Autohome Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 11, 2023

There are 6 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by for Autohome's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. OT. As a reminder, this conference call is being recorded. Autohome.

Operator

It is now my pleasure to introduce your host, Sterling Feng, Autohome's IR Director. Mr. Feng, please go ahead.

Speaker 1

Thank you, operator. Good evening, everyone, and starting soon. Welcome to Autohome First Quarter 2023 Earnings Conference Call. Earlier today, Autohome distributed its earnings press release auto. And you may find a copy on the company's website at www.autohome.com.

Speaker 1

On today's call, we have Chairman and Chief Executive Officer, Ms. Yuan Long and Chief Financial Officer, Ms. Questions. After the prepared remarks, our management team will be available to answer your questions. Before we continue, please note that the discussion today will contain forward looking statements made under the Safe Harbor provisions the U.

Speaker 1

S. Private Securities Litigation Reform Act of 1995. Forward looking statements are subject to risks And uncertainties include, but are not limited to those outlined in our public filings with the U. S. The Securities and Exchange Commission and Stock Exchange of Hong Kong Limited.

Speaker 1

Autohome doesn't undertake any obligation to update any forward looking statements Autohome's earnings press release and the conference call all the non GAAP measures to the most directly comparable GAAP measures and is available on Autohome's IR website. As a reminder, this conference call is being recorded. In addition, a live and active webcast of this earnings Autohome's IR website. I will now turn the call over to Autohome's Chairman and CEO, Ms. Long, for opening remarks.

Speaker 1

Please go ahead, Mr. Thank you, Sterling. Hello, everyone. This is Quan Dong, Chairman and CEO of Autohome. Thank you for joining our earnings conference call today.

Speaker 1

We got off to a solid start in the Q1 with total revenue increasing by 4% year over year despite a challenging auto market. Media Services' robust revenue growth of 35.5% year over year. Notably, revenues from TCP and data products Otis. And the revenue contribution from new energy brands continue to rise With the growth rate once again outperforming the market, we not only made solid progress in our businesses, Home. We also improved our profitability.

Speaker 1

Adjusted net income attributable to Autohome for the Q1 was up We launched our C and user centric, create oriented and make car life better strategy to enrich our platform services, expanding from our previous focus on car consumption to capture all aspects of cars' lifespan. This shift is transforming our platform's overall content to address a wider range of automobile consumers' needs. On the customer side, We fully implemented our new Autohome Energy space retail model and initiated franchised stores to quickly replicate the service model according to plan. We've also made drive in products and technology creation, augmenting the application scenarios for our digital products and the new AI powered data products for dealers. These advancements have broadened our business horizons with more comprehensive services offerings that help us maintain our competitive edge.

Speaker 1

Moreover, we also connected to Baidu's early boat, becoming its 1st ecosystem partner in the automotive information industry. Going forward, Autohome and Baidu will jointly explore and propel the application of large language models. Looking into 2023, we are seeing positive trends in the automobile market and expect it to maintain a steady upward our trajectory. The penetration rates of new electric vehicles will continue to rise and greater consumer demand will be released. We also look forward to additional supportive governance policies, which will help further stabilize the auto market and encourage auto consumption.

Speaker 1

Meanwhile, we will strive to create a healthier and more vibrant ecosystem, serving our continuously expanding user groups Leveraging our core business and technological innovation to reduce decision making and transaction costs for our partners Now with that, I will now turn the call over to our Chief Financial Officer, Greg Zun, for a closer look at our Q1 operating and financial results. Thank you, Ms. Long. Hello, everyone. I'm Praxing, the CFO of Autohome.

Speaker 1

During the Q1, we continue to implement our C and Ecosystem strategies. On one hand, we strive to advance content innovation and the enhanced product experience to provide users with exceptional services. On the other hand, we focus on our content creator ecosystem, empowering creators across the areas of content, incentives, our to holistically encourage high quality content creation. We've also formed a diversified content matrix

Speaker 2

For example, at the

Speaker 1

beginning of the year, We introduced a series of incentives at Autohome Creators Conference, resulting in a significant increase in the number of new orders auto and the steady amount of new high quality content posted on our platform. On the content front, we launched Made in China in the Q1 auto. On original IP combining auto evaluations with cross border elements, it attracted a massive audience Generating more than 130,000,000 views and over 840,000 interactions across the entire network. In addition, for the Shanghai Auto Show, we utilized AR and Holographic Card Reading technology to provide users auto show. The auto show generated over 24,000 pieces of content, resulting in a total exposure auto loans.

