Q1 2024 Cheche Group Earnings Call
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I'd now like to turn the conference over to Crocker Coulson Investor Relations for <unk> Group. Please go ahead.
Crocker Coulson: Thanks, so much operator.
Speaker Change: Good morning to all of you joining us here in the U S. Good evening to those of you joining us from Asia.
Speaker Change: We'd like to welcome you all and thank you for joining us to review <unk> 2024, our first quarter results.
Speaker Change: This morning, ketchup posted both the earnings release and the related Investor presentation.
Speaker Change: Through our website and you can find that at IR Dot Church of group Dot com.
Speaker Change: Now with us on the call today are.
Speaker Change: Lee Jong churches, founder and Chief Executive Officer, Sandra G Churches, Chief Financial Officer, and also Qing Lin churches, Chief strategy Officer.
Speaker Change: After the repaired remarks are concluded we're going to open up the call for your questions.
Speaker Change: But before we begin I'd like to note that some statements in this teleconference are forward looking within the meaning of the federal Securities laws.
Although management believes these statements are reasonable we can provide no assurance that they will prove to be accurate because they are prospective in nature actual results could differ materially from those we discussed today. So we encourage you to review the most recent form F. Four and subsequent filings for risk factors that could materially impact.
Our results.
Speaker Change: As I mentioned the earnings release is available at IR Dot Church of group Dot Com and we encourage you to review the reconciliations of certain non-GAAP financial measures that are contained within.
Speaker Change: With those formalities now out of the way, it's my pleasure to turn this call over to Lei, Zhang Chief Executive Officer.
Lei Zhang: Please go ahead.
Lei Zhang: Thank you Rocco.
Lei Zhang: Good morning, we're glad that you have done.
Speaker Change: As China's largest auto insurance technology, Bladdersful by digital auto insurance transaction premiums.
Speaker Change: I'd say the driver in the digital transformation, we are continuing to gain market share through our cutting edge embedded is who is <unk>.
Abilities powerful ecosystem and unique offerings.
Speaker Change: <unk> remains well positioned to capture significant opportunities, resulting from accelerating digitalization will ultimately market in China.
As of March 31st 2024, which will facilitate a wider range of ultra reinsurance transaction providing corp.
Speaker Change: <unk> 49 million worker pleasant.
Speaker Change: $7 billion in writing premium.
Speaker Change: And collaborating with over 100 insurance carriers between 2020, one and the first quarter of 2024.
Speaker Change: EV market in China has the highest penetration rates in the ward, which had attracted et cetera international automaker to begin manufacturing electric reoccur skier.
Speaker Change: Driving further industry competition and the potential.
Speaker Change: We have capitalized on this new market segment with our recently announced partnership with walk the web and digital sales in our service.
Speaker Change: To.
Speaker Change: Amplify the presence of Volkswagen <unk> insurance business.
Speaker Change: We also began collaborating with Beijing Ho Chi the insurance brokerage firm in Xiaomi group. This quarter tell me this delay vintages, the ugly marketed with a bigger splash.
We will leverage our technology platform and SaaS solutions to have them provide ultra insurance services.
Speaker Change: Product to consumers in multiple cities across China.
Speaker Change: We remain the industry's leading provider.
Speaker Change: <unk> solutions and our technology roadmap continues to.
Speaker Change: Archive, winning additional higher profile EV manufacturers and growing our current market share 11 partnerships.
Speaker Change: As a result of it.
Speaker Change: Airport.
Speaker Change: <unk> embedded policies is up to 124, 4% year over year to 119000 with local responding written premium growing 78, 5% to <unk>.
Speaker Change: Safety one.
Speaker Change: Mainly U S dollar over the same period last year.
Speaker Change: Our sales were re enforcing cloud base model is highest scalable.
Speaker Change: Daily collects the whether the data insights that.
All organic leverage of the <unk> driver of increasing efficiencies of our products.
Speaker Change: Over this year.
Speaker Change: Crossed over to account for more than 50% of our new vehicle sales in China.
Speaker Change: The range of offerings are now available to Chinese consumers is more affordable.
Speaker Change: Intelligent and make driving more entertaining tens of comparable IC offerings.
Speaker Change: <unk> continues to align its growth strategy with many of them are critical dynamics driving the automotive industry in China.
Speaker Change: It sets the standard for affordable functional and tenable, where Chris.
Speaker Change: The first phase of the strategy is there.
Speaker Change: Fabless collectively has embedded as soon as the technology and.
Speaker Change: Operating service provider, so that EV manufacturers can capture and source third annual renewal as the puzzle that direct to consumer relationship.
