Q2 2019 Earnings Call
At this time all parties, but in a listen only mode. After managements prepared remarks, there will be a question and answer session.
Today's conference call is being recorded if you have any objections you may disconnect at this time.
I'd now like to turn the call over to see some Investor Relations Director you see Thank you. Please go ahead.
Thank you operator, Hello, everyone. Welcome to use just doesn't hold her 2019 conference call.
They did pay or older as the old agenda, our CFO will discuss our financial results for the second quarter.
Well in the prepared remarks, they pay on Jay will be available to answer your question.
Before we start I'd like to remind you that our statements today will contain forward looking statements, but we made under the safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 90 95. These statements are based on managements current knowledge and assumptions about future events, that's evolved risks and uncertainties, which could cause actual results to differ materially from our expectations. You'll seen does not undertake any obligation to update any forward looking statement, except as required under applicable law for more information about the potential risks and uncertainties. Please refer to the companys filings with RBC.
With that I will now turn the call over to ever be OLTP. Please.
Thank you Nancy Hello, everyone. Thank you for joining our second quarter 2014 earnings conference call.
As you May already know, we announced a proposed transaction ways that Golden pass or.
To divest our long facilitation related business. This July as a result going forward, we will completely.
The last hour to see interim original business no longer provide a garden to services for the to see cross read him business.
Divested a corresponding assets and the liability.
And are therefore significantly relieve ourself off guard and T. obligation for the existing loan balance on the loan previously facilitated by us.
Our two fee business no.
Suddenly come fifties, Oh, I used car transactions, which previously.
Were recorded as to see cross ragin transactions no corresponding revenue streams, No commission revenue and a value added service revenue.
Before we dive into more detail.
The proposed transaction, let me first to give a quick recap of our second quarter performance.
It is important to note that the financial impact of the proposed transaction has already been reflected in our second quarter results as required by the accounting policy.
We'd rather let toby the relevant to revenue costs and operating expenses of beef continue we've continued oh prescience exclude excluded from our financial results. We are pleased to report another strong quarter with a 58% year over year increase in total revenue to RMB 439 million in particular, our toothy business continued a strong growth in the second quarter, our tooth your revenue substantially.
Substantially increased 11 times year over year to RMB 322 million contributing 73% of total revenues.
Looking at our two seed business in more detail.
We continue to see robust and momentum in our online used car transaction volume during the quarter, we completed or.
24500, a UTI the transactions in our online shopping more.
500% year over year.
This not only reflects the growing traction of our one stop online use car buying products and services.
But it also sounds treated to consumers increased acceptance of buying new cars online from me without actually being a car when making a purchase decision.
As we created a sales opportunity and control the entire shopping quick progress.
Coupled with our comprehensive product and service offerings, we have maintained our strong ability to monetize all or used car transaction and a record total to see to create off 11.2%.
Per unit in the quarter equivalent to two per unit of revenue of over RMB 13000.
We have also made notable progress on kind of treating low tier city, our nearly 800, a franchisee contributed over 30% of total to see transaction volume in the quarter significantly up from a low teen percentage in first quarter.
[noise] more onto our to see business because of our change of approach you serving consumers with a corresponding eve as well as dealers growing prefer is to sell used car on over to see pop up as expected our to be transaction volume declined by 57% year over year to 39500 units.
But it will take reach slightly increased to 3.7% in the quarter from 3.5% a year ago period.
Even through to be revenue decreased to RMB 68 million to be business continues to serve as a complimentary pilar all our business as each has strengthened our relationship with dealers by offering them a high efficient to auction channel to improve inventory turnover. We may also continue to provide a favorable terms to our dealer customers, though to be possible. So as to maintain customer stickiness and encourage them to expand a calibration on our two feet topping out at the same time.
With that let me now share more color on the proposed transaction with Golden pass or.
As we.
He asked the other loan facilitation relate to the business.
We will only provide a financing pro doctor referral services.
Going forward to for those customers, who want to finance their car purchased a from our online shopping mall.
And we no longer need to to Promacta any car into services.
Accordingly, we will be freed from putting down the restricted cash and deposits out of banks escrow accounts.
This will gradually lower our capital needs improve cash flow and therefore create a more favorable operating environment for our long term development.
In addition.
The divestiture, which is a loss.
Well it will allow us to fully focus on fulfilling online used car transactions, which is exactly our gross apparel Ritchie and does try to each.
We have always be a transaction centre platform since day one.
No. We are we're involved in the model of a national online used car dealer, we are even better positioned to make the most of our strong student in executing online transactions.
More importantly, we firmly believe that super charged to used car online is a clear and.
Celebrating trend in China used car market.
Mirroring exactly what has happened in the mature markets overseas.
Our strategy is to focus all our resources only Oh lunch has actually area, where we enable us to better capture the may see market opportunities brought to buy these PYD.
With over to see business, becoming a pure player we will be better suited to to utilize our innovative supply chain and infrastructure to provide the consumer with a full core value through other one stop online use car production and the service offerings.
First.
The national wide selection of used cars.
As updated to limit to the local selection.
