Autohome Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 20, 2025
Skip to Participants
Operator

Ladies and gentlemen, thank you for standing by for Autohome's Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. Call. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time.

Operator

A live and archived webcast of this earnings conference call will also be available on Autohome's IR website. It is now my pleasure to introduce your host, Mr. Sun Lin Song, Autohome's IR Director. Mr. Song, please go ahead.

Moderator

Thank you, operator. Hello, everyone. I'm Sterling, and welcome to Autohome's fourth quarter and full year twenty twenty four earnings conference call. Earlier today, Autohome distributed its earnings release, which can be found on the company's IR website, ir.autohome.com.cn. Joining on today's call are Chief Executive Officer, Ms.

Moderator

Sun Yang and the Chief Financial Officer, Ms. Craig Yanseng. Management will go through their prepared remarks, which will be followed by a Q and A session where they will be available to answer all your questions. Before we continue, please note that the discussion today will contain forward looking statements made under the Safe Harbor provision of The U. S.

Moderator

Private Securities Litigation Reform Act of 1995. Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the U. S. Securities and Exchange Commission and the Hong Kong Stock Exchange.

Moderator

Autohome doesn't undertake any obligation to update any forward looking statements, except as required under applicable law. Please also note that Autohome's earnings press release and this conference call include discussions of certain unaudited non GAAP financial measures. A reconciliation of the non GAAP measures to the more directly comparable GAAP measures can be found in our earnings release. I'll now turn the call over to Autohome CEO, Ms. Yang, for opening remarks.

Moderator

Please go ahead, Ms. Yang. Thank you, Sterling. Hello, everyone. This is Sun Yang, CEO of Autohome.

Moderator

And thank you for joining our earnings conference call today. Today is my first time to join the earnings conference call as the CEO of the company. We suppose you have read the update filings by the company earlier today. Haier Group has become the new controlling shareholder of Autohome. Autohome, as China's leading online automotive consumer platform, is supported by the core foundation of data plus technology, both a broad user base, deep industry insights, professional content, a strong network of OEMs and dealers and a strong financial system.

Moderator

Higher strategic investments reflect recognition of Autohome's business model and the market potential, and we will inject new vitality into Autohome's long term development. In the future, Autohome will serve as a key hub in Hyatt's automotive industry ecosystem, continuing to solidify and develop the existing businesses while leveraging advanced management experience of Hyre and operational systems of Cartag in deeper user experiences, smart hardware connectivity and the new automotive retail to continue to strengthen Autohome's O2O intelligent exchange and the comprehensive service capabilities, further driving innovation and growth for the company and a better serving every user. At the same time, Ping An Group will remain as a key shareholder of the company and will continue to strongly support Autohome's long term development. Next, let us take an overview of the company's financials. We concluded 2024 strongly with significant breakthroughs across each of our innovative businesses.

Moderator

Total revenues for the year reached RMB7.04 billion with revenues from online marketplace and others increased by 8.1% year over year and accounted for 33.8% of total revenue. Notably, our NEV business maintained strong growth momentum with revenues in 2024 increasing by 55.2% year over year. Adjusted net income attributable to Autohome in 2024 reached RMB2.05 billion, yielding an adjusted net margin of 29.1%. Additionally, we announced a combination of RMB1.5 billion in dividend for the year and as of last week had repurchased approximately US88.5 million dollars worth of shares. Moving forward, we remain committed to executing the Board's approved dividend and share repurchase program, enhancing our shareholder returns.

Moderator

Our strategic focus throughout 2024 was integrating our online to offline ecosystem highlighted by significant milestones in user growth, enhances our content matrix, expansion of our new retail business and the deployment of AI applications, which were particularly successful for our innovative businesses. I'd like to take a moment to review these achievements in great detail. First, our online traffic reached new highs again with average mobile DAU exceeding 77,000,000 in December 2024, reflecting the effectiveness of our high quality content driven strategy in driving user growth. We also expanded partners with multiple Internet platforms leveraging open collaboration to engage with a broader demographic and expand our reach. Second, since the launch of our first Autohome space stores in 2022 and the subsequent large scale rollout at the end of twenty twenty three and the accelerated expansion of satellite stores into low tier cities in 2024, we've made substantial progress in building out our offline channels.