Speaker 1

According to QuestMobile, Autohome's traffic scale has expanded gradually since the beginning of the year. In March, our mobile DAUs increased by 42% year over year to reach a record high For our traditional business, our lead subscription package provides customers with a comprehensive range of products ranging from direct connection with users We are able to support our dealer customers' optimization and transformation with respect to user operations, expansion of profit points, operating decisions and more. Oti. As we enhance our core business, Oti. We use our deep understanding of the industry to identify trends that support our ability to explore new opportunities, for our New Energy business, we have been continuously optimizing and adjusting the operations process at our 1st offline experience store in Shanghai Since its launch last September, by enriching user test driving scenarios and shortening user decision making cycles among other refines, Our increased number of cooperative customers clearly demonstrates the efficiency of our multi brand services model.

Speaker 1

We've already reached cooperation with more than 30 brands and have started the construction of franchise stores aiming to further expand Otis and the scale of our new retail services this year. In the Q1, the revenue contribution from new energy vehicle brands continued to rise With a year over year increase of 67%, significantly outperforming the growth rate of broader industry sales. Moving on to digital products. In addition to continuously upgrading our existing data products, In the Q4, we launched our EV Smart Cloud, a new product designed to address blind spots auto. The new energy vehicle data and provides manufacturers with integrated data solutions.

Speaker 1

This product will greatly Smart Selection, an AI driven tool, which helps dealers quickly identify high net worth users, During the Q4, we experienced a rapid upward trend in all of our key indicators for our data products for dealer. The number of dealer customers for data products, the average revenue of the data products per dealer store And the average number of data products adopted by each dealer store all grew by double digits compared to the prior year period. We are now entering the era of active intelligence operation, where model decision making and the human collaboration come together auto. Regarding the used car business, fluctuating new car prices in the Q1 Home. Put some pressure on the used car industry.

Speaker 1

However, Autohome's used car business unit together with CPP still achieved Y o Y growth, AutoCAD. Demonstrating the synergy between our businesses. Our used car business as a whole also maintained profitability. In the Q4, through Autohome's matching and auction services, our platform accounted for about 21.8 In terms of products, we've taken our comprehensive vehicle condition inquiry tool for used cars to the next level. The two support queries, including general car repairs and maintenance, collision repairs and the new energy battery condition, providing sellers and its buyers is a transparent and reliable consumption environment.

Speaker 1

Going forward, We will remain at the forefront of the used car industry, creating a one stop full service platform for used car users and dealers Autohome. Overall, Autohome is staying ahead providing users with more comprehensive and diversified content, tools and services in addition to auto information. As an industry pioneer, we are committed to the concept of development through scientific and technological innovation. As such, We are rapidly advancing our core technologies and introducing new models to lead industry development. Looking ahead, we will continue to devote ourselves to empowering the industry with cutting edge technology, Autonomous.

Speaker 1

Next, let me walk you through the key financials for the Q1 of 2023. Please note that as with prior calls, I will reference RMB only Net revenues for the Q1 RMB1.53 billion, up 4.2 percent year over year. For a detailed breakdown, media services revenue came in at RMB361 1,000,000, an increase of 53,000,000 to 35.5 percent year over year. Lease generation services revenues were $681,000,000 and online marketplace and other revenues Otter. Moving on to cost.

Speaker 1

Cost of revenues in the Q1 RMB340,000,000 compared to RMB255,000,000 in Q1 2022. The increase was primarily attributable to the our Q1 2019. Gross margin in the Q1 was 77.8% compared to 80 Otter. Turning to operating expenses. Sales and marketing expenses in the Q1 RMB523 1,000,000 compared to RMB592 1,000,000 in Q1 2022.

Speaker 1

The decrease was RMB324 1,000,000 compared to RMB 355 1,000,000 in Q1 2022. Finally, General and administrative expenses were RMB149 1,000,000 compared to RMB137 1,000,000 in Q1 2022. So we delivered operating profit of CNY 263 1,000,000 in the 1st quarter compared to RMB241 1,000,000 in the corresponding period of 2022, representing an increase of 9.1% year over year. Adjusted net income attributable to Autohome Inc. Was RMB484 1,000,000 in the 1st quarter compared to RMB 4.30 RMB8 1,000,000 in the corresponding period of 2022, representing an increase of 10.5% year over year.

