Q1 2023 Full Truck Alliance Co Ltd Earnings Call
Speaker 2: Ladies and gentlemen, good day and welcome to Full Truck Alliance's first quarter 2023 earnings conference call. Welcome to the full truck alliance's first quarter 2023 earnings conference call.
Speaker 2: Today's conference is being recorded.
Speaker 2: At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.
Speaker 3: Thank you, our moderator. Please note that today's discussion will contain four working statements relating to the company's future performance, which are intended to qualify for the State Harbor formula ability as established by the U.S. Private Security
Speaker 3: Such statements are not guaranteed of future performance and are subject to further risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to further delay from those mentioned in today's press release and discussion.
Speaker 3: A general discussion of the risk factors that could affect FTE's business and financial results is included in certain findings of the company with FTE. The company does not undertake any operation to update its foreign information except as to the
Speaker 3: During today's call, management will also discuss certain non-GAAP financial measures or comparison difficulties. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see our new study, or species for this today.
Joining us today on the call from FDA's senior management are Mr. Huizhou, our founder, chairman and CEO , and Mr. Simon Tai, our sales force. Management will begin with prepared remarks and the call will conclude with the Q&A session. As a reminder, this conference is being recorded.
In addition, a webcast with many of these calls will be available on the FDA's investigation website at ikod.foodtruckalliance.com. I want to look over to our founder chairman, Mr. John . Please go ahead.
And take a look at your template.
Thank you for your attention.
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Hello everyone, thank you for joining us today on our first quarter of the 2023 earnings conference call. We are pleased to deliver another strong quarter of growth to pick up 2023, boosted by China's economic rebound as the pandemic subsided.
In particular, we experienced a sizable pickup in activity following the Spring Festival in January . It improved user activity, most trackers and shippers, and sustainable growth across our business, further accelerated our monetization efficiency in the first quarter.
illustrating the unique appeal of our business model, while paving the way for our rapid business expansion and achievement for our long-term strategic growth.
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Now, a detailed number at our first quarter performance, our peak daily fulfilled orders and active user numbers jumped to an energy circle high to be the quarter. The number of fulfilled orders and average sugar and the new reach 30.3 million and 1.75 million, is practically.
up by 20.5% and 23.3% year-over-year, with an increasing contribution from high-quality drug treatment.
Beyond that, both our top line and bottom line once again be smartest expectations in the both corners. Our total net revenue is grew by 27.7% over here to RB 1.7 billion and under non- GAAP measures our adjusted net income surged by 100 and 71.3%
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People that users like and interests are always one of the company's top priority. We made significant efforts to further develop our user-based system and threaten our hierarchical capitalism to improve user experience during order. Going forward, we will continue to accelerate the implementation of our...
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Looking at the rest of the year, we've learned to implement more active user-applicious strategies, consistently reinforced and enriched our products and facilities for their action firms, and both are the activities and thickness of our users on platform, positioning the company in advance our long-term growth in both user skills and state volumes.
At the same time, we are prioritizing the expansion of our platform's field advantage, refining its operational process, and harnessing its core competitiveness in terms of free matching, free capacity allocation, and free rate management, with the goal of creating a value for users and building a healthy future.
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Next, I'd like to provide an update on our share and purchase program. As to our 500 million US dollar share and purchase announced earlier this year, as of May 21, 2003, we had a purchase of approximately 5.6 million US dollars.
in advocate for approximately $37.4 million US dollars from the former market. Even in the current mortgage capital market environment, we are optimistic about the company's long-term vision and its development strategy, and we'll continue to reward our shareholders during share bye-bye. Visit our world-renowned industry company for more parlament terms and combinations of a lot of foremost scenario related to development strategy.
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Luckily, further today, we've announced a chance to all both. Mr. Wenjian's eyes resigned from his position as a member of the company's follow-up directors for personal reasons.
Mr. Lang Bo-Guo, our former chief strategy officer, was appointed as a new director to field safety and was simultaneously promoted to President of the company. Mr. Guo was still ready to responsibility in certain of our middle and back office functions and business operations.
Ms. Kui-jin Ma, our current director of the ball, will take over Mr. Sae's previous responsibility as a member of our composition committee. We would like to express our most sincere gratitude to Mr. Sae for his invaluable contribution to FDA for the years. And look forward to Mr. Kuo adding more value to his new position.
