Q4 2023 Full Truck Alliance Co Ltd Earnings Call
Operator: Ladies and gentlemen, good day and welcome to Full Truck Alliance's fourth quarter and fiscal year 2023 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.
Ladies and gentlemen, good day and welcome to full truck alliances fourth quarter and fiscal year 2023 earnings conference call.
Today's conference is being recorded.
At this time I would like to turn the conference over to <unk> head of Investor Relations. Please go ahead.
Mao Mao: Thank you, Operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the Safe Harbor Formal Ability as established by the U.S. Private Securities Mitigation Reform Act.
Thank you operator.
Please note that today's discussion will contain forward looking statements relating to the company's future performance, which are intended to qualify for the safe Harbor.
As established five in U S. Private Securities Litigation Reform Act, such statements are not guarantees of future performance and subject to certain risks and uncertainties assumptions and other <unk>.
Mao Mao: Such statements are not guarantees of future performance and are subject to certain risks and uncertainty, assumptions, and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release. A general discussion of the risk factors that could affect FTA's business and financial results is included in certain findings of the company with FTA. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-gap financial measures for comparison purposes only.
Some of these metrics I'll be young company's control and could cause actual results to differ materially from those mentioned in today's press release.
All right.
A general discussion of the risk factors that could affect <unk> business.
And financial results is included in certain filings the company with.
The company does not undertake any obligation to update its forward looking information except as required by law. During today's call management will also discuss certain non-GAAP financial measures.
I'm focused on it.
Mao Mao: For a definition of non-gap financial measures and a reconsideration of gap to non-gap financial results, see the early release issued earlier today. Joining us today on the call from FTA's senior regiment are Mr. Hui Zhang, our founder, chairman, and CEO, and Mr. Simon Tsai, our CFO. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this call will be available on FTA's Investor Relations website at ir.fulltruckalliance.com. I will now turn the call over to our founder, chairman, and CEO, Mr. Zhang. Hello everyone, welcome to the 4th season of Full Truck. We are very happy that the 4th season has once again given us a brilliant results sheet, marking the perfect end to the year. In 2023, with outdoor challenges and My, of China and Myanmar.
A definition of non-GAAP financial measures and variation of GAAP to non-GAAP financial results. Please see the earnings release issued earlier today.
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John our founder Chairman and CEO and Mr. Simon <unk> our CFO.
Much will begin with prepared remarks, and the call will conclude with a Q&A session.
As a reminder, this conference is being recorded in addition, a webcast replay of this call will be available on <unk> Investor Relations website at <unk> Dot photo Alliance Dot Com I will now turn the call over to our founder Chairman and CEO. Mr. Zhang. Please go ahead Sir.
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Hui Zhang: ?? Hello everyone, thank you for joining us today on our fourth quarter and fiscal year 2023 Earnings Conference Call. We are thrilled to report another quarter of stellar results for the fourth quarter of 2023, closing out the year on a strong note. Despite the challenges and opportunities present in the external environment, we have adeptly navigated the prevailing trend of efficiency enhancement and cost reduction in the freight industry. By embracing the digital transformation of China's road freight sector, we have positioned ourselves as the leader in online digital and intelligent logistics solutions, effectively replacing traditional offline logistics with our core cost-saving advantage. Through continuous enhancement of our product features and operating efficiency, we have successfully deepened our penetration among direct shippers.
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Hello, everyone. Thank you for joining us today.
Fourth quarter and fiscal year of 2023 conference call. We are thrilled to report another quarter of stellar results for the fourth quarter of 2023 closing out the year on a strong note despite the challenges and opportunities present.
The environment, we have definitely mitigated the prevailing trend of efficiency enhancements and cost reduction and the freight industry.
Embracing the digital transformation of China Road freight sector, we have positioned ourselves as the leader in online digital and intelligent logistics that solution effectively replacing traditional offline logistics with our core cost saving advantage through continuous enhancements to our product feature.
And operating efficiency when you successfully deepening our penetration amongst the rack sugar, we are committed to becoming the preferred shipping gateway for tens of millions of small and medium sized chip.
Hui Zhang: We are committed to becoming the preferred shipping gateway for tens of millions of small and medium-sized shippers, empowering enterprises with greater logistics competitiveness and improved profitability. Our key operating indicators in this quarter, a steady improvement, are reflected in the scale of users, product operation, supply and demand, and one-time service. In terms of user scale, the number of shipments has exceeded 2.4 million. 19% In this quarter, the number of direct customer orders continued to increase. The order ratio of direct customer orders has broken through 45% for the first time.
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Hui Zhang: This reflects that direct customer orders are constantly shifting from the traditional offline mode to the online mode of Shenqian High School. In terms of product operation, we have provided direct customer orders and high-efficiency product functions to new users. This effectively reduces the threshold for new users' use and has further promoted the strong growth of new users.
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Hui Zhang: In terms of profit supply, we have upgraded the actual distributed operating system to continuously optimize the transaction efficiency through the adoption and matching of rights and interests. The scale of transportation and the year-on-year performance of the driver also continue to improve. In terms of temporary service, our full transport insurance, financial insurance, energy, etc.
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Hui Zhang: The penetration rate of political business continues to expand. At the same time, transportation business has formed a co-operative effect with political business to improve the reliability and satisfaction of the integrated design. These achievements further prove our network effect and growth. We continue to promote the public transport market and change from the traditional offline mode to the high-efficiency digitalized new mode. In the fourth quarter, we witnessed steady improvements across key operational metrics, spending user base, product operation, Transportation Capacity Supply, and One-Stop Service.
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In the fourth quarter, we witnessed steady improvement across key operational matrix semi user base product accretion tripled.
Transportation capacity supply and one stop services, our average ship <unk> and.