We are able to expand our inventory from local to national reach Oh, preteen allude to national inventory system with over 18000 offline dealers be our inventory suppliers.
In the second quarter, we provide a real time selection of over 110000 used car you are online shopping more more importantly, under armour National Oh, I used car dealer model, we do take actually even to a risk only one when we receive a 100% of certain contracts out or from the consumer who pay a 10% deposit for the Petronas even events.
Do we start to.
Procure the inventory from the supplier.
Second.
Oh, I standardization on standardized products.
Our standardized video is actual reports and a we are displayed for used car.
Create a high transparency on car completion. In addition, our south consultant to will also visit a customer in person and help them into prior to the video is actual reports introduce car specifics.
Access to them in selecting the car they prefer and help them executed a purchase.
This will give the consumer reach piece greet peace of mind to buying a big ticket item online.
Third.
A one stop online purchasing experiments.
In addition to selling a used car.
We also acquired a frenzy and insurance products are referrals and a comprehensive warranty program as vetted out of service.
Hi, its comprehensive return policy to better meet consumers various naive and offer overall solutions.
Force.
National fulfillment services, we have Buda and National Logistics network to make sure every used car will sell online we fell in line can be delivered to the consumer on time.
We also provide an offline title transfer assisted to ensure a seamless and a hassle free ownership transfer between Cds.
I will run data fulfillment services make online shopping for used car finally as convenient as buying any other standardized product online.
Looking ahead, we are excited about our growth potential in the year to come we believe our new more focused the business structure. We are booster I recall radical and more importantly, enable us to leverage the market trend and a gross opportunity you all on used car transaction in China.
That's pet, though how do we use that to China overall auto market has been feeling since last year. We believe the used car market is a more refined into a dumb down cycle because of used car better price to performance.
There is a great growth potential in the coming year, given the size of the China market.
It is off.
He is of course important to note is that we the earlier adoption of China fix the new emission standard.
Server or several regions experiments to.
Our job in used car ourselves to some extent.
And we have failed to certain effect as well. However, we believe the used car market it will gradually.
Tickets to the effort. The fact to end up the macro environment will improve after short term adjustment.
The Minister this 11.
We have completed to.
38000, our used car transaction our platform you full year 2018, and aim to complete over 100000 units. This year. We are excited about the achievement to date.
And the target that we set for 2019.
It's a demonstrated we have been winning overtones to from a faster growing group of consumers, who have accepted the revolutionary way of purchasing used car online from us without us seeing the actual car when they make the process to purchase decision.
This is a particularly.
The encouraging that Oh I use contract is actually model has not only proved proven well accepted but also has lead us into a whole new chapter in China used car sector.
We are confident to that as we continue to enhance our value proposition to consumers and to consistently execute our growth strategy to expand our used car transaction business.
We can maintain a strong momentum in the transaction volume for the increase of the market share and abuse, a more sustainable business over the long term.
With that I would like to turn the call over to our CFO decision to talk through our financials. So please go ahead.
Okay. Thank you Ken Hello, everyone.
We are pleased to deliver another set of strong results for the second quarter before we go through the financial details. Let me give you an overview on how the proposed transaction with Golden Pacer reshaped our financial profile.
Please note that all the discussion and the comparison below par on Apple to Apple basis.
Given the divestiture and in accordance with the applicable accounting standards, we significantly we'll leave ourselves off guarantee obligations for existing loan balance of RMB 33.2 billion as of June Thirtyth 20 nights for the used car loans previously facility the buyouts.
In addition, ansys of RMB 3.9 billion yen liabilities of RMB 0.9 billion were reclassified as assets and liabilities had was still on our consolidated balance sheet as of June Thirtyth 20 nights.
And the results of operations related to the divestiture of the business were reported as net loss or income from operations of discontinued operations.
Revenue of discontinued operations and its corresponding cost off the revenue and operating expenses for the second quarter of 2009 were RMB 464 million RMB $89 million and RMB 378 million respectively.
The proposed does that better than that but that future will effect to lead lower our capital needs for and improve our cash flow.
Setting a solid foundation for Oliver sustainable growth going forward.
And the piano Weiss our to see revenue stream now include commission revenue and value added service revenue.
SDK mentioned earlier.
Our strong ability to monetize all our used car transactions remain unchanged. We are confident that we can buda the skill in the topline, but you see on the used car transaction on a more solid and sustainable business as we fully focused on expanding this business.
The proposed transaction expected to temporarily impact the gross margin due to our cost structure.
Our cost of revenue is now only includes the.
The salary of inspection professionals and of the costs are related to the of offline logistics and the title transfer. This cost item are more associated with our continuing operation.
So the majority would mine we've been the last call.
We are confident about the gross margin will further improve overtime as we continue to achieve better economy of scale.
Convert to more used car sales with odd aid into many used cars inspected and to further optimize the logistica roots and better utilize our delivery capacity with the transaction volume growing larger.
Our ability on the front is evidenced by our gross margin improved to 53% in the quarter from 42% in the prior year period.
In terms of operating expenses the proposed the divestiture will save us a significant portion of the.
