Missfresh Limited

Total net revenue was RMB2.12 billion in Q3 2021, up 47.2% year over year from RMB1.4 billion. GMV was RMB2.57 billion, up 41% year over year. Gross profit was RMB260.6 million, up 9% year over year, and gross margin was 12.3%, versus 16.6% a year ago and up 480 bps sequentially. Operating loss was RMB970.7 million, net loss attributable to ordinary shareholders was RMB973.7 million, and non-GAAP adjusted net loss attributable to ordinary shareholders was RMB886.5 million; non-GAAP basic and diluted net loss per ADS was RMB3.87. For Q4 2021, management guided net revenue of RMB2,232 million to RMB2,315 million, implying about 35% to 40% year-over-year growth, gross margin improvement of 100 to 150 bps quarter over quarter, and non-GAAP operating margin improvement of 800 to 1,000 bps quarter over quarter.

Zheng Xu framed the quarter as validation of Missfresh’s “high-quality growth” strategy, driven by both DMW on-demand retail in first- and second-tier cities and lighter-weight intelligent fresh market expansion in lower-tier cities. He emphasized rising penetration, better network density, stronger private-domain customer operations, and the early success of private labels and direct sourcing. His tone was confident and constructive, repeatedly saying the company is “on track” to improve unit economics and eventually reach positive fulfillment profit and operating cash flow.

Catherine Chen said gross margin improved because of a greater focus on high-value customers and a shift to higher-margin direct-sourced products. She noted cost lines still rose sharply year over year: cost of revenue was RMB1.9 billion, fulfillment expenses were RMB637.9 million, sales and marketing were RMB256.2 million, G&A was RMB192.2 million, and technology/content was RMB145.1 million. She highlighted quarter-end liquidity of RMB2,479.5 million, up from RMB1,041.5 million at the end of 2020, while net cash used in operating activities was RMB669.2 million in the quarter. She also guided to Q4 gross margin improvement of 100 to 150 bps and non-GAAP operating margin improvement of 800 to 1,000 bps quarter over quarter.

Analysts focused on what drove growth, how much room there is to reduce fulfillment and marketing costs, and whether the company would need to raise capital in 2022. Management said growth is being driven by higher penetration in first- and second-tier cities, improved customer frequency and average order value, and private-domain operations such as the Missfresh Adviser service. On margins, management said higher AOV, better fulfillment efficiency, and improved supply chain economics should lower expense ratios; on capital, it said there is no concrete funding plan yet and any decision would depend on market conditions and business needs.