Q3 2022 Uxin Ltd Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the using earnings call for the quarter ended December 31, 2021 at this time all participants are in a listen only mode. After management's prepared remarks there'll be a question and answer session. Today's conference call is being recorded if you have any objections you may disconnect. At this time I will now turn the call over to your host for today's conference call.
The storage tank at our director of the company. Please go ahead ma'am.
Thank you operator.
Hello, everyone welcome to Yoshida and East Coast pool for the quarter ended December 31st 2021 on the call today I D. P. M D and C O B O G and John D E F O B O S T.
Teekay will review business operations and company highlights followed by John who will discuss financial and guidance.
It will both be available to answer your question Duane the Q&A session that follows.
Before we thought I would lie to you mind you that this call may contain forward looking statements made under the safe Harbor provision of the U S Securities Litigation Reform Act of 1995.
Statements are based on management's current knowledge and assumptions about future events that involve not no one no one week and uncertainty.
Which could cause actual results to differ materially from those in the Pilbara looking statements.
<unk> does not undertake any obligation to update any forward looking statements, except as required under applicable law.
For more information about the potential risks and uncertainties. Please refer to our filings with the a C C.
But I don't know turn the call over to our C. O P. P. Please go ahead.
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As you mentioned.
Hello, everyone. Thank you for joining our earnings conference for today.
<unk> communicated with both domestic and international investors My prepared remarks today will still be in both English and Chinese.
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We are pleased that our business maintained its robust growth through the third quarter of fiscal year 2022, which spans from October to December 2022.
Total transaction volume grew by 111 per se year over year to 1879 units in the quarter.
And grew by 33% compared with last quarter basically retail transaction volume with 1671 unit, an increase of six 1% compared with last quarter.
Although the resurgence of COVID-19, if it easy on you.
Our food I see is located.
And then did you why don't you last December .
Strong growth momentum of our Sitka IRC equals eight generation, it's not as if actually help us mitigate some of the negative impact from the disruption yeah.
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Just going to say as he officially open for business in mid November 2021, after six months of cooperation with the successful model our yeah I I see as a foundation, we decided to start the operation process through a series of upgrades and improvements.
But we have to equip our assay with an omni channel model integrating all night dose each week warehouse operation.
For our customers a diverse selection of high quality and cost if I take the vehicles premium transaction services.
I'll, just ask Gavin to creating the superior used car shopping experience that has been widely welcomed by customers since opening.
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As evidence of our.
Improved customer experience our.
MTS continues to life so to speak.
Sensitive content to reach a new Rep, Ohio 59 in the third quarter from 56 in the prior quarter. This is a testament to our persistent efforts optimizing all aspects of our operation to better fulfill the customer need some vehicles southeastern transaction delivery and other stuff.
Going forward, we will continue to refine and upgrading our products and services, which will be the key for driving high quality sales growth through customer reputation.
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John Thanks, Howard I'm, sorry, and I put it.
In terms of vehicles policy, we are actually increasing the number of cars, we purchase from consumers.
Banco around 25% of used cars to either retail inventory, we spoke he loves sometimes the most immediate quarter, notably.
Notably, we further strengthened our used car purchase services from local consumers, which enable us to further reduce procurement cost, while you're boosting sales conversion rates in the region.
These measures have proven to be part of any of our efforts, we will continue to expand into sourcing channels to purchase vehicles from consumers.
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Also wrote our youth E V business in this quarter, we have already developed a core E, especially in capabilities.
For battery and motor fashion, while expanding our youth E V Apis out ability.
We currently have five of the best selling any leased hotels, including Tesla, Neil Neil Auto home and E D.
Secondly, in the Johan <unk>, leaving the Trimble team will Johan Aquilina, Google Engineers, Egypt.
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Moreover, the continuous optimization of our supply chain also yield very inspiring to read out.
By improving the synergies between each projects throughout the supply chain cycle, we reduce the time needed to meet a car, we procure ready without by 30% in the quarter.
In the meantime, we leverage our big data analysis of my Kid market dynamics and consumer prefer to be to ensure we keep it in automotive glass shouldn't of course in our inventory as such our improved the vehicles falasha approach enable us to further refine and localize the stature of our vehicles in inventory.
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To bolster the opening of the Hubei IR state. This quarter. He also ramp up of our new media marketing jet age that Larry King live streaming and short form video content on popular platforms, our marketing material. How do you spend it is customer courage and garner excellent response and feedback.
We will go to successfully reach our target customers immediately improving our marketing efficiency and reducing its cost through this new marketing strategy.
