F-1/A: Boqii Holding Limited Files Amendment No. 1 to Form F-1 for Resale of 2,000,000 ADSs

Boqii Holding Limited files an amendment to its Form F-1 registration statement for the resale of 2,000,000 American Depositary Shares by selling shareholders to enhance liquidity.

Summary

• Boqii Holding Limited has filed Amendment No. 1 to Form F-1, concerning the resale of 2,000,000 American Depositary Shares (ADSs) by the selling shareholders.
• Each ADS represents 150 Class A ordinary shares, totaling 300,000,000 Class A ordinary shares being offered.
• The selling shareholders aim to enhance liquidity in the public trading market for Boqii's equity securities in the United States.
• Boqii will not receive any proceeds from the sale of these ADSs.
• The ADSs are currently traded on the NYSE American under the symbol BQ, with the last reported closing price on May 7, 2025, at $2.25.
• Boqii is identified as an emerging growth company and may take advantage of certain exemptions from reporting requirements.
• Investors are cautioned that they are purchasing securities of a Cayman Islands holding company, Boqii Holding Limited, and not the securities of its subsidiaries or VIEs operating in China.
• The company's operations in China are conducted through PRC subsidiaries and VIEs, which involves unique risks due to the VIE structure and potential regulatory changes in China.
• The document highlights risks associated with doing business in China, including legal, political, and economic factors, as well as the potential for Chinese regulatory authorities to intervene in the company's operations.
• The document also mentions the Holding Foreign Companies Accountable Act (HFCA Act) and the potential for Boqii's securities to be delisted if the company's auditor cannot be fully inspected.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the company highlights cost-saving measures and progress in private label development, it also acknowledges a decrease in total revenues and net loss. The regulatory risks and uncertainties associated with operating in China add a layer of concern.

Positives

• The selling shareholders are aiming to improve liquidity in the public trading market.
• Boqii is taking advantage of exemptions available to emerging growth companies.
• The company's auditor, Assentsure PAC, is headquartered in Singapore and has been inspected by the PCAOB on a regular basis.
• The company recorded net loss of approximately RMB106.0 million and RMB68.9 million (US$9.5 million) in the years ended March 31, 2023 and 2024, respectively.
• The company recorded net loss of RMB37.7 million and RMB29.6 million (US$4.2 million) for the six months ended September 30, 2023 and 2024, respectively.

Negatives

• Investors are purchasing securities of a Cayman Islands holding company, not the Chinese operating companies.
• The VIE structure involves unique risks, and Chinese regulatory authorities could disallow this structure.
• There are significant legal and operational risks associated with having substantially all of the company's operations in China.
• The Chinese government may intervene or influence the company's operations.
• The company's securities may be prohibited from trading if its auditor cannot be fully inspected.
• There are limitations on the ability of the company, its subsidiaries, or the consolidated VIEs to transfer cash out of China.
• The company's total net revenues decreased by 35.9% from RMB389.4 million for the six months ended September 30, 2023 to RMB249.7 million (US$35.6 million) for the six months ended September 30, 2024.

Risks

• The VIE structure poses risks to U.S. investors that are not present in other organizational structures.
• Exerting control through contractual arrangements may be less effective than direct equity ownership.
• The Chinese government could determine that the agreements establishing the VIE structure do not comply with Chinese law and regulations.
• Boqii's securities may be prohibited from trading if its auditor cannot be fully inspected.
• There are limitations on the ability of Boqii, its subsidiaries, or the consolidated VIEs to transfer cash.
• The company may not pay cash dividends in the foreseeable future.
• Investing in Boqii's securities involves a high degree of risk.

Future Outlook

The company plans to continue investing in growing content, improving user experiences, and enriching a pet-focused ecosystem.

Management Comments

• Mr. Hao Liang, Boqiis Founder, Chairman and Chief Executive Officer commented, Despite persistently pessimistic social expectations and increasingly weak consumption in the first half of fiscal 2025, we have demonstrated our resilience.
• Our private labels are riding a wave of thriving development, showing the effectiveness of our strategic focus on that area.
• The number of SKUs for our private labels has increased from 3,088 in the first half of fiscal 2024 to 3,546 in the firt half of fiscal 2025, the revenue share of our private labels increased from 27.5% to 29.0%, and we also saw the gross margin of our private labels rose by 330 basis points from 29.9% to 33.2%.
• This gives us a strong foundation and we remain energized for the future.
• Ms. Yingzhi (Lisa) Tang, Boqiis Co-Founder, Co-CEO and CFO commented, Besides fostering the progress of our private labels, we have implemented cost-saving measures and enhanced efficiency by optimizing our supply chain operations and simplifying our organizational hierarchy in the first half of fiscal 2025.
• The implementation of these measures has resulted in a reduction of our fulfillment expenses as a percentage of total revenue, from 8.9% in the first half of fiscal 2024 to 7.5% in the first half of fiscal 2025.
• This reduction has underpinned a positive shift in our post-fulfillment profit margin, which saw an increase from 11.2% to 13.3%.
• Furthermore, there has been a notable decrease in our sales and marketing expenses by 21.3% and our general and administrative expenses by 22.5%, when compared to the corresponding period in fiscal 2024.
• These adjustments have collectively contributed to a 21.6% decrease in our net loss.
• We believe the strengthening of our financial results affirms that our business approach and strategic initiatives are effectively aligned with our goals, and we are committed to generating ongoing value for our consumers and investors alike in the time ahead.

Industry Context

The announcement reflects the ongoing challenges and regulatory scrutiny faced by Chinese companies listed in the U.S., particularly those operating under VIE structures. It also highlights the competitive landscape of the pet industry in China and the importance of adapting to changing consumer preferences.

Comparison to Industry Standards

• It's difficult to directly compare Boqii's results to global benchmarks without specific competitor data.
• However, companies like Chewy (U.S.) and Zooplus (Europe) are major players in the online pet retail market.
• Chewy, for example, focuses on customer service and a wide product selection, while Zooplus emphasizes competitive pricing and convenience.
• Boqii's focus on content and community building differentiates it from some of these players.
• However, the regulatory risks associated with operating in China and the VIE structure are unique challenges that these other companies do not face.

Stakeholder Impact

• Shareholders may experience volatility in the stock price due to market factors and regulatory uncertainties.
• Employees may be affected by cost-saving measures and organizational restructuring.
• Customers may see changes in product offerings and service quality as the company focuses on profitability.
• Brand partners may be impacted by the company's strategic shift towards private label products.

Key Dates

Keywords

Boqii Holding Limited, American Depositary Shares, ADSs, resale, selling shareholders, liquidity, emerging growth company, VIE structure, China, HFCA Act, PCAOB, financial risk