NEW YORK, March 26, 2021 /PRNewswire/ -- Ucommune
International (Nasdaq: UK) is China's leading coworking community operator,
manager, and services provider. With its expertise in the real
estate and retail industries, Ucommune operates its agile office
spaces with high efficiency under unique asset-light business
model, and engages in the urban transformation of older and
under-utilized buildings to redefine commercial real estate in
China, aligned with the central
government's economic development plans.
One-stop services provider for SMEs - Ucommune's
DNA goes beyond just offering multi-functional services and modern
office facilities. Through its integrated platform comprising over
1,000 service and facility providers across sectors, Ucommune
advocates consumption-upgrading to be align with the central
government's national economic development
scheme. The Company provides one-stop services geared for
small to medium-sized enterprises, encompassing Financial Advisory,
Human Resources, Media Publishing, International Shared Medical
Service Platform, Online Sports Travel Commerce, Intellectual
Property Protection, Intelligent Hardware, Start-up Accelerator,
and Interior Design.
Value-add business growth partner - Ucommune offers Asia's international coworking
space, an inclusive, premium work environment for you to grow your
business at affordable prices. The Company aims to provide
flexible, secured, and dynamic workspaces and full-fledged U-Plus
services, value-added to members' diversified business
and corporate development needs, including U-Product and U-Bazaar.
It offers convenient and high-quality facilities for their members
to learn, to share and to connect in an open and vibrant
environment, complemented with expansive global network enabling
its members to unleash their potential and collectively create
maximum value.
Defensively positioned with unique hosting or asset-light
business model - Ucommune's strategic transformation
towards a defensive asset-light business model has helped mitigate
the negative impact of COVID-19 on the Company's
revenues and profit margins, as evidenced by less-than-expected
revenue decline and faster-than-expected margin improvement.
Contrast to direct-operation under the self-operated model, the
asset-light model unburdens Ucommune of lease obligation and
decoration expenses, enabling the Company to keep costs low while
yielding much higher profit margins. With resources being
redirected towards managing profitability and controlling expenses,
Management is confident that the Company is on the right path
towards profitability and positive cash flow in the coming
years. The Company's asset-light business model,
market leadership in managing agile office space, and capital
markets access should help pave the way towards sustainable profit
growth in the long run.
Low customer acquisition costs enabled by U Plus value-add
services - With AI-based analytical data made available on the
screen and digital displays in the Company managed physical spaces,
as well as in-app push on U Bazaar, Ucommune is able to add value
to the advertisers comprising its members and business partners in
delivering "precision marketing" online and offline.
The Company expects to draw WeChat mini program users to its U
Bazaar platform with broader product offering at favorable price,
which in turn should significantly increase its member network and
business partner base while keeping member acquisition costs
low.
Founded in 2015 and headquartered in Beijing, Ucommune International has since
created a large-scale intelligent agile office ecosystem throughout
economically vibrant cities in Asia.
By leveraging its industry expertise in real estate and retail,
Ucommune operates high-efficient office spaces and redefines
commercial real estate buildings in Asia regions.
With flexible and cost-efficient office space solutions,
Ucommune empowers its members to grow their businesses in
Asia. It has grown a global network of 58,000 workstations
and 860,400 members, and has established co-working offices across
51 tier-1 and new tier-1 cities, covering regions throughout
China nationwide and Singapore.
Anchored on four pillars: Sharing, Innovation, Responsibility,
and Success for all, Ucommune's mission is to
cultivate a new working culture and foster a global intelligent
coworking ecosystem, allowing the Company's members to
leverage that network to collectively create maximum value – backed
by the vision of the Company's founder, Dr.
Mao Daqing.
