Q3 2024 Full Truck Alliance Co Ltd Earnings Call
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Speaker Change: Ladies and gentlemen, good day and welcome to Full Truck Alliance's 3rd Quarter 2024 Earnings Conference Call.
Speaker Change: 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.
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 from liability as established by the US Private Securities Litigation Reform Act.
Mao Mao: 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 and discussion.
Mao Mao: A general discussion of the risk factors that could affect FDA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update this forward-looking information except as required by law.
Mao Mao: During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today.
Mao Mao: Joining us today on the call from FTA's senior management are Mr. Hui Zhang, our founder, chairman, and CEO, and Mr. Simon Tai, our CFO.
Speaker Change: I will now turn the call over to our founder, chairman and CEO, Mr. Zhang. Please go ahead, sir.
Speaker Change: Hello everyone, welcome to the 3rd quarter of the Manchester City Council 2024. In the past quarter, we have continued to enhance digitalization, smartization, and change in logistics.
Speaker Change: to help businesses in the current macroeconomic environment to further reduce their costs.
Speaker Change: has achieved a growth of 22% compared to the previous year and continues to replace the traditional offline payment model. At the same time, with the rapid expansion of the user scale, the dual-sided effect of the platform continues to be strengthened, bringing more extreme cost-effectiveness and transaction efficiency.
驱动公司增长,飞轮持续运转
Speaker Change: Hello everyone. Thank you for joining us today on our third quarter of 2024 earnest conference call. Over the past quarter we have continued our efforts to drive the digital and intelligent transformation of the logistics industry. By helping enterprises reduce cost and improve operating efficiency, we have enhanced their logistics comparativeness, a key differentiator in the current macro environment.
Speaker Change: As a result, we achieved 22% year-over-year growth in fulfilled orders in the third quarter, steadily advancing the shift away from traditional offline logistics matching models.
Speaker Change: In addition, the rapid expansion of our user base, together with the significant strengthening of the synergetic network effect between our shippers and trucker users, has improved cost and transaction efficiencies, organically fueling our growth.
Speaker Change: Since the 3rd quarter, all of our operations have been successful, which is reflected in the growth of our new products.
and the four problems of해�a
Speaker Change: and Huanxin. At the same time, we also optimized the membership of Huozhu, Chen Ming and Ju Zheng.
Speaker Change: In this effort, the average number of new arrivals this quarter has reached 2.84 million, an increase of 33.6%. In terms of supply and demand, we have increased the number of new arrivals this quarter by
Speaker Change: Even with the rapid and positive growth, the rate has reached 34.5%, which is 5% higher than before.
Speaker Change: At the same time, the delivery speed of the dry line is further accelerated. Finally, in terms of cable quality, in this record, we have further and efficiently released the huge potential of platform monetization. Promoting deep and high-speed growth, the above results further prove that the full-band platform helps customers save more money, helps the car to pick up orders, improve the effect, and make more money.
Speaker Change: For new shippers, our vast addressable market covers tens of millions of small and medium-sized enterprises that have logistic needs nationwide.
Speaker Change: During the quarter, our efforts to capture this market, including user acquisition campaigns across diverse channels and ongoing product enhancements to improve new shippers' user experience, drove a strong influx of new shippers.
Speaker Change: In terms of shipper operations, we executed a full rebranding for Ying Man Man this quarter and boosted user thickness by optimizing our product matrix for shipper members.
Speaker Change: These initiatives drove average shipper MAUs to another record high, reaching 2.84 million in the third quarter, up 33.6% year-over-year.
Speaker Change: To enhance our trucker supply, we fostered sustainable growth in transportation capacity by strategically leveraging our premium cargo bidding initiatives, Trucker Membership Program and the Trucker Credit Rating System.
Speaker Change: This not only led to an increase in fulfillment rate to 34.5% this quarter, up 5.5 percentage points year-over-year, but also shortened the average matching time for our long-haul transactions.
Speaker Change: Lastly, on monetization, we continue to gradually unlock our platform's substantial monetization potential during the quarter, propelling rapid revenue growth.
