Q4 2021 Uxin Ltd Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to <unk> earnings Conference call for the fourth quarter ended March.
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Hum in 'twenty 1 at this time.
All participants are in a listen only mode. After management's prepared remarks, there will be a few of my session. Today's conference call is being reported.
You have any objections you may disconnect at this time I would now.
I'd like to turn the call over to your of holds true.
The conference call Mr. Eric Yuan. Please go ahead Sir.
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Thank you operator, Hello, everyone welcome to <unk> earnings Conference call for the quarter ended March 31, 2021 and the full fiscal year of 2021.
On the call today are.
For today's who's the founder and CEO and the Chung Li sample.
Do you kind of will reveal of business operations on the company highlights followed by Jos who will discuss financials on the guidance.
They will both be available to answer your questions during the Q&A session that follows.
Before we start of I would like to remind you.
The pass this call may contain forward looking statements made an order to safe harbor provisions of the U.
Private Securities Litigation Reform Act of 1995.
These statements are based on management's current on knowledge and assumptions about future events out of them of known or unknown risks and uncertainties, which would of course.
The actual results to differ materially from those in the forward looking statements using does not undertake any obligations to update any forward looking statement, except as acquired and the applicable law for more information about the potential risks and uncertainties. Please refer to our filings with the SEC with that I.
I'll turn the call over to our sealed Dk. Please go ahead Sir.
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Low everyone.
I will now for joining our earnings conference call today for better communicated with both domestic and international investors My prepared remarks today, it will be in both English and Chinese.
For most of them are your opinion of the facility tuition on our Union that you don't think of it.
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We are pleased to report another solid performance.
For the quarter ended March 31.2021.
In spite of of a slower quarter in the Chinese domestic used car market due to the Chinese new year holiday the constrain our working capital we still delivered on our operational targets set last quarter as you can see from our kind of for the quarter.
And Ed.
True in 2021, usually it has returned to a solid growth trajectory following our successful transformation into our inventory only model.
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<unk> growth, which CTG, which many of the $2.5 gen on that did you lose the huge energy loans, yet when the EDA.
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From October 2022 July 12 of 2021 will face the challenge of all of our sustaining the sufficient working capital for our operations.
This also puts significant pressure on all of our ability to continue as the Gulf.
Volume concern.
Despite the pricing of financial constraints, we overcame many of the for 4 years and deliver of some key achievements.
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Well first of all the solution since introducing the GOP <unk> growth on me and Beaumont, We ultra petroleum tax free so we're using for the intranet emission zone.
First of all with transforming our business into our inventory only model instead of only being the platform based model. This worth of critical decision driven by the enormous pressure.
The trend for our business from the combined impact of COVID-19, and the severe capital constraint.
The face the challenge head on and of successfully transform the business with a stronger foundation of <unk>.
Much leaner and efficient operation as a customer centric company, we believe the key to creating.
<unk> customer matter is to continuously improve on customer.
That is faction.
The used car transaction the key to customer transaction.
The customer satisfaction is to enhance vehicle quality and per why the best in class after sales services and the.
On the inventory only model, we can better control over the quality of vehicles of.
Ventura team acquired of used cars, the more than 40 cities across China, and the only the ones that met our strict standards in terms of quality and the value for money were added to our vehicle inventory.
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Our customers confirm the order to banner increments of our goal of improving customer satisfaction, we have been closely monitor.
<unk> sales.
Our sales net promoter score or NPS.
Since the second quarter of 2020.
Our committee of the effort in the past year have generated some impressive results we were happy to see that our NPS remained at 42 in the.
The March quarter, the same as the previous quarter despite of the net of impact on vehicle deliveries.
During the Chinese new year holiday to put the March improved the scoring perspective, our NPS was the only 10 why don't we just started to monitor desk matrix.
In a quarter end of the Jordan continues.
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Maintaining our industry high NPS of <unk> 42 for 2 consecutive quarters.
Reflecting the stronger customer recognition of our premium quality use or use of the vehicles.
Vehicles on the services.
It also demonstrated of that and we are heading in the right direction with our inventory.
<unk> business model moving forward, we will conduct regular assessments and the necessary improvements to our products and services based on customer feedback in order to provide the best in class.
Car purchasing experience Ana in the in the industry.
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After more than a year of effort with the last day at our loan for.
Facilitation business and if that hold our remaining ger.
Guarantee liability in the second half of 2020.
In order to meet our customers' financial needs we.
The New Corporation, a model with the financial institutions the per well.
The third party auto low financing options, which we no longer undertake any of credit risks.
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So it's really on told our cohort cohort on the occupancy Geotrichum true.
We also made of sustained efforts to optimize our operational costs, we have adjusted our organization.
All of which are structural accordingly, following our business model transformation. Meanwhile, with the <unk>.