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Now moving onto our expectations for the fourth quarter of physical year 2022 during the three months ended March.
31, 2022, we have experienced a lot that E on as.
Well I think I think Chinese new year holiday season. Thank you.
Yeah, well the second provincial capital city in China to shut down since the outbreak in 2020, our yeah I actually began to recover after the Chinese new year holiday and business is now back to sustain that level before COVID-19.
However, given by a robust performance of our let's say I see we expect our retail staff to continue to growth in the fourth quarter.
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Although the impact of the epidemic and.
Has brought forth new challenges I have no doubt that our team has the capabilities to overcome these obstacles.
We have a team that has been experienced skus and T. United and we are grateful to everyone's hard work and dedicated contribution.
We have the Lifevantage in place and we will continue to provide customers with high quality products and services.
Our commitment to driving high quality growth through customer reputation and creating long term value for our customers and shareholders will all of this stuff as the foundation of our business in Asia.
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Well, Mr <unk>, Zhang let yourself in <unk>.
With that I'd like to turn to port over to our CFO . John what are you through the financial results. John Please okay. Thanks, Dk Hello, everyone. Thank you all for joining US today I will walk you through our financial performance in the quarter ended December 31st for 2021 .
This quarter, our retail sales volume increased by 61, 3% quarter over quarter and our overall sales volume increased by 43, 4% quarter over quarter as a result, despite the COVID-19 impact starting from mid December our revenue grew 46, 5% quarter.
Quarter and slightly beat the revenue guidance, we shared last time.
Contribution from our <unk> was the key driver of our sales and the revenue growth in the third quarter, the new IRC significantly boosted the scale of our retail inventory.
In the second quarter, we only had the one <unk> with a total inventory of about 600 cars. The newly added her the IRC can reach up to 2500 cars inventory.
Inventory enabled us to ramp up our sales and enhance our operation efficiency and improve our one stop car shopping experience to our customers.
Due to the opening of the RSC, we can keep our retail growth momentum both in Q3 and that will be in Q4.
With the opening of appropriate Iot in Q3, we incurred additional costs and expenses on construction renovation site rental and new employees. We also invested in additional marketing for customer acquisition and coffee city as well as the entire province to maximize our brand and in the regional markets.
Other than that we continue to operate our business in the leanest way possible. We plan carefully and then we only invest in key areas that we would.
And that will be quite position improve our technology leadership and refine our supply chain system.
Our business progress and operational optimization have been executed a steadily following our long term development plan and then we received a further capital injection from our strategic investors.
With respect to the financing transaction with Neil Capitola majority capital.
Last Friday.
The 25, we received a $10 billion from the second close.
We also expect to receive the remaining $12 5 million U S dollars from the second closing in the coming months and.
In addition, we are on track with the investors about the execution of the 165 and building use Palo wallet.
Now I will run through some key financials all numbers are in RMB terms unless otherwise noted.
Total revenue was 504.
$506 6 million.
Presenting on a quarter over quarter growth of 46, 5% on a year over year growth of 56, 9%.
Gross margin was 14, 1% stable compared to was four 2% last quarter.
Total operating expenses were 120 million compared to $2 $85 9 million in the prior quarter and a $188 3 million in the same period last time.
As I shared earlier during this quarter, we incurred expenses.
Preparation of the launch of the New IRC and then we also invested in additional marketing.
non-GAAP adjusted loss from continuing operations was 16, $68 6 million compared with $43 2 million last quarter and a $162 5 billion in the same period last year.
Similar to last quarter, there was a fair value impacts related to our financing transaction.
Oil price was 150.
158 U S dollar per Avs on December 31, 2021, compared with $2 70, 276 U S dollars per avs on September 32021. This resulted in a noncash gain of 1.3 dollars 6 billion RMB.
The change of the warrant liabilities in the spot where the liabilities on our balance sheet.
I'd like to reiterate that this fair value impacts was a non cash gain and there was not a result of our operations.
Consequently, net income from continuing operations was a net gain of 128 billion RMB in the third quarter compared with a net loss of $1 71 billion in the last quarter and then that allows us $172 9 million in the same period last year.
Removing the fair value adjustment the impact the non-GAAP adjusted net loss from continuing operations was $80 2 million.
Canada with a net loss of $56 9 million and a net loss of 171 million in the same period of last year.
Then about our cash position as of December 31st 2021, we had a cash and cash equivalents of $161 3 million RMB.
Moving onto our Q4 guidance.
Fourth quarter, we are facing two major challenges.