Speaker Change: We are laser focused on securing relationships with our remaining large <unk> players.
Speaker Change: If it's true we foresee that any reinsurance.
Speaker Change: Most of the falling features.
Speaker Change: The first of these embedded.
Speaker Change: Subscriber that you saw some others will become mainstream.
Speaker Change: Embedded in the subscriber insurance will feature integrated product.
Speaker Change: Competition.
Speaker Change: <unk> renewal and a digital claims with EV makers as the new shopping and service portal.
Speaker Change: Secondly, it's always the way will be that is driven and provide a real time pricing.
Speaker Change: The data driven model will come.
Capitalize on data analytics, and AI actuarial molding capabilities.
Speaker Change: Such as data connection through time pricing and commodity risk management to reshape auto insurance.
Speaker Change: Third EV makers, we of lifetime of services to users and we will be more involved in well added services such as financing deals of cars and the new card services that insurers.
Speaker Change: Phase III, we leverage it.
The enormous data screening.
Speaker Change: Managing from <unk> to have a manufacturer understand the driver behavior and risk profile.
Speaker Change: Granular lever.
Speaker Change: This data stream, we grew over richer as alto transition towards <unk> III and <unk>.
Speaker Change: They were full autonomy and the dry with Dev spec either <unk>.
Speaker Change: But he didn't matter one cost in <unk>.
Speaker Change: Supervised automagical model.
Speaker Change: With our foundation.
Speaker Change: Fortis insurance relevance drive a data truthfully the positioned to embed AI deeper into the tactic and rollout capabilities such as automated claims the management automated of fraud prevention and individualized risk adjusted pricing that is generated.
Value for our partners and higher margins for Tricia.
Speaker Change: Our strategy is to develop and leverage the network effect.
Speaker Change: Effect of being the hub over the industry to build.
Speaker Change: The tangible.
Speaker Change: Competitive advantage at half our partners.
Speaker Change: Survive and thrive in the years to come is the long term, we may consider global expansion opportunities in regions, such as North America and Southeast Asia.
Speaker Change: We are pleased we're pleased with our progress in 2024 and look forward to capitalizing on the industry's evolving opportunities.
Speaker Change: I will now turn the call over to our CFO Sandra Thank you.
Sandra G: Thanks, Lee I'd like to begin my attach all of our first quarter operational and financial highlights before taking.
Sandra G: Taking questions.
Sandra G: For the operational update Churchill continues to grow his business.
Sandra G: Capex light technology focus and strategy as a result total written premiums placed for the quarter increased nine 2% to RMB, five 4 billion or $751 $1 million of total number of policies placed grew 71.2.
Sandra G: Percent in a quarter or two for meaning.
Sandra G: I mentioned 119000 policies and RMB 372, 8 million or 51 3 million U S dollar.
Sandra G: <unk> vomiting premiums were embedded in any of the deliveries were all in 124, 5%.
Sandra G: And 78.55%, respectively year over year word of mouth referrals and our local industry relationships remain central to charge offs organic growth strategy for the installed base of auto insurance market.
Sandra G: <unk> addition of over four <unk> and 600, new referral partners contributed to the company's approximately one 2 million total referral partners at the quarter's end.
For the financial update in terms of the net revenues, we generated RMB $787 1 million or $109 million in the first year up 1% year over year cost of revenues in the first quarter was RMB 700.
Sandra G: The 50 to $8 4 million or.
Sandra G: $104 3 million U S dollars also up 1% year over year, along with the revenue growth. The total operating expenses decreased by 18, 5% to RMB $65 7 million or $9 1 million U S dollars from RMB.
<unk> 7 million in the prior year quarter, mainly due to a decrease in share based compensation expenses marketing expenses and staff costs.
Sandra G: Excluding the impact of share based compensation expenses and.
Sandra G: Listing related professional services fees. The adjusted total operating expenses increased by three 4% from the prior year quarter, mainly due to the incurrence of RMB five 2 million impulse listing professional service fees.
Sandra G: Net loss decreased 28, 8% or 8% to RMB, 31 point dwindling or $4 $3 million over the prior year quarter. Excluding non-GAAP expenses. The adjusted net loss was RMB 12, 2 million or $1 7 million U S dollars.
Sandra G: Increasing by RMB, four 4 million compared to the adjusted net loss of RMB seven 8 million for the prior year quarter, mainly due to the incurrence RMB five 2 million impulse less team professional service fees turning to our balance sheet we had.
RMB 234 million or 32 four.
