Autohome - Earnings Call - Q2 2025

Transcript

Operator (participant)

Ladies and gentlemen, thank you for standing by for Autohome second quarter and interim 2025 earnings conference call. At this time, all participants are in the listen-only mode. The question and answer session will follow management's prepared remarks. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. 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. Sterling Song, Autohome's IR Director.

Mr. Song, please go ahead.

Sterling Song (Director of Investor Relations)

Thank you, Operator. Good morning, everyone, and welcome to Autohome second quarter and interim 2025 earnings conference call. Earlier today, Autohome distributed the earnings release, which can be found on the company's IR site at ir.autohome.com. Joining me on today's call are Chief Executive Officer Ms. Song Yang and Chief Financial Officer Ms. Craig Yan Zeng. Management will go through their prepared remarks first, which will be followed by a Q&A session where they will be available to answer 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. 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 Hong Kong Exchange. 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 most directly comparable GAAP measures can be found in our earnings release. I will now turn the call over to Autohome CEO Ms. Yang for opening remarks. Please go ahead, Mr. Yang.

Song Yang (CEO)

[Foreign language]

Thank you, Sterling. Hello everyone, this is Song Yang. Thank you for joining our early conference call today.

[Foreign language]

In the first half of the year, we made steady progress in advancing our O2O strategy by effectively optimizing the synergies between our online and offline resources. We improved both user experience and service quality.

At the same time, we accelerated AI-driven product innovation and upgrade, leveraging intelligent technology as a core enabler to empower user decision-making and help customers reduce costs while improving efficiency.

[Foreign language]

On the new retail front, we are redefining the automotive consumer experience through technology online. Our Buy for Me live stream enables multi-vehicle comparison and citywide traffic inquiries. Offline, we deliver differentiated experience through 3 key services, immersive VR movie, AI-assisted test driving with customer guidance, and AI-powered purchasing assistance. This innovation significantly reduces transaction costs for both end users and customers, creating a complete online-to-offline service ecosystem. As of the second quarter, the number of new retail franchisors has surpassed 200, continuously expanding our service coverage and reaching a broader consumer base.

[Foreign language]

In terms of AI technology applications, we've created end to end intelligent solutions for consumers.

Our AI Smart Assistant now cover all scenarios for both new and used cars with industry leading performance in precedent. They've integrated AI technology into the entire customer journey from marketing to customer acquisition to transaction conversion and to after sales services, creating a comprehensive and close digital marketing loop that enhances operational efficiency. Today we've already served over 50 automotive brands.

[Foreign language]

Additionally, we've established an expansive ecosystem of alliances and continue to expand our partnership network through strategic collaboration with leading platforms, including Alipay. Through jointly developed channels and co-branded marketing initiatives, we've built a comprehensive user engagement network to amplify our brand input. Notably, in late June we officially launched the international version of the Autohome website featuring over 1,900 vehicle models from 52 Chinese automobile brands going global.

This not only provides substantial support for the globalization of China's auto industry, but also marks a crucial step forward in our international business expansion.

[Foreign language]

Looking forward, we will continue expanding AI applications across our products and services and deepen the deployment of our automotive ecosystem by capitalizing on the industry trends of electrification, intelligence, and globalization. We will further drive the transformation of the automotive consumer experience.

[Foreign language]

With that, I'll now turn the call over to our Chief Financial Officer, Craig Zeng for a closer look at operating and financial results.

Craig Zeng (CFO)

[Foreign language]

In the second quarter, we reinstalled our brand position as the go-to platform for discovering new car launches with the position of the new car launching come to Autohome. We did this by developing a comprehensive new vehicle content matrix centered around drive streaming.

This initiative focuses on four key dimensions: the reshow, casing, initial test driving, professional testing, and technical intelligence, effectively driving the content growth around new vehicle consumption. For example, in June, we launched the Autohome new car first test program and created a special feature titled the Ultimate New Energy SUV Showdown. This intensive testing marathon delivered more than 50 hours of intensive testing live streaming across five vehicles in five days, generating over 160 million views across various platforms. The program not only strengthens consumer understanding of newly launched vehicles but also significantly enhances Autohome industry influence as a trusted authority in professional vehicle assessment.

[Foreign language]

At the International Automotive & Supply Chain Exhibition in Hong Kong, we took Chinese brand globalization as our core theme through a continuous six-hour bilingual live streaming in both Chinese and English.