Moderator

The total number of franchised offline stores now exceeds 150, generating strong brand aggregation and extensive channel coverage. At the same time, we helped more than 1,000 cities tweaking for new auto shows in over 200 cities during the year, effectively promoting tweaking for new and the AUVs in the rural areas policies. In terms of technological innovation, we've simply seen integrated AI across all aspects of our business, from content creation for consumers to operational management and decision making analysis for clients, significantly enhancing productivity and operational efficiency for our customers. Automobile play a crucial role in driving domestic demand and expanding consumption, making the industry vital to China's economic growth. In the automotive media sector, we will continue to build differentiated competitive advantages by diversifying expanding online traffic through our professional content matrix and ecosystem of partnerships.

Moderator

We also deepened our presence in offline regional markets with improved services for users and leverage our digital tools to connect online and offline operations by utilizing our deep understanding of consumer needs and capitalizing our opportunities to transform the industry, we are building a virtuous cycle between our online and offline businesses. Looking forward, we'll continue to target the substantial business opportunities we see in low tier markets, deepen our presence in these regions, operate and refine our business models and enhance operational quality to propel our development of new heights. With that, I will now turn the call over to our Chief Financial Officer, Craig Zeng, for a closer look at our fourth quarter and full year 2024 operating and financial results. Thank you, Ms. Yang.

Moderator

Hello, everyone. I'm Craig Zeng, the CFO of Autohome. In 2024, we continue to make progress in content development, leveraging our professional evaluation capabilities and a deep understanding of our user needs. We focused on two core technological areas, smart vehicles and AV. With this in mind, we've developed a series of professional IP messages that are both useful for users and beneficial for the industry.

Moderator

For example, in December, we launched the first winter dual temperature test program focused on NEV. This initiative directly addressed three major industry pain points under low temperature conditions: short range, slow charging and high energy consumption. We conducted comprehensive tests on the reliability and comfort of vehicles in low temperature environments, covering more than 50 models across 30 brands generating over 600,000,000 views across various platforms. Multiple OEMs shared our content, underscoring the industry's broad recognition of our expertise in professional content creation. Additionally, our content localization strategy was successfully implemented in several pilot cities such as Chengdu and Tian.

Moderator

In this location, we adopted an open platform model to create localized content channels that integrate services and promotional activities from local automotive partners. This approach connects regional user needs with local resources forming a complete closed loop from user demand to serving and merchant cooperation. This initiative not only helps us acquire traffic from low tier markets, but also lays a foundation for the further expansion of our regional businesses. According to QuestMobile data, the number of our average mobile DAUs in December 2024 reached 77,480,000, an increase of 13.6% from the same period in 2023, reflecting our leading position in the automotive media vertical. Turning to NEVs, during the fourth quarter, our new retail business focused on strengthening operations via online live streaming and offline activities.

Moderator

Online, we utilized its exhibition halls and holographic cabin at Autohome space stores to boost local user acquisition capabilities through live streaming. Off line, we leveraged vehicles from several brands to create curated sales events that simplify the car selection process for users while making purchasing more cost effective. We also observed rapid growth in new media matrix accounts and the key influencer accounts related to new retail in the fourth quarter, driving significant growth in both leads and transaction volumes on a sequential basis. To date, we have established 28 franchised Autohome space stores and more than 130 satellite stores nationwide. We are also pleased to report that total revenues from NEVs during the year, including those from the new retail business increased by 55.2 from last year, reflecting its huge growth potential.

Moderator

In addition, as China's largest automotive Internet platform, we absolutely support national trade in policies. We aggregate subsidy policies and promotional offers from manufacturers in real time through our online platform, providing users with a one stop service for discount information and automatic matching of benefits that accelerate demand for vehicle upgrades and trade ins. Moreover, we organized the 100 cities trade in for new series of offline auto shows to bring our products and services into third and fourth tier cities. By focusing on these low tier markets, we create transaction scenarios and facilitate the implementation of Precine for new and NEV policies in rural areas. In 2024, we hosted nearly 1,000 offline auto shows covering almost two fifty cities nationwide with over 80% of them in low tier cities.