With more resources, more connectivity, and more secured space,
Ucommune makes sure that its members are provided a workspace with
necessary resources and support. The Company offers
affordable premium coworking and office spaces, event venue spaces,
corporate business services, as well as solutions for start-ups,
small to medium and large-sized enterprises. Similar to Huazhu
Group Ltd (Nasdaq: HTHT), a hotel management company with
asset-light strategy, Ucommune has adopted the asset-light business
model since 2019, which has increased the Company's
flexibility to scale its business, while reducing operating risks
and costs. The Company has four business segments:
Workspace Membership segment competes against incumbents with
annual revenues of greater than $25
million and tenant members of more than 100,000, where IWG
is identified as the most comparable competitor.
Office space - Ucommune offers various offline coworking space
services include (1) self-operated models - U Space, (2) small-size
spaces - U Studio, and (3) customized spaces - U Design, as well as
asset-light models such as (4) U Brand which utilizes own design,
build services and brand, and (5) U Partner, which is a new model
launched in Aug. 2019 that utilizes
own operation and management services.
Event space - Ucommune offers venue rentals for various event
styles, comprising medium to large-sized event spaces for both
corporate and non-corporate functions, as well as premium kitchen
space, fitness and yoga room, on top of luxury meeting rooms and
more.
Besides space offerings, Ucommune also equips its members with
necessary tools and amenities, including dedicated reception
support to help with administrative support, smart-office
technology-based facial recognition doors for added safety and
security, complimentary unlimited Beverages and Snacks, fast
printing & scanning services, members portal allowing members
to engage with each other, and smart-IT systems through reliable
high-speed wireless internet connection.
Additionally, members can easily reserve a desk, meeting room,
zone door lock and private office with a single stroke on
Ucommune's mobile app, a convenient online system that
also allows members to share their daily work life to its
community, as well as allows the Company's to design
bespoke services catered to serving the enterprises'
diversified business needs.
Advertising & Marketing service segment competes with a list
of comparable public companies in the digital advertising and
online marketing space.
This service platform does not compete with the traditional ad.
agencies which typically focus on larger advertisers, but rather
caters to serve its tenants of all sizes, with technology allowing
advertisers to self-manage their own marketing campaign.
Workspace Solutions segment competes with a number of building
engineering companies.
The Company offers one-stop services dedicated to its community
members, from engineering, design, decoration to build. This
segment has recorded strong growth given its brand awareness in
China, as well as leveraging its
deep office leasing operation experience.
Back Office Digital Solutions and e-Commerce segments compete
with a number of large public companies in the same space.
Powered by its technology proficiencies, Ucommune is able to
leverage its large amount of community traffic to discover new
monetization initiatives, meanwhile bring additional value to its
members, business partners and startup investees by building a
vibrant virtual community to serve a broader group beyond its
members and the physical spaces.
Ucommune community also connects members in upstream and
downstream sectors from specific industries, offers high-quality
services to its members through U Bazaar, an enterprise and
lifestyle platform collaborated with over 700 business partners and
more than 30 startup investees from the Company's
incubator/accelerator tenants. By leveraging technology to
analyze the large amount of data from community traffic data, the
platform helps the Company better understand its
members' demands and preference, and with that insight
to devise and monetize U-Plus diverse services catered to meeting
their business development needs, including Precision-Marketing
services on U- Bazaar and the Company's physical
spaces, and U Product, a community e-commerce
marketplace.
Overall, the ever-expanding U Plus value-add services are
targeting to enhance the Company's member stickiness
with improved user experience, and to collectively build a vibrant
community.
Key milestones achieved include:
2015 - Established Ucommune and launched the first co-working
space in Beijing.
2016 - Launched its mobile app, U Bazaar, and strategically
invested in ZGG.com, which is an IP service platform, designed to
create synergies in the Company's co-working
space.
2017 - Acquired Hongtai Space, a China-based co-working start-up; Operated over
90 co-working spaces as of December 31,
2017, and initiated its global operations by entering the
Singapore market, as well as
launched U Brand under the asset-light model.
2018 - Acquired six enterprises from industries across
co-working, advertising & branding, and design & build,
including Daguan Architects and Shengguang Zhongshuo, meanwhile
further expanded its global presence by entering the Hong Kong and the U.S. markets.