Thank you, Mr. John , and hello to all of you. I'd like to thank everyone for joining up today on our first quarter of 2020-23 earnings call. I will start with operational highlights and then provide a brief overview of our key financials. I will start with a few other groups by 20.5.
It is worth mentioning that our order volume increased by more than 30% for the month of March, is marking a record high. This has been an expected performance with mainly attributable to ongoing improvement in user skill and activity.
In particular, we noted a significant rebound in truckers engagement, which even exceeded pre-pandemic levels.
Let me dig into the detail.
Transpitation costs for truckers decreased during the border at the pandemic impact ease and impediment to transportation were eliminated. On top of that, the resumption of new user registration over the past six months and largely alleviated the shortage of truckers we observed last year.
Thanks to our effective new initiative and product optimization designed to enhance user experience, as well as new user acquisitions, our user retention rate and engagement level continues to improve. We have also noted that this industry's competitive landscape has undergone some major changes due to the pandemic over the past few years.
That's an offline model became inefficient and inexcept for the user's during the pandemic. A growing number of truckers and shippers turned to online transactions and have not looked back.
As a result, our market share in the above FTO Transpiration Market has increased significantly. And the network effect of our leading market position has become more pronounced. Turning to our human mate, the robust recovery in carrier supply.
have made it much easier for shippers to find truckers, usually proving matching efficiency.
Our average fulfillment rate for the first quarter reached 28%, a year-over-year increase of 6%, and a quarter-over-quarter increase of 4%.
In March, the fulfillment rates reached 30%, another historical record for us. The reduction in our matching time also with matching efficiency improvement.
After a year of elevated levels, our median freight matching time returned to single digit during first quarter, falling to around eight minutes.
Furthermore, in the first quarter, the other contribution from our non-negotiations based transaction which has tap and go in trusted shipping model and others search to a rectal high, improving overall matching efficiently.
We're very pleased to have achieved the record-breaking performance amid high macro economic uncertainty and a low economic recovery. So, just strengthening our confidence in our long-term sustainable growth prospects and the resilience of China's macro and biolin.
Now moving on to our users, we strategically capitalized of the strong growth momentum on the fourth quarter last year to further broaden the scale of our user base during the first quarter. Driving our first quarter of average shipper MAUs to 1.78 minutes after approximately 23% year-long year.
March average shift for MAUs reached two men in, also an all time high.
The extension of both our six AK members and non-membering user-basis is the resumption of user acquisition last year as resulted in further optimization of our user composition.
In the first quarter, the contribution from 688 members and non-paying members by a number of a few others increased by 5 percentage points year over year, reaching 45% of the
Notably, our 68 members average for human weight in the first quarter was close to 50%. And going forward, we expect continued improvement in our platforms overall for human weight as other contributions from low to median frequency shippers in free food.
On the trucker side, our average trucker MAUs responding to orders increased by more than 10% year-over-year in the first quarter, with 3.55 million active truckers receiving orders in the past 12 months.
Additionally, our 12 month rolling retention rate of shipyard shipper members and next month's retention of truckers who responded to orders remained high at around 85%. Before the boost our leading position we promoted our grant and increased our online exposure and recognition.
and we have a huge SM community all first-based, significant opportunity to add new direct support users, particularly six, eight members to our platform.
Accordingly, we plan to invest more resources and explore innovative ways to support our SME development, increase thickness among our existing users, and appeal to more high-quality direct shippers with the goal of optimizing our user competition.
with a great proportion of six easy members.
Now a quick look at our trucker booth, we've done after a trial period of just over five months, the trucker booth program we announce, last quarter, now covers all truckers on a platform.
As part of this program, we introduce priority-wise to certain qualified truckers with early access to high-quality freight information. Our users immediately embrace the new feature which continues to gain wide recognition of the truckers.
Last, let's turn to our online transaction services. Rounding from our commission model, which are the 401 million-litre corner, what is entering an increase of 55.3% year-over-year.
This or a vertical was primarily driven by our sustainable in the number of food orders combined with a human treatise in commission per order.
We're also testing different emission strategies in a small group of the back-to-city.