Hui Zhang: Our average shipper MAU reached an all-time high of 2.24 million, representing nearly 19% year-over-year growth. Notably, the scale of direct shippers continued to increase during the fourth quarter, with their proportion of fulfilled orders surpassing 45% for the first time, reflecting a significant shift toward more efficient and cost-effective online channels. For product operations, we further refine and streamline the shipping and efficient fulfillment product features for new direct shippers, facilitating their onboarding and driving robust growth. With respect to trucker supply, we upgraded our tiered trucker rating system, consistently optimizing transaction efficiency through incentive-driven offerings and precise matching, while continuously expanding the supply of truckers and elevating users' demand. Additionally, for our one-stop service, our value-added services, such as freight brokerage services, credit solutions, and insurance, energy services, and ETC, solely continued penetration, synergizing with our transportation business to enhance user satisfaction and safety.
An all time high of 2.24 million, representing nearly 19% year over year, but notably the scale of drop shippers continue to increase during the fourth quarter with the proportion of fulfilled orders. The policy is 45% for the first time, reflecting a significant shift towards more efficient and.
Cost effective online channels.
For product accretion, we further refine and streamline of shipping and efficient fulfillment product features four new direct shippers facilitating their on boarding and are driving robust growth.
With respect to truck of supply, we upgraded our T. A trucker weighting system consistently optimizing transaction efficiency through incentive driven offerings and precise matching well continuously expanding the supply of truckers and added user thickness.
Additionally for our one stop service our value added services, such as freight brokerage service quite solutions and ensure energy services and PTC. So continued penetration scene that driving with our transportation business to enhance user satisfaction and the stickiness.
Hui Zhang: These achievements further boosted our network effect growth momentum, catalyzing the road-free market shift from traditional offline models to an innovative, efficient, and digitalized future. The strong growth of the business has brought us more than expected financial performance. The annual income increased by 25.3% and reached 24.1 billion yuan.
These achievements further boosted our network effects relative momentum capitalizing the relative market shift from traditional offline model to an innovative efficient and digitalize the future.
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Hui Zhang: After the adjustment under the Non-US Joint Accounting Regulation, the net profit increased by 64.4% and reached 7.3 billion yuan. In the future, we will continue to optimize the platform input structure and improve the transformation efficiency to create greater value for shareholders. On February 24, the fourth meeting of the Central Financial and U.S. Department of State emphasized the effective reduction of all social logistics costs.
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Hui Zhang: The production and consumption of logistics links is the foundation of Zhishan's real economy and will gain more attention and support. In such a big environment, we are confident that digital logistics will further promote the improvement of logistics efficiency and the reduction of costs to create greater value for the industry and users. Our strong business growth translated into exceptional financial performance, with revenues growing by 25.3% year-over-year to RMB2.41 billion in the fourth quarter, and Loan Gap adjusted net income increasing by 64.4% year-over-year to RMB733 million.
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Our strong business growth translated into exceptional financial performance with revenues growing by 25, 3% year over year to RMB 2.41 billion in the fourth quarter.
Adjusted net income increased by 64, 4% year over year to RMB 733 million going forward. We remain we remain committed to optimizing our revenue mix and enhance the monetization efficiency to create greater value for our shareholders.
In February 'twenty 'twenty four the fourth meeting of the Central Commission for a financial and economic our fifth emphasize the importance of effectively reducing logistics costs throughout society.
Mao Mao: Going forward, we remain committed to optimizing our revenue mix and enhancing monetization efficiency to create greater value for our shareholders. In February 2024, the fourth meeting of the Central Commission for Financial and Economic Affairs emphasized the importance of effectively reducing logistics costs throughout China. As logistics serves as the backbone of the real economy, it continues to garner increased attention and support. Within this strategic landscape, by leveraging digitalized logistics offerings, we are confident in leveraging digital logistics to further enhance logistics efficiency and reduce costs, creating greater value for both the industry and our users. Next, I will give the time to Simon to give a brief introduction to our actual performance.
<unk> logistics serve as the backbone of the real economy. It continues to garner increased attention as a part within the strategic landscape by leveraging digital light logistics offerings. We are confident in leveraging did get cold logistics to further enhance logistics efficiency and reduced cost creep.
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Let me pass the call over to our CFO, Simon who will provide an update on our fourth quarter business progress and financial results.
Thank you Mr. John and thanks, everyone for making the time to join our earnings conference call today.
Chong Cai: Thank you. Let me pass the call over to our CFO, Simon, who will provide an update on our fourth quarter's business progress and financial... Thank you, Mr. Chong, and thanks everyone for making the time to join our earnings conference call today. I will now provide an overview of our operational highlights and financial performance for the fourth quarter of 2023. We concluded the year with strong operational and financial results in the fourth quarter. Our fulfilled orders experienced a remarkable 40.4% year-over-year growth, driving quarterly average daily fulfilled orders to an all-time high. Despite the impact of the adverse weather conditions, fourth quarter order growth again outpaced the overall freight market, propelled by sustained scale expansion and increased activity of both shipper and trucker users.
I will now provide an overview of our operational highlights and financial performance for the fourth quarter of 2023.
We concluded the year with strong operational and financial results.
For few others experienced a remarkable 44% year over year growth driving quarterly average daily fulfilled others to an all time high.
Despite the impact of the adverse weather conditions fourth quarter order growth again outpaced the overall freight market propelled by sustained scale expansion and increased activity of both shipper and trucker users.
We set a new record and fulfillment rate at approximately 32% in the fourth quarter, an increase of more than eight percentage points year over year and more than three percentage points quarter over quarter.
From a supply demand perspective, the quarters increased supply of truckers improved matching efficiency across various transaction types, including negotiated authors tap and go others entrusted shipments and including long haul full truckload less than truckload and <unk>.
