20-F: Webus International Reports FY25 Loss Amid Strategic Shift

Webus International Limited reported a net loss of RMB12.48 million for the fiscal year ended June 30, 2025, as it continues its strategic shift from domestic to higher-margin overseas markets.

Summary

• Net loss increased significantly to RMB12,483,047 ($1,742,567) for the fiscal year ended June 30, 2025, compared to RMB4,055,592 in FY2024.
• Total revenues decreased by 22.6% to RMB35,593,055 ($4,968,599) in FY2025 from RMB45,976,421 in FY2024.
• Gross profit decreased to RMB5,900,348 ($823,657) in FY2025 from RMB6,430,323 in FY2024, but the gross profit margin improved to 16.6% from 14.0%.
• Operating expenses increased by 38.7% to RMB19,273,589 ($2,690,490) in FY2025, primarily due to higher professional service and advertising expenses.
• Net cash used in operating activities was RMB58,731,377 ($8,198,584) in FY2025, a substantial increase from RMB55,031 provided in FY2024.
• The company is undergoing a strategic shift from the domestic market to higher-margin overseas markets, particularly for packaged tour services, which had a gross margin of 20.4% in overseas markets for FY2025.
• Commuter shuttle service revenue decreased by 71.3% in FY2025 due to contract terminations with major customers and a strategic decision to downsize operations.
• Customized chartered bus service revenue decreased by 71.8% in FY2025, partly due to the integration of a portion of these services into packaged tour offerings in overseas markets.
• The company completed its initial public offering (IPO) on February 28, 2025, raising gross proceeds of RMB58,262,400 (equivalent to $8,000,000).
• Two material weaknesses in internal control over financial reporting were identified as of June 30, 2025, related to insufficient financial reporting personnel and IT general control activities.
• The 2025 Share Incentive Plan was adopted by the board on October 30, 2025, reserving 3,300,000 ordinary shares for future awards, subject to shareholder approval.
• Zhejiang Youba's HNTE certificate expired in December 2024, resulting in a higher enterprise income tax rate of 25% from January 1, 2024.

Sentiment

Score: 3

Explanation: While the company completed an IPO and is strategically shifting to higher-margin overseas markets, the significant increase in net loss, substantial negative operating cash flow, and overall revenue decline indicate poor financial performance for the period. The identified material weaknesses in internal controls and pending recovery of advance payments add to the concerns, despite some positive strategic moves.

Positives

• Gross profit margin increased to 16.6% in FY2025 from 14.0% in FY2024, driven by the strategic shift to higher-margin overseas packaged tour services.
• Overseas packaged tour service revenue increased by 8.8% in FY2025, demonstrating growth in the targeted international market segment.
• Successfully completed an initial public offering (IPO) on February 28, 2025, raising RMB58,262,400 ($8,000,000) in gross proceeds.
• Collected RMB18,281,800 of receivables from third parties as of the report date, improving liquidity.
• Recovered US$500,000 (RMB3,581,800) of other receivables in USD Coin (USDC) on October 29, 2025.
• Management believes existing cash balances and projected cash flows will provide sufficient liquidity for the next twelve months.

Negatives

• Net loss significantly increased to RMB12,483,047 ($1,742,567) in FY2025 from RMB4,055,592 in FY2024.
• Total revenues decreased by 22.6% in FY2025, indicating an overall decline in business activity.
• Net cash used in operating activities dramatically increased to RMB58,731,377 ($8,198,584) in FY2025 from RMB55,031 provided in FY2024.
• Domestic packaged tour service revenue decreased by 34.0% in FY2025, reflecting a decline in the traditional market.
• Customized chartered bus service revenue decreased by 71.8% in FY2025, with the overseas portion also decreasing by 72.7%.
• Commuter shuttle service revenue decreased by 71.3% in FY2025 due to contract terminations and downsizing, leading to negative gross profit margin for this service.
• General and administrative expenses increased by 93.9% in FY2025, primarily due to a RMB4,623,816 ($645,460) increase in professional service expenses related to IPO and strategic consulting.
• Total other income, net, decreased significantly from RMB3,365,839 in FY2024 to RMB792,852 ($110,678) in FY2025, mainly due to a decrease in government grants.
• Identified two material weaknesses in internal control over financial reporting as of June 30, 2025, posing risks to financial reporting reliability.
• Termination of market development, software development, and electric bus purchase agreements, with some advance payments still pending recovery (RMB785,000 by Dec 31, 2025, and US$2,000,000 by Feb 28, 2026, and April 30, 2026).
• Zhejiang Youba's preferential 15% HNTE tax rate expired in December 2024, increasing its tax burden to 25% from January 1, 2024.