Moderator

On the digital front, during the fourth quarter, we prioritized AI driven upgrades for our products, particularly for lead subscription package services. For example, our AI GC Video Generation two now features modular graphics and video production capabilities that greatly enhance the format of content while empowering dealers to create high quality content efficiently. Additionally, it also supports one click distribution of content across multiple mainstream media platforms, significantly improving operational efficiency for dealers. We also integrated AI into core products for dealership operations. For example, in lead management, AI driven smart follow ups provide dealers with comprehensive strategies and tools for managing leads from initial contact into the transaction, improving store staff PC resolution efficiency by over 20%.

Moderator

In business management, AI incorporates each store's operational data and standardizes complex operational data analysis process so that managers can quickly obtain insights to guide their decision making. These upgrades not only enhance the efficiency of content creation and distribution, but also significantly improve operational and management efficiency of dealerships. For our used car business, in 2024, we enhanced digital application, providing users and clients with a broad range of digital inquiry and other marketing tools such as vehicle condition and pricing to enhance the user experience and improve client operational efficiency. We also continue to strengthen vehicle sourcing, particularly for certified high quality vehicles to ensure vehicle quality and promote the healthy development of the industry. Over the year, the number of average steady certified vehicles on our platform almost doubled compared to the previous year.

Moderator

Moving forward, we'll continue to focus on strict cost control while optimizing operational efficiency to ensure the stable development of our business. Before discussing the specifics of our financials, I believe everyone has already noted that the decrease in our media services revenues during the fourth quarter narrowed significantly on the back of an improving auto sales market. Looking ahead to the New Year, we hope to see our traditional businesses continue to stabilize and recover as we will continue to prudently invest in innovative growth initiatives in order to achieve our new objectives of business expansion and financial stability. With that, let me briefly walk you through the key financials for the fourth quarter and full year 2024. Please note that I will reference R and D only in my discussion today unless otherwise stated.

Moderator

Net revenues for the fourth quarter were RMB1.78 billion. Breaking it down, media services revenues were RMB437 million, lead generation services revenues were RMB758 million and online marketplace and others revenues were RMB588 million, dollars up 3.3% year over year. On cost, cost of revenues in the fourth quarter was $429,000,000 compared to $368,000,000 in the fourth quarter of twenty twenty three. Gross margin in the fourth quarter was 76% compared to 80.8% during the same period of 2023. Turning to operating expenses.

Moderator

Sales and marketing expenses in the fourth quarter were RMB718 million compared to RMB730 million in the fourth quarter of twenty twenty three. Product and development expenses were $328,000,000 compared to $356,000,000 in the fourth quarter of last year. General and administrative expenses were $131,000,000 compared to RMB157 million during the same period of 2023. Overall, we delivered an operating profit of CNY232 million in the fourth quarter compared to to $367,000,000 for the same period of last year. Adjusted net income attributable to Autohome was $487,000,000 in the fourth quarter compared to $5.00 $3,000,000 in the corresponding period of 2023.

Moderator

'20 '3. Non GAAP basic and diluted earnings per share in the fourth quarter were both one compared to 1.04 in the corresponding period of 2023. Non GAAP basic and diluted earnings per ADS in the fourth quarter were four point zero two and three point nine nine respectively compared to four point one five and four point one four, respectively, in the corresponding period of 2023. I'll briefly summarize our 2024 full year results. Total revenues were $7,040,000,000 of which media services revenues were $1,520,000,000 lead generation services revenues were $3,140,000,000 and online marketplace and others revenues were RMB2.38 billion, an increase of 8.1% year over year.