Speaker 1

Basic and diluted earnings per share in the Q1 were both $0.98 compared to both €0.87 in the corresponding period of 2022. Non GAAP basic and diluted earnings per ADS in the 1st quarter OTT. 3.92 and 3.91 respectively compared to 3.47 for both As of March 31, 2023, Our balance sheet remains very strong with cash, cash equivalents and short term investments of CNY22.71 billion. We generated net operating cash flow of RMB1.03 billion in the Q1 of 2023. Our.

Speaker 1

On November 18, 2021, our Board of Directors Autohome's ADS for a period not to exceed 12 months thereafter. On November 3, 2022, our Board of Directors authorized and intention of the share repurchase program for another 12 months, expiring on November 17, 2023. As of May 5, 2023, we have repurchased approximately 3,94,000 ADS With that, we are ready to take your questions. Operator, please open the line for the Q and A session. Thank you.

Operator

Certainly. We will now begin the question and answer session. For Our first question comes from the line of Xiaodong Zhang from CICC. Please go ahead. Oti.

Speaker 3

So thanks management for taking my questions and congratulations on the strong quarter. So first of all, could you please share your views on the structural the opportunities for the outdoor market in upcoming quarters. And also could you update us on the progress of the new retail model for NVs and your expansion plans for the offline experience in stores for the rest of the year. Thank you.

Speaker 4

Auto. Okay. Mr. Long is taking the first question. Market.

Speaker 4

As we all see, in the Q1, we see that the auto market is a little bit sluggish. And according to the statistics of CPCA, From January to March, the cumulative retail sales of passenger vehicle dropped by 13.4%. Otter. One reason is because of the early spring festival and the second reason is because some of the car purchase preferential policies already expires by the end of 2022 auto and car purchase amount has been released in advance last year. And another important reason is because since March, we see that there is very strong impact domestic 6D policy.

Speaker 4

And there's also the price cut as well as the promotion and the price war, which auto attendant. We then cue attitude of the consumers. So in March, we see that the passenger vehicle sales remained flat. However, if you look at the CPCA statistics released in April. There's a YOY growth of 55.5% and month by month growth of 2.5%.

Speaker 4

We see that price will have been fading away as the consumers are getting back to the reasonable consumption and we then see attitude is also mitigating. The entire auto market started to be stabilized and to recover. You also asked a comparison between ICE cars and EV cars. So generally speaking, you can see that ICE car market continues Otterbe weakening and you can see that the reduction of the sales continue to expand. In the year 2022, the ICE cars sales Dropped by 13.3% YOY.

Speaker 4

And in Q1 of this year, there's a YOY decrease of 23.4%. And since March, Otter. We'll be promising to take the lead and the production in the price cut as well as promotion. And after that, many other OEMs Nationwide started to follow-up and consumers started to hold their money and to win and see a better attitude. So you can see that these are all imposing negative impacts on ICE car sales, while in the same time with the further improvement of the AUV penetration, We believe that the sales of the ICE cars will be further squeezed.

Speaker 4

OTT. And its penetration keeps increasing. So since Q4 of 2022, the new car sales of the NEB started to slow down. OTTA. And in Q1 of 2023, the well Y sales increased by 22.4%.

Speaker 4

However, the penetration already hit 30.8%. Auto. CTCA also forecasted that in 2023, domestic NEV penetration is expected to hit 36%. And just to conclude the Shanghai Auto Show, we see the launching of about 150 new car models, OTT. Among which, almost 100 are EUV new car models and among the 1500 cars in exhibition, auto.

Speaker 4

Almost more than half of them are actually NEV cars and become the mainstream of auto show. So you can see that competition of the NEV market is also quite fierce. We think that in the future, the EUV market still got a huge potential for growth and we're quite promising about the future development. Besides from the policy side, in April of this year, NDRC also expressed that they will quickly improve the policy system and also identify that after 2023, they're going to launch the tax incentives for the new car purchase. And since the end of April, a series of important working conference of the central government also pointed out that We should continue to consolidate and further expand the development strength of the NEV and also accelerate the facility development, including the charging power, energy storage as well as the supportive power grid.

Speaker 4

Well, at the same time, you can see that many local governments also launching your consumption incentive policies for Q1 to promote auto consumption. With the stimulation of all of these favorable conditions and the policies, we believe that the car purchase auto market. We are quite bullish about the future trend of domestic auto market and we believe that Since Q2, the national as well as the local governments will continue to launch relevant policies to promote the development of the entire auto industry auto market will gradually come to the stable development and we're also trying to get even more promising future. Thank you, Mr. Long for taking the first question and Mr.