Speaker Change: These achievements further underscore our immense value in driving cost savings for shippers, while empowering truckers with more orders, higher turnover, and extra income.
Speaker Change: Based on the high-quality business operations, the financial performance of this record has exceeded the market expectations again. The total revenue of the record group has reached 30.3 billion yuan, 34% growth in the same period.
Speaker Change: The total revenue of the trading service has increased by 69%, and the total revenue of the three groups is close to 35%. After the adjustment of the non-US accounting standards, the operating profit reached 8.8 billion yuan, and the growth rate increased by 93%. After the adjustment, the net profit reached 12.4 billion yuan, and the growth rate increased by 50%.
Speaker Change: Meng Gap Adjusted Operating Income surged by 93% year over year to RMB $884.5 million and Meng Gap Adjusted Net Income increased by 50% year over year to RMB $1.24 billion.
Thank you for watching!
Speaker Change: As the domestic industry is rapidly upgrading, the Man Bang Group is also actively integrating into the trend of developing new production capabilities. Through renewable, new manufacturing logistics, based on competitiveness, to help enterprises achieve relatively high-quality development, the government is looking forward to the fourth quarter.
Speaker Change: Under the call to reduce all social logistics costs, Manmang will continue to increase digital and smart product innovation as a representative of the exquisite productivity of logistics and create greater value for users and society. Next, I will give the time to Simon to introduce the performance of our three-quarter performance.
Simon Tai: Honest in the momentum of China's industrial transformation and upgrading, we have actively embraced the new quality productive force trend, empowering emerging manufacturing industries with more competitive logistic solutions that drive their high quality growth.
Speaker Change: As a pioneer in advanced logistics productivity, we are committed to addressing the government's need to reduce logistics costs across society.
Speaker Change: Looking ahead to the fourth quarter, we will continue to invest deeply in digital and intelligent product innovation, creating greater value for all of our users and society as a whole.
Speaker Change: Okay, thank you Mr. Zhang and thanks everyone for making the time to join our earnings conference call today. Let's review our operational and financial results for the third quarter of 2024.
I'll start with our operational performance
Speaker Change: Although overall freight market activity remained subdued this quarter, our fulfilled orders increased by 22.1% year-over-year to 51.8 million in the third quarter.
Speaker Change: and user experience on the platform. Our fulfillment rate also continued to improve in the quarter, in the third quarter, reaching 34.5%, up 5.5 percentage points.
Speaker Change: year-over-year and surpassing last quarter's record-setting fulfillment rate. This improvement was largely driven by the continuous shift in our shipper user structure and the resulting optimized order structure.
Speaker Change: The order contribution from our direct shippers reached 49% in the third quarter, which is expected to exceed 50% soon
Speaker Change: Meanwhile, both our 688 membershippers and non-membershippers achieved average fulfillment rates above 50%.
Speaker Change: Looking ahead, we are committed to further enhancing our platform's overall order structure by advancing our direct shipper acquisition strategies and improving matching efficiency.
Speaker Change: through streamlined fulfillment processes across transaction types. We're confident that these efforts will lead to sustained improvements in fulfillment efficiency across the platform.
Notably, our average shipper miles surpassed 3 million in September.
Speaker Change: The strong growth in shipper users was largely attributable to growth among our low and medium frequency direct shippers, particularly our expanding non-member shippers, underscoring the effectiveness of our user acquisition strategies and our outstanding execution capabilities.
Speaker Change: across diverse channels, effectively expanding our reach to a wider pool of potential users.
Speaker Change: Additionally, we have sharpened our focus on customer experience, taking multiple steps to address their feedback, including simplifying the shipment process and proactively engaging dormant users through targeted customer service efforts.
Speaker Change: We're confident that we can maintain rapid growth in our shipper user base.
Speaker Change: Moreover, by refining the fulfillment experience for shippers' first three orders
Speaker Change: We have meaningfully improved new users' perception of our services and increased our share of mind, resulting in consistently robust shipper activity, with our shipper member 12-month rolling retention rate remaining above 80% in the first quarter.
