Uxin - Q1 2025

Transcript

Operator (participant)

Hello, and welcome to the Uxin Q1 fiscal year 2025 earnings conference call. All participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I will now like to turn the conference over to Jack Wang. Please go ahead.

Jack Wang (Head of Investor Relations)

All right, thank you, operator. Hello, everyone. Welcome to Uxin's earnings conference call for the Q1 ended June thirty, 2024. On the call today with me, we have DK, our founder and CEO, and John Lin, our CFO. DK will review business operations and company highlights, followed by John, who will discuss financials and guidance. They will both be available to answer your questions during the Q&A session that follows. Before we proceed, I would like to remind you that this call may contain forward-looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our filings with the SEC. Now with that, I will turn the call over to our CEO, DK. Please go ahead, sir.

Kun Dai (CEO)

谢谢主持人。大家好，很高兴跟各位投资者再次通过电话会的形式见面，感谢大家来参加我们的业绩电话会。为了方便和国内外投资者进行交流，我会用中英文的形式和大家分享公司最新的进展。

Jack Wang (Head of Investor Relations)

Hello, everyone. Thank you for joining us today. I am pleased to reconnect with you all on the call, and to facilitate communications with both domestic and international investors, I will share our company's latest progress in both Chinese and English.

Kun Dai (CEO)

2025财年的第一季度，也就是2024年的4到6月份，尽管新车的价格战还在不间断地对二手车市场造成扰动，但我们超级大卖场的业务运营依然保持高速增长，季度零售销量达到4,090台，环比增长31%，同比增长142%。车辆流转的效率保持在相当健康的状态，库存车辆的周转天数在30天左右。

Jack Wang (Head of Investor Relations)

During the Q1 of fiscal year 2025, which covers April to June 2024, our superstore operations maintained strong momentum, despite ongoing disruptions in the used car market caused by the aggressive pricing competition in the new car market. We achieved retail sales of four thousand and ninety units for the quarter, representing a 31% increase sequentially and an impressive 142% growth year-over-year. Our vehicle turnover efficiency also maintained very healthy with the inventory turnover days at approximately 30 days.

Kun Dai (CEO)

业务处在快速增长轨道的同时，客户对购车体验的满意度又上了一个台阶。在连续九个季度维持在六十分左右的行业最高水平的基础上，NPS由上个季度的六十二提升至本季度的六十五。客户对我们的产品质量和服务水平愈发认可，优信线下大卖场模式的优越性和竞争力愈发明显。

Jack Wang (Head of Investor Relations)

As our business continues on this rapid growth trajectory, customer satisfaction has also reached new heights. After maintaining the highest Net Promoter Score in the industry for nine consecutive quarters at around 60, we further improved this quarter, reaching an NPS of 65. Our customers increasingly recognize the quality of our products and the level of service we provide, further solidifying the competitive advantage of Uxin's offline superstore model.

Kun Dai (CEO)

我们在上个季度的致股东信中，宣布了预期在二零二四年的十到十二月份实现单季度公司的EBITDA盈利。最近几个月业务强劲的发展势头，让我们朝着这个目标更加靠近。在这里，我想主要跟大家分享近期我们关注的三个方面的工 作。

Jack Wang (Head of Investor Relations)

In our shareholder letter last quarter, we outlined our expectation to achieve adjusted EBITDA profitability company-wide by the December quarter of 2024. The strong business momentum over the past few months has brought us even closer to this goal. Today, I would like to highlight three key areas we're focusing on to drive continued growth.

Kun Dai (CEO)

第一，继续稳步提升库存水平。今年六月份以后，新车价格战相对缓和，市场对二手车的消费需求也逐步升温，我们开始重新拉升库存水平，预计今年年底的库存水平将是年初的两到三倍，满足更多消费者的车辆选择，这也将推动未来几个季度零售销量的持续增长。

Jack Wang (Head of Investor Relations)

First, we are steadily increasing our inventory levels. Since June, the intensity of new car price wars has begun to ease, and consumer demand for used cars has gradually picked up. In response, we've resumed expanding our inventories, and we expect to increase our inventory to two to three times its size at the beginning of the year by the end of 2024. This will provide a wider selection of vehicles to meet customer demand and drive continued retail sales growth over the next three quarters.

