Q1 2020 TuanChe Ltd Earnings Call
After prepared remarks by the management team there will be question answer session. Today's conference call is being recorded I would now like to turn the conference call over to your host today Ms. Cynthia Tan IR director of the company. Please go ahead man.
Thank you and Hello, everyone. Welcome to control first quarter 2020, unencumbered pool, we have released our name itself or the other guy I'm not available on <unk> website at <unk> and his wife said if it if we continue to never got the discussion today will contain forward looking statements made under the safe Harbor.
Vision of the U.S. Cod, it's a good litigation Reform Act liking that's why.
Forward looking statements involve inherent risks and uncertainties I thought I figure results, maybe materially different from the bills expressed today for the information regarding does and other big uncertainty is included in our earnings release and I would just you show statement filed with the FTC punch. It does not assume any obligation to update and before looking.
Statements, except as required by law.
Hey, you're here from Mr. weight, when the company's Chief Executive Officer will provide an reveal our growth strategies and business development will be followed by Mr. Tracy Bonnie the Companys Deputy Chief Financial Officer will provide additional details on the Companys financial results and discuss the financial outlook following management's prepared remarks.
Well open up the called the question [noise].
But that's that I wouldn't like to trying to go over to Alfie almost completely. Please go ahead sir.
Hello, and thanks, everyone for joining us today.
Fourth quarter, and it's going to earnings core in the fourth quarter old conduit punky.
Weeks tourists.
Because of the challenges stemming from local either like Q outbreak.
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Hi, I'm sure you're over your net revenue decline.
A widening that law.
English pool.
With with swiftly adjusted I will appreciate me to the evolving demands.
The challenging environment.
<unk> this quarter with focus.
However.
Several key.
For arch is including.
For <unk>.
<unk> Truing.
Hello, and aseptic off our employees or the customer.
Second.
Accelerating our online strategy.
We're forming a relationship with Baidu your job, but do you.
<unk> information service ATP in the old.
Bill logical.
I mean, our collaboration.
With T. more older.
The completing the acquisition all loan yet international.
On the FERC.
Managing our cost structure to maintain sufficient.
Cash balance under the liquidity.
Let's take a look no after the fourth quarter remarkable our business segments.
Wow or for providing.
Additional detail on our strategic and operational priorities.
Sure.
Well offline marketing services.
We had will expand in press release.
Hi, all tool today, all pulse concern.
Oh public health and they all kind of seeing a.
Accordingly.
With our national and local regulatory.
Got it aligns.
Okay, Great Lunching prevention and control.
Most of older show.
They show promotional event.
What's her son data for both but both February and March due to that kobin align to outbreak.
Our team now.
95%.
Your over your revenue decline for offline marketing services.
<unk> approval would help fuel offline event.
For the best thing Trust or public health.
In order to afford to support the government.
Got it.
Guidance on the endemic prevention under control.
That's being saved.
Please.
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Next thing for me as a complete the 19 up all the break.
Sadly five.
Under the Chinese government.
Okay, the toward relax prevented preventative control males.
Oh offline business.
Began to steady steadily recover.
For a lot.
Good teachers.
Perspective.
Just to the pays off our business expansion, while staying committed immediately to enhancing I will call older show business.
With a focus on generating high wise to ensure a healthy margin.
Under 10 level growth for our business.
By leveraging our deep inside.
Automotive transactions.
Further develop I will compromise, though they show promotional events boys auto dealer and the OEM.
Helping them further improve.
The customer experience.
Arkon lately leading to improved.
So its conversion rate.
Increased.
One of the well Monotype position all fall off their customer bases.
Next.
Let me move onto our girls mutual aid Hill in virtual dealership, an online marketing services.
In the fourth quarter of 20 to 20.
We made encouraging.
Progress in advancing.
Our online business Inglis falls to the complete the 19 outbreak.
Recording revenues Oh.
3.7 milling RMP.
Or virtual dealership and online marketing services.
Cruising Oh.
12.3% year over year.
Compared to two general.
Consumer goods.
Purchasing decision surrounding a car is obviously a much more complex and up protected.
<unk> percent due to the higher costs and the longer life cycles involved.
