, up from 90% in the previous quarter.

Meanwhile, the marketing cost / quarterly MAU increased to $143, which was much higher than that of the previous quarter of 83 yuan, while the marketing cost / new quarter buyer was 177 yuan, which was also higher than the last quarter's 73 yuan.

In contrast, the total marketing cost of Taobao and Tmall / quarterly MAU increased to 93 yuan, and the marketing cost / quarter increased by 87 yuan.

There is still a big gap between the conversion rate of marketing expenses and Taobao and Tmall.

It is foreseeable that in the long run, the growth of GMV will still be highly dependent on the high cost of the market. It is worth noting that in the short term, there will be no big change in the situation.

The continuous investment and marketing costs not only cost all the income, but also seriously affect the gross profit margin of the platform.

In 2018, the gross profit was 4 billion 200 million, gross margin was 75%, and the ratio was 2%.

Although a lot of high growth is heavily dependent on the high cost of marketing, what really worries the market is the significant increase in the cost of attracting customers.

In 2018, a lot of sales and marketing expenses were up to 13 billion 441 million 800 thousand yuan, exceeding the company's annual revenue.

Among them, 3rd Anniversary shops, two eleven, two dozen, a lot of Q4 marketing costs up to 6 billion 24 million yuan in 2018, does not include R & D and administrative expenses, in 2018, Q4 has been unable to make ends meet because of marketing expenses.

It should be noted that last year, a lot of money was invested in huge marketing costs, and did not change to the high growth rate of active users.

In 2018, the average monthly number of Q4 users was 272 million 600 thousand, up 93% from 141 million in the same period in 2017, but the number of new buyers in the quarter was 42 million, which was only 18.2% higher than that in the third quarter, which made the market worry about its sustainability.

At the moment, too many have been caught in the awkward position of left hand and right hand.

In order to ensure the stability of the cash flow of the platform, we should continue to squeeze businesses to achieve cash flow.

In 2018, the Q4 payable ratio increased significantly by 6 billion to 16 billion 400 million, Merchant Deposit increased by 490 million, offset by Restricted Cash increased by 660 million compared to the annex, and 800 million increased in the previous quarter.

Accounts payable almost contribute to all operating cash flows.

Taking into account its non-GAAP loss of 1 billion 900 million, it can be estimated that a lot of cash flow should be negative.

But the company shows it to be positive 5 billion 700 million.

In addition, in February 2019, a lot of shares were sold to the open market at the price of 25 US dollars, and the equity financing was consolidated to 1 billion 180 million US dollars (deducting other expenses such as issuance). By the end of December 2018, it was much more cash and 2 billion US dollars, so there was a total of 3 billion 200 million dollars.

The loss of Run Rate is about 1 billion 100 million per year (10-12 in 2018, *4 =2.8*4).

Excluding platform payment, with this round of additional financing, the loss of Run Rate will continue for about three years.

From the market perspective, the next 3 years will be full of too many uncertainties, such as channel sinking, consumption upgrading, industrial pformation and so on.

A lot of high growth is at the top of the US local time in February 15th. On the eve of the most recent quarterly earnings report, Citibank warned in a new research report that a lot of users will face the pressure of slowing user growth, and will be faced with short boards such as fake management, lack of technology and lack of operational experience of the company in the long run. This will seriously threaten the confidence of the capital market in this new Chinese e-commerce platform.

In the past, under the sanctuary of many social network entries such as Tencent WeChat applet, WeChat third party service, QQ, micro-blog and so on, the high growth GMV has made a lot of money become a top guest of capital.

However, when a lot of revenue scale exceeds a certain zero point, it will inevitably encounter growing pains like Jingdong's slower revenue growth.

From the industry perspective, the growth rate of the electricity supplier industry is slowing down and the penetration rate of online shopping is high.

Since the Alibaba set up a B2B e-commerce wholesale platform for small and medium-sized businesses in 1999, the Chinese electricity supplier industry has gone through 20 years of development, from scratch to GMV up to 9 trillion (including goods and services).

The penetration of online shopping users and online shopping habits has reached 24% of China's online shopping penetration.

By the end of June 2018, the number of online shopping users in China had reached 570 million, and the penetration rate among netizens was as high as 71%.

Online shopping Taobao, buying 3C on the Jingdong has become a user's habit of choice.

From the perspective of market structure, according to the data of e-commerce research center, in 2017, China's online retail market share (including B2C and C2C), Ali and Jingdong totaled 75.7%; only considering the B2C market (B2C is about 50% of retail sales), Tmall and Jingdong combined 85.2%, have monopolized nearly 8 of the market share.

Among them, Alibaba Taobao is committed to C2C business, Tmall is committed to B2C business, strong user stickiness, category focused on clothing and other supplies; Jingdong belongs to B2C business (self: third party about 57:43), category focuses on consumer electronics products and other, logistics to self built mainly.

From the point of view of the electricity supplier, it is much more like Taobao, focusing on clothing and consumer goods, using third party logistics and warehousing.

Opportunities and challenges ahead: sink the market space.

At present, there is no relevant statistics to count the share of the major electricity supplier platforms in the three or four tier cities. But from Taobao, Jingdong and other market strategies, we can see that it is unlikely to monopolize the sinking market dividends if we fight too much.

It can be predicted that with more and more efforts to further expand its commercial base, the homogenization of commodities on more and more platforms will become more and more serious. The attractiveness of the group mode in the process of market sinking is unknown. After all, Tencent will lose its thighs.

At the moment, for most of the companies, the most lethal ones may not be high growth, high losses, regulatory risk, backward technology and management. But how long can they enjoy the sheltering time of Tencent WeChat's ninth century grid traffic?

From the Tencent's three quarter earnings report in 2018, we can see that its profit structure has changed considerably.

The profit from Tencent's one-time investment equity has increased from 3.48% in 2015 to 37.55% in 2018, compared with Q3 in 2018.

Tencent's growth engine, the game business, began to lose its effectiveness after the 2017 Q3 glory.

Other businesses come from payment and cloud computing (small program) are replacing the game business, becoming the latest growth engine of the group.

It also means that Tencent has ended the dividend growth period of 3G and 4G due to technological changes.

The driving force of growth has been changed to a cash dividend period dominated by WeChat (payment, small procedures, etc.).

In other words, investment income has become an important way of cash flow for Tencent.

And most of the traffic comes from WeChat's "Nine Palace", which means how strong the WeChat liquidity is and how high is the stock price of Tencent.

At present, in the ninth palace of WeChat, apart from Jingdong, vip.com, and the US group, with Cheng Yilong and Didi, all have been completely loaded up and become the eleven palace.

In theory, in the eleven palaces, who brings the most benefits, who can enjoy the flow bonus continuously.

But at the moment, several platforms have not only failed to solve the profit puzzle, but also the phenomenon of falling stock prices.

For many spells, after the expiration of the cooperation with Tencent, the choice of Tencent will directly affect the future of the platform.