Kun Dai (CEO)

第二，提升向个人车主收车的比例。随着在卖场所在城市及周边城市品牌知名度的提升，我们获得了很多原生的卖车流量，有更多机会从个人车主处进行收车。那么当前总收车数量中，来自个人车主的车辆比例在60%以上，这意味着我们在收车端站在了供应链的最前沿。...有更多的空间去保障合理的收售价差水平，也有助于增强我们在区域市场的竞争优势。

Jack Wang (Head of Investor Relations)

第二, we are increasing the proportion of vehicles we acquire from individual car owners. As our brand presence grows in the cities where our superstores are located, as well as in the surrounding areas, we are seeing a substantial rise in the organic traffic from individual car owners looking to sell or trade in their vehicles. Currently, over 60% of the vehicles we acquire come directly from private owners, placing us at the forefront of the supply chain.

This not only helps us to secure better pricing margins, but also strengthens our competitive edge in regional markets.

Kun Dai (CEO)

第三，提升增值服务的渗透率。我们依托线下大卖场和整备工厂的一站式购车场景，不断拓展金融、保险、延保、精品、维修保养等高毛利衍生服务，推动毛利率进一步上涨。

Jack Wang (Head of Investor Relations)

Third, we are focusing on enhancing the penetration of value-added services through our one-stop shopping experience at our offline superstores and reconditioning centers. We continue to expand high margin services such as financing, insurance, extended warranties, premium accessories, and vehicle maintenance. This strategy will further improve our profit growth margin.

Kun Dai (CEO)

此外，基于现阶段已成功验证的业务模式，我们也在持续推进新卖场的拓展。在今年七月份，我们与郑州政府达成战略合作，推动优信二手车工厂店项目落地郑州。我们也正在和一些其他城市进行深度洽谈中，那么很快会再落地一到两个与地方政府的战略合作。新卖场的拓展将大幅提升优信在新产业区域的市场影响力，持续推动未来销量的增长和业绩表现。

Jack Wang (Head of Investor Relations)

In addition, we are continuing to expand our network of superstores, building on the success of our current business model. In July, we reached a strategic partnership with the local government in Zhengzhou to establish a new superstore in the city. We are also actively engaging with several other cities and expect to finalize one to two more strategic partnerships with the local government soon. This expansion will significantly enhance Uxin's market presence in new regions, driving further sales growth and improving our overall business performance.

Kun Dai (CEO)

我今天先分享到这里，接下来我们的CFO John会为大家展示财务上的情况。

Jack Wang (Head of Investor Relations)

John, please. That concludes my updates for today. I will now turn the call over to our CFO, John, to discuss the financials in more detail. John, please go ahead.

John Lin (CFO)

谢谢 DK，大家好，因为同时有国内国外的投资者参会，我们这次依然用中文和英文与大家分享公司 2025 财年第一季度的财务情况。

Jack Wang (Head of Investor Relations)

Thank you, DK, and hello, everyone! Since we have both domestic and international investors joining us today, I will be presenting our Q1 financial results for the fiscal year of 2025 in both Chinese and English.