Chong Cai: We set a new record in fulfillment rate at approximately 32% in the fourth quarter, an increase of more than 8 percentage points year over year and more than 3 percentage points quarter over quarter. From a supply-demand perspective, the quarters saw an increased supply of truckers, improved matching efficiency across various transaction types, including negotiated orders, tap-and-go orders, entrusted shipments, and including long-haul full truckload, less-than-truck Operationally, we can continue to make progress with our tiered trucker operation strategy during the quarter.
Short haul by distance distance range.
Operationally, we continue to make progress without tier trucker, all Krishna strategy during the quarter.
Initiatives, such as our saving package two points and truckers deposits helped to strengthen our tier to truck rating management and incomes fulfillment quality of truckers, thereby boosting with retention among the high frequency I pick truckers.
In terms of all those structure, we sustain the growth momentum of direct shippers from the third quarter with direct shippers contributing more than 45% of total fulfill the orders in the fourth quarter.
Chong Cai: Initiatives such as our Saving Package 2.0 and Truckers' Deposits helped strengthen our tiered truck rating management and enhanced the fulfillment quality of truckers, thereby boosting retention among high-frequency active truckers. In terms of order structure, we sustained the growth momentum of direct shippers from the third quarter, with direct shippers contributing more than 45% of total fulfilled orders in the fourth quarter. We expect DirecShippers' order contribution will continue to grow as their penetration increases, leading to additional improvements in our platform's overall order fulfillment efficiency. Regarding our user base, our average super MAUs reached a historic high of 2.24 million in the fourth quarter, up 18.7% year-over-year and 4.9% sequentially. This increase was primarily driven by rapid growth of our non-member low-frequency direct shippers. Meanwhile, our 1688 and 688-member shippers' activity levels remained essentially stable year over year, given all types of shippers, whether it's professional shipper or direct shipper, have incentives looking for efficient shipping channels to lower their logistics costs.
We expect direct shippers order contribution will continue to grow as penetration increases leading to an additional improvement in our platforms overall order fulfillment efficiency.
Regarding our user base, our average Super Meu's reached a historic high of 2.24 million in the fourth quarter up 18, 7% year over year and four 9% sequentially.
This increase was primarily driven by rapid growth of our long number low frequency direct shippers.
While our one 688 and six to eight members shippers activity levels remained essentially stable year over year, given all type types of shippers, whether its professional shipper or direct shipper have incentives looking for efficient shipping channels to lower logistics costs.
We expect this trend to continue with robust growth in our shipper user base through through the year of 'twenty 'twenty, four primarily from low and medium frequency direct shippers.
Our platform strong and growing network effect draw parallel growth in both our trucker base and activity during the quarter. For example, the number of active truckers fulfilling orders through our platform over the past 12 months rose to 388 million in additional.
Chong Cai: We expect this trend to continue with robust growth in our shipper user base through the year of 2024, primarily from low and medium frequency direct shippers. Our platform's strong and growing network effect drove parallel growth in both our trucker base and activity during the quarter. For example, the number of active truckers fulfilling orders through our platform over the past 12 months rose to 3.88 million. In addition, we maintained our shipper member 12-month loading retention rate, as well as next month's retention of truckers who responded to orders on a sequential basis.
We've maintained our shipper remember 12 months rolling retention rate as well as our next month's retention of truckers, who responded to others on a sequential basis.
In the fourth quarter of 2023 revenues from our online.
Online transaction Commission amounted to RMB, $644 8 million up 44% year over year.
This growth was fueled by solid expansion in.
In a number of a few of the others.
The heightened commission penetration.
Chong Cai: In the fourth quarter of 2023, revenues from our Online Transaction Commission amounted to RMB644.8 million, up 44% year-over-year. This growth was fueled by a solid expansion in the number of fulfilled orders and a heightened commission penetration. Our commission model currently covered more than 59% of fulfilled orders and generated an average commission per transaction of RMB 23.7 during the quarter. It is important to note that, historically, we did not include revenues from our InterCity Commission model in online transaction commission revenues. Therefore, intra-city transactions were also included when calculating our commission penetration, resulting in an underestimation of overall commission model coverage.
Our commission model currently covered more than 59% off a few of the others and generated an average commission per transaction of RMB $23 seven during the quarter.
It is important to note that historically, we did not include revenues from our interested a commission model.
Online transaction Commission revenues.
Therefore interested here transactions. We're also included when calculating our commission penetration, resulting in an email.
And their estimation of horrible overall commission model coverage.
Moving forward starting from 'twenty 'twenty four we will rename our transaction Commission revenue stream to transaction services, which consists itself all monetization from truckers really relating to freight matching services, including the revenue generated from our interest of the business that was previously classified.
Slide under the freight listing and value added services in order to better reflect the company's latest development status and the business nature of our revenues.
Chong Cai: Moving forward, starting from 2024, we will rename our Transaction Commission revenue stream to Transaction Services, which consists of all monetization from truckers relating to freight matching services, including the revenue generated from our intercity business that was previously classified under the Freight Listing and Value-Added Services, in order to better reflect the company's latest development status and the business nature of our revenue stream. Next, a brief update on our share repurchase program. From November 20, 2023 to March 6, 2024, we repurchased approximately 7.9 million ADS shares, totaling approximately US$52.7 million. Since we announced the program, we have purchased a total of around 30.7 million ADS shares from the open market, with a total value of approximately US$200 million. Now our 2023 fourth quarter and year-end financial results. In the interest of time, I will be presenting abbreviated highlights only.
Next a brief update on our share repurchase program from November.
2022 'twenty three to March to six 'twenty 'twenty four we repurchased approximately seven 9 million shares totaling approximately U S dollar 52.7 minutes.
Since we announced the program we have repurchased a total of around 37 million shares from the open market with a total value of approximately U S dollar $200 million.
No our 'twenty to 'twenty, three fourth quarter and year end financial results in interest of time I'll be presenting abbreviated highlights only we encourage you to refer to our press release issued earlier today for complete details.