Sandra G: $4 million in cash cash equivalents and short term investments, which provides us with a healthy financial flexibility.
Sandra G: Flexibility looking ahead Cherokee Israel for enhanced previous to this date and the guidance, which as we continue to expect that net revenues for 2024, well range from RMB <unk> 5 billion to $3 7 billion, representing an increase of six 1%.
Sandra G: To 12, 1% compared to the four year 2023.
Total written premiums placed are expected to range from RMB $24 five getting to 26.5 about bidding representing an increase of eight 4% to 17, 3% compared to four year of tenure tenure story with that we're happy to address any of your questions.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
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Speaker Change: Once again it is star then one.
Speaker Change: To ask a question.
We will now pause momentarily.
Speaker Change: To assemble our roster.
Speaker Change: The first question comes from Zhejiang with CIC.
Speaker Change: Please go ahead.
Speaker Change: Hey, guys good morning.
Speaker Change: Yeah.
Speaker Change: Yes, you bet.
Speaker Change: Would you think.
Speaker Change: And I'm just using that instrument.
Speaker Change: Sure.
Speaker Change: No.
Speaker Change: Good.
Speaker Change: The engine choice.
That's right.
Speaker Change: No, Jason Jason Thats actually in the past.
Speaker Change: So what I actually said.
Speaker Change: Yeah.
Speaker Change: So I have one question.
Speaker Change: This is Bob.
So a potential offset.
Speaker Change: And GBM.
Speaker Change: Just a quick one show upside off and JBL codes, I insurance markets and Winston Churchill place in website users market. Thanks.
Speaker Change: Post tissue or sure.
So youll Dolly.
Speaker Change: If you don't Guy here he is relevant here.
Speaker Change: And then with Gen $10 trillion.
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Speaker Change: I wanted to check on the bidding jobs.
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Speaker Change: Toyota Eagle Ford <unk>.
Speaker Change: It's really a financial decision.
Speaker Change: Oh thanks.
Speaker Change: Question.
Speaker Change: We have seen now that the.
Speaker Change: Opinions after the auto insurance.
Speaker Change: Right.
Speaker Change: Uh huh accounted for over 60% of their total ownership of the Ltvs and the like.
The market has become the main service.
And it has.
Speaker Change: It has become the main segments.
Speaker Change: The EV makers and it is no longer serve as.
Speaker Change: Hum affiliated.
Speaker Change: Offering of the EV makers.
Speaker Change: But it is said that the core business.
Total offering.
Speaker Change: No more useful opinion.
Speaker Change: Familiar I'm not sure you answered on <unk> synergy and Sanjay <unk> agree more.
Speaker Change: Bay Hotel at Cheetah, <unk> have issued onshore Sharona Caesar Tonga should at least hold which any so each of the shutdown.
Speaker Change: Yeah.
Speaker Change: Although which endo button, either John or <unk>.
Speaker Change: And our next year, we believe that the revenue will.
Speaker Change: Growth from the 200 billion RMB to the 300 billion RMB.
Speaker Change: And in terms of the revenue from the <unk>.
Speaker Change: Parts and from the auto market.
It's we all are.
<unk> 500 billion RMB.
Speaker Change: So the total <unk>.
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Speaker Change: <unk> range of between.
Speaker Change: 500.
Speaker Change: And then two eight.
Speaker Change: 800 billion.
Speaker Change: R&D.
Speaker Change: No material that is the $2 <unk> Hana will new languages.
Speaker Change: Shaban rule seemingly to entergy.
Speaker Change: It's a tricky answer John Chiles Gerardo Tanger.
Speaker Change: Bundled commentary any shutting in the south of <unk> in an elite.
Speaker Change: So.
Speaker Change: As a service provider there two roles that we play in this ecosystem first of all we will help them and assist the EV makers could become the main participant in the market.
Speaker Change: And we're helping them to be able to source system and power.
Speaker Change: All of them with the operating services.
Speaker Change: No more material that you are so I'm not too sure that trend.
Speaker Change: Good she now you actually answered on that either.
Speaker Change: Dean Foods Aqua travel shop to the bango volume.
Speaker Change: Toby function Guanglie Hale Chinanet, India, <unk> rollout will industrial so it's Joshua.
Speaker Change: <unk> to that those are women.
Speaker Change: Sure on the doubting Joseph.
Speaker Change: Hum.
Speaker Change: And on the other hand that.
Speaker Change: So rough become more intelligent and what services, we will help the insurance carriers.