Operating expenses, mainly due to the relevant employees will will be transferred to the Golden Pacer Accordingly.
We have also streamlined the business operations to improve employee productivity.
As we continue to take a prudent measures in cost and expenses and management, we believe our faster growing all a used car transaction volume will bring us greater economies of scale and higher operating leverage.
With all the measures in place and being executed combine that with our more focused.
Business model and the streamlined the operation, we're confident that we'll be able to achieve profitability as soon as possible in the coming years.
Now, let me walk you through our financial details for the second quarter. Please note that all discussion below relates to continue.
Operations only all numbers are in RMB unless otherwise stated also please note that some numbers I refer to our non-GAAP .
You can find a reconciliation of this numbers in our earnings release.
In the second quarter total revenues increased by 58% see RMB 439 million from RMB 277 million in the prior year period.
The increase was primarily due to the increases in to see transaction volume GMI Commission rate and a value added service take rates.
Drilling down to our business of yours in terms of our to see business total to see revenue were RMB 322 million, representing a sequential increase of 11 times year over year from RMB 28 million in the prior year period.
All I used car transaction volume increased by 500% year over year to 24585 units.
And its corresponding GMB increased by 482% year over year to RMB 2860 4 million.
Moving on to more details Commission revenue was RMB 179 million, representing a sequential increase of 893% from RMB $18 million in the same period last year, primarily due to the increases in the transaction volume GMB and the commission rate.
Benefiting from our enhanced the service improve our user experience and a higher pricing power to me for Rayva increased to 6.2% from 3.7% in the same period last year.
Value added service revenue was RMB 144 million, representing US up 10 show an increase of 14 times from RMB 10 million in the same period last year, primarily due to the increases in the transaction volume GMI and we have a great. So yes take rate increased to 5% from 1.9% in the same period last year.
Due to our optimize the services, which will result in a higher pricing power in the higher percentage not to see all our used car transaction that are successfully refer with.
Yes.
In terms of number to be business to be transaction facilitation revenue was RMB 68 million, representing a decrease of 57% year over year.
Overtake referred to be transaction facilitation slightly increased to 3.7% from 3.5% in the prior year period.
Cost of revenues increased by 27% year over year to RMB 205 million. The increase was primarily due to the increases for few months cost, which was corresponding driven by the increased our transaction volume.
As long as the increase in salaries and benefits of employees engaged in the car inspection quality control customer service and after sales service.
Gross profit increased by 100, and a 1% to RMB 234 million for RMB $116 million in prior year period.
Gross margin increased to 53% in the quarter compared to 42% in the prior year period.
Driven by the better economy of scale.
Total operating expenses was RMB 577 million non-GAAP operating expenses.
Excluding share based compensation was RMB 550 million.
Sales and marketing expenses decreased by 14% year over year to RMB 247 million. The decrease the decline reflects our continued efforts to enhance operating efficiency.
Suzanne the marketing expenses, including share based compensation expenses of Neil as a percentage of total revenue decreased to 79% during the quarter from 144% in the prior year period.
[noise] DNA expenses decreased by 81% to RMB 174 million.
The decrease was primarily attributable to the decreasing the share based compensation expenses.
Jenny expenses, excluding share based compensation expenses was RMB 147 million, representing 33% of total revenue in the quarter compared to 31% in the prior year period.
R&D expenses increased by 28% to RMB 56 million. The increase was primarily due to the increase in the salaries and benefits expenses.
R&D expenses, excluding share based compensation expenses was RMB 56 million, representing 13% of total revenue in the quarter compared to 10% in the prior year period.
Loss from continuing operations was RMB 342 million a decrease from RMB 1250 $8 million in the prior year period.
non-GAAP loss from continuing operations, which excluding share based compensation expenses was RMB 315 million a decrease from RMB 398 million in the prior year period.
non-GAAP loss from continuing operations as a percentage of total revenue was 72%.
A significant decrease from 100 and a 43% in the prior year period.
Fair value change of the route to letter abilities with me in the quarter compared to a gain of RMB 1540 4 million in the prior year period, we no longer see any impact of the directive liability as the preferred shares were converted into ordinary share at the time of IPO.
Now loss from continuing operations was RMB 360 million compared to a net income from continuing operations of RMB 285 million in the prior year period.
The change was mainly due to that to the fair value change of disruptive liabilities no longer exists that unit quarter compare again in the same period last year.
non-GAAP net loss from continuing operations, which exclude the share based compensation expenses was RMB 333 million in the quarter, a decrease from RMB $399 million in the prior year period.
non-GAAP net loss from continuing operations as a percentage of total revenue was 76% decreasing significantly from 144% in the prior year period.
Turning to our cash position as of June Thirtyth 2000 item, we have cash and cash equivalent of RMB 783 million.
Moving onto the guidance factoring the diverse divestiture of our loan facilitation related business. It's a golden Pacer, we expect the total revenue for the third quarter of 2019 to be in the range of RMB 440 million to RMB 460 million.
Excluding the alone facilitation relative business.
