Q1 2021 Uxin Ltd Earnings Call
Take a look for more information about the potential risks and uncertainties. Please refer to our findings with the ICC with that. I will now turn the call over to our CEO, please go ahead. Thank you Nancy. Hello everyone. Thank you for joining our earnings conference call today in the most recent 2/4 the impact of coronavirus and continue the 2-month crazy challenges for overall economic given the current democracy government. We are glad that we successfully completed the divestiture of our loan facilitation business office and then relieved ourselves off the historical guaranteeing liability reduce business changes in case the financial impact of diversity the loan facility business Saturday, it's Financial guarantees, and they're visiting the beach will be business was and will continue to be reflected in our financial statements for the club.
end date of June and the September 13th 2020
Okay, let me try we have she paid our business strategy for our monthly business students to acquire focus and shifted our growth strategy from being financed. Am driving to one. In used used the car quality and service oriented under the previously previous the financing driving approach life experience the rapidly transaction volume growth. We will also wait it down by a significant underlying credit risk and constraints off on slow because we had to take all the gardening liabilities and the buyback is a default long will this link with the assets meet a certain criteria? Mm. Now we'll keep trying to be handed off we enter into a new phase of development as a transaction oriented online used car dealer.
We are our focus is quietly on all in high-quality value-for-money used cars and the premium purchasing Services. We believe that God has laid enhance used car quality and the purchasing Services is the best way to maximize customer value and give more customer trust and the water almost referrals wage. Although it takes time to build a reputation and grow at a scale with this use the car and the service orientated approach. We believe that that's the key to maintaining our long-term competitive advantages and achieving sustainable growth in order to create the best value and experiments across the entire value chain for our customers. We upgrade our used car transaction processed and the Mac rotated every sale step on line.
Can you transfer me our business we have upgraded the key points throughout our service process reviewed a group of inventory selectors. Mm curates that in for money use the car from across the country ensures that the highest standards of quality needs to be careful inspection simplify our pricing structure to facilitate the customers purchasing decisions offer professional consultants and purchasing Services wage in a timely fashion from our online sales Consultants.
North Korea is more financing Partners to offer Diversified and used car finance products and improve overall wrong approach approval rate for our customer service provider will run the program and after sale services and it makes the entire purchasing process more convenient and efficient for our customers with all this efforts have a translated into better customer satisfaction and brings her trust in our using brand.
along with this business
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increase net promoter score amount of our customers
to further enhance the customer experience. We will reinforce our role as China's leading online news popular and being to build our own inventory of years this month. This will help us better control our hours of hygiene for used car and the deliver High higher transaction certainty to our customers as we bought a supply chain and assess used car as more favorable acquisition price. We will have a greater flexibility in offering more competitive pricing to our customers for their building using as a check data and go to online decision for buying used car.
in contrast to the local offline dealers traditional way of acquiring inventory based only on individual experience and the user case our intelligence our inventory and Amanda Jean comes from our strong data and
finally an electric capability. We will take a more scientific and systematic approach to procure used car off my amount of faxing the extensive use user behavior used car and the transactional data aggregated our fax them over the years. We will selectively view our inventory based on our proprietary assessment of customer preference, of course, value-for-money performance as well as real-time market dynamics and the trains in addition, we will offer refurbished refurbishments as a new service rep my reconditioning our car to a like new condition before handling it over to our customers. This will be another key step in ensuring the best overall purchasing experience.
As the reconditioning can further enhance our cars better for money performance.
We believe that our data driving and quality Focus inventory strategy will further enhance customer satisfaction will enabling our to achieve the inventory turnover. This will be another significant milestone for us in solidifying our position as China's leading national wide. Berth dealer and offering high-quality value-for-money used car and the premium service is will not I'd like to turn the call over to our CFO to walk you through the fiber account, please. Okay. Thanks. Hello everyone. Thanks for joining us today as we came in completing the online transformation of our transaction process. We have also restricted, uh, our costs and expenses to adapt to the new business and the service model. We not have a streamlined inventory sourcing and a car inspection team.
All I do is call comes old team and in fact all his support teens Elysian higher customer.
