BingEx Ltd (FLX) Q2 2026 Earnings Call Transcript

Good day, and welcome to BMEX's 2026 Second Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Yidin Fu from Piacente Financial Communications. Please go ahead.

Thank you, Operator. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could differ materially from those mentioned in today's news release and in this discussion due to a number of risks and uncertainties, including those mentioned in our most recent findings with the SEC. The non-GAB financial measures we provide are for comparison purpose only. The definition of these measures and the reconciliation table are available in the news release we issued earlier today. As a reminder, this conference is being recorded. In addition, a webcast replay of this conference call will be available on the BEX company's IR website at ir.ishansong.com. Furthermore, throughout the call, we will constantly use the company brand name FlashEX to refer to its publicly listed entity, BEX Limited. Joining us today from FlashEX Senior Management are Mr. Adam Xue, founder, chairman of the board, and chief executive officer. Mr. Hong Jinyu, co-founder, director, and executive president, and Mr. Luke Tang, chief financial officer. I will now turn the call over to Mr. Adam Chue.

Thank you, Eden. Hello, everyone, and welcome to FlashEx's second quarter 2026 earnings call. The out-demand delivery industry continued to evolve in the second quarter. Users today accept more than speed alone, placing grossing weight on the entire service experience. From the moment they place an order to the moment it arrives, at the same time, AI is advancing quickly and low-altitude airspace is opening up, creating new ways to fulfill orders in your industry. This plays to the on-demand dedicated courier model FlashEX has been building all along, as well as the technology work we have been advancing over the past several quarters. The operating approach we have followed over the past several quarters translated into real results in the second quarter, with skill and delivery efficiency improving together. Total order volume grew 8.9% quarter over quarter, and average delivery time shortened from 25.7 minutes in the first quarter to 25.3 minutes in the second quarter, even as volume rose. Behind this is the writer base and service network that keeps expanding. As of the end of the second quarter, register slash writers reached $3.23 million and our service coverage extended to 299 cities. Our user base also grows steadily with register users up to $4 million from the end of the first quarter to $124 million, Turning to our financial performance, total revenue from the second quarter was 940.3 million RMB with a gross margin of 10.2%. Non-GAAP income from operations was 10.8 million RMB and non-GAAP net income was 11.4 million RMB. Our cash position stood at 853.4 million RMB as of the end of the second quarter, reflecting a healthy overall financial position. Looking at the order mixed-back category, volume recovery in the second quarter came from a cross-force. Fresh flowers, a core category we have cultivated for years, grew 29.2% quarter over quarter in order volume. Food, cakes, and electronics, or post-it order volume, grows both year over year and quarter over quarter, leaving our overall order mix more balanced. Several major categories moving up Air Trans tell us how well our on-demand dedicated career model fits high-value scenarios, and it also sprites our order composition more widely, reducing our resilience on any one category. On the merchant side, we set out to simultaneously grow our merchant base and improve its quality in the second quarter. Newly signed merchants grew 18% quarter over quarter, and the share of high-value, high-stakeness merchants rose meaningfully as our merchant space expanded. Enterprise clients stood out in particular, with new signing up 53.1% quarter over quarter, moving our merchant structure in a healthier direction. This came partly from optimizing our sales team assessment framework and partly from a dedicated effort to develop key accounts, pursuing enterprise clients through a separate track given their longer sales cycles and more complex decision making. What we have observed is that delivery demand from these clients comes out of their day-to-day business processes, such as transferring inventory between stores, sending client documents back and forth, or dispatching after-sale parts urgently. These demands ran more continuously and the relationships lasted longer, making our revenue more stable. On the individual user side, the role FlashGF plays for all users continues to extend from delivering an item to completing a task. Compared with first quarter, luggage delivery, order volume grew 37.5%, food pickup grew 25%, parcel pickup grew 7.2%, and assisted purchasing grew 6.7%. Growth across these scenarios came from delivery, developing new service formats around what users actually need, and from reaching out to them at the specific moments those needs arise. Round-trip orders, which we launched recently, as one example, they combine delivery, waiting, and the return trip to a single order handled by the same flash writer designed for tasks that require a round-trip, such as document and contract signing. These are exactly the tasks a dedicated courier model handles well. and they bring FlashEx further into our users' everyday routine. Our AI work in the second quarter centered on two priorities, making our service easier for users to reach and putting AI to work across the company's daily operations. Starting with users, we saw notably more users placing orders through our Quick App entry point in the Huawei Harmonious OS ecosystem during the second quarter. Order volume through this entry grew 27.6% quarter over quarter, and the number of users ordering through it grew 12.9%. This lightweight entry point made our service easier to access, driving both new user acquisition and high order frequency. In June, we lost AI-powered ordering in the FlashEx types. Users simply describe what they need by voice, and the system identifies and matches the pickup and drop-off addresses and other order details, completing the order in a single exchange.