2019 - Further enhanced the Company's leading
position in the co-working industry by acquiring Rocket Calendar,
and expanded vertically in the "To B" domain; launched
U Product, the Company's community e-commerce
initiative, and launched U Partner under the asset-light model.
Revenue Model
Workspace Membership segment accounted for 57.8% of
Ucommune's revenue in the first 9 months of 2020.
Ucommune offers flexible membership plans geared for business of
all sizes and needs. With the options of either full or part-time
membership, the business can work comfortably at the
Company's premium workspace without having to commit
to a long-term lease. Its flexible plans and comprehensive services
are intended for businesses to save costs, meanwhile able to
showcase stunning workspace designs to their clients and prospects
of global audiences.
The Company's Flexible Coworking Office Plans range
from hot desks to full, customizable enterprise solutions at best
affordable coworking prices:
Affordable Desk Plans offer low-cost options for start-ups and
SMEs with guaranteed flexible terms, including:
Hot Desk – Members can choose from unlimited hot desk seating
options globally, ranging from comfortable chairs, couches, and
even standing desk areas, significantly reducing their payment for
workspace, while enjoying 24h access to hot desks at any of the
Company's global locations.
Shared Office Plan – By sharing small private offices with other
entrepreneurs, this plan indirectly enables strategic partnership
to form among the members who share the same private office spaces,
ideal for part-time office users. Members of this plan also enjoy
24h access to hot desks at the Company's global
locations.
Hourly rental and virtual offices are also available upon
enquiry.
Premium Office Plans allow members to own an office qualified as
"Headquarters". Members can choose from the
Company's various options of private office plans,
including:
Private Office Plan – This plan offers members a fully-furnished
private office space. Members of this membership also enjoy 24h
access to hot desks from the Company's global
locations.
Custom Office Plan – Members of this plan can enjoy a customized
office floor plan suited for their specific needs at the best
prices.
Enterprise Solutions U-Bespoke Plans – Enterprises can elect
bespoke solutions in office design and floor plan tailored to their
specific business needs. This premium enterprise solution
offers members an entire floor with personalized services at market
leading rates.
Advertising & Marketing service segment represented 34.6% of
Ucommune's total revenue in the first 9 months of
2020.
Workspace Solutions segment represented 7.5% of
Ucommune's total revenue in the first 9 months of
2020.
Back Office Digital Solutions and e-Commerce segments are still
in their initial stage. However, revenues from its U Plus
value-added services are expected to pick up the momentum along
with the economy recovery in China
and Asia. U Plus services
include:
U Product, Community e-Commerce – Through business partnership,
Ucommune launched U Product community e-commerce back in
August 2019, by which its members and
contacts can participate in group-buy of high-quality products
ordered on its platform and delivered to its coworking spaces at
discount. As of September 30,
2020, the Company had processed an aggregate of ~ 37,200 U
Product orders, with a gross market value of RMB74.9 million since its launch, made mostly
through Ucommune's WeChat mini program.
U Bazaar, Precision Marketing Services – Through U Bazaar and
its agile office spaces, the Company is able to offer precision
marketing services. By analyzing the large amount of platform
data, Ucommune helps its advertisers better understand consumer
trends. Its smart Advertising and Branding platform is
integrated with U Bazaar to facilitate the purchase of service by
its members, and make the advertisements available on digital
display at the Company's spaces.
Management Team and Board of Directors
Dr. Daqing Mao is the founder of
Ucommune, Zhuangkun He is the Chief Executive Officer, and
Kwok Mun serves as the Chief
Financial Officer and Chairman of the Board, Xin Guan is the Chief Operating Officer, Binchao
Xu is the Chief Technology Officer, Zhenfei Wu serves as Chief
Marketing Officer, Guohang Wang is the Chief Strategy Officer, and
Jianghai Shen is the Chief Product
Designer.
Zhimo Zhao is another director on the board, along with 3 other
independent directors.