The model now covers 204 cities and nearly 59% of the transactions were feeding through us. With every submission per transaction of our due 22.5.
So I think now I'd like to provide a brief overview of our 2020 three first quarter and answer results.
Our total revenue in the first quarter for R&D 1,700 and 2.2 minutes representing an increase of 27.7% year-old years, primarily attributable to an increase from revenues on great matching services.
Gravity from freight matching services including service fees for freight brokerage models, non-gorship fees from listing models, and commission from online transaction services for R&D 1,370.5 million in the first waters, representing an increase of 24.9% year-to-year.
primarily due to an increase in revenue for freight flow pitch service as well as continuous growth in transaction conditions. Revenue from freight flow pitch service in the first quarter will arm the 732.6 million up 16.6 percent year over year. Primarily it should look about to continue to grow.
in the first quarter will be 223.9 minutes up 13.1% year over year, primarily due to an increase in total pain numbers.
Revenues in transaction commission amounted to 401 million in the first quarter, up 55.3% year-over-year, primarily driven by an increase of order volume as well as an uptick in transaction commission for orders.
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to go to an increase in revenues from credit solutions and other value-added services.
The cost of revenues in the first quarter was R&B 849.4 minutes, compared with R&B 6.8, 3.9 minutes in the same period of last year. The increase was primarily due to an increase in BOT related tax surcharges and other tax cuts, now that the tax refunds from government authorities. These tax related cuts, now that the refunds total R&B 7.5.
compared with RB192.0 minutes in the same period last year.
The increase was primarily due to an increase in advertising and marketing expenses for users acquisitions.
General and administrative expenses in the first quarter were RMB 179.5 minutes compared with RMB 458.4 minutes in the same period last year. The decrease was primarily due to lower share base compensation expenses.
R&D expenses in the first quarter were RMBE.
229.9 million compared with RMB 221.3 million in the same period last year. The increase was primarily due to higher salary and benefit expenses.
Overall, the income from operations in the first quarter was R&D 165.8 minutes, compared to the amount of R&D 252.0 for the remaining and the thank you last year.
Letting come in first quarter was on the 400 and 11.4 women, compared with a net loss of R&B 132 minutes in the same period that year. On the log-up measures, our adjusted operating income in the first quarter was on the 272.4 million.
An increase of 104.4% from RMB 133.2 minutes in the century period last year.
Our adjusted net income for the first quarter was RMB 514.8 minutes, an increase of 171.4% from RMB 189.7 minutes in the same period last year. Basic and diluted net income per ADS were RMB 0.38%
could be 5.17 in the time period last year.
As of March 31st, 2023, the company had cash and cash equipment, restricted cash, short term investment, and long term deposits of the 25.8 billion in total. Compared with the 26.3 billion as of December 31st last year.
In the first quarter of 2023, Natcash provided an operating activity was RMB 86.8 minutes. Looking at our business outlook for the second quarter this year, we expect our total revenues to be between RMB 1.91 billion.
and RMB 2.01 billion, representing a year-over-year growth rate of approximately 14.5% to 20.5%.
These forecasts reflect companies' current and preliminary views on market and operational conditions which are subject to change and cannot be predicted with reasonable accuracy as of the day-to-day.
That concludes our carefully launched. We now look to open the course of Q&A. I'll put your please go ahead.
Thank you. If you would like to ask a question, please press star then 1 on your telephone keypad.
If you are using a speaker phone, we ask you please pick up your handset before pressing the keys. To a draw your question, please press star then two.
For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English.
Today's first question comes from Ronald King with Norman Sachs. Please go ahead.
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Thank you management. In the first quarter we saw that fulfilled orders grew over 20% year-on-year, so much faster than
broad freight market and the macroeconomic recovery. So what are the main drivers reasons behind that and how should we expect the fulfilled order grow to trend in the second quarter? Thank you.
Thank you, Ronas. I would just all the remainder Q&A in English directly. Oh, I think we're pleased. We're pleased to see our platforms trade others, too much faster than the bottom market in the past quarter.
