Written by Dou Wenxue

Edited by Ziye

Lalamove has updated its prospectus again.

On October 2, Lalamove's parent company, Lalamove Technology Holdings Limited, updated its prospectus on the Hong Kong Stock Exchange (HKEX) and disclosed its interim results for 2024. Goldman Sachs, Bank of America Securities, and J.P. Morgan served as joint sponsors.

Lalamove prospectus, sourced from the HKEX official website

Since March 2023, Lalamove has made frequent attempts to list on the HKEX, submitting listing applications in March and September 2023 and April 2024, respectively, but no significant progress has been reported.

Prior to its frequent listing attempts, Lalamove's story was marked by frequent capital investments, rapid corporate expansion, and criticisms from both consumers and truck drivers.

Since its establishment, the company has expanded vigorously, developing into a freight platform with operations covering 363 cities in China, 7.6 million monthly active users, and 580,000 monthly active drivers within a few years.

In 2015, Lalamove attracted angel round funding and had completed 11 funding rounds by the time of its frequent listing attempts, raising a total of US$2.662 billion.

However, since 2021, the dividends of its "brutal expansion" have gradually faded, exposing safety hazards that have damaged Lalamove's reputation. The subsequent COVID-19 pandemic further pushed the company into an adjustment phase. It was not until the prospectus updated in April 2024 that the company disclosed its turnaround from losses to profits in 2023.

According to the latest prospectus, Lalamove continued its trend of turning profits in the first half of 2024.

The prospectus shows that in the first half of this year, Lalamove generated revenue of US$709 million, a year-on-year increase of 18.2%; achieved a net profit of US$184 million and an adjusted net profit of US$213 million; facilitated over 338 million completed orders, with global gross transaction value (GTV) reaching US$4.992 billion, a year-on-year increase of 18.4%.

Through a hybrid monetization model, Lalamove has achieved growth in its monetization capabilities and improved its platform operation model, forming a closed-loop transaction that encompasses order placement, pricing, advance payment, freight matching, order tracking, payment settlement, and confirmation. This model has, to some extent, balanced the relationship between consumers and truck drivers.

In addition to its main business, Lalamove has also explored second growth avenues, launching errand services, initiating research and development of electric commercial vehicles, and experimenting with credit services.

Is Lalamove ready for a successful listing this time?

1. Lalamove Turns Profitable, Fourth Attempt at HKEX Listing

In less than two years, Lalamove has submitted its prospectus to the HKEX almost seamlessly.

In March 2023, Lalamove officially submitted its prospectus to the HKEX for a main board listing, with Goldman Sachs, Bank of America Securities, and J.P. Morgan serving as joint sponsors.

In September 2023, Lalamove updated its prospectus again, revealing that as of June 30, 2023, its platform facilitated over 260 million completed orders, with global freight GTV reaching US$3.927 billion, an average of approximately 12.2 million monthly active merchants, and approximately 1.1 million monthly active drivers.

In April 2024, Lalamove updated its prospectus again, adding financial data and other relevant information for 2023.

At that time, the prospectus showed that from 2021 to 2023, Lalamove's revenue was US$845 million, US$1.036 billion, and US$1.334 billion, respectively, with year-on-year growth rates of 22.6% and 28.8% in 2022 and 2023. In 2023, the company achieved a profit of US$973 million and an adjusted profit of US$391 million, marking a turnaround from losses.

In the latest prospectus, Lalamove updated its performance data as of June 30, 2024.

As of June 30, 2024, Lalamove generated revenue of US$709 million, a year-on-year increase of 18.2%; achieved a profit of US$184 million; and an adjusted profit of US$213 million. In the first half of 2024, Lalamove facilitated over 338 million orders, with global GTV reaching US$4.992 billion, a year-on-year increase of 18.4%.

Judging from the latest disclosures, Lalamove's overall performance has stabilized.

As seen in the prospectus, Lalamove's primary revenue sources can be divided into three parts: freight platform services, diversified logistics services, and value-added services.

Among them, freight platform services are Lalamove's primary revenue generator, accounting for nearly 60% of revenue in 2023. This revenue can be further subdivided into membership fees paid by drivers and commissions earned from completed freight orders.

Breakdown of Lalamove's revenue from 2021 to the first half of 2024, sourced from the HKEX official website

The prospectus shows that Lalamove's commission revenue in 2021, 2022, 2023, and the first half of 2024 was US$48 million, US$290 million, US$444 million, and US$222 million, respectively, accounting for 5.7%, 28%, 33.3%, and 31.4% of total revenue. Membership fees were US$356 million, US$271 million, US$325 million, and US$156 million, respectively, accounting for 42.1%, 26.1%, 24.4%, and 22.2% of total revenue.