Financial Highlights of the First Nine Months of 2020
Net revenues were RMB598.5 million
(US$88.1 million), with gross margin
remained flat year-over-year.
Operating loss margin was 38%, narrowed from 64% in the same
period of prior year, while net loss was RMB358.8 million (US$52.8
million), improved from a net loss of RMB570.7 million a year ago.
EBITDA loss margin was 52%, compared with 55% in the same period
of 2019, while adjusted EBITDA loss margin was 24%, compared with
26% a year ago.
Net loss in the first nine months of 2020 was RMB358.8 million (US$52.8
million), and adjusted net loss (Non-GAAP) was RMB278.8 million (US$41.1
million), narrowed from a net loss of RMB343.1 million in the same period of 2019, when
the Company still operated under the asset-heavy model.
Operating Highlights As of September
30, 2020
UCommune Group had 222 office spaces in 51 cities, among which
158 spaces were in operation, providing approximately 58,000
workstations to Ucommune Group's 860,400 members.
The Company's total number of spaces under contract increased by
126% to 106 from 47 as of December 31,
2019, while its total managed area under contract increased
by 59% to 272,900 square meters from 171,200 square meters as of
December 31, 2019, including those in
operation, under construction, and in preparation for
construction.
Cash, cash equivalents and restricted cash were RMB112.4 million (US$16.6
million) as of September 30,
2020, representing a decrease of 43% from December 31, 2019, primarily due to the repayment
of loans.
Net cash used in operating activities decreased by 99%
year-over-year to RMB2.3 million
(US$0.4 million), mainly due to
decreased leased facilities as a result of the Company's temporary
slowdown in expansion of co-working space as the Company
transitioned into an asset-light model.
Business Review & Outlook
The year-over-year decline in the Company's
financial results were only a natural consequence brought about by
the rapid spread of pandemic. However, Ucommune was able to limit
the impact of industry headwinds facing the coworking industry
caused by the global pandemic with swift transformation into an
asset-light business model.
According to the Company's founder, Dr. Mao,
Ucommune decided to transition its business towards an asset-light
model towards the end of 2019 even before Covid, and the pandemic
had only accelerated the transformation. During the first three
quarters of 2020, the Company proactively closed office spaces
whose cash flows were negatively impacted, while re-allocated its
resources to those business segments able to fast-track progress to
profitability.
Owing to the decisive, timely transition,
Ucommune's revenues from workspace membership services
in the first nine months only declined by 18% year over year,
meanwhile able to narrow its EBITDA loss by more than 35% during
the same period. However total revenues year-over-year
decline were exacerbated by sharp reduction in revenues from
marketing and branding services caused by economic uncertainty
amidst the pandemic.
Nevertheless, as businesses are gradually returning to the old
norm of "working from offices",
Ucommune's workspace occupancy rate should improve
accordingly, and so should the unit space revenue.
Furthermore, Management plans to continue to innovate the
Company's business model through diversified revenue
streams and effective cost management. Evidently, the Company
has achieved momentous transformational improvements in occupancy
rates and unit space revenues since the third quarter of 2020.
Completed in December 2019,
Ucommune's proprietary SAAS management platform,
namely DOMES, for office buildings and industrial parks has shown
early success. This platform includes functions such as lease
contract management, CRM promotion management, IOT intelligent
device management, member operation management and asset
management, used to enhance the value of properties managed by the
Company.
According to the Company's F1 filing, DOMES clients
include major real estate companies in China, such as Beijing Jingying Menggu
Changying Industrial Park and Shanghai Dashu Shared Office.
The client base and revenue from its SAAS
business grew significantly in the fourth quarter of 2020 on the
back of China's
recovering from COVID-19, and the momentum is expected to continue
going forward as the Company further develops its SAAS
business.
Looking forward for the full year of 2020, the Company expects
net revenues to be in the range of RMB850
million to RMB870 million,
representing a year-over-year decline of 25% - 27%.