We believe that rapid growth mainly came from our increased market share in the FCL market as we have consolidated our market-leading position in the online freight matching services. The strong growth of other bodies in the first quarter was primarily due to two factors. First, the pandemic's impact largely eased the number of people in the workforce.
in the first quarter and truckers travel was no longer restricted. And second, perhaps more importantly, we have observed that a considerable number of users have migrated from offline to online. Through our user interviews, we have learned that in the current market condition,
truckers and shippers in the BOP F-T-L Transfinition Market both good for to transact online. In other words, compared with offline matching, market share of online flake matching has significantly increased at the market either in the online flake matching service.
we obviously benefit the most from this trend and we expect it to continue going forward. Internally, things that not fear our continued efforts to user acquisition have also been paid off. Our new users are mostly small to begin to frequent the shippers while telecolyte direct shippers and who contributes.
the most from this trend and we expect it to continue going forward. Internally, since last year, our continued efforts in user acquisition have also been paid off. Our new users are mostly small to medium frequency shippers who are typically direct shippers and who contribute high quality orders.
In the first quarter, roughly 48% of the food orders came from those low to medium frequency shippers. This number increased from roughly 40% about a year ago. We expect that number to keep rising.
In addition, we continue to enhance our rational capabilities and the algorithms. For example, during the first quarter, we improved the platform's shipment origin and destination address infrastructure and broadened the overall coverage of accurate address.
down to street numbers.
The approved trucker's witness to take orders, that's why we're for human capabilities and we reduce the potential issues. When we look into second quarters, we expect a number of food orders to maintain the rapid growth momentum, and we expect a number of food orders to increase about 40% from the second quarter the only way.
Thank you, and our next question today comes from Julie Lee with CICC. Please go ahead.
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so much. Now, I'll also find out the 28% fulfillment rate in the first quarter marks a significant increase both over year and quarter-over quarter. What has made the reasons behind this increase and what's your fulfillment rate target for the second quarter.
Now, actually, we are finally here. The 28% fulfillment rate in the first quarter marks a significant increase both over here, over here and the quarter over quarter. What has made reasons behind the increase and what's your fulfillment rate target for the second quarter? Thanks.
Thank you. The improvement in perfumer and weight in the first quarter is mainly attributable to the change in supply and demand dynamics. So I'm starting this year, the impact of inefficient trucker, in sufficient trucker supply, which is a bit headache for our shaker uses over the past two years.
have been substantially alleviated. With more truckers available, it becomes easier for our shippers to find a match and without increasing the overall fulfillment rate. The optimization of user composition also contributes to the increase of the fulfillment rate.
Ever since we resumed our user acquisition during the middle of last year, the proportion of direct shippers has continued to rise both in terms of monthly active uses and also other contributions. Most of our low and median frequency shippers are direct shippers with a fulfillment rate close to 50%.
Therefore, the continuous continuously increased contribution from direct shippers will further drive for human weight growth.
in the SPOT FTL transportation market. The fulfillment rate will continue to grow during our first quarter's momentum.
Thank you. And the next question today comes from Charlie Chen at China Renaissance. Please go ahead. Hello everyone. I'm Charlie Chen from China Renaissance.
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In the first quarter, the growth of revenue from fried brokerage and business flow that compared with private quarters, what are the main reasons for that? And also, could you please share some color on the operational strategies for your fried brokerage business? Also, have you witnessed any changes in tax return policies recently? Thank you.
Thank you. The free broker service we provided to shippers, mainly refers to situations where the platform enters into shipping contracts with shippers, and others are fueled by truckers matched by the platform on an entrusted basis.
for truckers designated by shippers themselves. We assume the role of freight brokerage and provides VAT invoices.
Beyond that, the platform also offers shippers' protection against truckers, the amount of fee increases and delays as well as cargo damages to certain extent.
Upon the fulfillment of the others, the shippers pay service fees to us. The services we charge for freight-blockage services are based on a percentage of shipping fees, which was approximately 6% for the first quarter, of the one of the highest in the industry. We regard the freight-blockage.
as the business lines that in un-tipped users thickness, its strategic significance lies in increasing the dependence and frequency of shippers on the FTA platform. Our data also shows that shippers who use straight-focus service tend to shift more frequently.
In company, there's a huge demand for the service from shifters, while the user penetration is relatively low, leaving a plenty room for adjustment.