Speaker Change: This has been demonstrated by the number of active truckers who are feeding others through our platform over the past 12 months.
Speaker Change: which by September reached a new milestone exceeding 4 million for the first time.
Speaker Change: Even with a growing user base, our next month's retention of truckers who responded to orders remained above 85% by average in the third quarter.
Speaker Change: In the meantime, the average number of quarterly fulfilled orders per active truckers fulfilling orders on our platform surpassed last quarter's peak, hitting another new record high.
Speaker Change: Taken together, these user metrics underscore trucker-scrolling reliance on FDA's platform.
Speaker Change: To enhance trucker operations, we implemented an area of operational upgrades and optimizations based on the existing operations framework.
Speaker Change: First, we identified and segmented new truckers as well as providing user training, helping them quickly familiarize themselves.
Speaker Change: with FTA's features for order acceptance and fulfillment to ensure an optimal fulfillment experience for shippers.
Speaker Change: We also introduced our carefree package or trucker membership program for the long haul segment to increase trucker retention and stickiness.
Speaker Change: In addition, we continue to drive the Premium Cargo Bidding Initiative launched last quarter, leveraging the distribution of high-quality orders to incentivize truckers to boost their fulfillment efficiency and credit rating, which resulted in higher overall trucker activity.
Speaker Change: Next, I'd like to highlight the progress we made on our transaction service. In the third quarter, revenues from transaction service maintained their strong growth momentum.
soaring by 68.6% year-over-year to RMB 1.05 billion.
Speaker Change: Our monetized order penetration ratio reached 82.8% for the quarter, an increase of more than 12 percentage points year-over-year from 70.1% in the prior year period.
Speaker Change: Our average monetization amount per order including transaction commission and trucker membership fee increased to RMB 24.4 in the third quarter from RMB 20.9 a year ago.
Speaker Change: Without compromising user experience and matching efficiency, we have consistently refined our commission strategy by tuning the granularity of commission metrics to cater to the sensitivities of different transaction types, supplied among dynamics and user demographics.
Speaker Change: Looking ahead to the fourth quarter, we expect both the monetization rate and monetized order penetration ratio to remain disciplined and steadily improve.
Speaker Change: Before going over our financial results, I'd like to provide a brief update on our share repurchase program. Since we announced our one-year share repurchase program totaling US$300 million on March 13, 2024, we have repurchased approximately 4.9 million ADS shares, totaling approximately US$40.3 million.
Speaker Change: Moving on to our third quarter financial results, our total net revenues in the third quarter were RMB 3 billion, 31.4 million, representing a 33.9% increase year-over-year, primarily attributable to an increase in revenues from freight matching services.
Speaker Change: Net revenues from the freight matching services, including service fees from freight brokerage models, membership fees from listing models and commission.
Speaker Change: from Transaction Services, or RMB 2,551,800,000 in the third quarter, representing an increase of 34% year-over-year, primarily due to a rapid increase in transaction service and the continued growth in freight brokerage service.
Speaker Change: Revenues from the freight listing service in the third quarter were RMB 223.4 million, up 4.9% year-over-year, primarily due to a growing number of total paying members.
Speaker Change: Revenues from value-added services in the third quarter were on the 479.6 million, up 33.4% year-over-year. The increase was due to the growing demand from truckers and shippers for credit solutions and other value-added services.
Speaker Change: Third quarter cost of revenues was RMB 1,364,900,000 compared with RMB 1,142,100,000 in the prior year period.
Speaker Change: The increase was primarily due to an increase in VAT, related tax surcharges, and other tax causes, net of grants from government authorities.
Speaker Change: 90.8 million in the same period of 2023. The increase was primarily due to an increase in advertising and marketing expenses for user acquisition.
Speaker Change: General and administrative expenses in the third quarter were RMB227.9 million compared with RMB290.4 million in the same period of 2023.
Speaker Change: The decrease was primarily because we recorded settlement in principle of certain U.S. securities class action in the same period last year, which was disclosed in a form 6K furnished to the FCC on September 18, 2023.
