On the evening of January 8th, JD subsidiary Dada Group announced that it had discovered some suspicious practices in its routine internal audit, which may lead to doubts about some of the company's revenue from online advertising and marketing services in 2023, and will entrust a third party to re audit.
On the same day, JD Group issued a statement confirming this news.
Affected by this news, the stock price of Dadami fell more than 20% before the trading session on January 8th, and as of the close of the day, the stock price had fallen by more than 45%, almost halving. On the 8th, the US stock market on JD.com closed down 2.7%, while the Hong Kong stock market opened at HKD 100.30 per share on the 9th, down about 0.9% from the previous trading day's closing price of HKD 101.20 per share.
According to insiders at Dada, this incident was voluntarily discovered during an audit or caused by individuals suspected of committing fraud. The insider said, "We have reported the case to the public security organs. In addition, this matter does not involve Dada's core business and the scope of impact is very limited."
Dada announced that based on preliminary evaluation and independent review, the company currently estimates online advertising and marketing service revenue and operational support costs of approximately 500 million yuan each for the first three quarters of 2023, which may have been exaggerated. In addition, the revenue guidance provided by the company for the fourth quarter and full year of 2023 cannot be used as a reference.
At present, the audit committee is seeking and will receive the assistance of independent professional consultants, including a legal accounting firm that is not a company auditor and an international law firm. The company will update the progress of independent review in a timely manner in accordance with applicable rules and regulations.
According to the previously released third quarter report for 2023, Dada's total revenue in the third quarter was 2.9 billion yuan, an increase of 20% compared to the same period last year; After adjustment, the net profit margin increased by 11 percentage points year-on-year, and the profitability significantly improved year-on-year. In the third quarter of 2023, Dada's costs and expenses amounted to 3.1 billion yuan, a 6% increase from 2.92 billion yuan in the same period last year. Among them, sales and marketing expenses were 1.019 billion yuan, compared to 1.15 billion yuan in the same period last year.
In the second quarter of 2023, Dada just achieved its first overall profit after going public. In this quarter, Dada achieved a revenue of 2.8 billion yuan, an increase of 23% compared to the same period in 2022; After adjustment, the net profit improved by more than 17 percentage points year-on-year to profitability, further demonstrating the synergistic effect between Dada Group and JD.com.
At the end of 2023, the management of Dada had just completed the adjustment. On November 15, 2023, JD Group announced that Xu Ran, CEO of JD Group, will also serve as CEO of JD Retail, effective immediately. Former CEO of JD.com Retail, Xin Lijun, will have another position at JD.com.
In December 2023, Dada also announced a management adjustment, and Xin Lijun resigned from his position as Chairman of the Board of Directors and a member of the Board of Directors. JD Group CFO Shan Su took over as Chairman of Dada's Board of Directors and a member of the Nomination Committee. Subsequently, Chen Zhaoming, the former Chief Financial Officer of Dada, notified the Board of Directors that he had resigned from the position of CFO of the company due to personal reasons, effective from December 19, 2023. Dada appointed Henry Jun Mao as the CFO.
According to public information, Dan Su was appointed as CFO of JD Logistics in May 2022 and was promoted to CFO of JD Group in May 2023.
As of September 30, 2023, Dada held cash, cash equivalents, restricted cash, and short-term investments of 4.41 billion yuan.