This forecast reflects the company's current and the primary view on the market and offerings of regional conditions, which are subject to change.
That concludes our prepared remarks.
Thank you operator.
On the call for questions now.
Ladies and gentlemen at this time, if you want to ask a question. Please press star one on your telephone and wait for a name to be in though.
If you wish to Ken So request. Please press the pound Heskey once again to ask a question. Please press star one.
If you like to ask questions Andrea tidy translate your questions.
Please.
First question comes from the line offset the Wong from Morgan Stanley . Please go ahead.
Hey.
Hey, Michael and nothing of Uh Huh.
Got you and taking my question.
Hello, gentlemen.
Hello.
So which had been tissue yoga until then.
So how should 100 years.
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Also sort of farming, finishing your luggage out services.
Because no one Bob.
Auto finance is a vision to move and.
In this whole focus on Jay good trend will go down.
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Number one just to touch on.
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Different implications.
Hi, Sean.
James you thought a good years under short.
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Hello, Nigel saw horses.
So Jeff Jacobson, how does question.
So going into this for the yours.
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Good job change of heart of one of your pushes sandwich and the module facility.
The whole cellphone.
Hello.
Jade Goody Whos done do you follow me.
So for me it was their daughter Joey shift.
Touching genic, what's your sense of the U. ways of doing so.
The agenda, just trying to do the job.
Hi, Joe.
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This should they go with you.
The continued tailwinds as youre showing a good.
Uh huh.
Jason.
Hello Hello.
Uh huh.
Sure.
Cleveland jumped quite a financial.
Oh I have two questions. The first is that's a given our current strategy is more concentrated.
Online used car transaction business.
How have your view on used car ecommerce industries.
So does that mean that's.
For the industry wise, so we'd have passed the stage.
Oh.
Sure the first priority and the leading used car park.
From a leverage.
Voltages and animal focus on vehicles.
Outages and what's the implication in terms of competition, but the competition.
Ammonia, so, leaving a leading platform.
As a being chance as before.
This is the first question and second question is about the.
Oh, a strategy must have.
So is there any incorporation synergy, which this year after they become our strategic investor.
In the second quarter. Thank you.
Hello, CJ thinking thank you Andy.
Okay, Lastly, dochula LNG to Hawaii tool with our balance sheet Nancy multiuser amongst.
Now eager should one region growth on year that very few Joel who will take which will be more down the hill.
Dividend that should that pushing initiative any man tomorrow to how you see the conveniently or somebody that those that go to Joe usage on Florida, you see other issue.
Number two hit in the legal activity should double the engineered wood I don't want to wish him to show that you go humans you sure. We don't see them job to go either because we are going to be it will change with them make what each year should it you said okay.
Yeah. So hi look has the overall industry so over the past few years.
All that.
The players odd find different models.
We do want to take more time to look back about love history, but now let me introduce hollaway look heavy compared to comparable much warmer in the U.S.
Okay, not make royalty on Josh is that we all the options for the monthly Josh a carmax how are you going to come on up Namal mechanical carmax caught the tail yeah.
So just on that single incision enough I don't you pulling us in that general trend made them generally on the back.
The majority of the decrease in them a broad base in Arkansas, you can hide though.
No sure Cabana them at home and Jinyan, Joe down to your question on what are you trying to that trend may jump.
Yes, so it will not have the U.S. market too.
Players Harmetz under Carla So look at Carmax after India decades of operation based on their current volumes. There are a lot. This year is around 2%. If we look at the U.S. only use copper Oh yeah.
That's all based on the sheer volume of Jacksonville here their market share will be like their pipe.
Kumar, who push for you guys.
Feet on DPM as you weigh our CIB choose your feet on Navy Jacob.
We don't take a tissue difficult number to that go to each of you I'll tell you about north ethanol from the initial Jimmy.
Oh, So you woman.
Because of the warm or hot memo came out of the year will be it will be the year will equal for anybody who call. So you know say increase will be more heavily on the J code 800, only through the tender is still true essential element that we sell these are the ones you may feel go to Jay Bullock.
Well the goal JV, which all should own political Baigent go the vehicle should help.
Sure.
So the one on JV.
A woman the vivo data when it should do though sad to see the yield, which we view that Ontario Global center of a consumer to buy a second car. So as we look at the the Dod.
And that's a frequency if way.
Looking ahead.
Robert speech will be business obviously.
Hey, it's more higher volumes for the field and will be the right strategy, but it is not necessarily to four hour to see business because.
For individual.
Her because there's severe there will be more.
Taking more years before they combine their second car. So in this case we were.
We care more or the consumer care more about the service and the four Oh.
Oh, we care more about service and as well as the per unit margins and how we can drive down the per unit cost.
So that's our focus.
Among some that use and finishing the arbitrage. Thanks Joey.
We're in the tone.
We more clearly how much idle actual kind of hub and so you don't get on the call.
You may feel free to say no Suzanne format funding position virtues evaluation, some understand them I'd say just hitting the vehicle.
How about $20 million.