This makes.
It's challenging fortna, although transaction to be down completely through online channels.
Such a combination of online.
First structure and Oh flying capabilities.
Good to go to the successful successful online auto cells.
Our poll for all flying present process and Oh.
Expertise in data.
Analytics.
Position.
Position us well not only become appear in the auto sales industry, but potentially a driving force.
He was shaping the automobile buhr retire or the title Len Netscape altogether.
In January put their 20 reformed up partnership with bad wheel job battles information service ATP being the automobile.
Well, it's cool.
Sure. This partnership we won't be able to combine by doing tremendous network traffic and the boss to your surveys.
Your job automobile.
Because it ecosystem.
With our strong and extensive relationship with Oh, yes on the dealer.
Well I can.
Accumulated a expertise and the data.
In customer transaction [noise].
We also continue order.
We're making progress on our collaboration with key more auto.
While.
Oh, well off line events will affected by the pandemic.
The captured as the opportunities.
Presented by the significant the increase in online traffic during the endemic period.
On the proactively launched online live streaming although shows.
If they show promotion events on T. Marlatt Liam.
Leveraging our.
Expertise in Penn texture.
Flies, although itself and the marketing in addition to our nationwide the sales network, we will ever to offer our customer well stop purchase services.
And Sim lists some buying online via car connection with offline vehicle pick up as far as attractive promotion discount.
Furthermore, with complete completed the acquisition of loan yet.
The National limited, a leading social CRM Hello system provider for China automotive industry.
Further enhancing our kept capability to empower OEM and the dealer to reach customers more a function effectively.
Bisha eventually.
[noise] aside from developing our online strategist.
In response to them material.
Impact to offer that Covina 19.
Pandemic <unk>.
We implemented a layer to adjust the pace of our operation <unk> expansion on the convert conserve the fotis.
[noise] such as far as well.
Arrangements and scaling back I will.
Crude recruitment budget and the employee size and the May resort to argue a cost cutting mayor Earth.
For the outbreak awful probably the 19 under its impact to persist.
I should also note that when our offline active activity if was suspended.
The viral Casa <unk>.
Associated with our.
Daniel Santos and a customer acquisition will also significantly reduced.
I was our of our culture potential Mayer under reduced viable.
Oh I.
Our operating expense expenses.
War.
61.8 milling I M b during the fourth quarter.
Decline.
47% year over year.
In summary.
During the first quarter, we're firmly focused on.
Executing I will own lives treated and low cost containment.
While <unk> or <unk>.
Oh, the causing the tariff and the safety of our customer and the employees.
The actions we took in the first quarter reflected our ability to respond quickly and our ability to execute.
While the covered the 19 outbreak.
Prevented a significant challenges it has also accelerated to [noise].
The ongoing some consumer.
Transition.
Toward online channels.
We're on the continued to be.
We are positioned to take full advantage, although this shift.
Further developing our omni channel initiative.
Going forward, we will continue to focus on effectively.
Leveraging our offline operations and applying our.
Expertise.
Facilitating.
Although transactions online.
So a hybrid brick and mortar and online business model.
I was trying to provide our customer with both the security and a quality.
I've got a customer.
So then purchasing in store in person as well as the convenience of cost them a customized.
Correct.
Expect from online shopping.
Lastly.
I'm pleased to to introduce our that's okay.
CFO Mr. you try and she Ronnie he was our financial controller since all Burke.
And the United Kingdom.
The only if indepth knowledge and the Ics.
And so if tariff incorporate accounting on the financial reporting.
Makes him a accelerating the twice for this important their goal and the we are confident.
That he's got a.
Effectively here for those trends than on our finance function.
No I welcome this core or virtual Ronnie for a closer look at our financial performance in the fourth quarter.
Thank you for the introduction Mr., Wang and Hello, everyone. Thanks for joining us I'm very excited I'm privileged to begin my new role with the company I'm confident in our ability to navigate through this challenging period, while at the same time continued laying the foundation for omni channel approach.
To achieving long term growth.
Please note that own member States is in my following remarks are eating RMB times.
Unless otherwise noted.