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Whether the order is an urgent document, flowers, or medicine, AI can quickly match the right delivery option. Along with the CLI tool, we open-sourced in the second quarter, developers and individual users can now reach FlashEx AI-powered service directly. Across all of our AI work, we keep coming back to one question. What does the user actually end up with? Whether an order is placed through our APP or a voice assistant or an AI agent is fundamentally irrelevant to the user. What shapes the experience is whether FlashEx arrives on time and complete the job to a high standard, and whether we can respond to the user concerns properly. That stays as the core of how we develop and deploy AI. Now, to our internal operations, we established an organizationally innovation committee in the second quarter letting each business unit propose and implement its own ai projects in customer service our ai system now independently handles 85 of the scenarios it covers addressing routine inquiries and complaints the moment they are submitted. In marketing, compliance review of IMCN content previously conducted manually now goes through a first pass by a self-developed AI reviewing system. In regional operations, the time required to model capacity applies for new city launches and holiday peaks has come down from several days to a few hours. Across these areas, operating efficiency improved by roughly 30%. We see AI as a compounding effort rather than a single link. It builds gradually with the grains adding up over quarters. As AI becomes a more routine part of how organization works, we believe that our operating expense ratio can improve further over the medium to long term, creating room for better profit margins ahead. Next, let's take a look at low-altitude logistics. The business moved from single-route trials to multi-route operations during the second quarter. Drone delivery order volume grew 169.3% quarter-over-quarter, and we now have 22 routes in operation. In July, Hangzhou's first cross-river route for low-altitude on-demand delivery entered commercial operation. taking only 13 minutes to cross the river. With flash riders handing off at each end and the drone crossing in between, orders that once took more than 40 minutes now arrive in little over 20 minutes. Since the route began operating, deliveries are mainly being medicine, urgent business documents, fresh food, and digital accessories, all categories, while timing matters. With use continuing to increase and the delivery model proving all across different scenarios, low altitude logistics has moved past the trial stage and into a broader expansion. On the rider side, we register the flash rider base, continue to expand in the sixth or quarter. We also further strengthen our training program and create protection through dedicated training around safety standards, handling procedures for high-value items, and new services such as round-trip orders. The stability and professionalism of the writer team remain the foundation of our high-quality service. Looking to the second half of the year, our focus stays on the service itself. AI and low-altitude logistics are two new paths to making that service better. AI helps users find us at the very moment they need us. And low audio logistics frees our flash riders from obstacles like a river or a busy road. We have seen this market change many times since we started. And we still believe the hardest thing to replicate here is trust. Earned through every safe, on-time delivery. Behind that trust is our brand, our FlashWriter team, and our technology. This is the foundation of the long-term value we create for all users, our writers, and all shareholders. That concludes my remarks. Now I will turn the call over to our CFO, Luke Tan.

Thank you, Alan. Hello, everyone. This is Luke. I'd like to walk you through our second quarter, 2026 financial results. During the second quarter, our unique on-demand dedicated career model remained resilient as we further refined our operations and extended the use of AI across the organization. position. We also maintain a healthy cash position and continue to return capital to shareholders through our repurchase program. Before I begin, please note that all numbers are in renminbi and all percentage changes are on a year-over-year basis, unless not Our revenues for the second quarter were $940.3 million compared with $1,024.6 million in the same period of 2025. The decrease was primarily driven by intensifying marketing competition. Our cost of revenues for the second quarter was $844.7 million, compared with $901.9 million in the same period of 2025. The decrease was in line with the decline in revenues. Our gross profit was $95.5 million in the second quarter, compared with $122.7 million in the same period of 2025, representing a gross profit margin of 10.2% compared with 12% in the prior year quarter. Turning to operating expenses or total operating expenses for the second quarter, or $88.3 million, representing a decrease of 14.6% from $103.4 million in the same period of 2025. We consisted of $36.6 million in selling and marketing expenses, $37.9 million in general and administrative expenses, and $13.7 million in research and development expenses. The decrease in operating expenses was primarily attributable to the reduction in advertising expenses, staff costs, and the share-based payment expenses. Our income from operations was $7.3 million compared with $19.3 million in the same period of 2025. Excluding share-based compensation expenses or non-GAAP income from operations was $10.8 million for the second quarter, compared with $31.9 million in the same period of 2025. Our net loss was $34 million, compared with net income of $53.5 million in the same period of 2025. The decrease was mainly due to $41.7 million of losses from changes in fair value of long-term investments in the second quarter. Excluding changes in fair value of long-term investments and share-based compensation expenses, our non-GAAP net income was $11.4 million, compared with $45.6 million in the same period of 2025. Our cash position remained healthy, with cash and cash equivalents, restricted cash, and the short-term investments, totaling $853.4 million as of the second quarter in. We also carried out share repurchases under the extended buyback program approved in March. As of August 19th, we had repurchased a total of approximately 3.9 million ADS in the open market for an aggregated consideration of approximately 11.8 million U.S. dollars. This underscores our confidence in the company's long-term value. As we move through the rest of 2026, we remain committed to disciplined execution and to the high-quality service that differentiates. We are confident that as AI becomes increasingly embedded across our operations, it will support a structural improvement in our operating expenses ratio over the long term, creating room for better profit margins ahead. that concludes our prepared prepared remarks we would now like to open the floor to your questions operator please go ahead thank you to ask a question