Total revenues for full year 'twenty to 'twenty three.
M B eight 4 billion, representing a 25, 3% increase year over year net.
Net revenues for the fourth quarter were RMB, two 4 billion, representing a 25, 3% increase year over year.
Net revenues from freight matching services, including service fees from freight brokerage models membership fees from listening models and commissions from electron section services were RMB $7048 8 million for the full year of 2023.
Chong Cai: We encourage you to refer to our press release issued earlier today for complete details. Total revenues for full year 2023 were RMB8.4 billion, representing a 25.3% increase year-over-year. Net revenues for the fourth quarter were RMB2.4 billion, representing a 25.3% increase year-over-year.
24, 6% from 2022, primarily due to the rapid growth in transaction commissions as well as growing revenues from our freight brokerage services.
Revenues from our freight brokerage service reached RMB, three 9 billion for 2023 ups up 16, 5% year over year.
Chong Cai: Net revenues from freight matching services, including service fees from freight brokerage models, membership fees from listing models, and commissions from online transaction services, were RMB 7,048.8 million for the full year of 2023, up 24.6% from 2022, primarily due to the rapid growth in transaction commissions, as well as growing revenues from our freight brokerage services. Revenues from our freight brokerage services reached RMB 3.9 billion for 2023, up 16.5% year-over For the fourth quarter, net revenue increased by 19.2% to RMB1.1 billion, primarily driven by an increase in transaction volume due to robust user demand. Revenue from the Freight Listing Service or RMB 929.4 million for the full year, up 9% year-over-year, and rose 10.4% year-over-year in the fourth quarter to reach RMB246.2 million, primarily due to a growing number of total paying members.
For the fourth quarter net revenue increased by 19, 2% to RMB, one 1 billion, primarily driven by an increase in transaction volume due to robust user demand.
Revenue from <unk> services were RMB.
$929 4 million for the full year up 9% year over year, and rose 10, 4% year over year in the fourth quarter to reach RMB $246 2 million, primarily due to a growing number of total paying members.
Revenues from transaction commissions amounted to RMB, two 2 billion in 2023, representing a 52, 6% increase year over year.
For the fourth quarter last year net revenues amounted to RMB $644 8 million, representing a 44% increase year over year, primarily driven by strong order.
So although volume growth.
As well as higher for all of their transactional Commission.
Revenues from value added services were RMB, one 4 billion in 2023, representing a 28, 8% increase year over year for the fourth quarter net revenues increased to $392 2 million, representing a 27 points 27, 3%.
Chong Cai: Revenues from transaction commissions amounted to RMB 2.2 billion in 2023, representing a 52.6% increase year-over-year. For the fourth quarter of last year, net revenues amounted to RMB 644.8 million, representing a 44% increase year-over-year, primarily driven by strong order volume growth, as well as higher per order transaction commission. Revenues from battery-added services were RMB 1.4 billion in 2023, representing a 28.8% increase year-over-year. For the fourth quarter, net revenues increased to RMB 392.2 million, representing a 27.3% increase year-over-year, mainly attributable to an increase in revenues from credit solutions and other value-added services. Fourth Quarter Cost of Revenue was RMB 1,152.3 million compared with RMB 951.8 million in the prior year period. This increase was primarily due to an increase in VAT-related tax surcharges and other tax costs and net of tax refunds from government authorities.
<unk> year over year, mainly attributable to an increase in revenues from credit solutions and other value added services.
Fourth quarter cost of revenues.
RMB $1152 3 million compared with RMB 951, 8 million in the prior year period.
This increase was primarily due to an increase in <unk> related tax surcharges and other tax cost and net of tax we felt from government authorities.
These tax related costs net of refunds totaled RMB 1000.
It was $15 3 million, representing an increase of 18, 4% from RMB $857 4 million in the same.
Period of 2022 primarily due to the increase.
Due to the continued growth in transaction activities are.
Involving our freight brokerage services.
Our sales and marketing expenses in the fourth quarter were RMB 421 million compared with RMB $281 1 million in the prior year period the.
The increase was primarily due to an increase in advertising and marketing expenses for user acquisitions.
General and administrative expenses in the fourth quarter were RMB 266 million compared with RMB $408 2 million in the prior year period.
The decrease was primarily due to lower share based compensation expenses and professional service fees.
R&D expenses in the FERC in the fourth quarter were RMB $255 3 million compared with RMB 250 to $250 2 million in the prior year period.
Chong Cai: These tax-related costs net of refunds totaled RMB1,015.3 million, representing an increase of 18.4% from RMB857.4 million in the same period of 2022, primarily due to the continued growth in transaction activities involving our freight brokerage service. Our sales and marketing expenses in the fourth quarter were RMB421 million compared with RMB281.1 million in the prior year period. The increase was primarily due to an increase in advertising and marketing expenses for user acquisition. General and administrative expenses in the fourth quarter were RMB$266 million, compared with RMB$408.2 million in the prior year period. The decrease was primarily due to lower share-based compensation expenses and professional service fees.
The increase the increase was primarily due to higher share based compensation expenses and increased investments in technology infrastructure, partially offset by a decrease in salary and benefit expenses.
Income from operations in the fourth quarter were RMB $250 8 million compared with a loss of a loss from operations of RMB five 3 million in the same period of 2020, 2022 netting.
Net income in the fourth quarter was RMB.
580.
$88 3 million, an increase of 200 and 206% from RMB $195.
7 million in the same period of 2022.
Under non-GAAP measures adjusted operating income in the fourth quarter was RMB $398 8 million, an increase of 66% from RMB $248 4 million in the same period of 2022.
Chong Cai: RMB expenses in the fourth quarter were RMB 255.3 million compared with RMB 250.2 million in the prior year period. The increase was primarily due to higher share-based compensation expenses and increased investment in technology infrastructure, partially offset by a decrease in salary and benefit expenses. Income from operations in the fourth quarter was RMB 250.8 million compared with a loss from operations of RMB5.3 million in the same period of 2022.