John Lin (CFO)

回顾财政年的第一季度，也就是自然年2024年的四到六月，因为新车市场的价格战对市场的行情造成了一些扰动，但是二手车市场整体回暖，全国二手车的销量同比增长6.4%。随着我们线下大卖场的业务模式完全跑通，我们的品牌力、产品力、服务力的全面提升，我们的销售业绩也达到了历史的新高。这季度的零售销量为4090台，环比增长31%，较去年同期大幅增长142%。

Jack Wang (Head of Investor Relations)

Looking back at the Q1 of fiscal year 2025, between April and June of 2024, we continued to experience some market disruptions due to the ongoing price wars in the new car market. However, the overall used car market has shown signs of recovery, with a nationwide used car sales increasing by 6.4% year-over-year. Importantly, our offline superstore model is now fully operational and strengthened by our brand, product and service capabilities, enabling us to achieve record sales in the quarter. Our quarterly retail transaction volume reached 4,090 units, representing a 31% sequential increase and a significant 142% year-over-year growth.

John Lin (CFO)

第一季度的零售销售额为3.25亿人民币，同比增长74%。零售车辆的平均售价由去年同期的11.1万降至本季度的7.9万，我们的销量的大幅增长抵消了车价下降对收入水平的影响。

Jack Wang (Head of Investor Relations)

The total retail vehicle sales revenue for the Q1 was 325 million RMB, reflecting a 74% year-over-year increase. The average selling price of retail vehicles decreased from 111,000 RMB in the same period last year to 79,000 RMB this quarter. The substantial increase in transaction volume offset the impact of the lower ASP on overall revenue.

John Lin (CFO)

车辆批售方面，一季度的批售销量是一千五百一十五台，同比略微下降百分之三，批售的总收入是六千三百九十万元人民币。那综合零售和批售，一季度的总收入是四点零一亿人民币。

Jack Wang (Head of Investor Relations)

On the wholesale front, our wholesale transaction volume in the quarter was 1,515 units, representing a slight 3% year-over-year decline, with the total wholesale vehicle sales revenue of RMB 63.9 million. As a result of the above, our total revenues in the Q1 were RMB 401 million.

John Lin (CFO)

...本季度的毛利率是6.4%，较上个季度基本持平。随着市场行情的回暖和增值服务渗透率的提升，我们预期毛利率还有较大的增长空间。

Jack Wang (Head of Investor Relations)

Our gross margin was 6.4%, which remains stable compared to the previous quarter. With the market gradually recovering and the increased penetration of our value-added services, we anticipate further room for gross margin improvement going forward.

John Lin (CFO)

随着我们的业绩表现和运营效率的大幅提升，我们同时也持续地贯彻严格的成本费用管控。本季度经调整后的EBITDA亏损为3,390万元人民币，比上个季度减亏589万元人民币，比去年同期减亏1,280万元人民币，同比减亏27%。

Jack Wang (Head of Investor Relations)

As our performance and operational efficiency improved significantly, coupled with our continued focus on strict cost control, our Adjusted EBITDA loss for the quarter was 33.9 million RMB, reflecting a reduction of 5.9 million RMB from the previous quarter, and a reduction of 12.8 million RMB, or 27% year-over-year.

John Lin (CFO)

Regarding the performance outlook for the Q2 of fiscal year 2025, which is July to September of 2024, our retail sales volume is expected to be 5,800-6,000 units, with sequential growth exceeding 40%. Total sales revenue is expected at RMB 480 million-RMB 500 million. For the Q2 of the fiscal year, adjusted EBITDA loss will be significantly narrowed to within RMB 10 million. We are very confident that in the Q3 of the fiscal year, which is October to December of 2024, we will achieve positive EBITDA for the company's single quarter.

Jack Wang (Head of Investor Relations)

Looking ahead to the Q2 of fiscal year 2025, between July and September 2024, we expect retail transaction volume to reach between 580 and 600 units, representing a sequential growth of over 40%. Total revenues are expected to be between 480 million RMB and 500 million RMB. We also anticipate that our adjusted EBITDA loss will narrow significantly to under 10 million RMB, and we remain confident in achieving positive adjusted EBITDA in the Q3, which runs from October to December 2024.