The lay of refining of every step of our business profile in order to further boost our operational efficiency.
In the March quarter of 2021 of all of our operational loss decreased by 40.
Amortization of quarter over quarter to.
RMB.
$998 million.
In the next quarter, we expect our operational of loss to further narrow down so far we have developed a set of refine the operational model that we believe are well in line with our.
Our business development, even during the time, when our cash liquidity with type of such.
Such operational model still allowed us to focus our resources and the capital on creating long term value for our customers.
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Our first day of inspection and Reconditioning center or IRC in Seattle was officially in operation in March 2021.
Should hold the importantly infrastructure part of our business transformation IRC has been designed to serve as a range of functions including vehicle for.
<unk> warehousing and the exhibition.
Establishing our own IRS the allows us to have stronger control and the management to over of the upfront and our supply chain.
And in the past the 6 months, we have of optimize our business process.
In relation to the IRT business as our inventory of used vehicles.
Increases for it.
We're expecting better operating leverage driven by our investment in IRC.
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Since the Keybanc options regarding the trial on Transocean.
The only march quarter of.
<unk> 21, we expanded our thoughts on of vehicles to individual car owners. This enriched our channels for sourcing high quality of vehicles and allowed us to empower the supply chain with our expertise in used cars from.
On the very beginning we'll also establish the strict infection senders.
The only select premium vehicles that Matt our online retail requirements will be refurbished on the feature our proper rates rate online platform, though.
Is that do not meet our centers.
<unk> will be sold to wholesalers.
Taylor's through offline dealership.
<unk> of wholesale is the efficient channel to sell used cars well, we're working capital was constrained.
The wholesale vehicle sales business.
Enabled us to accelerate the cash flow, while maintaining our penetration rate for the acquisition of premium used vehicles.
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G B loans, which is below 1 in Japan, and all of them into the 2 that the Ali.
We allow women attending the understanding of the showing of most of which 1 of the funds yet when job on not changing gear on quota.
Recently, we have the pure of key financing, which we believe is that the tender purposes going forward, we will collapse of onboard too.
Into a prominent the theme last first on new capital in the toy capital who share the same respect for the insurance business strategy.
And have entered into definitive agreements for a total investment of up to 3.
<unk> 300 on a 15 minute of U S dollar into the company we closed the first of.
A tranche of the financing transaction on July 12 and on.
Well track to close the remaining tranche.
The addition of funding dress the.
The depressing working capital issue that will be of where fate.
We're faced with the in the past the 6 months going forward, we will remain committed to our.
Our current business model on the strategy direction and the steadily expand our business network.
Concerning the niche or something of that of course of the year performance. All of you. The just essentially the equivalent of <unk> been going for Vinci on the feet on for the Hall.
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Like all great companies, we believe that attempt.
Temporary dip reported at the rate of having conquered we're only going to make a stronger and more resilient.
We will continuously expand our experience in the learn from our successes and the challenges either at the toughest.
In response to many factors, we made a field decisive but.
Timna for decisions and adjustments that we believe will benefit us in the long term.
We understand the only 1 we generally place our customers at Har.
Can we achieve sustainable development, we believe that our committed of focus on the quality of our products and services.
Drive.
Panic and sustain the business growth in the long run.
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They're going through the roof of <unk> initiatives.
The issue, which is for women Avon boost to volatility in energy.
I would like to thank all of our customers for their continued trust and the support even during all of our most difficult times.
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I'd also like to thank the entire <unk> team for their dedication in the way to spirit positive work attitude.
I would add on for those brands in the resilient over the years with the strong customer centric model.
<unk> able to continuously theater the development of <unk> in the right direction.
We've seen on hold in who are using the shales of local due to using genre of funds on a continue to do quality of new the shooting.
I would like to the center to new investors and our shareholders for supporting the oceans strategy ex transformation and they will continue on the trust of our amendment team.
Thank you <unk> and keep the hole machines in the change the refunded Judy Judy on the line now that we have addressed the liquidity issue, we believe on new.
Chapter for using life ahead.
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English on on possible, while millennials engine ton chiller of contingent on women's automotive.
Generally the availability.
On the debt approval that we bought going forward of it will continue towards for new opportunities for Florida analog of the potential of our IR fees, while maintaining the quality of our vehicles on the customer satisfaction.
Examples of this on expanding our vehicle inventory and the boosting our efficiency on the refurbishing used cars.
With our comprehensive measures, we believe our production.
The capacity and the business still will steadily increase we are confident that our sustained efforts and investment will generate.
The greater return for our shareholders in the long term.
Or any changes on the June July of women, the sample Zhang who whereby jobs, how retention is high which on the team John Please.
With that I'd like to turn on the call over to our example, Zhang for.
I'll walk you through the financial results some of them.
Okay.
