Q3 2021 Uxin Ltd Earnings Call
Ladies and gentlemen, and thank you for standing by and welcome to Yossi is earnings conference call for the quota and at December 31, 2020 at this time all participants are in listen only mode.
Management's prepared remarks, there will be a question and as the session and today's conference call is being recorded.
And your objections you may disconnect at this time I would now like.
The kind of cold over the other host for today's conference call. The Q1. Please go ahead Sir.
Thank you operator, Hello, everyone and we'll come to you. She is earnings conference call for the quarter ended the December 2020.
And the code today Dk from the one of the CEO and the Chung Li CFO.
D K will reveal business operations and the company highlights followed by Jos who will discuss the financials and our guidance.
They will both be available to answer the real questions during the Q&A session.
Before we start I would like to remind you of that this call may contain forward looking statements made and all of the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995 of these statements are based on management's current knowledge and assumptions about future events that involve known or unknown.
Risks and uncertainties, which could cause actual results to differ materially from those in the forward looking statements Youll see and does not undertake any obligations to update any forward looking statement, except as required and the the applicable law from.
More information about potential risks and uncertainties. Please refer to our filings with the SEC with that I will now turn the call over to our CEO D. K.
Please go ahead Sir.
Thank you Eric.
Hello, everyone. Thank you for joining other earnings conference call today.
We are pleased to report that we have completed all of our strategic the transformation into our inventory only model in the quarter ended of December 31 2020.
The majority of online used car transactions in December was soda from the inventory.
This successful transaction reflects our commitment and the ongoing efforts to better serve our customers with our online products and the services.
Operating as a national wide of online used car dealer, we have our own inventory.
We now have much of a strong control and the management of <unk> over the entire services and the supply chain.
From the selection and quality of our used car inventory.
Two online car consolidated for buyers and the customer services and.
And our own delivery and the after sales services and national wide.
To strength, our ability to provide of used car all of the high quality and the value for money.
We are building our own <unk> actually and the Reconditioning center all of IRC.
We are we can refurbish selected and inventory to like new condition and.
Of our first the IRC EC and has been the operating since March 2021.
Through our new natural walk of IRC and we can reflect the.
Facilitator, you house refurbishing for better control of quality and consistency.
So that the used car wheel sell meet all of our own quality excellent standards.
We are also able to better serve the markets we need the services.
Reviews of each IRC and location.
Moreover, we of this ongoing improvements to our product and the services offerings. We have been closely monitoring our net promoter score or NPS, we have seen our NPS increased to 42 during the report of the corner.
And from <unk> 30 in the quarter and date of September 32020.
And only 10 in the quarter ended June 32020 the.
And the significant improvement into the MTS is the.
Combination by our customers of our value propositions out and we are providing even higher quality value for money used car and the best in class online car Personalizing services.
It also give us greater confidence that we have the right of development and strategy in place and.
Ah hiding in the right the direction with our online business net.
And the increase the NPS has also strength strength data and all of our behalf that our award on loss referral strategy will provide a form of foundation for further development and the wheels generate a solid and sustainable long term growth reinforce.
And our brand and.
Market of position in China.
China used car market I have huge growth potential and of the Chinese government continues to introduce.
Prefer shoal prefers usual policies for the industry.
The value add of attacks on used car sales that has been cut to zero point and 5% from 2% in May 2020 the.
And the general office of the State of Council has recently of require all regions to remove the restriction on cross region transactions.
And the title transfer of used car.
The government and it has also of published data.
Blueprint for the digital the documentation of used car registration and other documents and documentation will be completely digitize for online transmission and recombination.
And this will simplify the documentation process reduced hydro transfer costs and the increased efficiency of cross region used car transactions.
Digital documents will be in testing and designed originally in June.
The expand the two major of our cities in September and the beep adopt and national wider in the first half of next year.
And the leading online used car dealer in China.
Use of beliefs these policies will create.
More efficient and sustainable environment for the used car business in the long room.
We will closely monitor of government policies and improve call quality and develop the services to a high level.
Two of contributed to the transaction and all of China used car industry.
Yeah.
Lots of week, we entered into a strategic partnership with JD com.
Two lunch hour of self operate our online store for used car transactions through <unk> platform.
The collaboration will provide customers with one stop online used car per charging solution include of used car inspection for <unk> insurance and after sales services.
And the increased plan for joined the development of data management, and technology inspections tenders and integrated and supply chain in the used car business.
We are committed to using big data and Internet and technology to empower the used car industry.
In order to raise industry standards and the the level of the services, we believe cooperation with JD Com, we will offer our customer of higher quality and the more reliable used comp of Chinese experiments the existing net.
In the market at present.
As a result, we are they replace the two.
Place the way the progress we have made of this quarter.