One is the citywide locked down in Xian from late December to late January and the other one is the traditional spring festival off season in February .
We expect we expect our total revenues to be in the range of RMB $440 million to 406 million for the three months ended March 31 2022.
Although our revenue growth slows down a little bit we expect our retail sales momentum to continue to increase please.
Please note that this forecast reflects our current and preliminary views on the market and operational conditions.
Which are subject to change.
So that concludes our prepared remarks.
Yeah.
Ladies and gentlemen.
Yeah.
Yes.
Ladies.
And gentlemen, if you have a question or a comment at this time. Please press. The Star then the one key on your Touchtone telephone. If your question has been answered or you wish to move yourself from the queue. Please press the pound key.
When asking a question state your question in Chinese first then repeat it in English for the convenience of everyone on the call we will pause for a moment to compile our Q&A roster.
Okay.
Okay.
Okay.
Okay.
Again, ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one key on your Touchtone telephone and again when asking your question. Please ask the question first in Chinese and repeated in English for the convenience of everyone on the call.
And our first question comes from call reconciled with American Trust.
Okay, Yes.
Given the recent increased COVID-19 related lockdown in China.
What is the impact to your vehicle inventory center.
And retail sales growth.
2020 to Boeing.
Going forward calendar year.
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A few try to use Chinese to answer is Apache and my colleague will translate to English.
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It was definitely a factor, but the resurgence of COVID-19, and the Chinese new year up season in particular populations.
Yeah on IRC was severely disrupted by COVID-19.
As we had the first lien lunch will be assay in November last year, its robust performance, helping us mitigate some of the impact.
After the Chinese new year holiday I was yeah I see has also resumed its growth gross passenger EV at Etsy.
I think the south volume has surpassed its political we love it.
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It <unk> easy to relinquish our remarks from John John Wong Senior Arent Infineon will mutually unusual shortly also controller onvia hydraulic Oxford culturalism done.
During the fourth quarter I was yeah as we continued to.
These are options caused by lingering Colby back.
However, we expect a strong momentum of our Hubei assay to enable us to offset the impact and sustain our growth in terms of retail sales volume in fact, well there's two vehicle year of 2022.
At both retail and total sales volume to achieve solid sequential growth.
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You heard Joe you know women Samsung each of them on the shelf of moisture.
And then since I imagine Jonathan comes from local Shanghai, which we don't know it would be helpful.
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Also we are always able to conduct our business across the country.
In certain regions are impacted by Cold me our own line of livestock motto has integrated all our offline store.
With our well using like Super Bowl this integration allows us to better.
Diary and minimize the impact of the coating license.
You're showing for what they pay that.
Thanks for the question.
Again, ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one key on your Touchtone telephone.
Our next question comes from Yang with China Securities.
Yeah.
Okay.
Your line is open you can ask your question.
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Your line is muted could you please UN mute your line.
The Chinese Securities Company you can ask you can go ahead and ask your question. Your line is open.
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Okay. Please allow me to translated to English.
The first question is can you share more details on the extent of the inventory turnover and average selling price. During 2021 also what's your view on the current conversation with glasses as well as traditional copiers.
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Our two I see are at different stage of development with maturity as we launched our CIA RFP in March 2021 and <unk>.
In November 2021, Oh, well, all our turnover is around <unk> as a whole.
I ask for the transaction price.
Priced retail vehicles is around RMB 144 disciplines.
Going forward, we will continue to diversify our slasher vehicles and such I think our average price will reduce to around RMB 10000.
100000 to RMB as well.
120000, which is more suitable for the diabetic needs for customers.
Thank you Jonathan.
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<unk>, which handle adhesion to consult to mature.
I recall, a computation, we and our peers are all focused on our business.
Business model that can facilitate our development the used vehicle market.
And highly Panoptic, we all share a common goal.
Nation to these traditional industry and creating a better shopping experience to our customers.
Our advantage and our customers our focus at the rehab.
What type of customer protection to improve the quality of our growth.
Have the largest operators.
<unk> customers with a lifeline.
With <unk>, we also have our own fashion and reconditioning.
Center with industry, leading technology and capabilities.
Vehicles.
So I'm Gonna go a number of itemized inspection and reconditioning.
Procedures to ensure our cost at the highest standard of quality. We also have the mood at the bank.
Online and offline integrated retail model, we would have first one is China's used car.
Your line nationwide.
Moving to geography barriers for customers.
Oh, yes.
I believe at the doorstep of our customers in more than 200 cities across China, We think four days.
Nation, our largest scale and centralized warehouses by retail model type of cost efficiency.