John Lin (CFO)

我们近日与港交所上市公司迪达出行达成七百五十万美元的融资协议，这笔资金将进一步支持公司提升车辆库存，推动我们零售销量的持续增长。我们今后一段时间的资金使用重点都是用于提升库存。另外，其他的一些融资安排也在按计划推进中，为公司未来业务的快速增长做好资金准备。

Jack Wang (Head of Investor Relations)

Recently, we secured a $7.5 million financing agreement with Dida, a company listed on the Hong Kong Stock Exchange. This capital injection will further support the company's efforts to increase inventory in vehicle inventory, driving continued growth in our retail sales. In the near term, our primary focus for capital allocation will remain on increasing inventory. In addition, we have other financing plans currently in progress, ensuring that we have sufficient capital to support the rapid growth of our future business.

John Lin (CFO)

以上就是我们今天准备和大家分享的内容，啊，谢谢各位。主持人，我们可以开始问答环节。

Jack Wang (Head of Investor Relations)

That concludes the prepared remarks for today. Thank you all. Operator, we're now ready to begin the Q&A session.

Operator (participant)

We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Fei Dai with TF Securities. Please go ahead.

Fei Dai (Analyst)

Hello company management. I am Fei Dai, the analyst from TF Securities. I am very pleased with the company's announcement of very good quarterly performance and performance guidance. I have two questions. First question: What specific factors drove the company's retail sales volume to such strong growth, and can this growth trend be sustained? Second question: From the company's quarterly report, we see that the company's RMB 630 million cash level is at a relatively low position. I would like to understand the company's planning in terms of financial management, and how it will support the company's business development in the future.

The second question is, we noticed from the quarterly report that the company's cash position as of June thirty is relatively low. Could you provide more detail on your financial management plans and how you will support such future business growth? Thank you.

John Lin (CFO)

好，谢谢戴飞。那我来回答第一个问题，然后请张阳来回答第二个。对于销量的大幅提升，我们总结下来三个方面的原因：第一是二手车市场整体行情开始回归，年初新车激烈的价格战对二手车市场造成了较大的影响，消费者的观望情绪比较重。...

那进入年中以来呢，价格战相对缓和了一些，消费者对二手车购买的需求正在回暖。第二，随着运营的逐渐成熟，我们在卖场所在城市的影响力也越来越大了。品牌力、产品力和福利的全面提升，销售转化效率变得更高，到了一个销量的爆发拐点。第三，我们在观察市场行情回暖后，开始增加库存，给了消费者更多的购车选择，也满足了更多消费者的购车需求，那么自然能转化更多的销量。

Jack Wang (Head of Investor Relations)

So this is DK. I will address, yeah, your first question, and then John will address the second. So there are three key factors driving the significant increase in sales. First is the overall used car market is starting to recover. Earlier in the year, the aggressive pricing competition in the new car market had a severe impact on the used car sector, and with many consumers hesitant to make purchasing decisions. However, as we moved into midyear, the price wars had begun to ease, and we've seen a noticeable rebound in demand for used cars. Second, as our operations have matured, we've built a stronger presence in the cities where our superstores are located.

Our brand, product offerings, and service capabilities have all improved significantly, leading to higher sales conversion rate. We've reached a tipping point where our growth is now accelerating. And third, we've, as we observed the market recovering, we proactively expanded our inventory levels, providing customers with a wider selection of vehicles, and this enabled us to better meet consumer demand, resulting in higher sales conversion.

John Lin (CFO)

我们下一个季度的销量还将保持强劲的增速，我们预计环比的增速会在40%以上。我们预计今年年底的库存规模较年初要增加这个一到两倍，总体的库存将在3000到4000台。同时我们也有很有信心保持高水平的库存周转，销量会在一个持续增长的轨道上。

Jack Wang (Head of Investor Relations)

Looking ahead, we expect sales growth to remain strong. For the next quarter, we are forecasting a sequential growth of over 40%, and by the end of the year, we plan to increase inventory by one to two times compared to the beginning of the year, with total inventory reaching 3,000-4,000 units. At the same time, we are confident in maintaining high inventory turnover levels, keeping us on a sustained growth trajectory.