Adjusted net income in the fourth quarter was RMB 733 million an increase of.
64, 4% from RMB, 400, and $445 8 million in the same period of 2022.
Basic and diluted net income per E. D. S were RMB 0.58 in the fourth quarter compared with RMB.
One eight in the same period of 2022.
Chong Cai: Net income in the fourth quarter was RMB588.3 million, an increase of 200.6 percent from RMB195.7 million in the same period of 2022. Under non-capital measures, our adjusted operating income in the fourth quarter was RMB398.8 million, an increase of 60.6% from RMB248.4 million in the same period of 2022. Our adjusted net income in the fourth quarter was RMB733 million, an increase of... 54.4% from R&B 445.8 million in the same period of 2022. Basic and diluted net income per ADS were RMB 0.58 in the fourth quarter compared with RMB 0.18 in the same period of 2022.
non-GAAP adjusted basic net income per ads were RMB <unk> seven in the fourth quarter compared with RMB <unk> 40.
Four two in the same period of 2022.
non-GAAP adjusted diluted net income per ads were RMB <unk> 60.
Six nine in the fourth quarter compared with RMB 0.42 in the same period of 2022.
As of December 31st 2023, our cash and cash equivalents restricted cash and short term investments long term time deposits and wealth management products totaled RMB 27, 6 billion compared with RMB 26, 3 billion as of December.
31 2022.
For our first quarter 2024 business outlook, we expect our total net revenues to be between RMB 2.11 billion and RMB 216 billion, representing a year over year growth rate of approximately 23, 9% to 20.
Seven 1% and.
This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change and cannot be predicted with reasonable accuracy as of the date hereof.
Chong Cai: Non-GAAP-adjusted basic net income per ADS, or RMB 0.7 in the fourth quarter compared with RMB 0.42 in the same period of 2022. Non-GAAP Adjusted Diluted Net Income per ADS, or RMB 0.69 in the fourth quarter compared with RMB 0.42 in the same period of 2022. As of December 31st, 2023, our cash and cash equivalents, restricted cash, short-term investments, long-term time deposits, and wealth management products totaled RMB 27.6 billion, compared with RMB 26.3 billion as of December 31st, 2022.
That concludes our prepared remarks, we would now like to open the call to Q&A operator. Please go ahead.
We will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
Is it any time your question has been addressed and you would like to withdraw 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.
At this time, we will pause momentarily to assemble our roster.
Okay.
Chong Cai: For our first quarter 2024 business outlook, we expect our total net revenues to be between RMB 2.11 billion and RMB 2.16 billion, representing a year-over-year growth rate of approximately 23.9% to 27.1%. This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change and cannot be predicted with reasonable accuracy as of the date hereof. That concludes our prepared remarks.
Our first question today comes from Ronald Keung with Goldman Sachs. Please go ahead.
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Operator: We would now like to open the call to Q&A. Operator, please go ahead. We will now begin the question and answer session. To ask a question, you may press star and one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
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We've seen that.
32% in the fourth quarter.
Key drivers behind them.
And.
With the year on year increase and that sequentially, we did well and what is your expectation for <unk>.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. For the benefit of all participants on today's call, if you wish to ask your questions to management in Chinese, please immediately repeat your question in English. At this time, we will pause momentarily to assemble our roster. The first question today comes from Ronald Keung with Goldman Sachs. Please go ahead.
For 2024, thank you.
Thank you Ron.
This quarter, we have seen a substantial improvement in the freight matching efficiency, which can be attributed to the rapid expansion of our user base on both ends.
Skilled effects generated as a result, so with more active shippers on the platform, we attract new truck or a registration.
Ronald Keung: Thank you, Chairman Zhang, for sharing with us. I'd like to ask about the CGB rate. We see that it has reached a new high of 32%. The same rate has increased by 8%. What are the main driving factors?
During a sufficient supply of transportation capacity to meet the diverse needs of shippers.
Quickly.
This dynamic cycle again lead to an influx of newly registered small and medium business owners.
Specifically the significant improvement in fulfillment rates in the fourth quarter. It was driven by a number of positive factors.
Ronald Keung: And what do we think about the 2024 rate? Do we have a target? I'd like to ask you.
Firstly, the average truck or daily.
Active user.
We're responding to others increased by approximately 13% year over year in the quarter, resulting in an increase in effective supply all the truckers site.
Ronald Keung: Thank you, management, for sharing. I'd like to ask about the fulfillment rate. We saw a record fulfillment rate of 32% in the fourth quarter. What are the key drivers behind this?
Further balancing the supply and demand and therefore, increasing the probability of successful matches.
And secondly, ongoing optimization of the shippers structure also led to an improvement in matching capability.
Hui Zhang: And with the year-on-year increase and the sequential increase as well, what is your expectation for the fulfillment rate in 2024? Thank you. Thank you, Ronald.
The contribution of your food orders from direct shippers increased by three percentage points year over year to over 45%.
Hui Zhang: In this quarter, we have seen a substantial improvement in freight matching efficiency, which can be attributed to the rapid expansion of our user base on both ends and the scale effects generated as a result. So with more active shippers on the platform, we attract new trucker registrations, ensuring a sufficient supply of transportation capacity to meet the diverse needs of shippers quickly. This dynamic cycle again leads to an influx of newly registered small and medium business owners. Specifically, the significant improvement in perfume sales in the fourth quarter was driven by a number of positive factors.
Housing the overall quality of the listing and the certainty of order fulfillment.
Okay.
Another key factor is to continue the improvement.
The platform's pricing capabilities.
For big data based on measurement.
The platform can set reasonable recommended prices.
Better align with the current market conditions and further increasing the likelihood of transaction completion and Additionally, we have continued to create remarkable value ads to our users during different human process, such as disputes resolution end user rating.
