DiDi Global Inc. Travel Technology Co., Ltd. beat Uber in China nearly three years ago, but the start-up whose investors include former competitors UBER TECHNOLOGIES INC and Softbank Corp. is still struggling to profit from its core ride-hailing business.

In an article published this week, Chen Xi, chief executive of DiDi Global Inc., said DiDi Global Inc. lost an average of 2 per cent of the fare paid by passengers per ride-hailing service in the three months to December.

Chen Xi, who is in charge of DiDi Global Inc. 's ride-hailing business, said that although DiDi Global Inc. earns an average of 19% per order, costs, including taxes and driver incentives, account for 21% of the fare. This is the first time DiDi Global Inc. has disclosed these data. Driver rewards include subsidies to encourage drivers to use the DiDi Global Inc. app.

Chen Xi said that this state is difficult to sustain for a long time, otherwise one day it will not be able to continue normal operation because of running out of funds. However, he said that in reality, losses are still a common phenomenon in the entire ride-hailing industry.

A spokesman for DiDi Global Inc. said that according to the detailed data provided by Chen Xi, 10 per cent of the money equivalent to the fare was used for operating costs, including technical research, safety and service costs. Another 7% is used to reward drivers, and 4% is used to pay taxes and related fees online. Chen Xi provided the data in response to public curiosity.

DiDi Global Inc. Travel does not provide any comparable data in the past, so it is difficult to judge whether the company's average cost ratio has been shrinking.

Although DiDi Global Inc. dominates China's ride-hailing market, the company is still investing to attract new users and drivers. DiDi Global Inc. also invested heavily in new security measures after two female passengers were killed in the past three months.

In the IPO prospectus released this month, UBER TECHNOLOGIES INC said that the share of the company's ride-sharing service was 22% in 2018. Lyft, a smaller competitor, said in its IPO file that the percentage cut for 2018 was 26.8 per cent. Lyft went public at the end of March, and a number of other lossmaking but well-funded startups are likely to launch on the public market.

UBER TECHNOLOGIES INC and Lyft reported an operating loss of $3.03 billion last year and a net loss of $911 million last year, according to their IPO filings. DiDi Global Inc., one of China's most highly valued start-ups, has yet to disclose specific financial information.

Will Tao, an independent consultant who follows internet companies, says potential investors in DiDi Global Inc. 's trip may see a 2 per cent loss as a sign that the company's ride-hailing business is not far from break-even. However, he also said that due to the lack of more specific financial information, it is difficult to judge when DiDi Global Inc. 's travel is likely to break even.

Chen Xi said that DiDi Global Inc. has been working hard to improve management efficiency since the end of last year. He was referring to the company's staffing optimization plan and measures to cut operating expenses. DiDi Global Inc. plans to cut about 2000 jobs this year.

Based on the information in UBER TECHNOLOGIES INC's IPO file, DiDi Global Inc. 's trip was valued at $51.6 billion as of the end of December. UBER TECHNOLOGIES INC has a 15.4% stake in DiDi Global Inc., which the company abandoned after the battle for the costly Chinese market. Major investors in DiDi Global Inc. 's trip also include Softbank Corp., Apple Inc Company, BABA Group and Tencent Co., Ltd.

DiDi Global Inc. discussed the IPO issue last year, but there was no news after the passenger death.

Bingyan Wang contributed to this article.
Write to Yoko Kubota at yoko.kubota@wsj.com


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