Women that DRG dilution whole sure the Arsenal tool Jayco, we now know the battle with you on that generally you going on treating women shown this increase is due to higher volume in the job a few months shelving to a shareholder you should do it.
If the woman shows you some bostons cluedup table.
Well done to the table.
So you know when you hold your whole limit that you could be able to Michelle Chicago, you will come to find out.
Yeah. So for only used car transactions, we believe a sealy is quite high so.
Oh, the uplift for the traditional way of purchasing a used car the us election in the local city is quite limited, but our real time.
Rick why Oh, our platform. It was about 100 and the 10000 used cars in Q2. So we believe we are the best choice for the consumer So we believe.
A table for the high quality of raw services and.
To maintain a high level all her <unk> per unit revenue as well.
Achieve better margin profile for per unit will be our target.
Paul will owe us enough. We now have you show that the article in future, who bother to Hallador things as you know it sounds I sure sure Susan and then we've got them to improve by that little bit underwhelmed commuting time availability should you sure no vocal.
Take of lending for those for that to wall art from tool, leading man show visual the account holder Jacob.
Sure goal you have.
No I think it comes on the line of Sean function within say.
No we don't come in should we Jimmy on the local dollar that what you do you view. This year, we will consider that theory of why there should be fun to begin using that.
So me into San Antonio you sure folded in July .
Like you we opened one little girl tends Avago downhole no contract Mendo currency on a year earlier, you'll show the take off a couple of Kim holidays, you kind of view the aging Haitian twod engaging the issue.
Yes so.
Our two leading used car platforms for tightness consumer in terms of the topic cooperation over the past few months. If you investors look had bought application well our inventory has already also there. So we also have the algorithms being optimized to free up pre that's what the consumer preferences are as well.
That's a good way of engine do shown from legal table from the initial you talk to them and are you seeing them when too much on the hotel for the locum do the Shelby.
And with that we'll show you the somebody there should be any man wont veggies without condiment, Google from Endo, Jayco, usually which also joining us in that we were using that either to grow the telco who came out on the elements. Some huge I'll go for the year that mission.
Yes, so oh crop ratio was bought how to think about it.
Quite a lot.
We've got more users from Obi so over the past three mode. If we look has the effective users it's actually accounting for about 15% of our total effective.
Not to share in the dual goal conjecture on on closing some feel for you and then using that option. There is ample eventual no meaning sounds you do buy Argo tool to go team had a yen coalition will do.
Yes, that's helpful.
Yeah, our high quality inventory.
Available I'll box platform will also benefit our user as your customers to have a fighter purchasing.
And then sorry, because you're doing that we can keep wouldn't say.
Trulia and those who do things you, who you're able to squeeze as you've heard me slogan Bordeaux tofu contingent Wendell.
Thanks user community by definitely let Jim will lag grew salvage okun jobs, one sure though to get another two now noma or something to keep with are usually a bundle.
Thank you John Chung.
Well you can can you give us some of the elements you own jayco, Bobby using by liability was helpful and John the using them fill backhaul, who though wouldn't meet face in the shekel, we more in the Modelo continued with a bundle.
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Well more I'll be given trade data sharing as fast as a user data sharing so based on the data analytics and giacobbe with <unk>.
Matos a wheel odd.
Our boat.
Thank you.
Yes, so Jeff and I said, it's is it.
Thank you for the questions next questions comes from the line off Roanoke Kim from Goldman Sachs. Please go ahead.
Thank you, Doug and Mike.
Hey, Joe Hogan.
Okay. So how will you know are not you know Joe sure Karl mentioned I think my front door. If they don't all should trend vocal not just a caution.
What are you seeing that they don't tell you nothing how you're talking about Michigan back when she gets you to the CNL endorsed Hot Salomon stock I've done my gosh. It at all not here at home sure Auto you call.
And how should I say, a couple of things on that.
Some kind of show you got to go Oh, gosh, I'm going to take a yes or no woman when I do the knits and on cash at all I'm not sure that's your leasing or.
Tos for the.
Standalones, Yeah, sure Hey, you mentioned that I got those shortening as Sachin Mark nothing kind of got show held in Dallas I Trust that you've got your wish it were so yes true focus I guess, you said how should the essential elements. So that's really good color travel go Yeah, We'll go and I got a question on does he says Augie you got the D. ill woman Jay that's tied to a fence holiday questioned on new that you go no go no.
And then just on television that onshore that's always you know your wife Ah Ah sound tease out what kind of focus we all on the users on the user side and how do we see cross regional volumes will will track as a percentage from nationwide transactions and our market share in that segment.
Second is could you walk through some of the unit economics, we here have unit revenue.
Oh is not is not around 13000 RMB. So one here what is the path to profitability.
Based on current model.
On the revenue side and again the cost side and are there any sort of volumes that we need to reach in order to cover the fixed cost and to a path of profitability. Thank you.
How does it Renault no well actually not be Eagle energy on the industrial Jane Good afternoon, I would not Douglas dealers, you will actually come to work with our document the mine life and.
Oh, yeah, good Formula age it out right on budget. Good she was even a Honda, which I should say in Utah.