Moderator

In addition, we delivered an adjusted net income attributable to Autohome of RMB2.05 billion with adjusted net margin of 29.1%. As of 12/31/2024, our balance sheet remains robust with cash, cash equivalents and short term investments of RMB23.32 billion. We generated net operating cash flow of RMB137 billion in 2024. On 09/04/2024, our Board of Directors authorized a new share repurchase program under which we were committed to repurchase up to US200 million dollars of Autohome ADS for a period not to exceed twelve months thereafter. As of 02/14/2025, we have repurchased approximately 3,300,000.0 ADS for a total cost of approximately US88.5 million dollars The above is our financials summary.

Moderator

With that, we are ready to open up the Q and A session. Operator?

Operator

Thank you. We will now begin the question and answer session. First question comes from the line of Thomas Chong of Jefferies. Please go ahead.

Moderator

Thank you, management for taking my question. I will transfer my questions. So I have two questions. First is for the transaction with Cartag. So what's the background and the purpose of this transaction?

Moderator

And how it will impact our business in the future and in what areas plan to cooperate? And my second question is we saw the recovery in the fourth quarter in 2024. So how's the reason the positive policies will impact auto market and Autohome? And what's the management outlook for the auto market in 2025? Thanks.

Moderator

Thank you for the question. My name is Yangsun. Firstly, we cannot comment on Hyatt's investment decision making, but we believe that Hyatt's Cartech strategic shareholding in Autohome is a decision based on multi phased consideration. As you know, stated in the news release, Bahayre as China's leading online service platform for automotive consumers, Autohome takes data plus technology as its core support and has a wide user base. In-depth industry insights, professional content as well as strong network of vehicle manufacturing, OEMs and the dealers and a stable financial system, higher strategic shareholding reflects its recognition of Autohome's business model and the market potential.

Moderator

And we are also injecting vitality into the long term development of Autohome. In the future, as a key hub in Hyres' automotive industry ecosystem, Autohome will continue to consolidate and develop its existing business and at the same time draw on Haier's advanced management experiences on the CarTech operating system to further promote the company's innovation and growth with aim to better serve every users and customers. At the same time, Hyaire utilized its leading advantages in technological innovation, user insights, consumer services systems and the human and order combination management model integrates the onlineoffline integrated operating of Cartag, especially its advanced store management, inventory management experiences and comprehensive Empower Auto Home. It will also develop Gainsi Energy in the field of in-depth user experience, intelligent hardware connection and automotive new retail and continuously strengthen Autohome's O2O intelligence integration and interaction and the comprehensive operating and service capability. So overall speaking, we firmly believe that by combining the resources and the professional knowledge of the two parties, more synergy can be created, providing users with more high quality and innovative solutions.

Moderator

In addition, I have a supplementary notice. After the transaction is completed, Ping An Group will continue to be the major shareholder of Autohome and a decent collaboration with Autohome in multiple assets such as after sales vehicle services, online marketing and support the long term development of Autohome together with Haier. Now it would be my great pleasure to answer your second question. Thank you for the question. I consider this to be a great question.

Moderator

According to our official data, the auto market performed strongly in the fourth quarter of last year with sales volume increased by 13.2% year over year. We believe that this is mainly because approaching the end of the year, auto companies made efforts to achieve the annual growth. We coupled with the expiration of some two new policies at the December, it effectively boosted the auto market sales and helped the recent recovery of the industry confidence. As you know, as a professional vehicle media platform in the automotive industry, in order to meet users' needs for the two new policies, which is the large scale equipment renewal and consumer goods trade in incentive. And we do see that Autohome has created a localized content channel, integrated and updated the local trade in for new policies and accurately connected user needs with local resources.

Moderator

According to the Questmobile data shows that in December of twenty twenty four, the average daily number of mobile users of automotive increased by 13.6% year over year, further consolidating its industry influences. At the same time, with the recovery of the auto market, auto home media business has also picked up, growing by 34% quarter over quarter. We expect this trend to be continued in 2025. Next, I would like to share with you my outlook for 2025. According to the market detail sales in 2025, it will increase by 2% year on year.

