In the Q3 2023 financial report, NaaS (Newlink's EV charging subsidy that's listed in NASDAQ) reported a remarkable single-quarter revenue of over $23.4 million, signifying a staggering year-on-year increase of 536%. Despite its relatively modest scale, NaaS has defied the odds in a volatile capital environment.
Much credit is attributed to its visionary founder, Zhen Dai.
The Man Behind NaaS
Meeting Dai was in early January in Manhattan. Having just participated in the 2024 CES exhibition, he was excitedly explaining over breakfast the two innovative products brought to CES by NaaS—self-developed charging robots and advanced AC/DC charging piles. Dai Zhen, a science geek, couldn't hide his enthusiasm not only for technological breakthroughs but also for his "ambition" to achieve something significant.
"What has driven me to this point is the unwavering ambition to accomplish something significant," he replied succinctly when the reporter curiously asked how he transitioned from a research-oriented tech guy to a businessman involved in various fields. "I knew that apart from extreme innovation, there was no chance in China. Now, with the opportunity of energy transformation, being a chemical engineering and technology major, I see a big opportunity. New energy will 100% replace old one; this is an opportunity I understand."
Dai, the founder and CEO of Newlink, is not a stranger to entrepreneurial success. With prior ventures such as Maoo Coffee, a chain of "Internet + Pet" themed cafes, Dai brings a wealth of experience and market insights to the "Internet + Industry" sector.
"Running a coffee business didn't fulfill my dreams; I wanted to build a billion-dollar enterprise. So, starting in 2015, I began starting in Newlink," continued Dai Zhen, putting down his coffee cup. In his view, the automotive consumer market harbors various business opportunities.
From Small Town to Nasdaq
Dai, optimistic about the automotive consumer market, seized the entrepreneurial opportunity in the energy sector.
However, Dai Zhen didn't choose the popular but crowded path of car manufacturing. Instead, he dedicated himself to building an energy internet platform, helping gas stations and charging piles digitize, while also assisting tens of thousands of domestic car owners in saving costs and improving charging experiences. This achieved cost reduction and increased efficiency in the energy retail sector.
"I'm from a small town in China. I missed both waves of PC internet and mobile internet. But I caught the current industrial internet wave," said Dai.
To create an integrated energy internet platform, Newlink has several subsidiaries, including NaaS, Tuan You, Nengcheng Technology, Newlink Retail, and Newlink Enterprise Service, covering a wide range of areas.
Of course, Newlink's rapid expansion and the establishment of multiple subsidiaries are not possible without the support of capital. Dai Zhen has been praised by the investment community as someone "skilled at innovating business models under new business forms."
According to statistics on Newlink's official website, since its establishment in 2016, Newlink has completed 15 rounds of financing, with a total financing amount exceeding 7.5 billion yuan. This includes investments from well-known investment institutions.
Capital rushed in, hoping to profit quickly. With the assistance of Bain Capital, NaaS successfully listed and begun trading on the NASDAQ, becoming China's first listed pure play electric vehicle ("EV") charging service company. This move was not only a necessary step in NaaS's development but also advantageous for quickly connecting to the capital market, seizing the enormous opportunities in the new energy vehicle industry and post-vehicle service market.
To some extent, this move by NaaS can be seen as a reassurance for its shareholders, ensuring that there is continued capital interest and investment in the company's future.
Digitally Managing Global Transportation Energy
China is the world's largest energy consumer, accounting for 26% of global energy consumption, 30% of carbon emissions, and 40% of incremental carbon emissions.
Naturally, digitization of the energy industry has become a major trend. Dai stated, "Reducing emissions from existing fossil energy and replacing them with new energy is the inevitable choice for carbon reduction in the transportation sector. Newlink's vision is to reduce carbon emissions in transportation by 10%, contributing to a 1% reduction in China's carbon emissions."
Clearly, whether in the traditional petroleum industry or the new energy sector, Newlink plays the role of an "intermediary," not holding any energy assets but relying on connecting and serving the upstream and downstream industries to improve the overall industry utilization and then carve out its own interests.
"If global transportation energy is managed digitally, it will be a particularly meaningful thing," said Dai. What is hidden behind the glasses is his vision for the future.
Undoubtedly, Newlink has chosen a promising path, as the energy services sector is a blue ocean.
However, despite operating in a light-asset mode, NaaS still finds it challenging to avoid the need for substantial investment to gain market share. Analysts believe that NaaS itself does not have large-scale offline charging piles or power resources like the State Grid, so to invite more charging pile operators to join and achieve network scale effects, it has to use the "burning money to subsidize users" approach.
In the case of large-scale expenditure to gain market share, NaaS is currently not profitable, and the amount of losses is increasing year by year.
"When I transition from light assets to heavy assets and the heavy assets do not form assets, it's just a process, very normal. I only care if my company is following the long-term plan I set out for the past ten years," Dai responded to investors' recent questions about high debt.
All-In on Core Business and the Chinese Market
From the financial report, an obvious trend can be seen: NaaS is rapidly transitioning to a new energy asset operator.
Whether in terms of order quantity, charging volume, or revenue, NaaS continues to maintain high growth: revenue increased by 536% year-on-year to a record 171 million yuan; during the same period, completed orders reached 59.2 million, charging volume reached 1.383 billion kWh, with year-on-year growth of 58% and 66%, respectively, accounting for 21.8% of China's shared charging volume. Meanwhile, the company's gross profit margin in the quarter increased significantly from 6.1% to 27.4% year-on-year, and the loss rate narrowed by 256%.
While NaaS continues to exhibit high-speed growth in core data, there is another data point that deserves more attention: the proportion of revenue from new energy solutions reached 81%. The financial report attributes this to the continuous delivery of energy solution projects, including renewable energy generation, energy management, and storage solutions.
It can be said that NaaS is now very different from when it first went public in 2022. Today, NaaS looks more like an energy asset operator. Looking at the transformation of its business structure, the company's business started with consumer-oriented aggregated services at the beginning of its listing, gradually transitioning to B2B+B2C, online + offline services. NaaS no longer aims to be a traditional large owner of charging piles.
In fact, this is not an "easy business" – it requires a long time to accumulate data and experience, as well as coordination in operations, certification, and charging pile construction across multiple fields. Therefore, it has high industry barriers.
"I will devote all my energy to doing well in the domestic market, focusing on the core business, and continuing to capture a higher market share in China," Dai wrapped up the interview with a strong and positive note.
The Future Ahead
"NaaS is building a pretty interesting business that would seem to be perfect for what is happening in China." Vice Chairman of Nasdaq, Bob McCooey shared.
After the successful listing in Nasdaq, Newlink Group is also preparing for an IPO, but the specific timing remains unknown. With its new logo, Newlink clearly aims to occupy a place in driving China's energy structure transformation through digitization, intelligence, and a comprehensive system of technology, products, and services.
It won't be smooth sailing, and we will have to patiently wait for its transformative moment.