All of which have also contributed contributed to the increase in fulfillment rates.
I'm looking into the coming year, we will continue to attract more and more.
Hui Zhang: Firstly, the average trucker daily active user who is responding to orders increased by approximately 13% year-over-year in the quarter, resulting in an increase in effective supply on the trucker side, further balancing the supply and demand and therefore increasing the probability of successful matches. And secondly, ongoing optimization of the shipper structure has also led to an improvement in matching capabilities. The contribution of fulfilled orders from direct shippers increased by 3 percentage points year over year to over 45%, enhancing the overall quality of order listing and the certainty of orders.
Sure.
Most shippers and truckers by utilizing a multilateral market approach to create and match more supply and demand, thereby maintaining a better balance between users on both sides.
We also continue to encourage shippers to utilize transaction types, such as in trusted shipment and tap and go which more truckers are willing to respond to while consistently optimizing the product function and improving data, especially see to drive even higher for human rights.
Also ask the user to structure a continuously shift towards direct shippers.
Hui Zhang: Another key factor is the continued improvement of the platform's pricing capability. Through a big data and measurement, the platform can set reasonable recommended prices that are better aligned with the current market conditions, further increasing the likelihood of transaction completion. Additionally, we have continued to create remarkable value-adds to our user-stewarded fulfillment process, such as dispute resolution and user rating, all of which have also contributed to the increase in fulfillment rate. Looking into the coming year, we will continue to attract more shippers and truckers by utilizing a multilateral market approach to create and match more supply and demand, thereby maintaining a better balance between users on both sides. We also continue to encourage shippers to utilize transaction types such as entrusted shipment and tap and go, which more truckers are willing to respond to, while consistently optimizing the product function and improving data efficiency to drive even higher fulfillment rates. Also, as the user structure continuously shifts towards direct shippers, we also anticipate a further improvement in the fulfillment rate. Thank you. The next question comes from Eddy Wang with Morgan Stanley. Please go ahead.
We also anticipate a further improvement in the fulfillment rate. Thank you.
Thank you.
The next question comes from Eddy Wang with Morgan Stanley. Please go ahead.
Okay.
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Whole woman audio Austin, Yes, Jim I think that at the metallic sheet divest or somebody on the shipping Oh, what did you find yourself. Thank you management for taking my question. My question is regarding diesel fuel orders.
We noticed that there was a 40% year over year order fulfillment.
<unk> seen the fourth quarter and for the full year last year. They were on a 33% year over year. So this is significantly higher than the growth.
The growth of the broad logistic market so what's the.
Eddy Wang: Good evening, Mr. Zhang, Mr. Simon, and Mrs. Mao. First of all, congratulations on a very strong performance. My question is about the increase in the number of pre-orders in the fourth quarter. I see that the increase in the fourth quarter is still very strong, 40% year-over-year, and then the year-over-year growth is also 33%. This is much faster than the growth rate of the entire supply chain.
The driver behind the.
Strong growth and what's your expectation for the oilfield auto growth Oh boy to growth in 2024. Thank you.
Yeah.
Thank you Eddie.
Things since last year, the online penetration of the freight matching industry has shown very consistent growth of our platform has maintained strong order volume growth over the past year and mainly benefiting from the continued increase of new shippers improved activity level of existing users.
Eddy Wang: So I just want to ask, what are the main driving factors behind the increase in pre-order orders on our platform? And what is our expectation for the increase in pre-order orders in 2024? Thank you, management, for taking my question. My question is regarding fulfilled orders.
And continued improvement in matching efficiency as a result of operational strategy optimization in.
Eddy Wang: We noticed that there was a 40% yield per year of fulfilled orders in the fourth quarter, and for the full year, last year, there was around 33% yield per year. So this is significantly higher than the growth of the broad logistics market. So what's the major driver behind this strong growth, and what's your expectation for fulfilled order growth, volume growth, in 2024? Thank you. Thank you, Eddy.
In the fourth quarter, we sustained our holistic user acquisition at force across various channels, including App store.
Information streams in S E M among others.
Currently our leading network effects brought us a large number of user and user registration through natural traffic.
As of the end of December we had an average of around 20000, new shippers.
Hui Zhang: Since last year, the online penetration of the freight matching industry has shown very consistent growth. Our platform has maintained strong order volume growth over the past year, mainly benefiting from the continued increase of new shippers, improved activity level of existing users, and continued improvement in matching efficiency as a result of operational strategy optimization. In the fourth quarter, we sustained our holistic user acquisition efforts across various channels, including App Store, Information Streams, and SEM, among others. Additionally, our leading network effect brought us a large number of new user registrations through natural traffic.
And 10000, new truckers registering.
On our platform every day I'm looking ahead to the coming year, we will continue to invest in branding and improve user acquisition.
Used to improve user acquisition efficiency by further exploring.
Innovative user acquisition channels, such as increasing offline trucks stickers.
Advertisement and promoting all of them in the program.
At the same time, we will optimize the conversion of registered users to active users through a series of effective operational twos.
Hui Zhang: As of the end of December, we had an average of around 20,000 new shippers and 10,000 new truckers registering on our platform every day. Looking ahead to the coming year, we will continue to invest in branding and improve user acquisition, and use that to improve user acquisition efficiency by further exploring innovative user acquisition channels, such as increasing offline truck stickers, advertisements, and promoting online information. At the same time, we'll optimize the conversion of registered users to active users through a series of effective operational tools. Also, this quarter brought more than just the growth of long-haul business, with our ongoing product functionality and operational efficiency optimization. The less-than-truckload orders lashed through our platform also grew rapidly in the past quarter. I would believe that the online penetration rate of LTL remains considerably low at the moment, indicating there's still a huge market opportunity to be unlocked.
Also this quarter brought more than just the growth.
