NaaS Technology Inc. ("NaaS") (NAAS), the first U.S. listed EV charging service company in China, announced its unaudited financial results for the second quarter and six months ended June 30, 2023.
Second Quarter and First Half 2023 Operational Highlights:
- Charging volume transacted through NaaS' network reached 1,228 GWh in the second quarter of 2023 and 2,251 GWh in the first half of 2023, representing an increase of 112% and 112% year over year, respectively.
- Gross transaction value transacted through NaaS' network reached RMB1.2 billion (US$160.8 million) in the second quarter of 2023 and RMB2.2 billion (US$297.4 million) in the first half of 2023, representing an increase of 109% and 108% year over year, respectively.
- Number of orders transacted through NaaS' network reached 53.8 million in the second quarter of 2023 and 98.2 million in the first half of 2023, representing an increase of 110% and 110% year over year, respectively.
- As of June 30, 2023, more than 652,000 chargers in over 62,000 charging stations were connected and accessible on NaaS' network, up by 80% from 362,000 and 59% from 39,000 as of June 30, 2022, respectively.
Second Quarter and First Half 2023 Financial Highlights:
- Revenues grew by 121% year over year to RMB48.6 million (US$6.7 million) in the second quarter of 2023 and 132% year over year to RMB84.8 million (US$11.7 million) in the first half of 2023.
- Total operating costs and expenses decreased by 82% year over year to RMB388.6 million (US$53.6 million) in the second quarter of 2023 and 76% year over year to RMB538.4 million (US$74.2 million) in the first half of 2023.
- Net loss attributable to ordinary shareholders decreased by 94% year over year to RMB334.7 million (US$46.2 million) in the second quarter of 2023 and 92% year over year to RMB444.3 million (US$61.3 million) in the first half of 2023.
- Non-IFRS net loss1 attributable to ordinary shareholders increased by 12% year over year to RMB108.0 million (US$14.9 million) in the second quarter of 2023 and 44% year over year to RMB210.3 million (US29.0 million) in the first half of 2023.
1Non-IFRS net loss was arrived at after excluding share-based compensation expenses, equity-settled listing costs, fair value changes of convertible and redeemable preferred shares, and fair value changes of financial assets at fair value through profit or loss. Please refer to the section titled "Unaudited reconciliations of IFRS and non-IFRS results" for details.
Recent Developments
Secured a RMB204 million order in Energy Storage
In September 2023, the Company secured a RMB204 million order for energy storage solutions to be executed in the next several months in collaboration with several enterprises. Through this collaboration, the Company will supply over 380 charging stations with energy storage equipment while offering comprehensive solutions, altogether boasting energy storage capacity of 130.088MWh. This initiative showcases NaaS' expertise in utilizing charging station digital analytics capabilities as well as its capabilities in constructing and operating integrated photovoltaic-storage-charging stations.
Established Strategic Collaboration with Hyundai Motor Group (China), PICC Real Estate Investment and CR Capital MGMT
In August 2023, the Company signed strategic collaboration agreements with Hyundai Motor Group (China), PICC Real Estate Investment and CR Capital MGMT, expanding its partnership roster. With Hyundai, the Company aims to enhance charging infrastructure and mobility connectivity tailored for Hyundai's PEV models. With PICC, the Company will work towards building a top-notch new energy charging service system, incorporating integrated infrastructure, co-branded stations, online connectivity, and comprehensive insurance services. With CR Capital MGMT, the Company will construct integrated energy ports, orchestrate new energy infrastructure projects, and innovatively securitize new energy assets, aiming to incubate, invest in and operationalize digital and intelligent applications within the realm of new energy.
Charge Amps Acquisition
On August 22, 2023, the Company entered into a definitive agreement to acquire 100% of the issued and outstanding shares of Charge Amps for a total consideration of US$66.4 million. Charge Amps is a prominent integrated EV charging solutions provider headquartered in Sweden. It brings a 22% Sweden's market share and a well-established international presence in 13 European markets. Their full suite of EV charging hardware and charge point management systems seamlessly align with NaaS' growth vision. The Company will leverage this integration to carry out localized services in Europe and achieve business synergy throughout the industry value-chain while broadening the scope of its global business layout.