Speaker 4

Zeng will take the second question. So this question is about the new retail model. And in Shanghai last year, we firstly launched our new energy offline experience store and which is Holographic experience in the Autohome Energy space. And through the one stop manner, we can actually have a 360 degree immersive experience of multiple new car models and the holistic dynamic breakdown of the EV. Really shorten the decision making cycle of the consumers and greatly enhance the car purchase efficiency and also being recognized by the consumers.

Speaker 1

Auto.

Speaker 4

This auto gained great recognition from our OEM clients. So you can see that now the Retail Experience store has already entered into cooperation in terms of the holographic modeling with more than 30 brands. According to the plan in Q2, we're going to launch the franchising model and there will be 2 franchisee stores gradually OTT being launched online. Well, in the same time, we're also going to start the franchise store development in the other cities in China. Everything has been well underway.

Speaker 4

And in the second half of the year, all of the franchise stores will be gradually opened. And then we will share with you more information about our franchise stores. Auto. So we think that this is actually a new trial for Autohome in terms of the online auto offline convergence model in terms of the new retail and we believe that it will become one of our core competitive ads.

Speaker 1

Thank you. Operator, the next question please.

Operator

Thank you. Our next question comes from the line of Richie Sun from HSBC. Please go ahead, Richie.

Speaker 1

Ot.

Speaker 2

Otter. I will translate it myself. So first of all, can I ask about the used car business revenue growth? How is the recovery trend? And also what is the profitability level right now?

Speaker 2

And how should we think about the 2023 revenue growth and the profit growth drivers for this part of business. 2nd part of the question is regarding AIGC and also Large models. How should we think about the challenges and also opportunities brought to online vertical platforms like Autohome?

Speaker 1

Oti.

Speaker 5

Otter.

Speaker 4

Okay. The first question is about the used car. So I think that in Q1, auto loan. Even though the new car price cuts imposed some pressure for the used car business as a whole, however, you can see that for Autohome. We have a very good combination of our used car business with TTP business and we have entered into highly efficient synergy.

Speaker 4

OTT. So you can see that the used car business as well as TDP business all experienced a growth in terms of the revenue, among which TDP revenue grew by YOY of 25%. Otter. And in terms of the market, you can see that our traditional used car business. We have times a very good growth in terms of the marketing, while at the same time, TTP also keeps generating profit and also realized that the first ever profit for quarter.

Speaker 4

So you can see that for TTP, Otter. This is adopted the auction plus the testing model. So comparing with the used car business, the margin used to be lower. Fiber. We think that in the future, we will continue to grow margin of CTP in a better way.

Speaker 4

So talking about the drivers for the revenue as well as margin. So firstly, let's talk about the used auto car business. Used car business growth is heavily dependent on the car park. You can see that overall car park in China has been constantly on a rise. Auto.

Speaker 4

As a result, the used car business will also be on a rise. Over the past few years, with the limitation of COVID-nineteen, there are fewer communications offline because you can see that used to car business need a lot of offline communication because they are all the nonstandard products. Another important driver comes from Autohome itself. We can see that in terms of the second auto parts business. We have been taking the lead.

Speaker 4

Besides, you can see that we're also going to play the synergy between our traditional used car business, TGP business as well as PM Group as a whole. So we will continue to actually build the car buying and car selling 1 stop 3rd question is about AIGC. First of all, I should say that AIGC is a tool. So the earlier you get familiar with this instrument and to the earlier you adopt it and use it, you will gain the early competitors at. That is why Otte.

Speaker 4

We have to enter into cooperation with Baidu in the first time. However, only EIGC itself is far from enough. We also need the other components in the entire ecosystem, Otter, including OGC, UGC and PGC that to create a better content. So together with the content creator, we're going to create a C and OTT ecosystem strategy. So besides, we also have the other AI smart instruments, for example, the smart outbound, Otis, the smart selection as well as the AI assisted dialogue assistance, etcetera.

Speaker 4

So all of these AI instruments will have the dealers to cut their cost and improve efficiency.

Speaker 1

Thank you. Operator, next.

Operator

Thank you. Our next question comes from the line of Thomas Chong from Jefferies. 3. Please go ahead, Thomas. Thank you for taking my question.