Now I'd like to work through our first quarter Twentytwenty financial results.
[noise], our total revenues in the first quarter were 9.7 million RMB decreasing 92.1 cents from 122.
Point 9 million RMB in the same period last year.
This was a result of the Atlas impacts of the Kobin learning seem pandemic and the sluggish Chinese economy.
The decrease was partially offset by the steady growth of merchant dealership and online marketing services.
Materially and negatively impacted by the suspension of older shows and special promotion Vince should you Didnt February and March of Twentytwenty.
Our offline marketing services.
Revenues generated from auto shows in the first quarter of Twentytwenty decreased by 95.2% to 5.7 million RMB from 100, an 18.8 million RMB in prior year period.
Revenues generated from special promotion humans in the first quarter of 20 to 24.3 million RMB compared with point 8 million RMB prior year period.
Revenues from virtually dealership online marketing services and others reached 3.7 million RMB during the first quarter of Twentytwenty compared with 3.3 million RMB in the prior year prior year period.
Primarily due to our continuous online marketing services expansion and revenue contribution from the company's completion of acquisition of long is international limited on generated surgeons.
[noise] Twentytwenty.
Our gross profit in the first quarter was 5.7 million RMB decreasing.
93.6% year over year from 88.9 million RMB in conjunction with revenue declines.
Gross margin decreased to 58.6% from 72.4% in the same period last year.
In the first quarter setting a marketing expenses decreased two.
31.7 million RMB from 86.1 million R&D in the same period last year, primarily due to the decrease in stock compensation I'm promotion expenses, mainly resulted from fewer offline events held.
General General and administrative expenses increased to 24.3 million RMB from 20 to 22.9 million RMB in the same period last year largely due to the increase.
You can comment Ization [noise].
Research and development expenses increased to 8.6 million RMB from 7.5 million RMB in the same period last year, primarily due to increased.
Hi counts as a result of the company's online or priests expansion for future development. Consequently, our loss from continuing operations was 59.
But in RMB in the first quarter compared with 27.6 million RMB in the same.
In the same period last year.
Cruising the effects of share based compensation expenses and fair value loss of warrants.
The adjusted net loss attributable to the company's shareholders was 51.9 million RMB into first quarter compared with 15.5 million RMB in the same period last year.
Adjusted basic and diluted net loss per ordinary share we're both.
0.17, RMB in the first quarter compared with point all five RMB in the same period last year.
Adjusted EBITDA was a loss of 50.7 million RMB in the first quarter compared with a loss of 17.7 million RMB in the same pure Josh.
Now turning to our balance sheet.
At the end of March Twentytwenty wed cash and cash equivalents.
Time deposits and short term investments of 205.2 million RMB.
For the second quarter of Twentytwenty, we expect our net revenues to be between approximately 47 million RMB and.
52 million RMB, representing an eight year over year approximate decrease of 76.9% to 74.4% mainly due to declines of the number of offline men, including auto shows and promotion events in the second quarter of Twentytwenty.
Compared with prior periods as a result of the Colby 19 pandemic, although we're seeing a gradual recovery opera.
Offline Vince in second quarter.
This forecast reflects the company's current and preliminary permissible luminary views on the market operational conditions as well as the influence of the coming Onstream pandemic, which are subject to change.
This concludes our prepared remarks for today operator, we're now ready to take questions. Thank you.
[noise] [noise], we will now begin the question and answer session to ask a question Human Press Star then one when you're Touchtone phone if you're using these speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then too.
Yes.
For the benefit of all participants on today's call. If you wish to ask a question to management in Chinese. Please immediately repeat your question in English.
This time, we will pause momentarily to assemble a roster.
Our first question comes from Lora Lu from Stonestreet Group. Please go ahead.
<unk>.
Hi, Good morning, guys I'm. So a couple of question like can you just share with us more updates on the the carbon situation of the our market and also the impact of this corner buyers.
No problem piece, let me translate to.
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On the social desolate.
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These are good you the corner Fleischer Dochula cohort takes local to the portal.
In the first quarter, China automotive systems declined by 42.5% year on year with passenger cost that was further declined by 45 come forth is that mainly due to the extensive quentin measures in responding to the complete now combined make this has resulted in consumer postponing their vehicle purchase.