Speaker Change: in the same period of 2023. The decrease was primarily due to lower salary and benefit expenses.
Speaker Change: Income from operations in the third quarter was RMB762 million compared with RMB247.1 million.
in the same period of 2023.
Net income in the third quarter was RMB
Speaker Change: On the non-GAAP measures, our adjusted operating income in the 3rd quarter was RMB 884.5 million, an increase of 92.9% from RMB 458.5 million in the same period of 2023.
Speaker Change: Our adjusted net income in the third quarter was RMB 1,241.2 million, an increase of 50.2% from RMB 826.6 million in the same period of 2023.
Speaker Change: Basic and diluted net income per ADS were RMB 1.06 in the third quarter compared with RMB 0.58 in the same period of 2023.
Speaker Change: Non-GAAP-adjusted basic net income per ADS was RMB 1.18 in the third quarter, compared with RMB 0.78 in the same period of 2023.
Speaker Change: Nongap Adjusted Diluted Net Income per ADS was RMB 1.17 in the 3rd quarter compared with RMB 0.78 in the same period of 2023.
As of December 30th, 2024
Speaker Change: The company had cash and cash equivalents, restricted cash, short-term investments, long-term time deposits, and wealth management products, with maturities over one year of RMB 27.3 billion in total, compared with RMB 27.6 billion as of December 31, 2023.
Speaker Change: For our fourth quarter 2024 business outlook, we expect our total revenues to be between RMB 2.94 billion and RMB 3 billion, representing an year-over-year growth rate of approximately 22.3 percent to 24.8 percent.
Speaker Change: This forecast reflects the company's 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.
Speaker Change: That concludes our prepared remarks. We would now like to open the call to Q&A. Operator, please go ahead.
I'm sorry.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then to
Speaker Change: 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.
Speaker Change: And our first question today will come from Charlie Chen of China Renaissance. Please go ahead.
Charlie Chen: This is a big step forward for the Chinese cargo market. We would like to know what is the driving force behind it.
And based on the order we can see now...
Charlie Chen: Let's take a look at the 4G single-unit gain. Let me translate it first.
Speaker Change: Thanks management to give me this chance to ask questions and congratulations for a very strong quarterly result
Speaker Change: My question is regarding the order numbers. So the number of fulfilled orders in the third quarter grew by 22.1% year-on-year, significantly outpacing the growth rate of the overall freight market in China. What were the key drivers behind it? And also, based on the order trends so far this year, how do you view order volume growth in the fourth quarter? Thank you.
Speaker Change: Thank you Charlie. Our platform's order volume continued to grow steadily in the past quarter despite very challenging macro freight market demand.
Speaker Change: This growth was largely fueled by an influx of new users and improvements in our matching efficiency driven by product feature optimization and enhancement. Additionally, our incremental order volume from new business also maintains a strong growth momentum.
Monthly active shippers increased by 34% year-over-year.
Speaker Change: Furthermore, our operations team focused on converting new users through their initial and the first three order fulfillment and fostering consistent online order placement and fulfillment habits among all the users.
Speaker Change: a holistic branding campaign introducing a more vibrant modern red and white checkered logo to enhance brand recognition and recall among shipper and trucker users.
for product features.
Speaker Change: Optimizing premium cargo bidding remained a priority in the third quarter.
Speaker Change: We have now extended the coverage to negotiated orders, which incentivize truckers to complete order matches and boost their credit ratings to obtain access to better orders. From the perspective of product effectiveness, matching efficiency for high-value orders remains stable.
supported by significant improvements in matching efficiency across
Speaker Change: Median Tier Cargo Categories. This progress led to an overall increase in order volume and fulfillment rates, with average orders fulfilled by monthly active truckers achieving over 10% year-over-year growth this quarter.
Speaker Change: In terms of our new business, our less-than-truckload business continues to serve as a major growth driver for users and other volunteers.
Speaker Change: In this quarter, we further optimized the product functionality of our LTL carpool offering, unveiling sequential route-aligned carpooling.
Speaker Change: This new feature leverages load optimization models and route alignment algorithms to provide truckers with precise freight matching capabilities.