Just a growth of long haul business with our ongoing product functionality and operate operational efficiency optimizations, the less than truckload others matched through our platform also grew rapidly in the past quarter.
We believe that the online penetration rate of L. T O remains considerably considerably low at the moment, indicating there's a still a huge market opportunity to be unlocked.
As we look looking out into 'twenty 'twenty, four we will see new opportunities for growth as the trend towards direct shippers and L. T O transactions continue to intensify.
We anticipate continued high growth in our total fulfillment others not solely confined to the MTO market.
Additionally, we anticipate making significant strides in new markets, such as L. T O and capitalizing on emerging opportunities.
Charlie Chen: As we look ahead into 2024, we will see new opportunities for growth as the trend towards direct shippers and LTL transactions continues to intensify. We anticipate continued high growth in our total fulfillment orders, not solely confined to the FTL market. Additionally, we anticipate making significant strides in new markets, such as LTL, capitalizing on emerging opportunities. Thank you. The next question comes from Charlie Chen with China Renaissance. Please go ahead.
Yeah.
Yeah.
Sure.
The next question comes from Charlie Chen with China Renaissance. Please.
Go ahead.
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Charlie Chen: Thank you for giving me this opportunity to ask questions. I would like to know about the progress of member service. We would like to see the trend of the number of members in the fourth quarter. We see that the number of members is increasing relatively fast, but the income growth of the member fee is relatively slow. What is the main reason for the gap in the middle?
Jose junior or senior enough, where you're in touch with each usually something Oh, what did you find yourself.
Could you. Please provide me with an update on flight Lufthansa. This is specifically the trend in the number of subscribing. She passed not members during the fourth quarter. It seems that the revenue growth of Fred lifting has been slower compared to the fast growth of monthly active she says could you. Please.
Charlie Chen: What is the expectation for the number of members in 2024? I will translate that myself. Could you please provide me with an update on freight listing services, specifically the trend in the number of subscribing shipper members during the fourth quarter? It seems that revenue growth for freight listing has been slower compared to the fast growth of monthly active shippers. Could you please explain the main reason behind the growth rate discrepancy and provide us with an estimate of the expected membership growth for 2024?
Explain the main reason behind the gross rate discrepancy and provide us with an estimate of the expected membership growth for country 94. Thank you.
Thank you the number of shipper members remain largely stable in the fourth quarter with approximately 790000 existing subscribing members as of December.
Hui Zhang: The number of Shipper members remained largely stable in the fourth quarter, with approximately 790,000 existing subscribing members as of December.
A steady increase from last quarter end.
Super members have demonstrated strong retention and engagement with a 12 month rolling and retention rates of over 80% since 2003.
Hui Zhang: A steady increase from last quarter. Our shipper members have demonstrated strong retention and engagement with a 12-month rolling retention rate of over 80% since 2023. The reason membership growth has been primarily driven by two factors.
The reason membership growth has been primarily driven by two factors.
Firstly, we have already achieved a high penetration rate among professional shippers.
We expect the number of shipper members from this segment to remain relatively stable in the future.
Hui Zhang: Firstly, we have already achieved a high penetration rate among professional shippers, and we expect the number of shipper members from this segment to remain relatively stable in the future. Secondly, we have observed a majority of the new shippers are low and medium frequency users, and the number of orders included in our 688 memberships exceeded their needs. So in response, our operation team is actively formulating product strategies and exploring the development of packages that are more suitable for low frequency direct shipping. In addition, although direct shipper members contribute less revenue from our pool perspective, there are specific characteristics such as willingness to accept higher freight rates.
Secondly, we have observed a majority of the new shippers are low and medium frequency users.
The number of orders included in a 688 memberships.
Exceeded their needs so it.
In response, our operation teams is actively formulating product strategies and exploring the development of packaged packages that are more suitable for low frequency direct shippers.
In addition, although direct ship her members contribute less revenue from our <unk> perspective.
There are specific characters such as are willing to.
Except higher.
<unk> freight rates.
Hui Zhang: Demonstrate the battles of the human way, provide us with a greater potential for cross-valley with online transaction services and value-added products. So, in the long run, DirectShippers will not only serve as the primary catalyst for future freight listing revenue growth but also present growth opportunities across rates, and other segments of our program. The next question comes from Jiulu Dui with CICC. Please go ahead. Hello, can you hear me
Demonstrate better fulfillment rates provide us with a greater a greater potential for cross selling with online transaction services and value added products. So in the long run direct shippers will not only served as the primary catalyst for future freak listing revenue growth, but will also.
Present growth opportunities across.
Other segments of our business.
Okay.
The next question comes from Jean Luc Romain with TICC. Please go ahead.
Jiulu Li: Thank you. Thank you. Bye. Good evening, President Zhang and Chairman Mao.
Hey did you know what the shame.
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Jiulu Li: Thank you for accepting my question. I mainly have two questions. The first question is about the draft.
This is there's a lot of key one would there be untrue.
No go ahead Keith.
Jiulu Li: We see that the overall draft process is relatively stable in 2023. So what is our overall draft plan for 2024? What are the main strategies for the penetration rate and draft rate?
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Jiulu Li: So let me ask the first question first. Okay, my first question is about commission strategies. So what are the overall commission strategies for 2024? And, in particular, what is your plan for commission rate and commission coverage improvement in 2024? Thank you. Thank you. Thank you. Thank you, Jiulu.
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My first question is about the commission strategy. So what are the overall commission strategy for attendees and it's well and in particular what is your plan for commission rate and the commission cut rate improvement in terms of your phone.
Okay.
Yeah.
Thank you to the substantial increase in our commercial revenue.