Inspection and more word-of-mouth referrals also translates into more organic traffic and a lower the need for external traffic acquisition. All these factors will enhance our long-term operational efficiency as we achieve greater skill over time. Thanks to the tax cost that it was implemented in China since May this year. I bought a used car dealers. Now only need to pay 0.5% off of the used car sales. This means we now have a more than a physical environment in which to operate as a actual dealer. We will work with the financial institutions in the form of inventory of financing to Thursday actually building our own inventory so that it will allow us to adequately manage our cash flow.
That's not being used cars at more attractive acquisition cost by moving up. The supply chain will not only reinforce our control over inventory. But I also have a 6 usually Drive Market extension over the long run. We believe this revamped inventory strategy will better position as to generate long-term value for our shareholders while maximizing the customer value and experience.
Now, let me walk you through our financial details for the quarter ending in June. Please note that the result I will discuss related to continuing operations. Only all numbers are in a MB unless otherwise it is also please note that some numbers I refer to our non-gaap numbers. You can find the reconciliation of this numbers at the bottom of our returning.
In the three months and June 30th 2020 total revenue R&B sixty-two million compared with the armed is 389 million in the same period last year the increase was primarily due to the decreasing that you see transaction volume and GMB as a result of economic downturn caused by the covid-19 atomic as well as the lead time that we need to fully run pop upgraded transaction process. Our total to see Revenue was RMB fifty-two million compared with the R&B 341 million imperial Asia. All I used car transaction volume is 3887 unit for 3 months and the June 30th 2020 and its corresponding GMB 1426 number.
Looking at the revenue stream of other PC business commission. Revenue was twenty nine million compared to this the RMV 179 million in the same period last year primarily due to the blue crisis in the transaction volume. Gmv, Keynesian rates expanded slightly to 6.7% from 6.2% in the same period last year as a result of continuous effort to offer a nation wide selection of the value-for-money used cars as well as the quality transaction services to the customer.
Add a service to revenue was armed twenty-three million compared with the R&B 162 million in the same period last year primarily due to the decreases in the transaction volume and Thursday. We have a Great Depression slightly to 5.4% from 5.7% in the same period last year as a result of pricing adjustment during the covid-19. Looking at other business Auto Revenue was armed 11 million for the three now in June 30th, 2020 compared to the home and be 48 and yelling in the same period last year but decrease was mainly due to the to have that feature of the companies salvage parts related business in the January twenty twenty dead.
Call some other revenues decreased by 53% year-over-year to R&B ate a meeting. The decrease was primarily due to the decrease in salary to antibiotics from employees engage in a car inspection quality control customer service and after-sales services as a while as the decreasing in the Fulfillment cost is due to a decrease in the transaction volume.
Those margin was not to 28.4% for the 3-month and the June 30th 2020 compared with the gross margin of 55.9% in the same period last month total operating expenses was RMB 161 million operating expenses, which excluded the impact of share-based compensation with R&B 156 million.
Sales and marketing expenses decreased by 61% year-over-year to R&B 116 million V. Was mainly due to be crazy in the salaries and benefits is Faith as a result of the adoption of the flexible workload Bay starting program and some from a nation of the employee contract resulting from our business model application as well as the decrease in the traffic acquisition.
Sales and marketing expenses excluding the impact of our share-based compensation or R&B 111 million.
Gianna expenses decreased by 29% to RMB eighty seven billion. The decrease was mainly due to a decrease in the salaries and benefits as a result of adoption also have flexible work load a stocking program and the some combination of employee contract results from our business model upgrade as well as the decrease in the share basic wage expenses and partially offset by the survey rent cost as a result of some termination of contract and a Goodwill impairment of or 9.5 million reported in the reported quarter.
Tiana expenses excluding the impact of a share-based conversation with the 98 million R&D expenses incurred by 29% to arm be twenty-three million. The decrease was primarily due to a beef raising the salaries and benefits expenses as a result of the adoption of the flagpole working today. Reprogram and some termination of employee contracted resulting from our business model upgrade.
Expensive excluding the impact of our share-based compensation would be 24 million.