Detailed Unaudited Financial Results in first 9-month of
2020
Total revenues in the first 9-month period of 2020 were
RMB598.5 million (US$88.1 million), compared with RMB874.6 million in the same period of 2019, or a
year-over-year decline of 32%. Nevertheless, revenues from
the asset light-model were RMB26.3
million (US$3.9 million) in
the first nine months of 2020, representing an increase of 79%
year-over-year.
Specifically, revenues from Workspace Membership services were
RMB346.2 million (US$51.0 million), representing a year-over-year
decrease of 18%, mainly due to the decreased number of spaces in
operation and the contraction of the Company's co-working
space. However, revenues from Marketing and branding services
were RMB207.4 million (US$30.5 million), representing a year-over-year
decrease of 49%, mainly due to decreased demand for advertising and
marketing services caused by the uncertainty brought upon by the
outbreak of COVID-19. Other services revenues were
RMB45.0 million (US$6.6 million) also decreased by 13%
year-over-year, primarily attributed to net revenue generated from
the Company's interior design and construction services, resulting
from the suspension of design and construction services caused by
COVID-19.
Total costs of revenues decreased by 33% year-over-year, while
the costs of revenues from the asset light-model increased 83%
year-over-year given the Company's business
transition. Specifically, costs of Workspace Membership decreased
by 26% year-over-year, owing to decreased operational costs related
to leases as well as decreased costs for property services and
staff. Costs of marketing and branding decreased by 48%
year-over-year, in line with the decrease in advertising revenue.
Costs of other services were flat year-over-year, mainly due to
decreased staff costs.
Operating loss was RMB227.9
million (US$33.6 million),
narrowed by 59% from the prior year's operation loss.
Basic and diluted net loss per share were both RMB2.61 (US$0.39)
in the first nine months of 2020, improved from RMB5.84 in the first nine months of 2019, as a
result of the combination of lower net loss and an increase in
weighted average shares outstanding.
Recent Corporate Development Milestone - Closing of Business
Combination Between Orisun Acquisition Corp. and Ucommune Group
Holdings Ltd
On November 17, 2020, Ucommune
International consummated the business combination with Orisun
Acquisition Corp.(Nasdaq: ORSN), a special purpose acquisition
Company, which resulted in Ucommune Group being a wholly owned
subsidiary of Ucommune International.
Upon the closing of the business combination, Ucommune
International Ltd, the combined Company and its warrants, commenced
trading on Nasdaq Capital Market on November
18, 2020, under the ticker of UK and UKOMW,
respectively.
In connection with the closing of the Company's
business combination, as of November 18,
2020, certain backstop investors had invested an aggregate
amount of $68.0 million pursuant to
backstop agreements, including an aggregate investment of
$60.9 million in a PIPE
financing.
Following the completion of the business combination, Ucommune
has assembled a strong management team in place to spearhead its
future growth efforts. The surviving publicly-traded Company
plans to leverage its expanded resources, brand equity, technology
advancement, operational intelligence and domain expertise to
capitalize on new growth opportunities and deliver lasting
shareholder value.
On Jan. 26, 2021, Ucommune
announced that the Company raised its investment in XiYu Technology
("XiYu"), a SaaS and IoT service provider, which
increased its equity stake to 53.2% from 51%. XiYu was founded in
2017, and had rolled out a SaaS platform "DOMES" that
provides value-added real estate assets and leasing contracts
management which in turn helps improve the real estate asset
values.
On Feb. 3, 2021, the Company
announced the closing of $20 million
underwritten public offering of 4,938,271 Class A Ordinary Shares
and warrants ("Firm Warrants") at a combined offering
price of $US4.05 per share.
Additionally, the underwriter exercised its option to purchase an
additional 740,740 warrants to purchase Ordinary Shares at an
offering price of US$0.01 per
Warrant. With this offering, the Company received gross
proceeds of approximated $20
million.
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SOURCE Ucommune International