please press star one one on your telephone and wait for your name to be announced to withdraw your question please press star one one again for the benefit of all participants on today's call if you wish to ask your question to management in chinese please immediately repeat your question in english our first question comes from gong shen lu with cicc your line is now open good evening uh schedule and can you hear me yes we're up oh thank you for taking my question uh this is ganshan from ccc i actually have uh

two questions a lotion trend yes yeah can you repeat your questions thank you okay yeah my first question is about the anti-evolution trends about this industry because we know you may seven leading instant retailer players, including Shansong, signed the Hangzhou Anti-Evolution Self-Discipline Convention, right? How do you interpret the broader industry trend from here? And what impact, if any, have you seen on RST and all the volumes?

Or where you view this as a pricing inflection point for the industry first question thank you yes thank you for your questions this is Luke I will take your first questions on May 28th flash X drawing the six other leading platforms in Hangzhou in sending an industry self-discipline convention covering marketing practices merchant rights, rider protections, and governance, what the convention points toward is shifting the center of competition from price back to service itself and directing more resources into creating incremental demand and improving conditions for merchants and riders. We see this as a healthy signal that the industry is maturing. For FlashX, this direction aligns closely with how we have operated for 12 years. Each flash rider stays with one order from pickup to handoff. Under this model, riders can give every delivery their full attention. and the rider experience and the user experience have never come at each other's expense. They reinforce one another. The convention moves the industry away from price wars and heavy subsidy-driven traffic, refocusing competition on service, quality, efficiency, and experience. For a platform whose competitiveness rests on service quality and fulfillment certainty, that is a favorable environment for us. In the second quarter, our total order volume grew 8.9% quarter-over-quarter, supported by better capacity allocation. The continued expansion of our service scenarios and new service formats will welcome the industry's return to rational competition and will keep investing along these lines. on pricing. Our focus is on the longer-term competitive dynamics rather than short-term movements. We have always believed that the core competitive advantage in on-demand delivery is not low price, but where every order reaches the user reliably and safely. That is where our differentiation lies, and where our long-term value comes from. Thank you. I'm waiting for your second question. Thank you.

Okay. Good to hear that. So my second question is about the low attitude. Could you give us an update on the growth of drone deliver order volumes? As you mentioned, the total volume earlier i just want to see the growth trend here and also your expansion road maps beyond the existing capacity for example beyond hanzhou besides combined these drones and ai deployment do these efforts translated into visible per course the segment level and what's your task to a scalable break-even. Thank you.

Thank you for your question. This is Adam speaking. Let me take order volumes and user cases first, and then expansion and the economics. In the second quarter, John's delivery order volume grew 169.3% quarter over quarter, and we now have 22 rules in operation, taking the business from single side trails into multi-route operations. In July, Hangzhou's first crossover route for low-altitude on-demand delivery entered commercial operation with a 30-minute flight across the river. With a rudder handoff at each end and a drone crossing in between, orders can once took more than 40 minutes now arrives in little over 20. at the same price as the standard FlashEx order. On user cases, what we carry today is mostly medicine, urgent business documents, fresh food, and digital accessories, all-time sensitive and relatively high in unit value. Low altitudes show its value where ground capacity runs into geography or traffic crossing a river a hill, or a district line, or a road that backs up at peak hours. These happen to be categories where we are already strong, and they sit close to what we already do. Our priorities at this stage are operationally safety, whether use can be replicated, and whether the time advantage of our ground delivery holds up consistently in the scenarios where it matters. We are confident the unit economics here will keep improving as road density rises, as daily order volume per road grows, and as we get more out of equipment and ground size. The 169.3% growth in joint order volume in this quarter also tells us demand is validated well. In terms of the next step on the low altitude business, our new team's focus is on refining the model in Hangzhou itself. This business draws heavily on local airspace management, landing site resources, and the supporting industry base. So what we want first is a set of operating standards and a cost model built in Hangzhou that we can carry into other markets. As our root network will continue to grow denser and operation experience builds, we are confident this model will travel well. On AI, our work in customer service, marketing, and regional operations lifted efficiency in those areas by around 30% in the second quarter, showing up in lower headcount requirements and shorter process cycles. The VCAI is that it accumulates efficiency step by step as it becomes a more routine part of how organization works. Those gains keep in compounding and we believe there is further room for operation expense ratio to improve over the medium to long term, creating conditions for better margins ahead. Thank you.

Thank you. And that concludes the question and answer session. I will now turn the call over to Yidin Fu for closing remarks.

Thank you once again for joining BMEX's second quarter 2026 financial result and business update conference call today. If you have any further questions, please contact the IR team at BMEX or PSNT Financial Communications. Thank you and have a great day.

This concludes today's conference. Thank you for your participation. You may now disconnect.