Porch Pet Holdings Limited Releases Unaudited Financial Results Report for the First Half of FY2024

The Chinese version of the financial performance report is for reference only. If there is any difference from the English version, the English version shall prevail

SHANGHAI, China, December 20, 2023 -- Porch Pet Holdings Co., Ltd. (hereinafter referred to as “Porch” or the “Company”) (American Stock Exchange: BQ), China's leading integrated pet service platform, has announced its unaudited financial report for the first half of fiscal year 2024 ending September 30, 2023.

Operating and financial highlights for the first half of FY2024

· Total revenue for the first half of fiscal year 2024 was RMB 389.4 million (approximately US$53.4 million), and total revenue for the first half of fiscal year 2023 was RMB 589.6 million.

· Operating loss for the first half of fiscal year 2024 was RMB 31.7 million (approximately USD 4.3 million), while operating loss for the first half of fiscal year 2023 was RMB 29.6 million.

· Net loss for the first half of fiscal year 2024 was RMB 37.7 million (approximately US$5.2 million), while net loss for the first half of fiscal year 2023 was RMB 29.5 million.

· The EBITDA [1] loss for the first half of fiscal year 2024 was RMB 33.5 million (approximately US$4.6 million), while the EBITDA loss for the first half of fiscal year 2023 was RMB 22.9 million.

· GMV [2] for the first half of fiscal year 2024 was RMB 903 million (approximately US$123.8 million), and the GMV for the first half of fiscal year 2023 was RMB 1,382 million.

· The customer acquisition cost [3] for the first half of FY2024 was RMB 2.8, down 46.0% from RMB 5.2 in the first half of FY2023.

· In September 2023, the company signed a number of financing agreements with third party investors.

Management comments

Mr. Liang Hao, founder, chairman and CEO of Poggy Pet, said, “In the first half of fiscal year 2024, some domestic industries faced certain challenges, and capital market performance fell short of expectations, all of which dragged down the overall consumer atmosphere. However, we are still full of confidence in China's expanding pet market and Porch's unique market positioning. Our private brand revenue share increased from 18.5% in the first half of FY2023 to 27.5%, reflecting the multi-dimensional and balanced development of the ecosystem. Despite the challenges, management remains optimistic about future developments.”

Ms. Tang Yingzhi, Co-Founder, Co-CEO and Chief Financial Officer of Porch Pets, added: “In the first half of FY2024, we continued to strengthen our operating capabilities and continued to develop steadily in a market environment full of variables. During the reporting period, our performance expenses fell from 11.6% to 8.9% in the same period of fiscal year 2023, and customer acquisition costs hit a record low, falling 46% year over year to RMB 2.8, showing Porch's operating capacity and profit potential. In the future, we will strive to build a closed-loop pet ecosystem, maintain stable business development, and create value for users and shareholders.”

[1] EBITDA is a non-US GAAP financial measure defined as a net loss excluding income tax expenses, interest expenses, interest income, depreciation, and amortization expenses, but includes all professional expenses associated with initial public offerings. Please see “Discussion of Non-GAAP Financial Measures” at the end of this press release.

[2] GMV refers to the total amount of product transactions, including the total value of orders confirmed through the Porch Mall, distribution model, or direct consignment model. In this model, regardless of whether the product is shipped or returned, we as the transaction subject are calculated based on the list price of the ordered product without considering any discounts. The total amount of GMV (1) includes GMV sold through Xingmu (2) does not include products sold under the consignment model (3) does not include the value of the services we provide.

[3] Customer acquisition cost refers to the average promotion cost of acquiring a user.

Financial results for the first half of fiscal year 2024

Total revenue for the first half of fiscal year 2024 was RMB 389.4 million (approximately US$53.4 million), while total revenue for the first half of fiscal year 2023 was RMB 589.6 million. Mainly due to the optimization of the product portfolio based on our business strategy.

Gross profit for the first half of fiscal year 2024 was RMB 77.9 million (approximately US$10.7 million), while gross profit for the first half of fiscal year 2023 was RMB 123.9 million.