Risks

• Global pandemics (e.g., COVID-19) could disrupt the travel industry and operations, negatively impacting business, financial condition, and results.
• Business may be negatively affected by the trend of remote working and flexible working schedules.
• Limited operating history in a competitive and rapidly evolving industry makes it difficult to evaluate prospects and manage growth.
• Incurred net losses for FY2023, FY2024, and FY2025; may not generate sufficient operating cash flows and working capital, potentially requiring additional capital.
• Growth depends on accurately predicting consumer trends and demand and successfully introducing new/improved products and services.
• Damage to reputation or brands may materially adversely affect business.
• Operations are mainly concentrated in one geographic area (Zhejiang Province, China), increasing exposure to local risks.
• Substantial customer concentration in the past, and cannot assure it won't happen again.
• Successful operation depends on cooperation with third parties (e.g., WeChat, Alipay, payment processors).
• Reliance on search engines, social networking sites, and online streaming services for user acquisition; changes in policies or pricing could limit ability to attract users.
• Increases in labor costs, oil, and natural gas prices could adversely affect projections, budgets, and revenues.
• Newly developed public transportation infrastructure may reduce demand for commuter shuttle and chartered bus services.
• Risks associated with the use or acceptance of digital assets (e.g., USDC) as payment, due to evolving regulations and potential value fluctuations.
• Substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating to the VIE structure, which could affect enforceability of contractual arrangements and financial condition.
• Reliance on contractual arrangements with VIE and Individual Registered Shareholders may not be as effective as direct ownership, and VIE shareholders may fail to perform obligations.
• Shareholders of the VIE may have conflicts of interest with the company.
• Certain terms of the Contractual Arrangements may not be enforceable under PRC laws (e.g., injunctive relief, winding up orders from arbitration).
• Contractual Arrangements may be subject to scrutiny of PRC tax authorities, potentially leading to additional tax.
• Significant liquidity risks due to VIE structure and operations in China, especially if PRC government restricts cash/asset transfers.
• Exercising option to acquire VIE equity/assets may be subject to limitations and substantial costs.
• Uncertainties with the Foreign Investment Law and its impact on VIE structure.
• As a holding company, reliance on dividends from WFOE; limitations on WFOE's ability to pay dividends could affect ability to pay holding company expenses or shareholder dividends.
• Uncertainties in using foreign currency proceeds for PRC operations due to time-consuming registration processes and capital controls.
• Changes in China's economic, political, or social conditions or government policies could have a material adverse effect.
• Uncertainties and quick changes in interpretation/enforcement of Chinese laws with little advance notice.
• Approval/requirements of CSRC or other PRC governmental authorities may be needed for future financing activities.
• Chinese government exerts substantial influence over VIE's business activities; significant regulation could adversely affect operations.
• Failure to comply with PRC regulations regarding employee stock incentive plans may lead to fines/sanctions.
• Classification as a PRC resident enterprise for tax purposes could result in unfavorable tax consequences.
• Regulatory bodies of the United States may be limited in ability to conduct investigations/inspections in China.
• HFCAA and related regulations pose risks of delisting if PCAOB cannot inspect auditor.
• Enhanced scrutiny over acquisition transactions by PRC tax authorities may negatively impact future acquisitions.
• New regulations on cybersecurity review, personal information protection, outbound data transfer may intervene or influence operations.
• Difficulties in protecting shareholder interests due to less protection under Cayman Islands law compared to U.S.
• Ordinary Shares may be thinly traded, leading to liquidity issues.
• Failure to meet applicable listing requirements could lead to delisting from Nasdaq.
• Market price of Ordinary Shares may be volatile or decline regardless of operating performance.
• Extreme stock price volatility unrelated to actual performance.
• Volatility in share price may subject the company to securities litigation.
• Broad discretion in use of IPO proceeds.
• Future issuance of additional securities may result in substantial dilution to current shareholders.
• Not likely to pay cash dividends in the foreseeable future.
• Exempt from certain provisions applicable to U.S. domestic public companies as a foreign private issuer, potentially offering less protection to investors.
• Reduced disclosure requirements as an emerging growth company.
• Increased costs as a public company, especially after ceasing to qualify as an emerging growth company.
• Management team (Zheng Nan, Zheng Jiahua) has substantial influence (74.09% ownership), potentially misaligning interests with other shareholders.
• May become a controlled company under NASDAQ rules, relying on exemptions from certain corporate governance requirements.
• Cayman Islands economic substance requirements may have an effect on business and operations.
• If securities or industry analysts do not publish research or reports about the business, or if they publish a negative report, the price of Ordinary Shares and trading volume could decline.