Operator

I have two questions. So first, can management share on our Otter Tailwinds for the data products and the plan for new product launch. My second question is on the use of cash management's share future plans. I will translate myself.

Speaker 4

Auto. So let me first relate to the question about the data products. Auto. In terms of our existing products, we will continue to optimize and iterate our existing data products and to further improve the acceptance as well as the usability of the product. Because data product is different from the other ones, the users need to get the media with products and combine it with their own business so that to let it play the biggest role.

Speaker 4

So we will continue to further expand the coverage of the client base and to further enhance the penetration of our data products. Otu. In terms of the new product, we'll also keep launching the new product. For example, in Q1, we have launched the eBay smart cloud targeting the OEM clients. And we also have the smart selection as well as the other data products targeting the dealer clients.

Speaker 4

So in the future, we're going to combine our decision making models as well as the menu synergy so as to launch more OTT's proactive smart operation products. And in Q1 of this year, the paying users for the dealers data products already exceeds 20,000. And you can see that the per store average corporation products as well as the per store revenue all got double digit growth. So we are quite bullish about the future data product development for the dealers. And we also have already developed the SaaS OTT plus CRM plus product matrix.

Speaker 4

We're going to strengthen our investment and input in data technology as well as product R and D to as you maintain our competitive edge in this area and also to facilitate and enable our clients in their digital auto. Your second question is about how we spend our cash as well as your future plan. I think that Autohome is always financially sound. OTTA. So as always, we have been increasing the proportion of dividend payout and we have been increasing the payout ratio.

Speaker 4

In the future, we will continue to consider about increasing our return to the shareholders. In terms of the shares buyback and repurchase, I have already elaborated on that and won't go into any details. So in terms of the business investment, we have been keeping a close eye on the potential business opportunities. Otter. Is there a good chance we're going to increase the investment, in particular in terms of new retail?

Speaker 1

Operator, maybe we take the last question since time is limited.

Operator

Otis. Certainly. Our last question comes from the line of Brian Gong from Citi. Please ask your question, Brian.

Speaker 5

I will translate myself. Thanks management for taking my question. Despite auto. 1st quarter auto sales was kind of weak. Our OEMs revenue growth grew decently.

Speaker 5

So can management share your view on the 2nd quarter OEMs growth given on one hand, auto sales still kind of weak, but on another hand, there have been a lot of new models rolled out in Shanghai Auto Show. Thank you.

Speaker 4

Auto. So to address this topic, first of all, I want to see that auto industry is a relatively long term industry. So the short term sales, volatility and fluctuation will not significantly impact the OEMs Ads as well as your marketing budgets.

Speaker 1

Auto

Speaker 4

Home. If you look at Autohome, the ads related revenue. You can see that over the past several quarters, even though there are fluctuations on market, however, our revenue from the ad business continue to

Speaker 1

be stable.

Speaker 4

So I think that in terms of your market opportunities, you just also mentioned that Shanghai Auto Show, there are launch of a lot of new car models and I believe that in the future, there will be continuous launching of the new car models. And I believe that With new car launching, we also need more ads as well as the marketing expenses. So here, we would like to see more opportunities for us. OTTR. And for the traditional ICE vehicles, it will be a little bit more complicated.

Speaker 4

Otu. You can see that in Q1, the sales dropped by 23% while 1. So we think that in Q2, things will be even more complicated because there will be the impact of the National VI policy. So the OEM will have many different choices, for example, price cuts Ot, or they may adopt other measures to mitigate these circumstances. So generally speaking, we think that in Q2, in terms of the ad business, there are both opportunities as well as challenges.

Speaker 4

Just like what I mentioned for our used car business, there are 2 drivers. The first thing is from the overall market performance. And A. We would like to pursue general growth together with the market trends. And the other driver comes from our own services.

Speaker 4

We would like to expand and tap into the new areas and offer new services to our clients. So generally speaking, we're going to better serve our clients us and to further improve our performance in the ad business.

Speaker 1

Okay. Thank you, operator. That is the end of the Q and A session. Operator?

Operator

Thank you. We have reached Otis. Thank you all very much for your questions. I'll turn the conference back to management for closing remarks.

Speaker 1

Thank you, everyone. Thank you very much for joining us today. Appreciate your support and looking forward to updating you on our next quarter's earnings conference call in a few months' time. So in the meantime,

Remove Ads
Powered by Quartr
Earnings Conference Call
Autohome Q1 2023
00:00 / 00:00
Remove Ads