John Lin (CFO)

OK，那我来回答，第二个问题，关于资金的问题。公司最近几个季度的现金的确处于一个比较低的水准，在这个过程中，我们看到公司业务的运营现金流其实是在显著改善，也获取了新的投资来补充我们的流动性。我们的现金使用的效率是非常高的，我们的运营资本也有充足的保障，因为我们的资金被充分投入到拉升零售库存的水平上。所以我看大家会看到我们的现金保持一个较低的水准，但其实我们的库存是在持续增加的，也推动了我们销量转化的持续增长。我们今后一段时间的资金使用重点，包括融资款的使用，也主要是用于提升库存。

Jack Wang (Head of Investor Relations)

Hi, this is John. I will address your second question about cash. It is true that our cash levels have been relatively low over the past few quarters. However, our operating cash flow has improved significantly, and we've secured new investments to further enhance our liquidity. We are also very efficient with our cash usage. And so while ensuring operational stability, the majority of our funds have been directed towards increasing retail inventory. That's why, while our cash balance may seem low, it's important to note that our inventory levels have been steadily rising, which has fueled continued sales growth. Over the coming quarters, our primary focus for cash allocation, including the recent financing, will remain on boosting inventory levels.

John Lin (CFO)

我们在资金的管理上秉持着两个原则：一个是确保公司的财务安全，一个是充分支持公司的业务增长，啊，这个对于资金管理水平有着极高的要求，那我们也在开源和节流上做了大量的工作。

Jack Wang (Head of Investor Relations)

Overall, we operate under two core financial principles. First, ensuring the company's financial position is secure, and second, fully supporting our business growth. This demands a high level of financial management, and we've made substantial efforts to both increase our cash inflow and manage expenses.

John Lin (CFO)

一方面，随着销量的大幅提升和盈利水平的增强，我们的两个卖场都已经实现了EBITDA转正，未来将逐渐从消耗现金转变为贡献现金。同时，投资人对我们的业务发展也充满了信心，优信可以持续获得新的融资。我们在九月初刚与滴答完成了七百五十万美金融资安排，还有其他的融资安排正在按计划推进中。

Jack Wang (Head of Investor Relations)

As our sales and profitability has improved, both of our stores are now Adjusted EBITDA positive. We are transitioning from burning cash to generating cash. Meanwhile, our investors continue to show strong confidence in Uxin's business prospects. In early September, we secured $7.5 million in financing from Dida, and we have additional financing plans currently progressing as scheduled.

John Lin (CFO)

另一方面，公司持续推动各种降本增效的动作，目前单月固定的费用较去年同期下降超过了1000万元人民币。

Jack Wang (Head of Investor Relations)

Also, we've implemented multiple rounds of cost-saving and efficiency-enhancing initiatives, resulting in a reduction of approximately RMB 2 million in fixed monthly expenses compared to the same period last year.

Kun Dai (CEO)

新卖场的开业准备和库存投入需要新的资金支持，基本上会通过地方政府的投资和优信的自有资金解决。那依托合肥和西安卖场建设运营积累的丰富的经验，以及新区域的各种政策上的支持，我们新开卖场的启动成本是完全可控的，会处于一个非常经济合理水平。

Jack Wang (Head of Investor Relations)

As for the new superstores in other regions, we will require additional funding for their launch and inventory build-up, which will primarily be supported through a combination of local government investments and our own capital. Based on our extensive experience in building and operating the Hefei and Xi'an superstores, as well as favorable local policies, the startup costs for new stores are entirely manageable and remain at a very reasonable level.

Kun Dai (CEO)

总体而言呢，优信的资金管理还是比较安全稳定的。那随着公司朝长期健康的方向发展，我们对资金状况的改善也充满信心。

Jack Wang (Head of Investor Relations)

So to summarize the answer, our financial management remains solid and stable. As we continue on our path towards long-term sustainable growth, we are confident in the ongoing improvement of our cash position. Operator, can we move on to the next?