Future Outlook

The company plans to further integrate its platform into a comprehensive mobility ecosystem, enhance big data and AI innovation, and expand customized tour and chartered bus services globally, particularly targeting Chinese outbound tourists and overseas Chinese. It aims to improve product content innovation capabilities and geographically broaden its service coverage. The company also intends to selectively pursue strategic alliances, acquisitions, and investments. It anticipates an increase in outbound travel by PRC residents driven by the continued recovery of international mobility and rising consumer demand for overseas experiences.

Management Comments

• We continuously monitor health issues for potential impacts on our business.
• We have noted Chinese travelers shifting their preferences towards emerging demand for short-haul travel, local trips, and domestic boutique and premium accommodation experiences.
• We have introduced novel products in order to capture these emerging trends and have proactively leveraged our live streaming function to promote local attractions and activities.
• We will continue to monitor and evaluate the financial impacts on our financial condition, results of operations, and cash flows in future periods.
• We believe the key factors affecting our financial condition and results of operations include our ability to improve user experience and diversify service offerings, our ability to retain and expand our collaborations with suppliers, and our ability to control costs and expenses and enhance operational efficiency.
• We expect to achieve greater operating leverage and increase the productivity of our personnel, allowing us to acquire customers and suppliers more cost-effectively and achieve higher operational efficiency.
• We would continuously seek new growth points to improve our gross margin.
• We believe that the going concern basis of accounting is appropriate.
• We believe that we maintain a good working relationship with our employees and contract workers, and we have not experienced material labor disputes in the past.
• We believe that we will be able to obtain adequate facilities, principally through the leasing of appropriate properties, to accommodate our future expansion plans.
• We believe that the Holding Foreign Companies Accountable Act and the related regulations do not currently affect us.
• We believe we are not a PRC resident enterprise for PRC tax purposes.
• We do not believe we are obligated to apply for a cybersecurity review pursuant to the Cybersecurity Review Measures and Cyber Data Security Measure (Draft).
• We do not anticipate to transfer any user information outside of the PRC.
• We believe we would be approved by the CAC through the cybersecurity review.
• We are committed to a high standard of corporate governance.

Industry Context

The global travel industry experienced significant disruptions from the COVID-19 pandemic, leading to declines in commute and travel demand. Post-pandemic, there is an increasing demand for overseas tourism and a shift among Chinese travelers towards short-haul, local, boutique, and premium accommodation experiences. The online collective mobility service market in China is highly fragmented, with competition from both self-operated and deal-making facilitation platforms. The expansion of public transportation infrastructure in China, such as subways and high-speed trains, poses increased competition for commuter shuttle and chartered bus services. Business travel is increasingly driven by technology, necessitating continuous innovation in digital platforms.

Comparison to Industry Standards

• Our tailored packages are offered at competitive prices compared to the prevailing market rate.
• We provide more customization options and personalized adjustments with better, in-depth, and more suitable travel experiences compared to traditional travel agencies and online group tour platforms.
• Self-operated platforms like Youba Tech, which focus on real-time travel data analytics for efficiency and safety, may have a competitive edge over deal-making facilitation platforms that require less assets and fleet management but may lack consistent service quality and safety.

Management Changes

Corporate Governance

Legal Proceedings

• Currently not a party to any material legal or administrative proceedings.

