FlashEx cuts costs for profit in Q1, but growth challenges remain unresolved

On May 21, FlashEx announced its financial report for the first quarter of 2026: revenue was 935 million yuan, down 2.7% year-over-year; gross profit was 106 million yuan; operating profit was 11 million yuan, up 10% year-over-year; completed orders totaled 57.9 million.

Revenue declined slightly, while operating profit increased, showing a characteristic of rising profits without revenue growth. The company stated that AI applications reduced operating expenses, partly offsetting competitive pressures, but growth challenges remain unresolved.

Total operating expenses in the first quarter fell 18.7% year-over-year to 94.8 million yuan, which was the main driver behind the increase in operating profit. Income costs declined slightly to 829.5 million yuan, in line with the drop in revenue, and gross profit margins did not expand.

It is evident that profit improvements mainly rely on expense reduction rather than income expansion. The CFO indicated that broader application of AI within the organization contributed to cost reduction, but the sustainability of cost-cutting logic needs to be verified in future quarters.

This marks another quarter of shrinking revenue for FlashEx. In 2025, full-year company revenue was 3.992 billion yuan, down 11.9% year-over-year, and order volume decreased by about 10%. The company attributed this to intensified market competition.

Since 2025, platforms such as Meituan, JD, and Taobao Flash Purchase have leveraged ecosystem traffic and subsidies to aggressively enter instant retail, putting pressure on FlashEx. While one-to-one urgent delivery maintained service premium, it sacrificed order density and limited the scale for growth.

Despite improved operating profit, net loss in the first quarter expanded from 10.3 million yuan in the same period last year to 42.6 million yuan, indicating that non-operating items significantly dragged down net profit.

Reviewing 2025, FlashEx turned a net profit of 109 million yuan, but about 79 million yuan came from investment income, with its main business contributing less than 30%, so the foundation for profitability is not solid.

In addition, rider compensation and rewards have long accounted for over 85% of income costs. Against the backdrop of increasingly strict rights protection policies, cost rigidity is prominent. The company has a cash reserve of 859 million yuan and has extended its $30 million share buyback plan, but its main business's ability to generate cash flow remains the primary focus of the market.

FlashEx is trying to tell a new story of AI and low-altitude logistics, announcing it has become the first company in the intra-city delivery industry to open source its core CLI tool, integrating delivery capacities into AI workflows; it has also obtained strategic investment to advance large-scale drone delivery.

However, these efforts are still in early stages; drones face many uncertainties in compliance and cost and are unlikely to contribute substantial revenue in the short term.

In the first quarter, FlashEx squeezed out operating profit growth through expense reduction, demonstrating some operational flexibility.

But under the pressure from industry giants and as the instant delivery sector shifts from scaling up to improving efficiency, cost-cutting can only buy time and cannot solve the inherent growth ceiling of the model. How to reopen the channel for scale growth while maintaining differentiated positioning remains the core question FlashEx must address.

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