Key Points:
- Didi Global reports a fourth-quarter profit, marking a significant turnaround from previous losses. Revenues for the quarter surged by 55.4 percent.
- Regulatory scrutiny in 2021, including $1.2 billion in fines and app removals for data security violations, challenged Didi’s operations.
- The company began to recover from regulatory challenges in early 2023 after receiving permission to relaunch its apps.
- A one-time expenditure in November related to compensating users for service disruption impacted Didi’s fourth-quarter net profit.
Didi Global, China’s largest ride-hailing company, has signaled a positive turn in its fortunes by reporting a fourth-quarter profit, indicating a gradual recovery from regulatory challenges that plagued the company in recent years.
In the three months ending December 31, Didi Global reported a net income attributable to shareholders of 818 million yuan (Approximately $115 million), marking a significant turnaround from a loss of 953 million yuan (Approximately $133 million) in the same period a year ago. The company also witnessed a substantial revenue increase, which surged by 55.4 percent to reach 49.4 billion yuan (Approximately $6.9 billion) for the quarter.
Throughout 2021, Didi faced intense regulatory scrutiny in China, particularly from the cyberspace regulator, over its attempt to pursue a US initial public offering without proper approval. This regulatory inquiry resulted in restrictions on user acquisition and removing Didi’s apps from major app stores. In July 2022, the company was fined $1.2 billion for data security violations.
Despite these setbacks, Didi Global began to recover from its regulatory challenges in early 2023 after receiving permission to relaunch its apps, signaling a positive trajectory for the company’s operations.
However, Didi’s fourth-quarter net profit was impacted by a significant one-time expenditure in November, attributed to compensating users for a glitch that disrupted its ride-hailing app for several hours. As a gesture of apology for the inconvenience caused, the company distributed millions of coupons valued at 10 yuan (US$1.40) each to affected customers.