Hey, Thanks, Dk Hello, everyone. Thanks for joining us today as the U K just mentioned Youll share on.
The 1 on some significant and profound changes in the fiscal year 2021 also after we shifted into the inventory owning of motto. The accountants trained them on the for revenue recognition and the structure of cost expenses.
We're also adjusted Accordingly, therefore, the financial data in the first fiscal year 'twenty than the 1 that was not directly comparable with the data for the fiscal year 'twenty. It on its 2020.
Overall speaking our total vehicle sales in the fiscal year 'twenty of the new 1 while lower than the prior fiscal year, but we were able to dramatically improve our operating.
The operational efficiency.
As you all know in the past year, we went through the top time. So the company took the reservoir, but carefully planned actions to reduce cost and expenses. This allowed us to a much lower operational loss in the fiscal year kind of the new 1 comparable to the fiscal year 2020.
If you look at the results.
<unk> just released our total revenue of vehicle sales in the fourth quarter were lower than the previous quarter first in this quarter, we had the Chinese new year holiday as of Q4 was the are traditionally off season for the Chinese power market.
Second our efforts to expand our vehicle inventory was restrained by hour.
Our cash constraints.
But at the same time, we continue to vigorously reduce cost and expenses and the bad.
The benefit of those actions with further reflected.
We will be further reflected on our financials in the next quarter.
As a result, despite lower sales volume and the revenue in the fourth.
The quarter, our operational loss decreased by 64 million RMB and this led to the first time in our history that our core quarterly operational loss has dropped the below the 100 million RMB.
1 thing I want to mention this debt.
On July the 12, we successfully closed the first.
Trench of our new financing also of the convertible note holders converted.
6 to 9 million U S dollars into ordinary shares.
<unk> reduced our repayment obligations.
At the same time the company entered into several of payable waiver agreement the company was exempted.
<unk> from the repayment of payables of Brock.
The approximately $120.4 million RMB or about around 87, many U S dollars.
These efforts have dramatically improved our cash position.
Full details on our fourth quarter ended March.
The 31.2021, and the annual financial results are available in our earnings release.
So now I will run through some key numbers all numbers are in RMB unless otherwise stated.
Online used car transaction volume was 1700 of 19.
<unk> units this quarter this was lower than 2000, and 307 units over the last quarter.
As I said earlier it was the traditional of CSN in the Chinese used car market.
Total revenue were $196 million.
Retail vehicle sales revenue was RMB $125 million while.
While the wholesale vehicle sales revenue was RMB 51 minute.
As you can see in this quarter, we broke down on the revenue stream.
The retail and the wholesale ecosystem revenues.
Of the cars, we acquired did not meet our quality standards for leased on the sell through our proprietary on our platform.
The form with cell to the wholesale dealers and other of the accelerate the cash flow number we sometimes need to choose to sell more cars on the our wholesale channels.
Gross margin was 4.6%.
Per the with 2.9% in the previous quarter.
The.
It was mainly due to the company's continuing the focus on cost management.
We stay focused on optimizing our business operations and we'll adjust our gross margins accordingly.
Accordingly to the day balance given the strategy of the company.
Total operating expenses were 100 the 20.
For a minute.
Ah 64 million drop from the $188 million in the previous quarter.
Overall labor cost and expenses, excluding the severance pay decreased by over 40% quarter over quarter due to the due to the restructuring of human resources. Following our business model transformation we are.
<unk> also significantly reduced our marketing expenses.
Looking ahead, we believe our ongoing efforts at the cost savings will benefit our financials in the long range.
The non-GAAP adjusted the loss from continuing operation.
Which seeks to exclude the impact of share based.
<unk> was $98 million for the 3 months.
In the March the 30, <unk> 'twenty or 'twenty 1.
Per the with 162 million in the previous quarter.
As I mentioned earlier. This is the first quarter of the loss is below RMB 100 million.
Net of loss.
Cash from continuing operation was $133 million for the for 3 months and the end of March 31, 2021 compared with $173 million in the previous quarter.
Then about our cash position as of March the 31st 2021, we had cash.
On the cash equivalents of $193 million.
That's some of.
Our results for the 3 months ended March 31st of 2021.
Moving on to our guidance, we expect our total revenues to be in the range of RMB 260 million to RMB.
180 minutes for the 3 months ended the June the 30th 'twenty 'twenty 1.
The non-GAAP adjusted the loss from continuing operation is expected to be less the RMB 15 minutes.
This forecast reflects our current and the preliminary views on the market and the operation condition.
Which are subject to change that concludes our prepared the remarks today. Thanks.
Yeah.
Operator.
We're ready to take questions now thank you.
Secondly, as a reminder to ask a question you will need to press star 1 on your telephone to.
To withdraw your question.
For us the founder of Hasheem.
Once again, if you wish to ask the question do you make a star and the number 1 on your telephone keypad.
