On November 20, NaaS Technology Inc. (NASDAQ: NAAS), the first U.S.-listed EV charging service company in China, released its Q3 2024 earnings report, showcasing an impressive performance.
According to the announcement, the company’s core strategy—its charging service business—has shown strong growth, contributing RMB 42.37 million in revenue, a 36% year-over-year increase, accounting for 95% of total revenue. This highlights the success of the company’s strategic focus, which also resulted in a significant increase in gross profit margin. In Q3 2024, the gross profit margin reached a record-high 57%, up from 38% in the previous quarter. Notably, the company achieved a critical milestone this quarter by recording its first-ever positive net profit. Non-IFRS net profit attributable to ordinary shareholders was RMB 21.2 million (US$ 3.0 million) for the third quarter, signaling a successful transition to the “high-quality development” phase, focusing on profitability and marking a significant improvement in the company’s earning capabilities.
Strategic Focus on Charging Services, Strengthening the Role as an Industry Connector
NaaS’s strong profitability this quarter is closely tied to its strategic decision to focus on its charging services business, which is a platform business in nature.
As a leader in third-party electric vehicle (EV) charging services, NaaS does not directly operate charging stations. Instead, it leverages its robust connectivity, operational, and intelligent digital capabilities to act as an “industry connector.” Positioned as a platform linking supply and demand in the EV charging industry, NaaS avoids the low-profit, high-capital-intensive energy solutions segment and emphasizes the distinct platform characteristics of its charging service business.
NaaS’s charging service business is supported by its strategic partnership with the Kuaidian APP, which serves as a traffic portal to provide interconnection services for various charging operators. The partnership expands NaaS’s user outreach while also improving EV charging stations’ utilization and operational efficiency, by drawing to them more customer traffic . For EV owners, the service enables quick searches for nearby charging stations, including real-time status updates, improving charging efficiency and optimizing the user experience.
NaaS’s platform-driven charging services integrate various industry participants, enhance ecosystem construction on both the supply and demand sides, improve industry efficiency, and align the charging sector with the rapid growth of China’s EV industry.
This platform business requires substantial early-stage investment, including subsidies, to cultivate market habits and expand network coverage. With the rapidly evolving EV sector, characterized by technological innovation and shifting market dynamics, initial investments may be amplified. However, as the platform grows and user loyalty strengthens, the industry shifts from chaotic expansion to refined operations, with NaaS gradually realizing economies of scale and achieving profitability at scale.
According to the latest financial report, NaaS is actively aligning with industry development trends by optimizing its internal processes and improving efficiency, thereby enhancing profitability. Driven by the dual forces of market demand and user growth, NaaS is gradually entering a harvest phase.
The financial report shows that in Q3 2024, the company’s charging service business achieved steady growth in both GTR (Gross Take Rate) and NTR (Net Take Rate), with the proportion of profitable orders rising to 73%. The total charging volume transacted through the NaaS network reached 1.284 billion kWh, a 13% increase quarter-over-quarter. These factors collectively fueled the growth of NaaS’s charging service business and are the primary reasons behind the company achieving its first-ever quarterly non-IFRS net profit.
Moving Beyond Subsidy Dependence, Achieving Organic Platform Growth
In addition to its impressive profitability, NaaS’s charging service business has also demonstrated significant high-quality growth in scale. As the market matures, NaaS’s business shows clear scale advantages that continue to expand.
Recognizing industry trends and aligning with internal capabilities, NaaS began reducing user subsidies in early 2024, transitioning from subsidy-driven growth to organic growth by expanding user acquisition channels and deepening partnerships. This shift not only allowed the company to focus on the core value of its charging services—promoting intrinsic growth through improved products and services—but also supported the development of a more stable and sustainable revenue model, strengthening its competitive moat.
This shift is reflected in the financial data. Optimized subsidy policies contributed to an 81% year-over-year decrease in selling and marketing expenses to RMB 29.7 million (US$ 4.2 million) for this quarter. Despite reduced subsidies, NaaS’s platform achieved strong growth in transaction users in Q3.
Besides, latest data also show the number of connected charging stations increased by 40% year-over-year to 96,000, and the total number of connected chargers rose by 49% year-over-year to 1.146 million, outpacing the industry’s average growth rate during the same period. Significant cut in expenses does not compromise the company’s continuous growth.
AI-Driven Business Growth, Building an Industry Ecosystem
Since the launch of ChatGPT in 2022, the industry has been exploring how AI can empower various sectors, with the trend moving from general AI models to domain-specific applications—charging is no exception.
AI can process and analyze vast datasets, including user needs, market trends, and historical transaction data, to accurately forecast supply-demand dynamics and provide personalized recommendations based on user behavior. This can significantly enhance supply-demand matching efficiency and accuracy, addressing key challenges such as inefficient matching and insufficient high-quality supply in the current charging industry.
NaaS was an early adopter of AI and has demonstrated foresight in leveraging it to advance the charging industry.
As early as 2016, NaaS began developing AI algorithms to improve transportation energy supply-demand matching, operational efficiency, and intelligent energy replenishment experiences. In 2023, the company launched its NEF (NaaS Energy Fintech) system based on advanced AI algorithms. This system manages station site selection, revenue evaluation, operational scheduling, maintenance, and more, enhancing the operational efficiency and financial sustainability of regional charging operators while improving the user experience.
The scale of data often determines the intelligence level of AI algorithms. With its charging station network, NaaS has accumulated significant supply-demand data, providing an extensive stage for AI applications. In Q3, NaaS officially joined the AI Applications Alliance and is poised to continue unlocking the value of AI in the charging service industry, accelerating the digital transformation of the sector.
Beyond AI-driven advancements, the rapid growth of EVs has facilitated the integration of ecosystem resources across the charging industry. NaaS is also building its own ecosystem around its charging services by establishing long-term partnerships with automotive OEMs, charging station operators, energy companies, and the State Grid. These collaborations expand infrastructure coverage, provide user-friendly experiences, and enhance customer loyalty.
In August 2024, NaaS announced an in-depth partnership with FAW-Volkswagen to provide smart, efficient, and convenient charging experiences for NEV owners. In September, NaaS reached a strategic collaboration with IM Motors to offer enhanced service capabilities. These partnerships highlight NaaS’s ongoing efforts to expand the ecosystem in the EV charging industry, creating a comprehensive and robust service ecosystem.
With the rapid growth of NEVs, the charging industry, as a critical supporting infrastructure, has entered a phase of accelerated expansion. As a “connector” in the charging service market, NaaS leverages AI-driven algorithms to continuously integrate resources from various industry participants and collaborate with ecosystem partners to build a mutually beneficial ecosystem. According to the latest financial report, NaaS has transitioned from the early “cash-burning” stage to a phase of refined operations, with its profitability model gradually being recognized by the market. The company is poised for large-scale profitability, supported by its wide network coverage, and its future development is highly anticipated.