Moderator

And also we can see that the cumulative retail sales in 2024 increased by 5.5% year over year, among which the retail sales of new renewable energy passenger vehicles will increase by 20% year over year and that this penetration rate will reach to 57%. We believe that this overall pattern of auto market in 2025 will be stable and positive under the following trends may be shown. I would like to provide you with three detailed analysis. So firstly, we do see continued favorable policies

Moderator

and a

Moderator

steady growth of the auto market. And secondly, we do see the continuous growth of the renewable energy vehicle and also the emergence of the intelligent trends. And thirdly, we do see the industry price competition will continue. In summary, in the long run, with the continuous development of the renewable energy vehicle industry and the government's introduction of the new favorable policies to support the auto market consumption, we believe that the auto market will have strong long term growth and we will also continue to deepen our efforts in the new renewable energy business and develop healthy together with the Chinese automotive industry. That's all for my answer.

Moderator

Thank you very much.

Operator

Thank you for the questions. Next question comes from Brian Kong from Citi. Please go ahead.

Brian Gong
Brian Gong
Internet & Media Research at Citi

I will translate myself. Thanks management for taking my question. I have two questions. First is regarding our lead generation business. How is the contract renewal on the situation so far?

Brian Gong
Brian Gong
Internet & Media Research at Citi

And any areas to further explore potentials for this segment? And the second question is about the outlook 2025 outlook for used car market. And when does how much do you expect when management expects this industry and our business to recover for used car business? Thank you.

Moderator

Thank you very much. I would like to take your question. Talking about the renewal of the DILI Connect, Actually, it started at the end of twenty twenty four as usual and it was basically completed after the spring festival in 2025. The renewal situation is very good. Actually, it exceeds 85%, which is better than previous year.

Moderator

Why we can achieve such success is because of the two factors. One is the product operates full scale AI implementation, integrating on platform, information data and workflow through AI operation reduction, AI flow efficiency improvement and AI decision making assistance. It reduces cost and increase the revenue for dealers. And secondly, the brand advantages. We have very strong brand influence, high user traffic and also we have the optimized operating experience and the comprehensive service guarantee continuously attracts a large number of customers to renew.

Moderator

And also I want to talk about the business potential in the model in three aspects. The firstly is the Chinese auto market. Although maybe different stores may have different projection, but we believe the overall trend would be up If the total sales go up, the leads would also go up. That is for sure the trend. And also we can do more on digitization and intelligent realization.

Moderator

For example, we can further optimize the AI technology to achieve more accurate customer portraits and personalized recommendations, helping the dealers to reach targeted customers in a more effective way. We can also analyze the user's car and using big data and AI to better achieve more efficient targeted market strategy suggested for dealers. And also we do see more opportunities and more coverage. In the past, our market is more focused on the big cities And in the future, we can get into the down market, which is more at the lower tier cities and help us to achieve more customers. And secondly, in terms of the lead business, we focused a lot on new car sales.

Moderator

In the future, we can do more post sales services, including the maintenance and etcetera. So in this way, we can further expand the business flow. Now talking about your second question, which is about the used car business. I should say in 2024, the used car sales increased while the profits declined. The annual used car transaction volume increased by 6.5%.

Moderator

However, out of the top 100 used car dealers, 40 nine had a single vehicle gross profit margin, which is only between 4% to six percent and twenty nine had a GP margin of less than 4%. Now talking about why the reason of sales growth, for example, they are from the policy support, for example, the trading for new policies in the new car market has driven the replacement demand for used cars to a certain extent. And also cross provincial business handling under the listing of the National five emission limits has simplified the trading process, reduced the trading cost and improved the trading efficiency. What the interesting part is about the renewable market used car. In the past, there are a lot of not so transparency in this market and the volume is not big.

Moderator

However, the transaction volume in 2024 exceeds 1,000,000 vehicles, an increase of 48% year over year, which is an important driving force for the market growth. While there are pros and cons, for example, the reason for the profit declining is majorly due to the price wars in the renewable new car market, which has led to large fluctuations in the purchase and the sales price of the used car and extended inventory cycle and the difficult capital recovery. So this single vehicle gross profit margin of used car dealership enterprises had generally declined. Now I would like to share with you my outlook for 2025. Firstly, the market.