Activities.
Oh, there's only a problem you though is in many automatic seems and helping me. So for now your phone BOMA upon homes for for the lead to so definitely Chen will goodies in his will Oh I'm books choosing she's on several dozen from.
Instead of only two tortured on the Philadelphia textured older people don't go to she says I don't Firstly, Oh, yeah. Some yet another I mean your since the hub ambitiously now will.
Hello, English I don't know FLIR Amplivue, that's you wish ideal up I'm here are there a little South Korea, yet on the if I'm not send out about Ritchie <unk>.
As there is no new pandemic cases reported in most domestic weekend and the government is gradually easing the containment measures coupled with a lot of newly launched auto auto market stimulus policy in various weekend.
Domestic auto sales are grappling with covering in China market. The total car transaction number in China has seen a year over year, 4.4% growth I'm looking from 5% wealth.
Increased respectively in April and May.
While the passenger car sales still style Luckily declined by 2.6% in April but it also rebounded in by 7% in May.
Oh sure you stores are now on the full isn't tasha since our IPO winner pressure to the hopeful well not before some teaching to have budgeting CMP Honda.
On the rule staging a thinking nickel loosens fashion outlets seem to do the one that being the Insulet you should get going for living so tell the gotcha that allows them to which anything starting in may our offline business is also gradually recovering in some regions. However, we do phase.
So look to come and certainty in terms of the pace of the recovery.
Due to recent new Cobank Nice NK. This report to engine in Beijing area.
We cut that this will continue give rise to uncertainties affecting becomes operational and financial performance.
Should yield quizzle that seemed will not a silicon cookie. The tradition walk you can go you thinking then kincardine well, but you will need to wonder how you can do when you. The so he can handle her she used again.
Hmm I program in returning to normal operations.
We'll continue to the problem on the specific situation with guarding the pandemic in different regions.
We will continue to monitor the degree and duration of the macro economic impact I got polemic going forward.
Oh, sorry, there's a component of I'm in the U.N., which actually is that why don't you handle that Dallas and was on a well millicom D cell phones for could influence on the yeah. We signed the junkie sitting with a large number and just your are feeling just your Hannibal.
On our cost control side, well our offline update this I would dilute the variable costs associated with our value on sales and customer acquisition also deal Accordingly, the Red Hawk wasn't next month, it's mostly related to stop salaries.
Oh, well individually each and other telecom well then I just for sure telecom quote on the profile of also seriously and fuel to the she's out I'm Uh huh.
So again just to use Oh, so young automobile mall in general what teaching sushi orangeade, well, Montana. She's just how did you just how should you ended or some other exposure.
As we face the challenge dropped by that pandemic, we implement it well implemented measure to adjust the pace of operation expansion and direction, Oh, well concerned obviously, including for long arrangement governed by our recruitment budget and employee side, maybe still to other cost cutting measures if the I'll pick up.
My team and its impact because they are after that.
Does that answer your question Mark.
Yeah, that's great and I'm just having another question. He also provides some more details regarding the Dalai strategy, especially in response to the at the corporate banking.
Okay. Please wait let me try but perhaps always ask if he had punch promotion bill tissue can bring to the hegemon King Kong no one vessel chunky and whether you could put I'm trying to initially.
She was on the older put on Danaos Thunder Formula you go sure.
Well then.
You know for sure has actually its electricity, it's hard to understand how you are you did a woman who by the will do that your job. Yeah. There was a battle that she's hook feeling you. The political so she made hunting that's another kind of level Oh strategy in response to the pandemic isn't mainly to proactively a fan out among business in the first call.
Uh huh with from a strategic partnership with by the real job, which is by those information service App in the automobile article.
No one a woman so they're going public was looking for doctrine, we'll muddle a global Tula you for your Palogic border to that's actually until athlete, but then don't seem to us in Tempe, a little warm as I said had hungry and why you saw the Tanya the Chile starts all she was on Sean hunting why you guys seem washer.