We are also encouraged of by the combination of our success by two will establish the Asia Fund and the we have entered into a binding term sheet for.
For potential investment of up to three.
300 of Mila U S dollar.
And this investor have expressed a strong belief.
And the potential of China used car market.
And they have acknowledged the use is leading market position strong branding and the capacity to provide a high quality of cars and the services to customers.
We are glad of that they also share the same risk packages for use of the business model gross share H and execution plans now.
And the financing is proceeding as expected we will work closely with this investors to transform China and used car industry and create long term value for our customer.
And does that I'd like to turn the call over to our CFO to walk.
To walk you through the financial results John Please okay. Thanks, Dk Hello, everyone and thanks for joining US today I will walk you through the financial results for the quarter ended December 31st the 2020.
Our online used car transaction volume was 2000 and 307 units. This quarter. The majority was so the from our own the inventory so and so we have shifted the do it and human should only motto our rate revenue of recommendation and the structure of cost and expenses of more in line with our industry peers.
We believe this way and facilitate the understanding of our.
Of our business and the financials.
And so since we have settled the majority of our remaining come and kill the liability in July of 2020 from this quarter the impact of the discontinued the loan facilitation business on the operating expenses has been minimized.
As a result, our financial performance will better reflect our core business.
Moreover, during this quarter, we drove the overall potential operational efficiencies through strict cost management, okay, and we target to grow the business at the most efficient cost level, we believe our ongoing cost saving efforts will be productive and the benefit of our financials in the coming quarters.
Now, let me walk through the financial details for the quarter ended the December the for the first the 20th wanting.
Which is the third quarter of our fiscal year, 2020 one.
All numbers are in RMB, unless otherwise stated.
Total revenue were 323 million. This is recognized on the gross but and as a result of the transformation into the inventory only model. Our total <unk> revenue was 300 and a three minute.
The majority of the revenue coming from our vehicle sales.
Gross margin was two 9% compare of the was negative $22 four per cent of the last quarter and the 15, 9%.
Three to nine 2% and the same peer over the last year.
Due to the adoption of the inventory only motto revenue recognition and the components of costs were significantly different from the corresponding period in the 2019 and also the last quarter.
However, we believe this is more comparable with our in the industry peers with the transformation completed we expect that the gross margin will rise gradually in the coming quarters.
Total operating expenses was a one.
188 million.
Per the with 300, the 18 million last quarter, and 862 million and the same here with the last year.
Total operating expenses decreased mainly due to the strength, our continuing actions in cost and expenses cutting and also the decrease and the loss related to guarantee liabilities for historically facilitated the loans.
And to talk more about the cost and expenses.
We also improved with overall operational efficiencies through spirit strength of the cost dimension.
As part of all of the strategy you aim to grow our business at the most efficient level the.
The marketing expense has decreased by around 50% year over year.
Right and expenses and the professional fees decreased by 72% compared with the corresponding current period in 2019.
Due to the adoption of the inventory of owning of motto. The most salaries and the benefits for employees engaged and car sourcing inspections. After sales services have been reclassified as sales and the marketing expenses, whereas before such items were classified as cost of revenues.
So labor expenses.
Overall speaking the labor expenses off of total operating expenses this quarter may not be comparable with previous quarters.
Obra speak and cost and expenses, excluding severance pay.
The labor costs decreased by 63% of year over year, and a 9% of the quarter over quarter.
Looking ahead, we believe our ongoing average debt cost and expenses saving will be productive and and benefit our financials and the long run.
The non-GAAP adjusted net loss from continuing operations, excluding the impact of the share based compensation was the 162 million and for the three months ended of December 31st of the 'twenty 'twenty compare the was 178 and nearly and last quarter and of $577 million and the same period of last year and.
Net of loss was 173 million and for the three months ended of December the first.
For the first for 'twenty, and 'twenty compared with 259, the last quarter and the $906 million to $7 million of the simple over the last year.
About our cash position.
As of December 31st of the 2020, we had the cash cash equivalents of $288 million compared with 200, and the $19 million as of September the 30th 2020.
Assuming that the potential of the investment of up to 300, and then the U S. Dollars is completed our cash position and will be significantly improved we believe that this will help remove the.
The going concerns continuing operation.
That's the investment as a subject to the company's fulfillment of the terms and the binding term sheet.
That sums up our the results for the three months ended December 31st of the 2020.
Moving to our guidance the.
And as of March the 31st 2020, one what's the traditional off season in China's used car market due to the spring Festival holiday.
With the adoption of the inventory only model, we expect our total revenue to be in a range of RMB 119 million to RMB 200 million for the three months ended the March 31, 2021.
Let's continue the focus on cost and expense management.
Gross margin is expected to increase to around the 5% and the non-GAAP adjusted net loss from continuing operation is expected to be less than RMB $110 million the.