Speaker Change: Wednesday, smart risk management, and our real time pricing and also with the innovations in terms of the insurance product.
Speaker Change: That's helped driving mode are becoming more and more mature.
Speaker Change: Well, Michelle as you know I'm not sure.
Speaker Change: Suddenly you actually quantify that until we issue as you know you actually answered on the drilling.
Speaker Change: That'd be less or no one yeah.
Speaker Change: That is usually the surround Toyota should answer.
Speaker Change: And we believe that we are went up that data and.
Speaker Change: And even more so in this market in China, and we will occupied a major market share in the neck.
Speaker Change: Next three to five years.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Did you have a follow up Ms. Zhang.
Speaker Change: Thank you very clear.
Speaker Change: Thank you.
Speaker Change: Again, if you have a question.
Speaker Change: Please press Star then one on a touchtone phone.
This concludes our question and answer session.
Speaker Change: Oh excuse me just a moment.
Speaker Change: Do you have a question.
Speaker Change: From Edwin Liu with CLSA.
Speaker Change: Please go ahead.
Speaker Change: Hey, guys good morning.
Speaker Change: Got to you in the Q <unk> dosing beyond thank you Sunil.
Speaker Change: So what's your view on kind of accounting jargon is now you can see.
Sunil: With me are kind of all going through.
Sunil: So we should see no control of your silicon with highways.
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Sunil: Kind of Gladstone.
Sunil: Tiger you gone yet beautiful advisors, a few millions for tanka woman Jojo.
Sunil: Welcome to <unk>, how close this entire all ones have been though you're going to guide you guys to Samsung.
Speaker Change: Oh, Yeah, Jonathan was at Golar power.
Speaker Change: And I can go through that.
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Speaker Change: <unk> should grow.
Speaker Change: Chris.
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Whole huge with you guys. So I wonder it will be a holder you Gerardo <unk>.
Speaker Change: What would have been <unk>, so no one knows how it quite a funny shar.
Speaker Change: So thanks for management for the opportunity to ask question I have two quick.
Speaker Change: Quick question Firstly in terms of the partnership with the OEM.
Speaker Change: For the insurance broker or a SaaS platform do.
Speaker Change: We have a rough idea.
Speaker Change: The percentage of our market share.
Speaker Change: Second question is.
Speaker Change: Based on the guidance for the adjusted net loss.
Speaker Change: We think.
Speaker Change: That would imply a sequential improvement in terms of the profitability from the first quarter this year.
Speaker Change: Understanding correct and.
Speaker Change: What would be the driver behind the improvement.
Speaker Change: Thank you.
Speaker Change: Sure.
Speaker Change: Sandra.
Speaker Change: Oh sure without the <unk> number.
Speaker Change: <unk> TV with Alibaba with Xiaomi to here at <unk>.
Speaker Change: Sure.
Speaker Change: How much I'm not sure I'm in the food Jonathan.
Speaker Change: Yeah.
Sure Ginger Biogen's Igl Fotis your whole China increase went up at the Newpage solar module should ensure the return go on the <unk>.
Ping heightened June cobalt <unk> come in at the onion the hope.
Speaker Change: Number one machine will be able to centuri with adult Avenue Wuxi, China towards <unk> hundred <unk> hundred all to enroll them in the south of Shanghai <unk> cobalt. This unplanned Nigel should be patient, we'll mention that agenda Holly bound rule <unk> two dee.
Speaker Change: <unk> had a short haul long order John.
Speaker Change: She was the hardest hit.
Speaker Change: Some formula Shaw <unk> to ensure they are financial.
Speaker Change: Yeah.
Speaker Change: So we would like to answer your first question. You have mentioned, we have worked with many major Chinese EV makers, such as Neal and Xiaomi and Oh, Yeah, sorry.
Speaker Change: On services that we're offering them now the first one is at the new car delivery and about 80% to 90% than new cars.
Speaker Change: Well I appreciate that.
Speaker Change: To ensure that through our platform. The second one is that and then when you jump.
Scott: Sure Scott.
Scott: Hum about 50% of the cars, we don't choose to renew their auto insurance.
Scott: Their app through our SaaS platform.
Scott: And the third one is the services that we.
Scott: <unk> provided in terms of the claims management will help that.
Scott: EV makers to build their additional platform.
Scott: And it will help the car owners to report about the car accidents.
Speaker Change: No woman, Florida, Colorado, twitching or men tissue.
What does it.
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Speaker Change: Sure Danielle <unk> with <unk>.
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Speaker Change: <unk> Entre number one measure to Jeff would've Fisherwoman five in Nevada to the tumor.