Hui Zhang: The substantial increase in our commission revenue... in the past quarter was fueled by the rapid growth rate of the platform's overall orders. The number of commissioned orders rose by 41% year-over-year and nearly... 10% from the third quarter. From an operational level, this quarter, we will continue to prioritize growth in users rather than just extending to additional cities under the commission model. By the end of 2023, our commission model will have been successfully rolled out in 204 cities. In the meantime, we have also stress tested higher Commission parameters in randomly selected cities to verify its viability.
In the past quarter was fueled by the rapid growth rate of the platform's overall orders.
The number of commission orders rose by 41% year over year annuity.
10% from the third quarter.
On operational level this quarter.
We'll continue to prioritize growth in users and all that.
Volume rather than just expanding to additional cities zones or the commission model.
But by the end of 2023, our commission model.
Had been successfully rolled out in 204 cities in the meantime, we have.
Also stress test a higher commission parameters and randomly selected cities and verified describing it.
Hui Zhang: Entering into 2024, we will remain; we will maintain our prudent approach to our transaction service business. In addition, we will continue to enhance the value of our transaction services to users through ongoing product functionality improvements. For instance, we recently launched our Shenxingbao 2.0 product for truckers, which includes various privileges and protection features for those who subscribe. And truckers who purchase the Faving Package 2.0 will also receive discounts on future commissions as well as a bonus order, which they can redeem for additional benefits such as expedited deposit refund.
Entering 2024, we will remain.
We will maintain our prudent approach for our transaction service business. In addition, we will continue to enhance the value of our transaction services to users through ongoing product functionality improvements.
For instance, we recently launched our sensing ball or dampening saving package to zero product for truckers, which include.
Various privileges and protection features for those who have subscribed and truckers, who purchased the saving package two points.
Also received discounts on future commissions as well as a bonus all their points, which they can redeem for additional benefits such as expedited deposit referrals.
Hui Zhang: From a long-term perspective, we believe that our current commission rates are very conservative and that there's still ample room to boost our commission revenues in the future. Looking ahead into 2024, as the platform's network affects, strengthens, and users rely on a deepened platform. We expect that year-over-year commission revenue growth will remain strong and potentially surpass the growth rate that we achieved in the past. Thank you. Thank you. My second question is mainly about our expenses.
From a long term perspective, we believe that our current commission rates are very conservative.
And that is due ample room to boost our commission revenues in the future.
Looking ahead into 2024 as the platforms in other words effects strengthens and users' reliance on our platform deepens.
We expect the year over year Commission revenue growth will remain strong and potentially surpassing.
The growth rate that we achieved in the past year.
Okay.
What are they are the ones you're not sure about.
Can we all shared chairwoman Jacob.
Jiulu Li: We can see that in the fourth quarter, the sales cost of Nongap increased by 50.6%. In fact, it is higher than what we saw in the first three quarters and even higher than our income. So what are the main reasons for the higher sales costs in this quarter? And if we look back at 2024, how should we predict the fluctuation of sales costs? I will also translate it here.
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Jiulu Li: My second question is that Nongap's sales and marketing expenses increased by 50.6% year-over-year in the fourth quarter, outpacing revenue growth for the same period. What are the main reasons for the high growth in sales and marketing expenses in the quarter? How do you expect sales and marketing expenses to trend in 2024? Thank you. The high growth rate of non-gap sales and marketing expenses in the fourth quarter was primarily due to the increase in investment in marketing to acquire new users both through online and offline channels, as well as brand promotion to increase our brand awareness. Online, we mainly advertise through app stores, information streams, and search engine marketing, among other venues.
Anyway by my.
My second question is that non-GAAP sales and marketing expenses increased by.
The key point.
Yeah over here in the fourth quarter outpacing revenue growth for the same period.
Main reasons for the high growth in sales and marketing.
Benefits in the quarter, how do you like expect sales and marketing expenses kitchen and clean it in there for six.
Thank you.
High growth rate of non-GAAP sales and marketing expenses in the fourth quarter was primarily due to the.
The increase of investments in marketing to acquire new users both through online and offline channels as warehouse a friend promotion to incur.
To increase our brand awareness.
We mainly advertise through App stores information streams and search engine marketing.
Among other values and offline, we primarily acquire users through truck stickers and advertising.
Chong Cai: And offline, we primarily acquire users through truck stickers and advertising, and our few marketers. Moving into the coming year, we will continue to employ a very active user acquisition strategy to grow our user base and optimize our user structure. Our overall user acquisition strategy will continue to attract shippers and truckers to our platform via a combination of online and offline channels, driving expansion in our logistics now. We expect to increase our user acquisition efforts in comparison with last year. In the longer run, we anticipate a continued increase in sales and marketing expenses, aligned with the expansion of new business ventures. However, as our revenue quickly scales up, and especially as we optimize commission penetration and further improve operating leverage, sales and marketing expenses will gradually decline as a percentage of total net revenue.
And our field marketing teams.
Moving to the coming year, we will continue to employ.
They're active user acquisition strategy to grow our user base and optimize our use of structure are all user acquisition strategy will continue to attract shippers and truckers to our platform via a combination of online and offline channels.
Driving expansion in our logistics network.
We expect to increase our user acquisition at force in comparison.
With last year.
One we anticipate a continued increase in sales and marketing expenses aligned.
With the expansion of new business ventures, However, as our revenue quickly scale up and especially as we optimize commission penetration and improved further improved operating leverage sales and marketing expenses will gradually decline declining as a percentage of total net revenues.
Operator: This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Again, thank you everyone for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance directly or TPG in West Ridge. Our contact information for IR in both China and the U.S. can be found in today's press release.
Okay.
Okay.
Yeah.
Okay.
This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
Okay, and thank you everyone for joining us today.
If you have any further questions. Please feel free to contact us at Flotek, along exactly or TPG Investor Relations.
Our contact information for IR in both China and U S can be found in today's press release.
Operator: Have a good day. Bye-bye. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Two Days Later BF-WATCH TV 2021
Good day.
Bye bye.
Okay.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
[music].