Ucommune International - An Intelligent Co-working Office Space Manager Empowering Your Business Growth In Asia
Ucommune International (Nasdaq: UK) is a leading coworking community operator in China, transforming older buildings into agile office spaces. The company has adopted a defensively positioned asset-light business model amid COVID-19, enabling it to reduce costs while improving margins. Ucommune provides one-stop services for SMEs across various sectors, supporting their growth with nearly 58,000 workstations. Key financial highlights include net revenues of RMB 598.5 million for the first nine months of 2020, with a narrowed net loss of RMB 358.8 million. The company expects revenues between RMB 850 million to RMB 870 million for 2020.
- Transition to an asset-light business model mitigated COVID-19 impacts, leading to marginal revenue declines.
- Net revenues for the first nine months of 2020 were RMB 598.5 million, with a narrower net loss of RMB 358.8 million.
- Significant growth in managed office space and workstations, reaching approximately 58,000.
- Increase in revenues from the asset-light model by 79% year-over-year.
- Total revenue declined by 32% year-over-year, primarily due to pandemic effects.
- Marketing and branding service revenues dropped by 49% due to economic uncertainty.
- Continued operating losses, with an operating loss of RMB 227.9 million.
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
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
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
Workspace Solutions segment represented
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
Operating loss margin was
EBITDA loss margin was
Net loss in the first nine months of 2020 was RMB358.8 million (US
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
Cash, cash equivalents and restricted cash were RMB112.4 million (US
Net cash used in operating activities decreased by
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
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
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
Specifically, revenues from Workspace Membership services were RMB346.2 million (US
Total costs of revenues decreased by
Operating loss was RMB227.9 million (US
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
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
On Feb. 3, 2021, the Company announced the closing of
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