Woman pedagogy completion, our team will go to Jay continue or should we get a woman's engine with chemical Youll wish on the project will Miss enough I shouldn't be liquids Usher woman the trend will go to cool.
Hi, shouldn't that gold, who use lunch home to them can show much easier coaching tickets you show you. How the fact you that a woman transaction will go you, though Ben took no doubt I mentioned that I guess for Steve on your maybe.
Not to lose money.
Surely told me to turn key common you fund the Dol goal. So you comment do you go my truly I'm sure other firms will do the usual you'll go on some of your previous you're going to be my eyes U haul covidiens hooked on Louisiana over the page.
Yeah, So I'd like to address this question is from two aspects.
So for the Uh huh.
Plenty most if I look at our Elias our production, our interventional business, our clientele I normally the group of consumers with relatively high purchasing a budget there normally than me too high and our customers.
This is also evidenced by our ASP around RMB 110 to solve it.
Correct.
So they could have bought consumers caring more about dog, we see lots of used cars. So normally they have their preference over third and car makes and models I can share with us.
No colors, etc.
No pollution I'm, just hoping to come into new Kumar, who could have noted we have several comments you on the gold that all come down to what we know today.
Total how many years Shimon nimble quarter, if you don't want to send a shovel.
Yeah, Thanks, and good as you go back what you'll see is helping US you on and go through it all comes out be a leader, who youre, though teagle geography.
Now what's on T. hit Vietnam, Hsu, who will use invention woman's AG chemical yield, it's actually going to ship Omar.
Yeah. So this is the type of consumers normally have higher requirement for the.
Used cars on service so they care more about the current condition. The after sales services as well as the convenience of about a third of it so all those oh, well because they care about a lot more in line with our value proposition to the consumer is actually.
They are the more than 100 player you to issue the often.
On Saturday May not began sure tejus will achieve when she's in a one time will not begin to lose yourself Angela due to that onto sure comes into Russia, I just don't seem to ensure natrium will go the yield on the dosing. Once you leave you may not be do RGB since that that trend will go shopmium could even be shopping to tune out to show you and act on them down I want to ask you sure Jay girl, she's going to be on my side to get them done we undertake the Japanese yen David.
No Qt Dol contribution to its helpful. I consider that women, who one day Sachin Leo will should continue and if you do kind of casualty and patients who started with us.
I'm, assuming that that becomes even tell you the to go down the entire you'll have in this solution will take a job analyzing these institutions to him, but no sure Joe you highlighted the.
Yes intrusion John This review Yeah, we started penetrating into lower tier cities thing last December so if we look at our own Luxembourg about 40% comes from the lower tier cities are the 6% from up here.
The person, who sort of Wisconsin, we should rely the Colombian put on the Eagle coming off you woman, Jonathan actually hedge we sure towable, you'll ship would be that you should come down means yet.
Yes going forward, we will highly paid into more lower tier cities, because our better probably needs a more stronger.
Those Cds.
Merchandise Hutus shooshan, who do the job.
Well, we feel that your home that's really sure that seems we should email me do not all a typical done got who should get that neither Joe yeah.
No as I was introduced to the immune cells do Michigan blood eightys into chemical into the contribution and wish all the solution will tonight and judging by Bernardo Jvs in Ontario.
Yeah, if we look at market share in a surgeon to see if we look at top tier cities our market share there was close to.
1%, if I look how lower tier cities our value proposition is stronger there.
In those cities our market share will be almost close to 2%.
Oh, you girls open between each other can ensure run on Windows will show that the interim goal soiled, Joe 80 million.
Single touch home goods analytic about Mb.
He told me to its you should say.
Using that I'm going to try to understand how people should out in terms will that be show, especially toward missions that tell you deal with that.
I'm trying to get back into church aren't the Trulia fusion pop you called them up and robotics Codell Shelby to complement the chart, how should the need to do that.
If I look at that time that really whether it's I didn't put it in Oregon original Ah or Apple actually the consumers I don't know where the industry is located so but if we look at the breakdown a 92% I know probably at an all time or to say of our per unit revenue.
Oh, one car is over RMB 13000, so we're confident that we can continuously to increase over to see take rates and a waste do you have the the room or space to increase that because we are continue to enhance our value proposition to our consumer and a four hour workout and I think they were mainly two items. One is the inspection and a one is to watch it began the type of transfer and the 40 Uh huh.
However, the inspection.
And that's mainly the salaries and benefits on our inspection professionals and our strategy is we don't expect to aid to many of the professionals to inspect more used car in the future. Instead, we focus more on the conversion from the cars expects it to the car sold.
So we all also will present or future to car 40 inspection by the sustainable price range and no material damage core conditions. So we'll select the car audio which well be back in order to save the inspection productivity only for those qualified to cars.
Weve optimized the inventory structure, we believe we can sell much more cars without inspecting equally that Manny.
This will briefly you drive down the per unit of inspection cost.
And the 40, a logistic and look delivery or as we grow of our transaction volume we are able to further optimize the delivery route planning and the better utilize our delivery capacity. This will also significantly lower our per unit delivery costs.