Okay.
For the last question from E. It's bad what are your plans to fund your future expansion.
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This is John .
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Joe you know you're going through some peak incentives.
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So let's address some key highlights.
In the words that total.
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Susan.
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Keeping fishing quota she and the IR team at.
They don't deal with term sheet tissue project.
Okay. As we mentioned before we signed a financing agreement with no capital enjoying capital into 2021 for the total consideration.
Mm 302 million.
As part of this agreement we received the first tranche.
$100 million E. In July 2021, the second change has a total consideration of <unk>.
<unk> made in U S dollars.
On March 25, 58, we receive.
$10 million after setting changed its thoughts you have for receipt totally $137 5 million.
Full for the financing and about $37 5 million from the second change.
We expect to receive the remaining $12 5 million.
On top of a date.
A total of 105.
The exercise I imagine.
I'm working on the water and program with our Investor base on that.
Eight of our expansion and the need for cash ingestion.
With this money, we aim to continue of humans.
Presenting on iOS and Android.
Our business growth and the long term.
We use our products and services.
Thanks for your question.
Our next question comes from Todd with Tia Securities.
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Hello, Okay.
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But yeah, I would say the specialty of course.
So tell me that I can sneak one more quick I should go to John Caldwell, you ask transactions behind the total Jonathan you should consider them with him uncle choice.
Hi, Jonathan.
Dave.
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It's getting my question in English According to the financial report.
This had a positive impact on the company's performance.
Well so the expansion of the company in the future for that more offline as well.
What do you think all Schofield tricky battle for Oscar.
Use the car market.
Well, it's accompanied cope with that.
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Total whatsoever.
Cool.
Oh right investments.
Finally into our I C.
Patient and reconditioning centers.
These investments enable us to scale our conditional capability.
We are able to better management managed the reconditioning process.
In July the procurement of recondition.
Consumables reached PS.
Depreciation power with our suppliers.
And I think Tom we are constantly refining our reconditioning technologies and process leading to higher efficiency.
This improvement will help us.
Reduce our cost.
Oh I.
I asked to fortify our competitive moat.
Shut down cleanly neutral I shouldn't say all day.
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So I mean without any social Wilmington, T regulatory energy in Shanghai, China.
Meat poultry are hungering, Cindy with Zalviso usage, because I'm sure on Kashagan are saying I'm not sure you call below cutoff, but she has traditionally Georgetown Buda Georgetown utilization local San.
So no change out.
Excluding them.
We are committed to the omni channel model that integrates all of ourselves with Lia hostile operation, regardless of better consumer buy online or.
All types of flight to quality clients of vehicles. The other thing we have.
We have accumulated extensive experience in online from beauty and upgrading China's leading online used car shopping destination using unlikely per mall.
Lots of consumers no our needs through our online reputation.
While we are accelerating our penetration into regional markets, while expanding our offline and fluid.
Our online and offline operations cause synergy.
Complement each other.
I'm going to keep.
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So those who are traveling.
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I was wondering usual combination that bundling Julien you should come back.
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Oh, Tricia controlling keeps congestion equals $300 you very often.
Hmm.
In 2021 the used car market in China continues growth S E T South volume.
17 million units or one Chilean RMB each transaction.
<unk> has been on the rise in recent years and they will get back from Italy to be an important component of the market in the future.
Retail used car dealership and the market share of more than one put them in terms of sales volume in China.
But we made to be nowadays and highly fragmented.
So the latter part of an account to send that push off schedule.
They are going for two potential does accident Hugo Thanks Shannon.
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And they will come in the future free woman spends strategic geography moisture.
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Total relocation.
Subsequent needle coke how untrue.
We had a consultant.
I think option journal truthfully this choice.
And we think that consumers are increasingly comfortable with <unk>.
However, the major pinpoints of the traditional used car industry are yet to be addressed. This is why we are actively developing our self operated used car sales model.
Our reconditioning and service capability.
We are also developing new services for E D.
You may all imagine in order to provide.
Customers with the reliable and safe used car product to fulfill their needs for high quality used car.
Well, then fed China, changing neither totaled who shot will more quickly.
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Charlotte.
But on ship all women she got one.
While we maintain an efficient operating system will keep investing to strengthen our core competitiveness.
Could it improve our operational efficiency.
Thank you for your question.
Thank you we reached the end of the question and answer.
Satellite conference back to management for any closing remarks.
Yeah.
Yeah.
Thank you to joining our conference call today, we look forward to see you next time.
This is Willie again.
Thank you.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
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