Forecast reflects our current and the preliminary views on the market and the.
Also the operational conditions.
And are subject to the changes.
That concludes our prepared remarks.
Thank you.
To ask a question you need the best part of one on your telephone until the Doi.
A question for us.
The power of Husky and.
While we compile the Q&A.
The last day.
Once again, please press star one for your questions.
Our first question comes from.
Tom Hamilton of Park Hill Capital. Your line is open. Please go ahead.
Hi, everyone. Thanks for taking my question.
We're happy to see the work you've been going on your strategic transformation.
Would you give us some more color on what's happening with your.
IRC and and share on your inspection and Reconditioning Center.
And.
Oh go ahead of time, they go to American College, and the Canola goes through the channel you try and see and which with all the ginger. So its sanction the insights on the Cta for example, chairwoman ICR and the I'll say the unions and call tissue.
Paul.
And.
Excuse me out and people well actually thought of I don't know Eric of ball phaseout.
Well this year and the IRC and I'm sure from Cheniere Chavez and casualty issue engine of question kind of hone the titanium and cash or <unk>.
Oh, she and the towards the damage hundreds and millions of Doug actually I once the champion the whole bulk haulage and he comes from geopolitical issues on the non the Buda Jen how are you holding up here will not and tend to hedge and <unk> now.
How much of the dosage and grew its EBIT will submit shoes did other than you can put out.
The India number of tenants in England and traveled for Matt had.
Much of what I might have low because that juncture of how're you.
And this year and I'm talking about my time should that use income will go with the Columbia outside of the simple no none of them.
Hello woman debt shoes are true.
And you're trying to and have about one of the leap should.
It should all of them and take them of Halloween and he can go keytruda, causing the IV and arbitrage surgical Honda and Toyota.
Eric and you finish up the tissue.
Okay. Thanks for the question for.
Yeah, I honestly, we started towards the latter of its the location and the construct from December 2020, and put it into operation in the past the March.
The IRS the covers the area of approximately 24000 square meters, including a special Hull Weyerhaeuser and the refurbished zone. Once completed the IRC can hold over one salad and the way of Coke, making and the largest.
Flagship store of used car, even off the north Western China and the single brand. So currently we have variety of stored hundreds of vehicles in the exhibition Hall. The IRC is schedule to officially open for business.
This is Mike.
The RSA.
And my honest they represent a major breakthrough, we and our business the development as a and nationwide online used car dealer, allowing us to have much stronger control over the entire surveys and the supply chain for.
Providing our customers with the of used cars of high quality of the value for money and.
As well as the full range of solutions.
And I'll say trigger for sure Sean and hungry.
And as I try and most of the launch and we shouldn't see channel show and Keith.
And our material by the yard for the fusion and shutdown of Tennant team using the income on tumbled him and he worked for.
So it's in one of the women summit with auto and weigh the jenn for her and Joe.
Using the and Mayo join the adjourn shortly of goods and Virginia on the shelf Angel Abouhalima, you've had shop and a portion of 1 million.
And we've got a diesel <unk>.
Since the initial channel based off of patient I'm trying out and the future and who should Shenzhen and diamond from Dallas hung Fuji and put some beta and should've known nature.
Major 12 months worth of work.
Clearly the Shelby that you won't you don't need for the quarters, yet Joe didn't go amount of shelf agent of change.
And someone who.
And teach them the.
And I suppose you and damage hunger and harmful maybe cheap number and you won't make that Joe zaccaria of whole true of guidance for you on for Joe.
The Eagle.
And I'm, a week, Joe and that that lack of blood digital kidney.
Tissue.
In terms of a vehicle sourcing of our team is doing that job.
About 40 cities across China was the only about 20% are finally admitted to our in house. The inventory. So every single week holding all of our human tree of has to pass more than 300 tests, there and the inspection process. So leveraging our professional testing equipment and the extensive for inspection knowhow.
Oh.
And we effectively of how customers true cost of good quality.
Meanwhile, we also apply our in house the developed the technologists to refurbish the vehicles of ordering has there are quality before they go to market.
Our same time, RCI, RSA syrups, and Marty Cole functions, such as warehousing and the inspection lift refurbishment and the vehicle demonstration. It also provides the vehicle registration services offering customers one stop car purchasing.
Spirits.
Local customers can come to all of our IRC out of the checkout of the car in person and they can also pick up the car on site rather than wait for delivery.
Overall, the development of share IRC is in line with our prior expectations and we believe it will positively contribute to the development of the used car market in the north Western China.
Was it is officially launched thank you.
Thanks, guys.
Thank you.
Ladies and gentlemen that concludes the conference for today and thank you for participating.
You may now disconnect.
Yeah.
Okay.
Okay.
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