Completed US$70 Million Financing
In July 2023, LMR Partners Limited ("LMR") completed the purchase of the US$30 million convertible note from the Company, convertible into American depositary shares representing the Company's ordinary shares. In September, LMR further purchased from the Company a convertible note with a principal amount of US$40 million, convertible into American depositary shares ("ADSs") representing the Company's ordinary shares.
"In the second quarter of 2023, we continued to deliver solid operating and financial performance while driving innovation and strengthening our core competitiveness," said Ms. Yang Wang, NaaS' CEO. "We more than doubled our revenue year-over-year and at the same time achieved a significant loss reduction in the second quarter, thanks to our continuous network expansion, growing client base of station owners across various stages of charging station construction, operation, and upgrades, as well as improving operating efficiency. Our strategic partnerships also continued to deepen and broaden, with leading enterprises attracted to our innovative solutions and one-stop services. In addition, we are thrilled to have secured a RMB204 million energy storage order, further boosting our confidence in achieving our full year revenue target and signifying a solid step forward in propelling the integrated photovoltaic-storage-charging station development."
"Alongside our progress in the domestic market, we also achieved significant milestones in global expansion by acquiring Sweden-based Charge Amps and a majority stake in Sinopower, a leading rooftop solar energy developer in Hong Kong. Capitalizing on their distinguished market presence and channel capability, as well as our extended product and service portfolio and financial strengths, we will further fortify the standing of Sinopower and Charge Amps in their respective regions while strategically expediting the global expansion of our product and service offerings," added Mr. Alex Wu, NaaS' president and chief financial officer. "Furthermore, in early July, LMR Partners completed its purchase of NaaS' US$30 million convertible note, followed by an additional US$40 million convertible note in September, which brought our total fundraising year-to-date to US$91 million, significantly enhancing our financial strength and fueling our growth initiatives. Through expanding our one-stop charging services, advancing integrated energy systems, and strategic acquisitions, we aim to become a leading player in the global new energy asset operation and management services market in the long term."
Second Quarter and First Half 2023 Financial Results:
Revenues
Total revenues reached RMB48.6 million (US$6.7 million) in the second quarter of 2023 and RMB84.8 million (US$11.7 million) in the first half of 2023, representing an increase of 121% and 132% year over year, respectively. The rapid increase was mainly the result of increased network order volumes and additional capabilities in the Company's Engineering Procurement Construction ("EPC") business established and acquired throughout the first half of 2023.
Revenues from online EV charging solutions contributed RMB22.7 million (US$3.1 million) in the second quarter of 2023 and RMB41.9 million (US$5.8 million) in the first half of 2023, with a growth rate of 91% and 113% year over year, respectively. The increase was primarily attributable to an overall increase in charging volume completed through NaaS' network. The Company offered incentives through platform (in the form of discounts and promotions) to end-users to boost the use of its network. The base incentives, being the amount of incentives paid to end-users up to the amount of commission fees the Company earned from charging stations on a transaction basis, were recorded as reduction to revenue and amounted to RMB80.4 million (US$11.1 million) and RMB42.9 million for the second quarter of 2023 and 2022, respectively, and RMB150.1 million (US$20.7 million) and RMB84.4 million for the first half of 2023 and 2022, respectively.
Revenues from offline EV charging solutions increased by 153% year over year to RMB24.7 million (US$3.4 million) in the second quarter of 2023 and 148% year over year to RMB40.4 million (US$5.6 million) in the first half of 2023. The increase was primarily driven by the expansion of EPC business.
Revenues from innovative and other businesses increased significantly by 227% year over year to RMB1.2 million (US$0.2 million) in the second quarter of 2023 and 439% year over year to RMB2.5 million (US$0.3 million) in the first half of 2023, primarily due to the growth of the electricity procurement business.