Operator (participant)

Again, if you have a question, please press star, then one.

Jack Wang (Head of Investor Relations)

Hi, operator. We have a question we received, so I'll just take the opportunity to ask, so we have a question from Gary with Water Tower Research. He wanted to know that since the company has been talking about that the price competition in the new car market has eased somewhat, can you share more about your recent observations on market conditions, and how consumer demand for used cars has been evolving in the current economic environment?

Kun Dai (CEO)

We have an investor, this Gary from Water Tower Research. He wants to ask, the company has been mentioning that the price war in the new car market has eased some. Can the company please share more about the recent market sentiment? Under the current economic situation, what changes have there been in consumers' demand for used cars? Good. I will answer this question. The new car price war has indeed been very intense over the past year or more. At the same time, this year's economic situation also has relatively big challenges. New car sales in the first half of the year grew only 5% year-over-year. We tracked some popular models. Starting from the Q1 of last year, there were consecutive three to four price drops. The cumulative selling price decline exceeded 30%.

Jack Wang (Head of Investor Relations)

Hi, this is DK. We'll address this question. So that is correct. The price wars in the new car market have been quite intense over the past year, and this year's economic conditions have posed, you know, significant challenges. Sales growth for new cars in the first half of this year was only around 5%, and we've observed several popular models experiencing price cuts three to four times since the Q1 of last year, with price cuts reaching around 30%.

Kun Dai (CEO)

新车市场激烈的竞争和价格下探，也自然导致了二手车市场成交均价的不断降低。我们现在的单车均价是七万多。但我觉得从长期来看，车辆价格的下探打开了更大的市场，更多的消费者可以用更少的预算买到更好的车辆，那么也更开始关注二手车作为高性价比的购车选项。

Jack Wang (Head of Investor Relations)

These aggressive pricing strategies in the new car market have naturally led to a continuous decrease in the average transaction prices in the used car market, where our current average sales average price per vehicle is just over RMB 70,000. We believe that in the long run, these lower vehicle prices have opened up a broader market, enabling more consumers to purchase better vehicles with smaller budgets. This dynamic is also causing consumers to increasingly view used cars as a high-value purchasing option.

Kun Dai (CEO)

但不论在什么样的经济形势和市场环境 下，消费者对产品质量和服务水平的要求都是越来越高的，那优秀二手车经销商的门槛也会变得越来越高。优信线下大卖场和线上全国购相结合的一站式购车模式，可以充分满足最广大消费者的购车需求，服务也深受消费者的认可。那我们的平均销售周转天数约为三十天，那么远远超过五十五到六十天的行业平均水平，那销量增速也远远超过行业平均水平，客户满意度NPS也是行业第一。所以不论市场行情如何变化，我们的业务运营有信心保持一个持续向好的状态，每个月都有新的突破。

Jack Wang (Head of Investor Relations)

Regardless of the economic situation or market environment, consumer expectations for product and service quality are consistently increasing, raising the bar for superior used car dealerships. Our integrated model of offline superstores and online national sales capacities can fulfill the broadest consumer needs, and we're highly recognized for our services. With an average sales turnover of about 30 days, which is significantly faster than the industry average of 55-60 days, our sales growth and customer satisfaction, as measured by our industry-leading Net Promoter Score, both consistently exceed industry averages, and therefore, no matter how market conditions fluctuate, we are confident in our business operations, maintaining a trajectory of continuous improvement with new breakthroughs each month, and that's our answer to Water Tower Research's question. Operator, can we move on?

Operator (participant)

Yes, this concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

Jack Wang (Head of Investor Relations)

All right. Thank you again for joining today's call and for your continued support in Uxin. We look forward to speaking with you again in the very near future. Thank you.

Operator (participant)

The conference has now.

Kun Dai (CEO)

Thank you. Bye-bye. Thank you.

Operator (participant)

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.