For the June 30th 2020 we incurred the guarantee liabilities associated with the remaining warranty obligations from the vehicle so long and that were not be transferred to Golden Kaiser. We adopted the accounting standard app update 2016 tank off into two men credit losses measurements of the federal laws on financial instrument on January first, The 20/20 and modified reach out back to the matinees before the option of three 3:26 in our lot related to guarantee liability account is afford to end or the operator of the amount to determine how long he has to be for 60 and the amount of determining enter has the 450 was recorded as the gain or loss from Dental or delivery.
After the adoption of ESC 326 expect to the credit losses from a contingent liability shall be accounted for in addition to and a separate leave from the extender ready guarantee liabilities accounted for Ender 60 and the provision for the contingent guarantee liabilities is currently recorded within provision for credit losses and release from the stands ready guarantee liabilities accountable for the Ender alt for 60 months. It's constantly recorded within other operating income.
Provision of credit losses not was 74043030 twenty twenty.
The reversal not the provision for credit losses were friendly due to the release of warranty liability of our MB 86 million as a result of a supplemental agreement reached between us and the one of our major financing under April 2020 with regards to our historical facility along the strength to this supplemental agreement with financing partner agreed to set a cap on the amount of cash. We were used to fulfill is guarantee liabilities with this standard wage earner from 2020 to 2022.
Lost from continuing operations with R&B 128 million compared with $220 million in the last year.
Long Cara just for the loss from continuing operation which excludes the impact of a share-based compensation was 133 million compared with R&B 196 going in the same period last year now. I'm from continuing operation were R&B 162 million compared with R&D 241 million in the same period last year long long. I just stood and now log from continuing operations, which actually would be impact of a shared the compensation were and be 157 million in the quarter compared with R&D to age of fourteen million in the same period last year
Turning to our cash position as of June 30th 2020. We have cash.
In a class equivalent of R&B 241 million that summer as a result for the 3 months and the June Thirty 20% moving on to our guidance starting this month of September 2020 will be with our own used car inventory started to select the value for money used cars in the market for cure this cars and arranged for the reconditioning and the refurbishment to operate them to a like new condition before selling them to our customers.
Oh, we are currently assessing relevant to revenue recognition in accordance with 60647 our own inventory for this tree months and phone number 30 20 20 taking into account The Continuous impact of the covid-19 dynamic operating progress of our business model and the complete business that has features excluding the revenue to be right nice and or spelling of our own inventory starting from September 2020. We expect our total revenue from continuing operations to be in a range of R&B thirty-three million to R&B thirty-five million, which included the commission Revenue value-added Service revenue and the other Revenue if taking into consideration part of the revenue to be recognized and we're selling our own inventory for which a portion of the revenue generated in September twenty twenty maybe right knife on a grow space dead.
We expect our total revenue from continuing operation for the 3 months ended September 30th, 2022 raised to our range of R&B 65 million two hundred Seventeen years this for Council reflects our parents and preliminary review on the market operational conditions and is faced account the current situation and uncertainties associated with the covid-19. Panic are subject to change this forecast is also based on our preliminary accounting assessment of such imagery owning a business model, which may be subject to refinements and with vision.
That's complete. Our prepared response to mister operator would like to open the call for questions now.
Show thank you ladies and gentlemen will now begin the question-and-answer session. And for your questions, please press star and the number one on your telephones and wait. We need to be announced took the request. It is the pound that haschke once again to ask a question, please press star and the number one on your telephone keypad.
Once again, if you have questions, please press 5. The number one and wait for your name to be announced.
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We have the first question from the line of Eddie one of Morgan Stanley. He's go ahead.
Hi DK, Michael and NZ. Thank you for taking my question. I'm going to finish I just want you to take off for the English and taking the jig of moisture just your home. So my question is about, you know, the long-term Outlook of the used car industry in China, especially for the next few years. So and and that background, I think that's what's the advantage of the immature taking business model. We adopt, you know, yeah, just just want to hear your thoughts on that. Thank you.
No idea no.
You got that off. It seems up with a solution to all right. So you go could see the energy if you like them and put them back in the market number to the Hyatt.