Speaker Change: <unk> also going down from kind of an entre to machine showed our shoe Bob Dudley pay those won't let you go.
Speaker Change: <unk> is a natural way to ultra.
Speaker Change: Essentially yeah.
Speaker Change: <unk> <unk> of impact number one man.
Speaker Change: <unk> Ashish.
Speaker Change: The bulk of the shoebox Ashish.
Speaker Change: <unk> Leandro <unk> Avenue by your Matt humor, Florida, now Michelle me and I can assure you.
Speaker Change: Shinju Poddar Jake.
Speaker Change: Just help Avenue Wuxi fab with warm this year for <unk>.
Speaker Change: During the last one hour Misha shutdown, which is generally larger.
Speaker Change: As we have mentioned that we have worked with a major EV makers for example.
Speaker Change: The first one is the Volkswagen.
Speaker Change: Factually I guess, where they were a lot.
Speaker Change: Yeah first electric vehicles in China, and we have and.
The exclusive partnership with them and to offer our services.
Speaker Change: Covering that new car.
Speaker Change: And that our insurance renewal and two the claims management and <unk> and other major.
Speaker Change: EV makers and and then I guess the easy sales.
Speaker Change: Well, China auto.
Speaker Change: Oh, we have served more than 60% to 70% of the auto insurance offerings.
Speaker Change: And including that new car.
Speaker Change: And our renewals and in particular, we have like 100%.
Speaker Change: Service for their and your services and the next one is and your EV makers tell me I know we have said.
Speaker Change: 50% of their total on.
Speaker Change: Car owners so F.
Speaker Change: And.
Speaker Change: Before we can say that we are a leader we are a leader in the auto insurance sector, especially in the evening shortly.
Speaker Change: So in our churches and Diana.
Israel Biogen did how shall hold a liter engine fit on that.
Because you cannot.
Speaker Change: So essentially the table, how do you manage on Alere and socialize with PGS, So Vishal Shaw, who are bullish and charge offs sure sure.
Speaker Change: <unk>, we are triple farm so each of the Churchill <unk> no you should get <unk>, and Australia and not that you are changing.
Speaker Change: John.
Speaker Change: G suite chary.
Speaker Change: T J.
Speaker Change: And then more importantly makers have realized that our insurers have contributed a lot choosier and revenues are in the after market.
Speaker Change: Our market services and 50% off there and then news coming from the repair it.
Speaker Change: Parts and after market sensitive and among them insurers have a content.
Speaker Change: The biggest part so they are more and more EV makers have made our insurers.
Speaker Change: Sure major.
Speaker Change: Strategies up their pizza World. So we believe that in the next five Katanga and you will.
The vast growth opportunities and the resources.
Speaker Change: And.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Sanjay I will answer the second question in terms of the adjusted net loss yes.
Speaker Change: Yes.
Speaker Change: There was.
Speaker Change: Increase in adjusted net loss in the first quarter of 'twenty to 'twenty four actually.
Speaker Change: A few special reasons.
Without it are in there.
Speaker Change: As a result.
Speaker Change: Firstly.
Speaker Change: We mentioned in the.
Speaker Change: We incurred RMB five two meeting post listing a professional service space like a lawyer fees I'll, just as et cetera.
Speaker Change: Compared to the first half compared to the first quarter of last year.
Speaker Change: The second reason is that there was a.
Speaker Change: That was a $1 4 million exchange gains due to the fluctuation of RMB and U S dollar exchange rate.
Speaker Change: And that's a kind of non operating related issue and the third reason is that that was.
Oh that was close to 5 million RMB government grants, which was due to the preferential tax tax policies.
Speaker Change: Regarding the other value added tax things of the beginning of this year. The government of cancer that is preferential policy. That's that's why.
Speaker Change: That's why we didn't enjoy the benefits and this year actually.
To sum up those those three races that they were all almost 10 million RMB different increased compared to the first quarter of last year.
Excluding this non operating went up.
Speaker Change: Issues actually way would have been deliver much better results compared to our compared to last year that that would be over 50% improvement in terms of the adjusted net loss. Thank you.
Okay.
Oh.
Speaker Change: He is also.
Speaker Change: Sandra.
Oh sure sure. Thank.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Once again, if you have a question. Please press Star then one.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Lei Zhang for any closing remarks.
Thank you. Thank you everyone for joining the call if you have.
Speaker Change: Follow up questions.
Speaker Change: <unk> context IR.
Speaker Change: Have a good great Dave. Thank you. Thank you everybody. Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.