Going forward, we'll encourage freight folkage users to pose more matching orders and stops from increasing the overall profit contribution after business rather than fully focused on increasing the revenue bill.
Moreover, the freight voltage business service involved a number of contractual shipping orders which helps us gain a full picture of shippers, completely beyond just on demand under the 421 American Unionomin GG National Organisation for the Offered distance which
Regarding the tax refund policy, we have not received any notices from regulators regarding the tax rebate rollback.
We have multiple cooperating tech sources. We're taking a flexible approach to adjust tech sources as the market evolves.
As we only get partial refund for VAT and other taxes we pay, the central and local government keeps majority of the tax we contributed, which is consistent with national policy guidance. In the future, as the tax system is upgraded, the local governments will also welcome us given our strictschedulegarance from which measures protect citizens of our far, protectivites today.
risk control and the contribution to the local GDP. This position is the leading player in the market, setting the bar for other online freight platforms and gradually raising the industry standards.
Furthermore, it's the way any extreme case requires.
together with all other freight brokerage players to adjust or otherwise terminate the freight brokerage business, the impact on our overall profit will be minimal, as our profit-growth contribution comes mainly from our commission business. And lastly, considering that freight brokerage requires FTA to advance VAT payments on behalf of shippers and to wait for a refund, we will carefully manage this growth rate to bring in the impact on cash flow going forward.
Thank you. And I trust you today, come from time, come on with city. Please go ahead.
I'll translate myself. In the first quarter, revenues from transaction commission surged over 55% a year. I know what are the key drivers behind that. And also we noticed that China's Ministry of Transport recently released a work plan, they're mounting platforms to lower the signing of excessive commission.
in the platform's overall order volume. Our commissioned orders increase by roughly 38% year-over-year in the first quarter. Our business team makes dynamic adjustments to commission rates and penetration based on platforms' real-time order volume to strike a balance among the increase in commission revenue, user activity goals and business skill improvement.
As user base and order intensity continue to rise, we plan to further expand the coverage of commission orders and prudently increase the overall commission rate. Regarding the recent proposal from the Ministry of Transportation for reduction in the Executive forTransformation Kurt marketplace.
We understand this is a follow-up announcement to the Operation Sun strike policy implemented last year. This proposal strives to achieve the same goal, mainly to further safeguard the rights and interests of users in a transparent and open environment.
Our commission rate is at a very low level and in fact significantly lower than other free platforms. We do not expect the company's operation to be impacted by the proposal.
Thank you. Thank you. And our next question comes from Sherry Leon with Bernstein. Please go ahead. Thank you, My name is
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Can you please provide an update on the progress of your new user acquisition? What are the key focuses of your new user acquisition strategy on the side of Schupfer and Trucker respectively? Thank you very much.
In the first quarter, our overall program in user acquisition generally met our expectations.
We implemented different acquisition strategies targeting shippers and also truckers. The shipper side, as previously mentioned, we have promoted our brands and platform through various online and offline channels, attracting more high-quality direct shippers as a result. As you know, China has over 30 million SMEs who may require FTL shipments.
all of whom are our potential shipper customers. Therefore, we will remain devoted to offering various transportation capacity solutions and meeting shippers involving logistics needs so as to consistently improve our penetration rate among those direct shippers.
As for truckers, we already covered most of the heavy-duty trucker drivers in China and we are expanding our reach to smaller trucks at the pandemic, supply and transportation activities in Brazil. We are also expanding our reach to smaller trucks at the pandemic, supply and transportation activities in Brazil.
On top of online user acquisition, we also focus on reactivating dormant truck drivers. Leveraging our on-going capability, we identify dormant drivers with the potential to return to our platform and operate sensitive to reactivate them.
In addition, we have formed cooperation with offline service areas, set up trucker service stations and temporary service points, and provided care packages for truckers to impede brake logistics period to help truckers enjoy short breaks and provide more
that increase their comfort while traveling. These amenities enhance truckers' sense of belonging on the platform while also attracting new truckers to FDA. And looking forward, we will continue to attract more high-quality truckers and shippers sustaining our growth.
in both user skill and transaction volume on our platform. Thank you. And that concludes the question and answer session. I would like to turn the conference back over to management for any additional or closing comments. Thank you once again for joining us today.