And our ability to on the front, it's actually evidence by our gross margin improved to 53% in the quarter up from 42% in the the prior year period.
Oh and that looking ahead, we are confident that we can for the improved gross margin as we continue to grow our skill increase the take rate and the optimized each idea cost item.
In the for the Opex, we now more focused on the conversion of our traffic. So we'll continue to optimize the traffic acquisition, China to generate some more cost effective sales leads and enhance the conversion rate.
And with the traffic spending stabilized.
At the current level, we are confident to lowered our per unit the traffic acquisition cost as well.
And.
For your for the number I think that with all the optimization measure in the place. We believe we can reach a breakeven point when we carry also about.
50000 cars.
Per quarter.
Thanks, Jeremy.
Thank you thank you Michael.
I was here in Austin.
Thank you for the questions.
Next questions comes from the line of Ashley Serrao from Credit Suisse. Please go ahead.
Hi, Glenn.
Oh My gosh.
Oh, okay.
I show no.
Yeah.
Oh, yes.
Thank you so much.
Thanks management for taking my question two questions from me representing Tina.
The first one is about a targeted volume growth this year into the business and.
What are the key the key driver.
And the second question is about the cross regional business, what Oh, what do see as the major challenges ahead and how to solve them. Thank you.
Policies, yet azure, what items, a little bit off when ansible thing.
Oh 200 on Hey, Tim engines. So many elements of was wonderful emphasis denied the taken king.
Now we'll move on to Union I will then turn the agenda.
Total issuance.
No two to two and three of them don't bulk holiday take mobileye contingent on what are the.
To idle some of them in a bundle, which your shirt which received.
No details behind them.
Sure So Don that she Johnstown woman inventing twitch and try the job Rugelach chemical viewership on them deal with research and we'll have to look on any of those trends.
Yeah.
So with our first house or a lack of volume was up over $44 a unit well look to add over Oh Wow.
Well, well hundreds and thousands of transactions for the whole year.
We'll move on to your model them in the table when Jennifer.
You may be usage on the Teva telemetry Joel you can be able to balance the shutdown homes here. The two girls Trillium cloud will really come from and usually there is no woman. The traditional I guess, you don't create bummed woman that Chembio Amin saw come go though.
Yes, So look had oh no no no no cat longer term.
I will.
Just mentioned based on our value proposition, we believe will further drive our transaction volume. So the first one is the wide selection of used cars and now based on our <unk> intelligence is a we have a better understanding of People's power preference and no which type of inventory I'm more preferred by the consumers and Thats me has our inventory structure.
But they aren't you going onto share Steve will Johnstown Woman's day session builder architecture from in the lead up and down you'll have a shelf you'll quarters should appeal terdema CGM, but you know not only should Obama so how have you done.
John Copeland ventral equally all the Kobe Hoosier John element that jolt from industrial equivalent local title for the Trillium was challenging to fund it we bone and see where the Julie Delmas conveyed to walk you some change in the woods, yet that I can take off.
So I read three of the value of our Oh, let's start the standard that nation, a one stop.
Karen and our offline fulfillment network, so called a unless they show will enhance our ability to provide them with ACA will build up of our brand and increase the word of word of mouth among consumers.
Now if you think that you don't know, but he also should use the woman's anecdotally from in the Teva Jacek.
No typically oxygen that you mutual goal sheet on trends in the shoulder will show a woman JV.
Diving middle kind of Trinity ones that you hold it through to the two women they showed renewed and how the JV no no not that we're going to go to jail.
Geologic pipelining in Jerusalem, either died down to 44 elements in Hayden Kendall will mention them be the changeover you then.
That means that you should in not ocharleys eligible common that some potential donors out at 100 sure yet.
I mentioned that over yet no month to be on the robot salary NFL showdown for utilities from now your share woman centric financial trajectory.
Yeah.
Third driver is our sales productivity.
[laughter] activity. So because you only used car transaction as a whole new models for the consumers as well as full hour. So small so how it works and then consumers to buy the car. We've now seen thus far in the first place is important so.
The seniority of our skills so.
Unfortunately, this law suit drive drive up the volume so if I look had oh, what those people if they stay with us for more than a tough no. There so severely as much higher than the new guy in terms of Ah if they received the same.
Same bunk bouchillon their fleet, so our focus will be.
Issues in that general under that have already been gentlemen, yeah. So for your second question. The challenges that challenges this year with ink comes more from the micro side. So the first why isn't it.
Overall, the market is facing some headwinds, though does the <unk>, but the used car market is less affected that you'll karma.
Okay are you wouldn't see the Honda should veggie industry, a U haul sure that Eagle Ford It within 10 months, we've seen that I cannot.
Lincoln's uses for those who were sure osten that Ginger quartile 20 on the two not to go into teaching and our which could have some years due to smuggle hedge that I should help to other uses investor manager.
Hook auto build and ours, which will have feet on potential.
Yes, that's another factor is the early adopt hills, but nothing that I knew you measure Shelby to sufficiently Shiites, where do we go to Lindsay.
I got you so.