Moderator

With the continuous implementation of the trading for new policy, the market demand would continue to be released. Coupled with the promotion of the renewable energy used car, the sales volume of the used car industry in 2025 is expected to continue to grow. Talking about the price war, I should say in 2025, the price war would continue, but the volatility would be less. We do believe that that would help to improve the market. We are aiming to address the pain point in the market, for example, to enhance the transparency of the used car transaction in terms of the pricing and the condition of the car.

Moderator

So that's why in Autohome, we want to promote the trustworthy used car source, which would increase significantly. So this certified and high quality car source usually has higher selling price and we help the dealers to improve the profitability. And also digital tools such as vehicle condition and price query can effectively improve the business operation efficiency. So in this way, we believe that the overall momentum is that it will be a long term growth of the market, but do not expect to see short term outbursts of the rapid growth of the market.

Moderator

Operator?

Operator

Thank you for the questions. One moment for the next question. Our next question comes from the line of Xiaodhan Zhang from CICC. Please go ahead.

Moderator

So thanks management for taking my questions. And could you please share your outlook on 2025 revenue and margin outlook for the NEVs new retail model? And how should we think of its expansion pace going onwards? Thank you.

Moderator

Well, thank you very much for the question. As you know, the renewable energy vehicle is one of the key development strategy for Autohol. And we believe that the new retail business, we would focus more on O2O, the online and offline collaboration. We believe that this will be the major driver for the future growth of the business. Actually, our past experience shows that this is a very good strategy.

Moderator

For example, in 2022, we only have one space store in Shanghai. By the end of twenty twenty three, we had 28 space station franchise stores. Since we started testing the satellite stores in May and also the total number of the space station and satellite franchise station has now exceeded 150. So it can be seen that the construction of our offline channels have taken initial shape, achieving the wide coverage of the high and the low tier cities. And this year, we will continue to explore, especially in the lower tier cities.

Moderator

We want to have a wider coverage in the smaller and the lower tier cities. In terms of the profit, we believe the profit would be reasonable and it is not a cash burning business for the renewable and the new retail business. And we want to see that our franchisees can achieve the balance in terms of its financial recovery imbalance in the short term. So in this way, our 2025 business will continue to grow. Okay, let me go.

Operator

Okay, let

Operator

me go.

Operator

Thank you. One moment for the next questions. Our next question comes from the line of Richie Sun from HSBC. Please go ahead.

Operator

Thank you management for taking my question. I want to ask how should we think about

Moderator

or

Operator

what is your view on further lifting the payout ratio or shareholder return? Thank you.

Moderator

Well, thank you very much for the great question. Actually, if you look at the past three years, in 2022, we had already paid a R500 million dividend payout. In 2023, this number reached to RMB1 billion and in 2024, it further reached to RMB1.5 billion. And also our Board of Directors also made a comment that in the future, in the next three years, we would pay out no less than RMB1.5 billion. In addition to the dividend payout, we also find out other ways to for example, for the share buyback policies to better boost our share price.

Moderator

It helps the investors to reduce its risk. Actually, out of these 200,000,000 share by backlog, as for now, we had executed approximately US88.5 million dollars So in the future, in addition to the dividend payout, we will continue to do more share buyback policies and other effective ways to help to better giving back to our shareholders.

Moderator

Operator?

Operator

Thank you. There are no further questions at this time. I will turn the conference back to management for closing.

Moderator

Thank you, everyone. Thank you very much for joining us today. We appreciate your support to the company and we look forward to updating you on our next quarter's conference call in a few months' time. In the meantime, if you have any questions, please feel free to contact us. And thank you for joining us today.

Moderator

Thank you, everyone. Bye bye.

Remove Ads
Analysts
Powered by Quartr
Earnings Conference Call
Autohome Q4 2024
00:00 / 00:00

Transcript Sections

Remove Ads