Operating costs and expenses
Total operating costs and expenses decreased by 82% year over year to RMB388.6 million (US$53.6 million) in the second quarter of 2023 and 76% year over year to RMB538.4 million (US$74.2 million) in the first half of 2023. The difference was mainly due to the one-time recognition of RMB1,912.7 million equity-settled listing cost in the second quarter and first half of 2022. Setting that aside, total operating costs and expenses remained steady notwithstanding the significant business expansion year over year.
Cost of revenues increased by 27% year over year to RMB29.5 million (US$4.1 million) in the second quarter of 2023 and 52% year over year to RMB59.6 million (US$8.2 million) in the first half of 2023. The increase was primarily due to the expansion of EPC business.
Selling and marketing expenses increased by 48% year over year to RMB86.1 million (US$11.9 million) in the second quarter of 2023 and 49% year over year to RMB152.5 million (US$21.0 million) in the first half of 2023. The increase was the result of increased incentives to end-users, as well as additional resources deployed to strengthen the development of EPC and the Company's other businesses. The excess incentives to end-users, being the amount of payments made to end-users that exceed the amount of commission fees the Company earned from charging stations on a transaction basis, recorded in selling and marketing expenses were RMB49.9 million (US$6.9 million) and RMB91.6 million (US$12.6 million) in the second quarter and first half of 2023, respectively, compared with RMB31.6 million and RMB55.3 million in the same periods of 2022.
Administrative expenses decreased by 87% year over year to RMB261.8 million (US$36.1 million) in the second quarter of 2023 and 86% year over year to RMB307.3 million (US$42.4 million) in the first half of 2023. The difference was largely due to the one-time recognition of RMB1,912.7 million equity-settled listing costs in the second quarter and first half of 2022.
Research and development expenses increased by 57% year over year to RMB11.2 million (US$1.5 million) in the second quarter of 2023 and 26% year over year to RMB19.0 million (US$2.6 million) in the first half of 2023. The increase was primarily due to investments to enhance the offerings of EV charging solution and capabilities of innovative and other businesses.
Finance costs
Finance costs were RMB7.2 million (US$1.0 million) for the second quarter of 2023 and RMB14.3 million (US$2.0 million) for the first half of 2023, as compared with finance costs of RMB36 thousand and RMB0.3 million for the same periods of 2022, respectively. This significant increase in finance costs was primarily attributable to increased interest costs related to bank loans.
Income tax benefits/expenses
NaaS' income tax benefits were RMB4.8 million (US$0.7 million) for the second quarter of 2023 and RMB1.8 million (US$0.2 million) for the first half of 2023, compared with income tax expenses of RMB1.3 million and RMB2.7 million for the same periods of 2022, respectively, primarily due to a credit upon reassessment of certain previously recognized tax charges.
Net loss and non-IFRS net loss attributable to ordinary shareholders
Net loss attributable to ordinary shareholders was RMB334.7 million (US$46.2 million) for the second quarter of 2023 and RMB444.3 million (US$61.3 million) for the first half of 2023, as compared with net loss attributable to ordinary shareholders of RMB5,302.2 million and RMB5,401.5 million for the same periods of 2022, respectively. The difference was primarily due to the one-time recognition of a RMB1,912.7 million equity-settled listing costs in the second quarter and first half of 2022. Non-IFRS net loss attributable to ordinary shareholders was RMB108.0 million (US$14.9 million) for the second quarter of 2023 and RMB210.3 million (US$29.0 million) for the first half of 2023, as compared with non-IFRS net loss attributable to ordinary shareholders of RMB96.0 million and RMB145.8 million for the same periods of 2022, respectively. Please refer to the section titled "Unaudited reconciliations of IFRS and non-IFRS results" for details.
Outlook:
Based on preliminary assessment of the current market conditions, the Company reaffirms its previous guidance and expects its full-year 2023 revenues to be between RMB500 million (US$69 million) and RMB600 million (US$83 million), representing a year-over-year increase of 5 to 6 times. The foregoing is the current and preliminary view of NaaS' management, and is subject to changes and uncertainties.