Related Party Transactions

• Loans from Zheng Jiahua (Chairman): RMB300,000 in FY2024 and RMB3,030,000 in FY2025.
• Repayment of loans to Zheng Jiahua: RMB300,000 in FY2024 and RMB3,030,000 in FY2025.
• Loans to Zheng Jiahua: RMB400,000 in FY2024 and RMB500,000 in FY2025.
• Loans to Zheng Nan (CEO): RMB6,300,000 in FY2025.
• Collection from loans to Zheng Jiahua: RMB500,000 in FY2025.
• Collection from loans to Zheng Nan: RMB400,000 in FY2024 and RMB6,300,000 in FY2025.
• Amount received on behalf of the Group by Zheng Nan: RMB111,341 in FY2024 and RMB191,820 in FY2025.
• Collection of accounts receivable on behalf of the Group by Zheng Nan: RMB223,316 in FY2025.
• Information marketing services procured from Chongqing Zijin Huangcheng (entity controlled by Zheng Nan's immediate family): RMB255,000 in FY2025.
• Amounts due to Zheng Nan (travel service payments received through Zelle): RMB111,341 as of June 30, 2024, and RMB79,845 as of June 30, 2025.
• Prepayments to Chongqing Zijin Huangcheng for marketing services: RMB200,000 as of June 30, 2025.

Stakeholder Impact

• Shareholders face potential dilution from future capital raises and risks associated with the VIE structure, Chinese regulatory environment, and potential delisting under the HFCAA. The significant net loss and negative operating cash flow could negatively impact share price.
• Employees are offered a new share incentive plan to enhance retention and motivation. However, strategic shifts and downsizing in certain service areas may impact some employees.
• Customers may benefit from improved user experience, diversified service offerings, and a focus on higher-quality overseas travel solutions, but domestic customers in certain segments might see reduced service availability.
• Suppliers are expected to continue strategic collaborations as the company expands its global service coverage.
• Creditors are exposed to increased short-term borrowings, though the company states it can renew these within credit limits. Company assets (building, real estate) are pledged as security for loans.

Next Steps

• Further integrate the platform into a comprehensive mobility ecosystem, building vertical and horizontal integrations.
• Enhance Big Data and AI innovation, continuing to attract, train, and retain technology and R&D talent.
• Expand customized tour and chartered bus services globally, focusing on Chinese outbound tourists and overseas Chinese.
• Increase Wetour brand exposure and popularity on new media channels and through precise marketing at railway stations and airport terminals.
• Build a one-stop customized chartered bus platform for international travel, integrating air travel, car service, lodging, and touring.
• Expand partnerships with major online travel agencies such as Ctrip, Fliggy, and Expedia.
• Provide more diversified international travel solutions for Chinese corporate customers by cooperating with international and local travel agencies, high-end membership organizations, bank wealth management departments, and international airlines.
• Improve product content innovation capabilities, launching diversified content formats (images, short videos, live broadcasts) and encouraging user-generated content.
• Geographically broaden service coverage by maintaining strategic collaborations with online travel platforms and increasing online marketing.
• Selectively seek strategic alliances, acquisitions, and investments, particularly in customized travel service brands and content providers.
• Address material weaknesses in internal control over financial reporting by establishing clear roles, hiring consultants, streamlining reporting, and strengthening IT controls.
• Seek shareholder approval for the 2025 Share Incentive Plan.
• Recover the remaining RMB785,000 from a market development agreement by December 31, 2025.
• Recover the remaining US$2,000,000 from an electric bus purchase agreement by February 28, 2026, and April 30, 2026.
• Youba Tech to repay additional short-term borrowing of RMB3,000,000 by June 23, 2026.
• Youba Tech to repay additional short-term borrowing of RMB9,500,000 by September 3, 2026.
• Hangzhou Shunxing to complete building and parking space purchases.

Key Dates

Recommendation

The company's financial performance for FY2025 shows a significant increase in net loss and a substantial negative operating cash flow, indicating deteriorating financial health. While the strategic shift to higher-margin overseas markets is a positive long-term move, it has not yet yielded overall revenue growth or profitability. The identified material weaknesses in internal controls raise concerns about financial reporting reliability. Furthermore, the inherent risks of the VIE structure, the evolving and uncertain Chinese regulatory environment, and the potential for delisting under the HFCAA add considerable uncertainty and risk to the investment. These factors collectively suggest a challenging outlook and warrant a 'sell' recommendation for seasoned investors.

Keywords

Mobility-as-a-Service, MaaS, SEC Filing, 20-F, Webus International, China, Cayman Islands, Travel, Transportation, Packaged Tour, Chartered Bus, Commuter Shuttle, VIE, Variable Interest Entity, IPO, Nasdaq, Financial Results, Net Loss, Revenue, Gross Margin, Operating Expenses, Cybersecurity, Data Privacy, PRC Regulations, Foreign Investment Law, HFCAA, PCAOB, Internal Controls, Material Weakness, Strategic Shift, Overseas Market, Digital Assets, USDC, Share Incentive Plan