Regarding the increasing commissions and decreasing membership fees, Lalamove explained in its prospectus that it adopts a hybrid monetization model, generating revenue through a combination of driver membership fees and commissions, enabling the company to effectively convert GTV growth into revenue growth.

This hybrid monetization model has also contributed to Lalamove's increased monetization rate, which is one of the reasons for its turnaround from losses to profits.

The prospectus shows that Lalamove's freight platform service monetization rate in mainland China increased from 7.6% in 2021 to 10.3% in 2023, and the gross margin of freight platform services increased from 58.8% in 2021 to 80.6% in 2023.

From the first half of 2023 to the first half of 2024, Lalamove's freight platform service monetization rate decreased slightly from 10.3% to 9.7%. The company attributed this to its ongoing review of monetization strategies in the first half of 2024, leading to strategic adjustments in fees charged to a minority of drivers to strengthen cooperation with them.

Sourced from Lalamove's official video account

At the same time, Lalamove has also started to control costs by managing marketing expenses and streamlining its employee structure.

In 2023, Lalamove's sales and marketing expenses were US$179.2 million, a decrease of 9.6% from US$198.2 million in 2022.

The prospectus attributed this decrease to reduced overseas advertising activities, resulting in a drop in other sales and marketing expenses from US$31.4 million in 2022 to US$19.7 million in 2023.

At the same time, Lalamove's employee costs decreased from US$29.9 million in 2022 to US$21.6 million in 2023.

Furthermore, reports indicate that Lalamove has reduced its previous subsidy strategy.

According to the 21st Century Business Herald, an industry insider from an internet freight platform stated, "After Lalamove submitted its listing application, there have been some changes in the industry. Subsidies have been reduced, and the industry is becoming 'healthier'."

Lalamove, which is actively seeking a listing, must consistently deliver impressive results.

2. Is Lalamove's Scale Story Attractive?

According to Frost & Sullivan estimates, under the closed-loop freight GTV metric, Lalamove was the largest logistics trading platform globally in terms of total closed-loop freight transaction value in the first half of 2024, with a market share of 53.9%.

Looking back at Lalamove's development journey, one can see periods of rapid and sometimes unbridled growth.

In 2013, Lalamove's founder Zhou Shengfu grew tired of the "zero-sum game" of gambling and decided to start a business. He saw the business opportunities brought about by the development of the internet for freight services and used the "first pot of gold" earned from gambling to establish the freight platform EasyVan, the predecessor of Lalamove.

In its second year of operation, Lalamove entered the mainland market, primarily offering intra-city and intercity freight services.

At that time, the intra-city freight sector in China already included players like 58 Express and 1hao Cargo, so Lalamove began competing for customers through various means, using vehicle stickers as its promotional tool.

It is understood that drivers who wish to haul goods on the Lalamove platform must affix "Lalamove" stickers to their vehicles. If they do not, they will face higher commissions (information fees).

Sourced from Lalamove's official Weibo account

Amidst this rapid expansion, Lalamove officially disclosed in March 2021 that its business covered 363 cities in China, with 7.6 million monthly active users and 580,000 monthly active drivers.

However, hidden dangers emerged. In 2021, news of a "23-year-old woman jumping out of a Lalamove van and dying" plunged the company into a storm of controversy. Coupled with imperfections in the platform mechanism, even drivers who joined the platform struggled to secure orders, and at one point, complaints from platform drivers even outnumbered those from consumers.

In the following years, impacted by the COVID-19 pandemic, competition from rivals, and public opinion, Lalamove entered a period of self-improvement and adjustment.

In recent years, Lalamove has continued to evolve, adopting a "closed-loop transaction" model that encompasses order placement, pricing, advance payment, freight matching, order tracking, payment settlement, and confirmation. This model ensures that once drivers complete transport orders and confirm the transactions, merchants can safely settle payments on the platform at the agreed-upon price.

Diagram of Lalamove's closed-loop transaction model in the prospectus, sourced from the HKEX official website

This makes consumer spending more transparent, eliminating concerns about additional service fees for services outside the budget. It also reduces the pressure on truck drivers who struggle to secure orders, enhancing user retention and loyalty.

According to the latest prospectus, Lalamove's average monthly active merchants increased from 9.6 million in 2021 to 15.2 million in the first half of 2024, while the average monthly active drivers increased from 820,000 in 2021 to 1.4 million in the first half of 2024.