In the past two years operating product quality and the services is the keynote in every consumer-facing industry and sector and the high quality product. And the fact that screening services are the foundation of becoming more customers and the building reputation under this environment where individuals are highly connected with each other and the information to change is highly factors building reputation and gaining word-of-mouth referrals is key to a company's long-term sustainable growth and this is also very true in the used car industry after over a decade of development where they're locked in the street vendors and honesty the industry the used car industry. Unfortunately had a reputation We Believe being honest and sincere when servicing customers offering them high quality used cars and the premium Services is the best wage.
Transform the entire industry and achieve a healthy and long-term growth for the overall Factor.
You should get an email want me to email you can go back and do my account in order to get the key on the cell phone number. Yep. Yep.
Consumers are turning away from new cars and choose to buy used cars. This is not simply because they cannot afford buying a new car. But more about they have now have a mortgage milk consumption philosophy. They want to spend less used car, but get like new condition, which is almost as good as new car with this trend more and more used car dealers will come up willing to offer high quality used cars and premium services and interact with the benefits more and more consumers will also choose buy used cars as well. And the affected by the soft macroeconomy roll used car industry will see a very slow process here. But looking at next one year or two, we're expecting them gradually recovered to a double-digit group.
It's not coming on the same page or that encouraged and driven by hour forecast and the customer referral strategy with a live offering high-quality value for money and used cards and the premium purchasing services will will not hire customer satisfaction and the reputation as well more customers cost and the word-of-mouth referrals will not only increase our car sales, but also improve our ability to drive log.
For Market expansion as a result of the quality premium. Our customers are willing to pay us not using that page for me and which we can show him the check off from that code once you make a month.
Okay, Tuesday.
We started to build our inventory now because we think we have three advantages. The first one is about the digital Edition and intelligent data analytics.
Both our historical transactions and the current transactions actually exist in digital digital form. So do our customer behaviors and their preferences aggravated off slow. So this enables us to well manage the supply and demand as well as the selling prices with totally different decision-making capabilities from the traditional used cars and our current data talk abilities allow us accurately predict. The the monthly sales of certain car makes and models even to predict the turnover of this off tomorrow, and then perfect so like to selecting cards and build our own inventory.
Be honest, I'm not sure if you don't answer the page. Don't touch him back called you going to keep in high school. And are you open. And the second is about our capability to realize purely online used cars production and services currently in China used car market. We are actually the only one who is able to sell cars completely from from online. Our customers can easily make the purchase decision. Yep.
To reading our used car digital profile online e-edition our customers able to make these decisions without a need to be assisted by offline sales staff throughout the entire process and also our fulfillment capability covers over 300 cities and countries combined across China. Our customers can receive their car that may or even beyond their expectations within days after they make the purchase outline. Our Pure online way of selling used cars significantly strengthen our ability of my truck with consumers Nationwide level, which also ensures higher chance of faster turnover.
Nissan is shooting good. Thank God take a woman mail hungry the same gotten him. I am trying to see the take the third one is about our advantages in the cost structure and our construction is actually fundamentally different from that of traditional offering dealers. So unlock them was only have the expensive offline physical showrooms, and we're doing it a large offline still to either touch the messages actual us to grow into a national online used car dealer with strong operational efficiency and the potential to grow at scale.
The people they're fully how that happens in there anything else?
You should know who should I ask for now that I'm not just show up and took you off when it becomes obvious when you click on it. So look has a match requirements now is actually a good timing for to take the data Pro given the current use taxation create more favorable environment plus to build the inventory and the things may of this year. They used car tax cut in China allows dealer only need to pay 0.5 bath.
Sense of used car sales as a tax compared with 2% previously and with tax rate our overall test expenses will increase much as compared with any reservation for the car that we procure up round. The car titles are actually with us. So we are able to work with financial institutions image refinancing home. So when everything runs up the the map current environment is actually also support our decision.
I need thank you, Daddy K. Thank you.
Thank you, and I'd like to have the conference back to this Nancy song for closing remarks. Thank you again for joining or Thursday and for your continued support English. We're looking forward to speaking with you again in the future. Thank you.
Okay.
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