The gross margin for the first half of fiscal year 2024 was 20.0%, compared to 21.0% for the first half of fiscal year 2023.

Total operating expenses for the first half of fiscal year 2024 were RMB 112 million (approximately US$15.4 million), down 27.1% from RMB 153.8 million in the first half of fiscal year 2023. Total operating expenses in the first half of FY2024 represented 28.8% of total revenue, compared to 26.1% in the first half of FY2023.

· The fulfillment fee for the first half of FY2024 was RMB 34.5 million (approximately US$4.7 million), down 49.4% from RMB 68.2 million in the first half of FY2023. The year-on-year decline was mainly due to (1) a decrease in total revenue; and (2) a reduction in transportation and handling costs, and the unit price of the contract was lower than the same period in fiscal year 2023. Fulfilment expenses for the first half of FY2024 represented 8.9% of total revenue, down from 11.6% in the first half of FY2023.

· Sales and marketing expenses for the first half of FY2024 were RMB 45.4 million (approximately US$6.2 million), down 28.6% from RMB 63.5 million in the first half of FY2023. The year-on-year decline was mainly due to: (1) the reduction in advertising expenses by RMB 7.8 million in order to save costs; (2) the reduction in commission fees for third parties by RMB 4 million; and (3) the reduction in personnel costs by RMB 5.1 million under the optimization of the organizational structure.

· General and administrative expenses for the first half of fiscal year 2024 were RMB 32.2 million (approximately US$4.4 million), while the first half of fiscal year 2023 was RMB 22.1 million. The year-on-year decline was mainly due to (1) an increase in option incentive fees of RMB 6.1 million and (2) an increase of RMB 3 million in expected credit losses in accounts receivable from third parties.

Operating loss for the first half of fiscal year 2024 was RMB 31.7 million (approximately US$4.3 million), while operating loss for the first half of fiscal year 2023 was RMB 29.6 million.

Net loss for the first half of fiscal year 2024 was RMB 37.7 million (approximately US$5.2 million), while net loss for the first half of fiscal year 2023 was RMB 29.5 million.

The EBITDA loss for the first half of fiscal year 2024 was RMB 33.5 million (approximately US$4.6 million), while the EBITDA loss for the first half of fiscal year 2023 was RMB 22.9 million. For more information on EBITDA, please refer to the “Non-GAAP Financial Measures” section.

The net loss per diluted share for the first half of fiscal year 2024 was RMB 0.52 (approximately US$0.07), while the net loss per diluted share for the first half of fiscal year 2023 was RMB 0.43.

As of September 30, 2023, the total amount of cash and cash equivalents and short-term investments was RMB 86.8 million (approximately US$11.9 million), while the total amount of cash and cash equivalents and short-term investments as of March 31, 2023 was RMB 159.6 million.

Conference Call Details

The company's management will hold a performance conference call on Wednesday, December 20, 2023 at 8 a.m. EST (Wednesday, December 20, 2023, at 9 p.m. Beijing/Hong Kong time).

Please call the number below 15 minutes before the conference call begins.

Call the phone number below to listen to the replay of the conference call, which is valid until December 27, 2023.

The company's investor relations website http://ir.boqii.com/ Webcasts and reruns of the conference call will be posted.

About Porch Pet Holdings Ltd

Porch Holdings Co., Ltd. (NYSE: BQ) is a leading pet platform in China. The company is a leading online pet products supplier in China, providing users with a wide range of high-quality, and cost-effective products and services, including world-renowned brands, domestic emerging brands, and its own brands Yoken, MoCare, and D-cat. The company's online sales platforms, including Porch Mall and flagship stores on third-party e-commerce platforms, provide users with convenient shopping channels and a wide variety of high-quality pet products. Users can enjoy a personalized shopping experience at Porch Pet. The Pochi Pet Community provides users with an informative interactive platform to share their love and experience in raising pets.

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