Okay.
Yeah.
Your first question comes from the line of Eddy Wang of Morgan Stanley. Please ask your question.
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The whole what kind of on quite a find yourself I have 2 questions first of its about the the used car industry.
Industry, we noticed that in the second quarter of this year.
The house actually was weaker than we expected I'm not sure of what.
What kind of you know the.
The market condition of the used car.
The market in China, and when do you expect the that the used car market could Uh huh.
Jason you know recover or even accelerate in terms of the are you know what the transaction volume going forward on.
My second question of actually is regarding to the competition as well as the yacht. It depends the model I became mentioned that so we are now I mean they.
Adopt the English only business model so.
How do you think you know are on the competition going forward. The among the different opinions model adopted by different you know used car platform and the why you choose this model and how do you think you know Oh do we think of this model will be the mainstream model going forward of for the all of these online used car platform of.
All you will think that you know.
The different model will also have a different chance in the ER.
The used car market in China.
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Thank you for Eric.
Okay.
Hence the ante in terms of the market, we think the trend is getting better for sure on it.
Hang.
On the size of the existing market is growing so the number of the vehicles available for sale has kept increasing and the interest of of.
We are really in car of from the potential buyer is stronger.
And.
The customers.
Dan have become more of adaptive to the.
The lack of youth the car in particular for <unk>.
On those with high value for money.
I have no cap of screening and the refurbish the Carnegie of youth.
The car so at all.
Our platform is approaching the latter.
A new 1 well of their price is much cheaper on a much more competitive.
This brings the potential value of current customers.
And on the second hand, with both favorable policies.
The worst market in the past few years.
In Tucson, and the 19 used cars.
Now allowed to be transferred between the seller and the buyers who are in different cities.
And a tiny tiny governmental reduce the related of AEP for a used car transaction.
No. The earlier this year, we saw the launch of our digital registration for.
The transaction.
Which makes the whole process much more come in it and the in the past the July the new the correlation of economy policy also promote the development of our sector.
So we are we will come in the Golden window of time from the perspective for policy, making thank you.
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Okay. So in terms of of competition. After 10 years of development, we now formulate believe.
Net of used car market in China is not a winner take all market the <unk>.
The thing is to take advantage of our own strength, we need to have a clear mind of what type of product, we want to offer and none of the profiles of our customers.
And we know how to consistently improve on wood products.
Of that on a sales channel.
We are focused on how to make each car on our platform better and to make our customer satisfied so in our avail. If other industry players are willing to improve the track of consumers increase the transparency and the positive thing for the overall industry.
We actually of light.
And then the more as an hour of adding rather than competitors.
Additionally, we think the real competition happens on the level of customer service and the product quality such competition, it's beneficial to the whole industry and the the drive the market participant to learn from each other and keep improving themselves.
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Andy.
Once again, if you wish to ask a question. Please press star and the number 1 on your calendar.
Sounds good.
Your next question comes from the line of.
Please ask your question.
Yes.
Yeah.
Thank you again.
Hum.
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The niche Lucent recently received the investment from now on the Joy cuts of Hollywood, you'll use of mine to promote the development of your new business models. Thank you.
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How much of do you see when do you hold on.
The interest in the whole woman.
The whole seasonally in the Golden Egypt tools used in the using the early on in the in the front of me Alan.
Oh I'm dealing with on a day John Ciulla on the key driven at the canceling of the well maybe we shouldn't hold it entirely on the judges who many of shock syndrome of go to the 1 school.
First of all of our way.
And of our newsletters have strong consensus on the strategies.
So in particular, you can see Neal is that.
The consumer facing company, which actually pays great attention to customers, which is a highlight on line with our business philosophy.
So because of all of our business transformation in 2020.
And we regard user needs the weak economy and the NPS at.
At the most of the important things.
And we have established the consensus with our new investors on strategies and the value proposition.
The total dollars of Hawaii will move through the toll booth in the evening share.
Who comes on so you can judge Judy.
So actually the recipient.
I mean sure I hope the latasha.
Can you guys hear me of women's and she'll go out on the Liza them in the tissue for the 1 on me if I'm Gonna Zone Young woman the pendulum on coach them kind of shoulder you sound good ought to equal the key goal number of the homes are not simple.
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The flow you ensure vulnerable mellitum Gal woman of the equivalent of <unk>.
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So after receiving all of the investment.
We will work together.
On a key strategy for us and it has.
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Digital and automation of our capabilities to further improve our of vehicle quality control and the production infill.
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Additionally, on the additional financing capital will also.
Allow us to expand our inventory LIFO inventory and the scale up of our business.
Thank you.
Sure.
Thank you.
Thank you Sir.
Question. This will conclude today's conference call you may now disconnect. Your line. Thank you.
[laughter].
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Part of that.
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Yes.
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