Chinese e-commerce and fashion platform Mogu Inc., which has reportedly carried out substantial layoffs recently, announced its financial report for the first half of fiscal year 2022. The report suggests that as of September 30, 2021, its revenue totaled 169.5 million yuan, down 30.8% year-on-year.
The firm’s net loss was 411.9 million yuan, compared to only 182.6 million yuan last year. If not calculated by US GAAP, the net loss was 69.9 million yuan, while that of last year was only 25.7 million yuan. The total transaction volume reached 5.454 billion yuan, down 12.5% year-on-year, while that of livestreaming increased to 4.972 billion yuan, up 8.5% year-on-year.
R&D costs decreased from 56.7 million yuan last year to 45.2 million yuan, down by 20.2%, and general costs and administration costs decreased by 12.8% to 42.1 million yuan, from 48.2 million yuan in the same period last year. Mogu Inc. explained the reduction was mainly due to the decrease in salary and rent, and the return of share compensation was because of staff resignations and lower allowance for doubtful receivables.
On December 21, the day before the firm released its financial report, many users said on Maimai, a China-based career and social-networking platform, that Mogu Inc. would lay off employees on a large scale. After the layoffs, the technical department would only retain 30 staff members, representing an 80% reduction. Operations and maintenance department and product positions only have three and two staff members, respectively. This is the second round of layoffs in Mogu Inc. since April 2020, when 140 people were laid off.
On Zhihu, a Chinese question-and-answer website, users claiming to be insiders of Mogu Inc. said the staff reduction is mainly for technical personnel. The firm’s operations have now been uploaded in the cloud, the core technology is hardly outsourced, and meanwhile, R&D costs a lot. This is why adjustments were made in the team size of technical department, and only a few staff members have been kept for system maintenance.
When layoffs were reported last year, Mogu Inc. founder Chen Qi explained that the staff reduction as a normal business structure adjustment, aiming to gather resources, increase revenue and reduce expenditure. Mogu Inc. now is committed to its e-commerce livestreaming business, and is driven by operational activities in stead of traffic procurement.
The financial report also indicates that Mogu Inc. plans to consolidate the business of Hangzhou Ruisha Technology Co., Ltd. Chen Qi again pointed out the significance of acquiring this company. “We will focus on expanding and utilizing the ability and experience of Mogu Inc. to provide services for businesses for years, and provide effective solutions for brands in different channels to achieve greater value growth.”