According to Frost & Sullivan, Lalamove was the logistics trading platform with the highest number of average monthly active merchants globally in the first half of 2024.

Apart from its continuous self-improvement, Lalamove has been favored by the capital market since its inception.

To date, Lalamove has completed 11 funding rounds, attracting investors such as Qingliu Capital, Sequoia China, and Hillhouse Capital, raising a total of US$2.662 billion.

The most recent funding round occurred in October 2021, raising US$1.5 billion and attracting major foreign investors including Boyu Capital, Sequoia China, and Hillhouse Capital.

After this funding round, Lalamove's valuation reached US$10 billion.

The prospectus reveals that in Lalamove's pre-IPO shareholder structure, Zhou Shengfu holds all Class A shares directly and indirectly through family trusts, accounting for 25.05% of all issued shares. Hillhouse Capital holds a combined 9.67% stake, Sequoia China holds 4.63%, Sequoia Capital holds 4.48%, and Shunwei Capital holds 6.91%.

Lalamove's attempts to list have become an inevitable option after multiple funding rounds.

3. The Key to Future Development Lies in Diversifying Business Lines

In addition to its main business, Lalamove has ventured into various second growth avenues, aiming to develop into a comprehensive logistics service platform.

The prospectus shows that Lalamove's business scope has expanded to include intra-city and intercity freight, enterprise logistics services, moving services, LTL freight, errand services, car rental and sales, and aftermarket services.

In the first half of 2024, diversified logistics services accounted for 30.5% of Lalamove's revenue in China, up 4.9 percentage points year-on-year.

Specifically, Lalamove officially announced the launch of its errand service in March 2023.

According to the announcement released at the time, Lalamove's errand service boasted the slogan "One-on-one delivery for both small and large items" and opened city assistance channels, allowing cities to open once their assistance value reached 200,000.

In addition, Lalamove's recruitment announcement for errand riders offered benefits such as limited-time zero commission, zero deposit, no training fees, and zero thresholds for accepting orders after city opening.

As of the end of January 2024, Lalamove's errand service was available in 62 cities. In March and May of this year, Lalamove announced the opening of new cities for its errand service.

Screenshot of Lalamove's announcement on new city openings, sourced from Lalamove's official WeChat account

Furthermore, rumors of Lalamove's involvement in vehicle manufacturing were confirmed with the disclosure of its prospectus.

In 2021, rumors emerged that Lalamove was manufacturing vehicles. According to its recruitment announcement in August 2021, Lalamove was hiring product managers and algorithm engineers for vehicle manufacturing.

In its first prospectus submitted to the HKEX, Lalamove disclosed that "the company is exploring new business opportunities using the knowledge and expertise gained from its existing vehicle rental and sales services operations, such as the research and development of electric commercial vehicles."

To date, this information remains unchanged.

In July 2022, the Chongqing High-tech Industrial Development Zone Management Committee announced that Lalamove planned to establish its China headquarters in the zone, with a total investment of RMB 10.5 billion, to develop a research institute, intelligent connectivity center, supply chain, and collaborative manufacturing centers.

According to Qichacha information, on October 24, 2023, a wholly-owned subsidiary of Lalamove Automobile Service Co., Ltd., named Xiamen Duola New Energy Automobile Technology Co., Ltd., was established, with a business scope encompassing technical services and development, sales of complete new energy vehicles, and sales of new energy vehicle production testing equipment.

In addition, Lalamove has also ventured into online credit services.

In May 2024, Lalamove launched its lending product "Yuanyijie." According to the 21st Century Business Herald, information on the Lalamove app at the time indicated that Yuanyijie offered a maximum loan amount of RMB 200,000 with an annual interest rate starting at 10.8%, and had partnered with leading licensed institutions such as Marshall Consumer Finance.

However, less than half a month after its launch, Yuanyijie was reported to have been delisted. Currently, the Lalamove app does not display any related functions for Yuanyijie, and the Yuanyijie official account has not updated any information.

Sourced from Yuanyijie's official WeChat account

Judging from Lalamove's current situation, it is difficult to continuously reduce costs in its main business.

As a freight platform, Lalamove must continue to compete for market share through preferential policies and improved services while also incurring costs to maintain drivers. Therefore, to achieve sustained profitability and further profit growth, the development of second growth avenues becomes a crucial factor.

However, regardless of the sector, Lalamove faces fierce competition and challenges. Whether or not its fourth listing attempt succeeds, Lalamove must continue to strive forward.

(The featured image of this article is sourced from the Lalamove official website.)