We showcased exhibition highlights while establishing a dedicated interactive technology zone to demonstrate Autohome's cutting-edge AI technology and VR innovation to global audiences. This initiative, together with the launch of the international version of Autohome website mentioned by Ms. Yang, underscores our strong progress in supporting Chinese auto brands in their global expansion and promoting our global capabilities.

[Foreign language]

Additionally, we continue to expand our traffic alliance network by promoting multi-platform and multi-scenario collaborations to create synergies across the entire value chain, further enhancing Autohome's brand popularity and industry influence. A prime example is our strategic partnership with Alipay Auto Life service sector in May. Together, we launched a dedicated car renting and selection service for Alipay users and certified car owners, including a special subsidy section to serve trade-ins and potential car buyers.

According to QuestMobile, our average mobile DAUs reached 75.74 million in June 2025, up by 11.5% from the same period last year, reflecting our sustained growth in user scale and expanding platform influence.

[Foreign language]

Turning to NEV, our new retail business is committed to building a one-stop automotive ecosystem, empowering customer service through emerging technology online. We use holographic live streaming technology and expand digital services into offline experiences. The Autohome Space doors leveraged immersive VR movie as a new driver of store traffic and perform multi-vehicle test driving with real car owners to increase traffic and improve conversion rates. Meanwhile, our AI-powered transportation assistant provides objective and neutral vehicle recommendations, further improving in-store service efficiency. As of the second quarter, total number of Autohome Space and satellite stores has reached more than 200.

Total revenues from NEV in the second quarter, including sales from the new retail business, continues to grow, increasing by 27% from last year.

[Foreign language]

On digitalization, we've adopted a development strategy centered on data technology as the core development driver. Integrate our proprietary data resources and industry analysis model to upgrade and launch five major digital intelligence product lines, including AI Marketing Brain, AI Customer Acquisition, AI Leads Master, AI Sales Champion, and AI Vehicle Inspector. These tools empower a comprehensive range of marketing needs, including enabling accurate marketing decision-making, automating content creation with intelligent distribution, improving user engagement efficiency and store visit conversion, strengthening frontline sales consultant capabilities, as well as providing vehicle conditions and pricing inquiry to sim. Powered by AI, we've redefined the entire marketing value chain, delivering a comprehensive set of intelligent solutions from insight to conversion for partners, which effectively drives improvements in customer business.

Efficiency

[Foreign language]

In our.

Used car business, we continue to enhance integration of our online and offline services system. In late June, we officially launched our flagship Certified Used Car section featuring carefully selected top-tier brands for cooperation and strictly controlling used car dealer qualification. Each used vehicle in the store comes with comprehensive inspection reports to ensure the safety and transparency of vehicle conditions. Additionally, we also provide reliable after-sales support, ensuring that what consumers see online is what they get offline. At present, we have already onboarded our first group of dealers to a platform. In the future, we will continue to prioritize integrity and standardized processes as our principles, expand cooperation with leading auto dealers, increase the coverage of high-quality vehicle sources, and enable consumers to purchase with greater peace of mind in their purchasing journey.

[Foreign language]

In summary, we are accelerating the implementation of our auto development strategy.

We are continuously incubating new growth drivers and are fully committed to building Autohome into an authoritative professional information platform and a seamless transaction platform. We will focus on the long term, continue to broaden our business horizon with new technology, and create a more efficient automotive service ecosystem to promote our steady development.

[Foreign language]

With that, now, please let me briefly walk you through the key financials for the second quarter 2025. Please note that our references are the only in my discussion today. Unless otherwise stated, net revenues for the second quarter were $1.76 billion. Breaking it down, media services revenues were $279 million, lead generation services revenues were $733 million, and online marketplace and others revenues were $746 million, up 20.5% year-over-year.

[Foreign language]

On top, cost of revenues in the second quarter was $503 million compared to $346 million in the second quarter of 2024.

Gross margin in the second quarter was 71.4% compared to 81.5% during the same period last.

[Foreign language]

Turning to operating expenses, sales and marketing expenses in the second quarter were $630 million compared to $753 million in the second quarter of 2024. Product and development expenses were $253 million compared to $315 million in the second quarter of last year. General and administrative expenses were $133 million compared to $180 million during the same period last year.