So which are the single and dual payback bantered about a delisting action on that at all to the calendar, but they are all the ones. You know you were too young to go.
Due to our defined on them again.
So just as a sort of Hoosier Chaucer Duncan will in any way in PIF take us into some of whom I kind of on a portfolio season, which we should in fact Jarraud all day take our channel extension.
Yeah well.
Oh, all to market within the us.
The.
Market conditions, Honda Numb on timing and so many indication audio built into our tool, which will then that should help me maybe I should come down which was yen. Yeah. So if we look at looking into next year.
In the first half we think there will be more a used car with high I mean, the new emission standard used car will be supplied to the market.
Hi, this is yet thank you.
Thank you for the questions.
The next question comes from the line of Rick Thank God Bless from JP Morgan. Please go ahead.
Hello.
I'm asking for Alex.
So my first question is what's the reason for that matter.
I'll take the second.
C transaction take rate from 6%.
Could you provide us with some breakdown.
So any guidance.
Right.
Second half of the year or longer term and.
Question is on.
This model transition.
Implication to business risk and scalability.
Thank you.
So how large to address your first question about you got to create as much.
So in terms of the total to see take rate. So as a result offer diverse that feature over to see revenues train now is converted to the commission revenue in a value added service revenue. Accordingly, we changed the commission rate again im not additive take rate from the consumer so thanks to the DUS Seuss opportunity, we create albertson shown in the entire shopping process and our comprehensive product and a set of service offerings of our ability to monetize all or used car transaction remain has joined us before.
So oh this is evidenced by our total to take rate to 11.2% per unit in the quarter up from 5.6%. The in the same period last year.
Oh I think we are.
Our strong monetization ability is also well supported hour by hour on match the value proposition to the consumer so lucky to mention we have the four men the value proposition first of the Oh the nationwide a selection of used car, which is much wider than the local market account for white and the second the online standardization for to extend the value the products such as the standardized video inspection report and we already play for the used car and the reach create higher transparency on the car condition and Las gave the consumer greater peace of mind buying that use current mine and the third is a one stop online purchasing experience, which means we rich man's as a value added service to the vast them to meet the consumers various needs and the lost about no will lead all the national service and the fulfillment.
That work, which can make life hershey's of used car that's convenient.
As buying another set of eyes product online. So we believe our four core value proposition enable us to maintain our older to keep a rate at a similar level and that too.
She was on wires onto wishes partial so thanks Joey.
Oh, we should you go changeable Femi me, though to ship.
The two elements you should balance sheet.
Jacob you may hours with Asian, Joe you have a shelf filing will be what Josh shanker.
Hi, Michelle visual say shipments were down accordingly.
How the JV will keep in the tens will be able to.
They are shopping tradition will go down in the quarter premiums do you put on the chocolate you'll come due to foreign counterparts.
No matter, who should a Honda thats, we don't comment Wow.
We do you want to go to me I was hoping to get that go into our traditional nimble QE and all critical mass usually younger children.
Conservative.
Yes, as we previously mentioned.
Oh, my used car transactions will be a accelerates and globally.
Because it's raised greater value to consumers that we just mentioned the white.
Right. So actually the used car like our used car transaction product and service offerings.
Consumer has that's finally enjoy a standard services in the used car when they purchase used car or the same as the purchase.
So I'm not sure.
He will be energy loans, yeah, nothing huge intermodal yield through two other foods yet.
Oh, what do you do you actually know woman, who will join to the trends in the motion consumables Covia should that you would yeah. You will get initial two hits, we manage on that usually attention you do that potential goal, Matt Hi, Optune Doe fee builder arm for some significant issues I mean, shelby to a higher she onboard who couldn't do the critical membership machinery on sort of.
Yeah. So maybe it is that and I think the.
Largest a bit for us it's all about execution that is to say a hallway has further how users Karen and because this is a whole new experience for consumers to purchase a car without seeing the car actually physically seen the car so.
Hi, all weekend optimism to choose to do so it is more important.
Do you feel like Atlanta right.
Hey, don't when you close to the other two phones.
Number around you forfeit on your Hawk agenda.
Okay, Tony you want Uh huh.
No doubt the issue.
So you should we assume a woman June July .
Well the indenture that Jacob Zuma two of them in bulk so many times what trends you and I guess in the you know either Columbian you all by you which initiatives for the future for Bill Yeah. So.
No cars that transparency out harsh conditions Hall, we can't help consumer to better understand the cards conditions as well as if we can deliver the hardest time, whether we can provide a well rounded after services and of course, not all of those three things.
Very important to you have a user experience. So I think our challenges are more oh this out.
That is why we will focus.
Not only our capital with or our.
Resources out of his business, but also for our own about management and our employees will all work together to to work towards that initiative.
Although it is yes.
Thank you.
Thank you for the question, yes, no more questions from the line.
Back to management for closing.
Thank you everyone a score.
Our call today and for your continued support for using Oh, we look of largely speaking to you again in the near future. Thank you.
Ladies and gentlemen that concludes our conference for today. Thank you for your participation you may now disconnect your line.