We also deep further deepen our cooperation with chemo was how about we have launched a number of new online product such as online live streaming special promotion events on Pmall life, and leveraging our years of solid <unk> backlog in offline sales and marketing to build a new encompass <unk> model for marketing there.
Online.
Leave all man woman.
If you do a teenager, the Latin American girl Townhome the.
Additionally, other to the hoping to hook.
Pardon the forget there's also the hot and just you know a soundings article a you will you use that told us that she's appears open about everything was up a bundle deals all go harder than voluntary from what you are sufficient. So yes, you got together to how do you.
In addition to that we completed the mergers and acquisitions with long yet in the first quarter of Twentytwenty.
Oh, yes for Estore, social see I'm system can hop our dealers better track, that's definitely uptake online light through our Lifestride. My other shows an increase conversion rate when customers are unable to visit the dealer stores doing a pandemic periods.
Does that answer your question mother.
Yeah, that's very helpful. I think that's all my questions. Thank you.
Thank you Laura.
Operator next question. Please next question comes from Jack Vander ARD from Maxim Group. Please go ahead.
Yes, Hello, Hello, Hope you all healthy in well just want to say welcoming congrats to Toronto in her new role see it bodes well.
Couple of questions from me, Yes, no problem couple questions for me.
I'll start with.
I guess provide allied detailing helpful color of the macro environment. So I'm going to start for with Q1 revenues I'm just because long I was explicitly mentioned that as a contributor.
Are you able to provide an explicit contribution of revenue were of rough estimate of what long I actually contributed to the quarter.
Oh, Please let me try it looks like I don't you don't even will give you condition.
Okay.
Hello, and thank you and.
We're not.
Ready to disclose.
In detail Loneliest isolated revenues got figure, but we can tell you that it contributed to our first quarter's revenue.
Maps and ER each will come to continue to be a steady growth to the companys total revenue stream.
Just a question.
Yes, it's fair enough and then as a follow up I was a couple more questions.
If I look at your two to revenue guidance you know it implies another large decline year over year, no surprise, but yeah, I I'm positively surprised by that the decline is far less severe than I, then I was expecting set deposit surprise its since the second quarter two.
Let me just finished.
Is there any preliminary data points you could share maybe in terms of how sales have trended arnie on a weekly basis throughout the quarter, maybe from like early April.
Through through May through the end of June is there anything you could share I'm, just kind of the trend of sales, what you've seen and where there any audio events offline auto shows hosted in June.
Oh, Please let me translate first.
Hi, someone decides to do.
Hello, Jack for your question.
Our April revenue was relatively slow.
Affected by that endemic but for May and June we are steadily recovering and we hosted an a number of our two shows in promotion special promotional events in both May and June.
That's the well asphalt weekly.
Change, we us Swiss well well at all I can tell you is that.
We are seeing.
Steady growth each week.
And that's also in conjunction with the macro.
Ultimate beer industry as earlier mentioned by Mr. When as we are seeing rig rebounding figures for the macro automobile industry.
Yes for your further referenced that would be in April that will be up 4.5% rebound and for may there'll be a 14.5%.
Market transaction, we back that the generator is yet to come out and our recovery trend is like you can use that as a reference data at the as your question.
Sure just to clarify.
Those those data points for April May you just provided.
Is that in terms of the industry or is that in terms of Twond Chase specifically.
That would be that total time, not automobile transaction data that will be that for the industry.
Okay got that's helpful.
And then.
Okay and follow up here.
Thats been getting ahead of myself.
But if we were to assume China's overall economic and in auto environment returns to a healthier normalized consistent level.
Are you able to speak to maybe how many auto show events in kind of what level of potential revenues, you think could be achieved realistically in 2021.
Well I'm trying to get out is do you expect revenue to kind of grow up the 2018 base for for 2021 or would you expect it.
The overall trajectory of revenues to kind of be be lower given the 2020.
Difficult environment.
Let me translate for us.
Hi, Jeff.
The way would take the question.
Wilmington, then if our tranches.
Our unions legal settlements entities.
You cannot provide any.
Forward looking statement regarding the 2021.
Daniel we don't even provide an annual forecast right now.
Yes. Thank you.
Sure good leasing some of those at all.