[Foreign language]

Overall, we delivered an operating profit of $297 million in the second quarter compared to $412 million for the same period of 2024. Adjusted net income attributable to Autohome was $476 million in the second quarter compared to $572 million in the corresponding period of 2020.

[Foreign language]

Non-GAAP basic and diluted earnings per share in the second quarter were both $1.01 compared to $1.18 in the corresponding period of 2024.

Non-GAAP basic and diluted earnings per ADS in the second quarter were $4.06 and $4.04, respectively, compared to $4.72 and $4.71 in the corresponding period of 2020.

[Foreign language]

As of June 30, 2025, our balance sheet remains robust with cash, cash equivalents, and short-term investments of $22.05 billion, with generated net operating cash flow of $495 million in the second quarter.

[Foreign language]

On September 4, 2024, our Board of Directors authorized a new share repurchase program under which we are permitted to repurchase up to $200 million of Autohome's ADS for a period not to exceed 12 months thereafter. As of July 25, 2025, we have repurchased approximately 5.35 million ADS for a total cost of approximately $142 million.

[Foreign language]

The above is our financial summary. With that, now we are ready to open up the Q&A session. Operator, please open the line for Q&A.

Operator (participant)

Thank you. As a reminder to ask a question, you will need to press Star one one on your telephone and wait for your name to be announced. To rejoin questions, simply press Star one one again. One moment for our first question. Our first question coming from the line of Thomas Chong with Jefferies. Your line is now open.

Thomas Chong (Regional Head of Internet and Media)

[Foreign language]

Thanks, management, for taking my question. My question is about the media services revenue. Can management share your thoughts about the trend in second half and also the expectations?

Thank you.

Craig Zeng (CFO)

[Foreign language]

Okay, thank you for raising this question. As for the media services business, I believe that we'll continue to look at the OEM advertising budgeting trend because we're still experiencing the price war. As a result, we still need some time for the price to go stable, and I believe that with the government intervention and the policy being released, actually we will expect that actually the OEM profits will gradually recover and the OEMs will invest more in advertising budgets during the traditional peak season of Golden September and Silver October in the second half of the year. At the same time, Autohome can also meet the needs of different manufacturers through online and offline integrated services and obtain automakers' budgets through multiple channels.

As a result, we think that in the second half of the year, we're more bullish about the media services business than the first half of the year. Thank you.

Operator (participant)

Thank you. Our next question coming from the line of Xiaodan Zhang with CICC.

Your line is now open.

Xiaodan Zhang (Equity Research)

[Foreign language]

Thanks, management, for taking my questions. First of all, could management share your outlook on the auto market for the second half of 2025, and are there any updates on the shareholder return plan? Thank you.

Song Yang (CEO)

[Foreign language]

Thank you for reading this question. I'll take the first question, and the second question will be addressed by Mr. Zeng.

[Foreign language]

First of all, let me share some of the recent market dynamics and the future trend.

[Foreign language]

First of all, we think that in order to cope with the price war of the auto industry recently, we can see that multiple government authorities have been releasing all kinds of policies for the guidance to fight against this kind of red racing trend. Since July, we have seen that the price has been gradually going stable.

In the medium and long run, we think that the price war is going to be eased and this will be very positive for the entire industry as well as Autohome.

[Foreign language]

The second thing we see is that the auto market differentiation is intensifying. On the one hand, you can see sales volume and profits of the automakers are concentrating on the top players, with the share of independent brands continuing to rise. However, at the same time, due to trading price for volume, the overall profit of the auto industry is still under a lot of pressure. Sadly, we can see that NEV continues to grow, but the growth rate has slowed down compared with the second half of the year.

[Foreign language]

The third point I want to talk about is that the auto exports have performed just brilliantly, and according to the data from the China Passenger Car Association, in the first half of 2025, China's passenger vehicle exports increased by 6.8% year-on-year, among which new energy vehicle exports increased by 48% Y-o-Y. You can see that the Chinese automakers are accelerating their overseas expansion, and this will be very positive for Autohome.

[Foreign language]

Based on the above-mentioned three understandings and forecast about the market trend, actually in Autohome we will also have a foreign strategy.

[Foreign language]

First of all, we should say that we have been heavily investing in AI technologies and there are lots of AI related technologies as well as deliverables that are attributable to our assets over the past 20 years.

In particular, in terms of the database content creation as well as AI related research and development.