Speaker Change: It has significantly improved truckers carpooling efficiency and success rates contributing additional value to our platforms business growth
Speaker Change: And as we enter to the fourth quarter, we're confident in sustaining growth in our online penetration rate through user growth and ongoing product feature optimization.
Thank you.
Xièxiè guǎn lìchǎng, thank you very much
Speaker Change: Our next question will come from Eddie Wang of Morgan Stanley. Please go ahead.
Hey, Zhang Hui Zong, Simon Zong, Mao Mao
Speaker Change: Thank you for accepting my question, and congratulations to the company for such a strong three-quarter sales.
我的问题是关于这个履业率的
Speaker Change: I would like to ask, based on the three-quarter rate, will it continue to rise to the level of 34.5?
has increased by 5.5 percentage points.
Speaker Change: Huan Bi also has 0.8% point increase I would like to ask what are the main driving forces of the increase in the rate of travel and what are the operational strategies to improve the rate of travel I will translate it myself
Speaker Change: Thank you, management, for taking my question. In the third quarter, the consumer rates further tracked upward to 34.5 percent, up 5.5 percentage points year-over-year and 0.8 percentage points sequentially.
Speaker Change: What were the key drivers behind this improvement and what operational strategy enhancement were implemented to boost the performance rate? Thank you.
Speaker Change: Thank you, Eddie. Our fulfillment rate once again reached a record high. We finished the quarter at 34.5 percent.
Speaker Change: Currently, direct shippers contribute around 49% of the total fulfilled orders, and these shippers mainly place orders in categories known for higher fulfillment rates, such as LTL, entrusted shipment, and short-haul deliveries.
consistently contributing to the improvement in overall human rate.
Speaker Change: Our monthly active 1688 membershipers practically hit saturation with the member count remaining flat quarter over quarter and year over year this quarter.
Speaker Change: We expect membership in this segment to stabilize or even shift toward other low and medium frequency shipper tiers in the future.
Speaker Change: This trend further reinforced our vision of redefining industry standards for road freight transport by gradually phasing out ineffective intermediaries and facilitating simulated connections between direct shippers and truckers.
Speaker Change: From an operational strategy perspective, this quarter we shifted our focus back to optimizing the application of foundational data in freight matching.
Speaker Change: Starting with trucker registration, we guided users to select tags such as cargo types and preferred locations for more accurate trucker profiling and clearer insights into their needs.
Thank you so much. Thank you.
Speaker Change: Our next question today will come from Jiulu Li of CICC. Please go ahead.
Jiulu Li: Thank you for accepting my question, Director-General. We can see that the performance of the third quarter is very good, and the number of shipments is increasing very fast. The number of shipments in the third quarter reached 2.84 million.
Jiulu Li: The share price increased by 33.6%, and the return increased by 7.4%. In fact, it has accelerated by more than 20% compared to the past. What are the main driving factors? And what is the image of the new customer?
Speaker Change: In the third quarter, the monthly active shippers reached 2.84 million, marking a year-over-year increase of 33.6 percent and a quarter-over-quarter increase of 7.4 percent. What were the key factors driving this growth and what's the user profile of new shippers? Thank you.
Speaker Change: Thank you, Jilu. Our monthly active shippers continue to grow rapidly in the past quarter, mainly driven by the ongoing increase in new users gained through our effective user acquisitions alongside improved user engagement resulting from our fine-tuned operational strategies.
Speaker Change: As our user base expanded, our user structure also improved, with monthly active direct shippers increasing by over 39% year-over-year in the past quarter.
Speaker Change: Our platform promotions mainly leveraged online app stores and strategic marketing placement to boost user growth, complemented by offline initiatives such as truck sticker advertising and brand awareness campaigns.
Speaker Change: We noted that our newly acquired shippers were widely distributed across diverse sectors
parts and components, metal and steel, and chemicals among others.
Speaker Change: During the third quarter, we boosted user activity mainly by optimizing product features and refining our membership strategies.
Speaker Change: Regarding membership strategies, we prioritize the promotion and penetration of our mini-membership program.