Sure Hey look on that would you fundamental jeopardize the national rollout will have handled wonderful.
As you can also understand.
Like just like in United States.
The China pandemic is actually much more ease right now, but still we still been an expanding vaccine coming out right like right away.
Just on for John John would you give on Miller Beshir news on the heels, Louisiana food how do on deal. What you did was actually clearly Joe yes, because there are huge uncertainties regarding the Pandemics development like just we without the pandemic is under control in all around China, but we have lots of new cases recently enjoy.
And in Beijing and that will.
Have some really material impact on our business.
Josh.
Our union to the each enclosure you share.
Now, let me accretive on harsher two usual.
And along the yield gleeful interchange on video please.
Yes, we may have little harder casual children are you doing I would argue by entering into detail.
If the pandemic is under control for the year of 2021, then we'll expect.
Business, especially on offline promotion events and offline, although shows will actually recover.
From the Twentytwenty current situation, but we still don't have and the like we don't have we cannot provide any comparison to the year Oftwenty 18, or 2019, because does that would be a totally different market situation back then.
I'll just ask your question Jack.
Yes, that's very helpful and I appreciate you.
Can you show with my question is helpful. As it could be I understand we're very early on.
And then sorry, just one more question kind of bigger picture.
In terms of the strategic value proposition.
Historically, not twangy has on average I believe help consumers save some are a little over 7% or so on average.
The purchase price when when consumers purchasing vehicle at one Jay you again versus say a third party dealer non affiliated dealer.
Given the recent pandemic in back in the industry.
Is there any reason you expect that 7% or so saving that you've historically achieved to to change in the future.
And if so what would be driving that.
Let me try perfect. Thank you.
Okay.
As the only so we will take the question.
Just a lumpiness Fisher should the Holland, you'd actually a bit higher hopefully that yes. This is a very good but not very easy question you issues as interim Watson good she's looking panna.
Because I thought a follow up.
Sure sure you'll have negotiated.
And what are generally John Lucia Hanukkah than you had a few battery Gail ideology, and we'll have Yehuda nickel younger from that under current market situation a lot of different Oems have divided into two parties. One of them are still very stable and still even can achieve some kind of growth, but the other good may have suffering from.
Kevin Mcus determination.
Asia hottest message you talked a closure that Canada.
For those.
Really strong brands that under very healthy situation that discounts may even.
Light up becomes smaller than previous.
Yes, you it was I'm sure cousin broader PDL hotel should have a nickel.
As I can tell us your current leveraging call acceleration hydroelectric generation you already have venture.
Just last month that these banks.
The park and even the whole car is imported as a whole so under the current situation of pandemic.
After inventory of imported cars, if it's getting.
Matt.
They mentor is lower so that the price, even stronger and more stable than ever.
Steve Wilson gloomy Atlanta turned up let me.
Being Shannon.
Showdown shop us under that will handle looking by calendar helpful should have been Donna and for some of the brands ARPU is totally built domestically and for those brands who are very weak why now in the market. The discount is actually gotten bigger.
Just wanted to double.
So other come back a little Heineken advantages.
Typically quickly kind of look in danger.
From this point of will.
Overall from our observation.
The number of the Oems that are on the like difficulty or travel is a little bit more than those who are more stable. So overall from our perspective that discount is getting larger.
Thank you will see very similar to the approval.
Thanks.
George Interdigital shallow shahada, Saddam nigger shahada inertia hole to those juggle currently only confidential.
With the recovery of the auto markets and when most of the Oems actually survive. This.
Impacts the discount may shrink back to the normal situation or even smaller than we previously expected.
No Thats your question Jack.
Yes, yes, it does a very helpful. I appreciate the color.
That's all my questions for now guys. Thank you again.
Thank you for calling Jack.
Operator, we have anymore question.
No there are no more questions in the Q.
As there are further.
There are no further questions now I'd like to turn the call back over to management for closing remarks.
Thank you once again for joining us today, if you have any further questions. Please please feel free to contract manager Investor Relations. So the contact information provided on our website or the TPG relation. Thank you.
Now.
Please the earnings conference call you May now disconnect your lines. Thank you.
Okay.
[music].