[Foreign language]

We have been quickly taking advantage of our AI strength in the above-mentioned area and turning it into actual productivity. Specifically speaking, this will be showcasing online, offline, as well as the product we delivered to our OEMs as well as dealers.

[Foreign language]

Second, we will continue to heavily work on the O2O ecosystem, which is featuring online plus offline.

[Foreign language]

We are actually the only Internet company with very large scale of the social media deployment in the auto sector.

[Foreign language]

We understand that for the auto industry, it heavily relies on the closed loop with both online plus offline. As a result, you cannot only rely on online service delivery to resolve all the consumer demands.

[Foreign language]

In the future, you're going to see that we will better connect our offline network with our online platform so as to continue to innovate our business models and deliver better performance.

[Foreign language]

The third strategy is to actually closely go in line with the going global trend of the Chinese market. As a result, Autohome is also very busy deploying our overseas resources.

[Foreign language]

For example, in June of this year in the Hong Kong Auto Expo, we actually serve as the only official auto media partner of this Auto Expo. We have been introducing the Chinese-branded auto to the rest of the world.

[Foreign language]

At the same time, during the 30s, we also launched the overseas version of the Autohome website. This is for the very first time we actually introduced the Chinese auto brands to the global consumers.

[Foreign language]

So far, we have covered six countries and regions including China, Hong Kong, Thailand, Saudi Arabia, United Kingdom, Australia, and Brazil. It also covers more than 1,900 models.

[Foreign language]

You can see that actually this is the first time ever that we have been doing this kind of media introduction in this way. We also hope that through this international website we have, we can actually bridge Chinese auto brands with the global consumers.

[Foreign language]

I expect that this year the overall Chinese auto export will be around 7 million units. In the next one or two years, this number will increase to 10 million. I think that this kind of overseas business deployment will also become the new growth curve for our business.

[Foreign language]

That's the answer for the first question. Now I would like to hand the floor to Mr. Zeng.

Craig Zeng (CFO)

[Foreign language]

In terms of the stock repurchase plan, I already gave you some briefing about this number. I think that this will remain unchanged and as committed by the board. Actually, in the year 2025, the whole year cash dividend payout will be no lower than ¥1.5 billion. This will remain unchanged. In the future, we will continue to get return and reward our shareholder in a sustained manner.

Operator (participant)

Our next question coming from the line of Brian Gong with Citi.

Your line is now open.

Brian Gong (Analyst)

[Foreign language]

I will translate myself just mentioning particular questions. As I mentioned, after the government intervention, you have seen some improvements on the OEMs competition. How does management think about industrial competition in the second half this year, and if the competition for new car sales are eased, when could we see the used car industry could recover? Thank you.

Song Yang (CEO)

[Foreign language]

Let me take these two questions. We have been saying that since May to now we have been witnessing that the government has been releasing the policies several times and calling for the stop of the evolution-related growth, and asked the OEMs to stop this kind of inordinate price war. At the same time, we also see some of the brands, for example BYD and Changan Automobile, etc., abolished their one price policy and only returned the trading policy, announced that reducing volume to maintain the price, et cetera. You can see that the fundamental reason for this is because of the overcapacity.

How?

Because the production capacity keeps expanding, we have been witnessing that the sales as well as profit margin shifting towards the top-tier players. As a result, the small and medium-sized OEMs will face a bigger pressure, and in the segmented area we can see that luxury as well as joint venture brands have been losing shares, and the self-owned brand sales have been increasing from less than 50% three years ago to more than 60% in the first half of this year. While at the same time, this kind of pressure on profit margin also forced OEMs to shift from size first or scale first to quality first. We also expect that through all of this policy guidance, the market will quickly go back to reasonable competition.

Chilling.

Sam.

Okay, the second question is about the second-handed vehicle. When can the market recover? We can see that this is closely related to the total car part for car ownership as well as the car age. Generally speaking, you can see that in China the car ownership keeps increasing while the average car at 6.8 years. At the same time, a lot of people, a lot of clients are interested in the second -hand vehicle, but they are still hesitant to purchase the second-hand vehicle. The reason can be attributable to the following several aspects. The first thing is because of the policy, even though eight government authorities, including MOFCOM have initiated the car circulation consumption reform pilots and also optimized the car registration mechanism.

However, you can see there's still a lot of intransparency in terms of the car maintenance, repair as well as the other historical data.