Speaker Change: By offering benefits such as shipment tracking and freight discount, we effectively converted a large a larger proportion of low and medium frequency shippers into pain members resulting in increased user activity and other frequency.
Speaker Change: We believe that the online penetration rate among small to medium-sized enterprises is well below saturation.
Speaker Change: Our long-term objective is to convert tens of millions of direct shippers.
Thank you.
Thank you.
Speaker Change: Our next question today will come from Bruce Mai of UBS. Please go ahead.
Speaker Change: Good evening, Mr. Zhang, Mr. Simon, Mao Mao. Thank you for giving me the opportunity to ask this question. My question is mainly about our transaction service revenue. Our revenue has increased by 69% in the third quarter, which is very high. I would like to ask what are the main driving factors behind this?
Speaker Change: Are we making some adjustments to the drawing strategy? Let me translate first.
Thank you for watching!
Thank you, Bruce.
demonstrated a steady upward trajectory compared to last quarter.
Speaker Change: Regarding growth in monetized orders, the solid increase in our fulfilled orders, along with the steadily rising monetization coverage ratio, both contributed.
Speaker Change: In the third quarter, the proportion of high quality orders rose due to the surging order demand from new direct shippers.
Speaker Change: On the trucker side, we promoted membership packages with benefits such as compensation guarantee, deposit reductions and waivers, effectively securing long-term capacity support.
average commission per order also increased.
Speaker Change: to RMB 24.4 this quarter from RMB 20.9 in the prior year period, up by almost 17% year-over-year. This increase was primarily driven by the increasing proportion of our high-quality orders.
Thank you. See you Sunday.
Thank you for watching!
Speaker Change: Again, if you would like to ask a question, please press star and then 1.
Speaker Change: Our next question will come from Yan Lau of CITIC Securities. Please go ahead.
Yan Lau: Thank you, Mr. Zhang, Mr. Sam, and Mr. Mao for giving me the opportunity to ask questions. I would like to congratulate the company for achieving such a strong performance. My question is related to Mr. Sam's question about the advantageous vehicle industry. I would like to ask the management team to give us a detailed introduction on the overall development of the third quarter advantageous vehicle industry and our future operational strategies. Thanks management for taking my questions.
Yan Lau: and congratulations for the strong results this quarter and could management share some color on how did the entrusted shipment business progress in the third quarter and in what areas where the option or strategy is refined. Thank you.
Speaker Change: Thank you. Our entrusted shipment segment fulfilled nearly 40,000 orders per day during the third quarter. This is almost double from the last year.
Speaker Change: Building on this momentum, we guided new shippers primarily towards the entrusted shipment channel in our recommendation, given its superior initial fulfillment rate compared to other orders, other types.
Speaker Change: The strategy facilitated smoother onboarding and conversion for new users. For our existing shippers, we maintained a hands-off approach, allowing them to make their own choices.
Additionally, we further refined our pricing strategy this quarter.
Speaker Change: Leveraging prior algorithms and business logic integration, we offered bids with lower freight rates than brokers and other intermediaries. This approach effectively boosted shippers' repurchase rates and retention within our interested shipping segment.
Speaker Change: For those others involving human intervention, we mainly focus on optimizing trade guarantees.
Speaker Change: for truckers, ensuring cargo protection for shippers, and minimizing customer complaints, all of which obviously enhanced the overall user experience and substantially elevated user satisfaction with our offerings.
Speaker Change: As we look to the future, we expect a continuous advancement in product optimization, pricing strategies, and user experience, which will support the continued order volume growth for our entrusted shipment business.
Thank you.
Xièxiè zhāngmì zǒu
Thank you for watching!
Speaker Change: And that will conclude the question and answer session. I would like to turn the conference back over to management for any additional or closing comments.
Speaker Change: Thank you operator and thank you everyone for joining us today. If you have further questions, please feel free to contact us at Full Track Alliance directly or TPG Investor Relations. Our contact information for IR in both China and US can be found in today's press release. Have a great day.
Liu Jian Qing Liu Yu? Out of business