[Foreign language]

The second thing, we can see that Autohome as the top layer in this industry, we have been making efforts to enhance industrial standards as well as the transparency and since June 27th we have launched the second hand vehicle official flagship store and the first deal signed with Lei Shing Hong and we helped Lei Shing Hong to build a brand and promote online offline integration of the services and consumers who want to find a source of the vehicle, they can directly come to the flagship store in the Autohome second hand vehicle column and all of the sources are validated pretty much in terms of the quality.

[Foreign language]

In addition, we also developed our own AI tools, such as the used car AI Smart Assistant, photo car recognition, vehicle condition tracking, and car price checking tools. As we all know, used cars or secondhand vehicles are non-standard products which requires our AI Smart Assistant to have higher accuracy in response and reply to each of the cars of the users is very different. This card is constantly being polished and upgraded.

[Foreign language]

And this year we also see that the Car Circulation Association predicts that the second-hand vehicle sales will increase by 6.5% year on year. If, actually, the price war can be eased and mitigated, and the price goes to a stable trend, I believe that there will be more consumers choosing the second-hand vehicle. Okay, next question, please.

Operator (participant)

One moment for next question. Our next question coming from the line

of Ritchie Sun with HSBC. Your line is open.

Ritchie Sun (Director of Internet Research)

[Foreign language]

Thank you, management, for taking my questions.

First of all, regarding the NEV business, including the franchise stores, what are the progress over there, and what are our thoughts on the second half and next year's development plan and expectations? Secondly, for the data products, what is the progress, and can you update us on the latest product suites that we have and any new product pipelines?

Thank you.

Song Yang (CEO)

[Foreign language]

Thank you for raising this question. By the end of the second quarter, we can see that the total number of the stores already exceeds 200, covering both major cities as well as the lower-tier cities. In terms of the functionality innovation, our space stores have already integrated a lot of functions such as 3D, naked eye watching the cars, multiple car same screen comparison, and multiple brands, one stop purchased, et cetera. We also rely on our AI technologies. We indigenously created a lot of AI functional-related experiences, such as AI buyers and car owners accompany, AI comparison tested drive, as well as the VR space, blockbuster movie, et cetera, that reshape the car consumption experience.

I got that.

In terms of the future development plan, actually, we will continue to deepen our business models and focus on the products and services, refined operation, as well as iteration and upgrading, and to enhance the single store operating efficiency as well as the customer reputation. At the same time, the revenue generation capacity of the new retail module will also be gradually enhanced. We will also continue to strengthen technology integration to integrate with AI big model, not only serving the terminal and consumer experience upgrading, but also to deliver more products and services based on this technology. At the same time, we will also continue to deepen our market insight so as to serve our customers when they do have going global requests.

[Foreign language]

In terms of our product matrix as well as business progress from the CAAM, we have launched AI Smart Assistant for both new cars and second-half cars based on the self-developed [audio distortion] large model, integrating almost 20 years of industrial accumulation of Autohome and professional knowledge base. Actually, we professionally answer users' car-related questions. At the same time, for offline, we also have AI Buyers, the industry's first intelligent voice assistant integrating AI large model and ultra-high definition 3D interaction technologies, supporting natural language dialogue and helping users customize car purchase plans and compare car sources, and improve car selection efficiency

[Foreign language]

And for the end product. Actually, I already said in my opening remark, and for all the OEMs, we have integrated five AI-related functions, both covering marketing, customer acquisition, and customer retail as well as store services.

I already mentioned all of this content in my opening remarks.

[Foreign language]

In terms of the future development trend of our data products, I believe that Autohome's strength is attributable to our more than 20 years professional content accumulation. We have those data users as well as the industrial know-how and all kinds of solutions. In the future, we will continue to combine all of these strengths together so as to further exaggerate our professional capabilities. On the one hand, we will continue to think about how to assist our customers to do refined operation to satisfy their individual life as well as personal demands. On the other hand, we will continue to build Autohome knowledge base to build the moat of the large language model era and continue to better serve our users and clients. Thank you.

Okay, operate then.

Operator (participant)

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

Song Yang (CEO)

[Foreign language]

Thank you, everyone. Thank you for joining us today. We appreciate your support and look forward to updating our next quarter. In the meantime, please feel free to contact us if you have any further typing or comment.

Thank you.

Bye-bye.

Operator (participant)

This concludes today's conference. Thank you for your participation. You may now disconnect.