Uxin Limited - Earnings Call - Q4 2025
April 30, 2025
Transcript
Operator (participant)
Welcome to the Uxin Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jack Wang. Please go ahead, sir.
Jack Wang (Head of Investor Relations)
All right. Thank you, Operator. Hello, everyone. Welcome to Uxin's Earnings Conference Call for the fourth quarter and full year, ended December 31, 2024. On the call with me today, 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 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. With that, I will turn the call over to our CEO, DK. Please go ahead, sir.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Good day, everyone, and thank you for your continued interest and support. It's a pleasure to welcome you on our earnings call today. To better communicate with our domestic and international investors, I will be discussing our performance over the last year, as well as providing insights into our prospects in both Chinese and English.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
2024 was a challenging year for the broader Chinese economy, marked by ongoing macroeconomic headwinds and an intense price war in the new car segment that weighed on the used car market. Despite these pressures, China's used car industry continued its upward trajectory. During 2024, China's used car annual transaction volume reached 19.6 million units, up 6.5% year over year, outpacing the 4.5% growth rate of the new car market during the same period. Policy tailwinds also played a supportive role. Beginning in September, a number of local governments introduced trade-in subsidy programs, which helped stimulate vehicle turnover that, in turn, stabilized and revived market demand.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
We are especially proud of the strong performance of our superstores' operations in 2024. The success further validates the scalability and replicability of our superstore, of our business model. In the sessions that follow, I will outline four key milestones that reflect our progress.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
First, fueled by our industry-leading product and service capabilities, Uxin's used car retail business delivered a growth that significantly outperformed the broader market. In 2024, our retail transaction volume rose from approximately 3,100 units in the first quarter to 8,500 units in the fourth quarter, achieving over 30% year-over-year growth for three consecutive quarters. For the full year, retail transaction volume reached nearly 22,000 units, representing a year-over-year increase of more than 130%.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
This remarkable growth was underpinned by enhanced operational execution across our business. We scaled our inventory levels in a disciplined manner, ending the year with stock roughly three times higher than at the start of 2024. At the same time, we maintained an efficient inventory turnover cycle of approximately 30 days, which supported sustained sales growth.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Second, as we scaled our operations, we also continued to strengthen brand equity and customer loyalty in the core markets where our superstores operate. We actively collected and analyzed customer feedback to refine our after-sales service processes, improving response times and elevating service quality. As a result, our NPS reached 65 in the fourth quarter, up from an average of 60 in the prior year, further reinforcing our position as a trusted leader in China's used car retail landscape.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
At the same time, we continue to strengthen our digital capabilities, leveraging data to build intelligent, technology-driven decision-making across every aspect of our operations. Recently, we began integrating large language models into our business processes to further enhance efficiency in areas such as pricing, vehicle reconditioning, and customer acquisition. The use of digital technologies is enabling greater standardization and scalability across our platform, laying a solid foundation for the large-scale replication and expansion of our superstore model.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Lastly, our financial position continues to strengthen. In the fourth quarter of 2024, we delivered a positive adjusted EBITDA for the first time on a quarterly basis. As our sales volume grows and we are starting to achieve meaningful economies of scale, our gross margin has improved from 4.8% in the fourth quarter of 2023 to 7% in the same period of 2024. With additional superstores coming online and our business scale expanding, we are confident in our ability to deliver sustainable and growing profitability in the quarters and years ahead.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Looking ahead to 2025, we will continue to build on the foundation of our large-scale superstore model, executing a disciplined regional expansion strategy to further scale our operations and drive profitability.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
First, we aim to unlock additional capacity at our existing superstores and increase our market share in their respective cities. Currently, both our Xi'an and Hefei superstores are operating at less than 50% of their full capacity. In 2025, we plan to continue ramping up inventory at these locations while maintaining efficient turnover cycles to support sustained growth in retail volume.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Second, we plan to open between three to four new superstores in key regional markets while strengthening our integrated online/offline retail ecosystem. As previously disclosed, Uxin has entered into partnerships with the local governments in Wuhan and Zhengzhou to establish new superstore operations. Both cities have populations exceeding 12 million and vehicle ownership bases of over 5 million units, representing highly ideal markets for expansion. Our Wuhan superstore began trial operations in February of 2025, and our Zhengzhou superstore is on track to open in the second half of the year. In parallel, we are actively identifying and preparing additional locations to support new store launches in the coming years.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Third, for our full-year operational targets in 2025, we aim to achieve another year of over 100% growth in retail transaction volume and to deliver our first full-year positive adjusted EBITDA. As we pursue expansion, we remain committed to maintaining the long-term health of our financial position.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Now, China's car ownership has surpassed 350 million vehicles. As an increasing number of these vehicles enter the secondary market, the trailing RMD used car sector is expected to maintain strong growth momentum over the next 5-10 years. The sector is evolving towards a new phase of growth defined by brand-oriented, large-scale, and standardized development. As a pioneer and leader in China's used car industry, Uxin is well-positioned to lead this transformation. Through our modernized retail experience, professional vehicle reconditioning capabilities, and a highly efficient data-driven operating model, we are setting new benchmarks for the sector's advancement. We remain fully committed to delivering the best used car products and services to our customers and to generate long-term value for our shareholders, many of whom have supported us through every phase of our journey.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
With that, I'd like to turn the call over to our CFO to walk you through the financial results. John, please go ahead.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Thank you, DK, and hello everyone. I will now share an update on our financial performance.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
We delivered another quarter of strong results in the fourth quarter of 2024. Retail transaction volume reached 8,554 units, representing a 42% increase quarter over quarter and a 178% increase year over year, significantly outperforming the overall China used car market, which recorded a year-to-year growth rate of approximately 10% during the same period. This marks the third consecutive quarter in which our retail volume has grown by more than 100% year over year.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Total retail revenue for the quarter was RMB 553 million, up 25% sequentially and 73% year over year. Our average selling price, or ASP, for retail vehicles decreased from RMB 104,000 in the same quarter last year to RMB 65,000 this quarter, primarily due to the broader shift in vehicle mix. However, the substantial increase in sales volume more than offset the impact of lower ASP on overall revenue. Our current inventory is well-positioned to meet the needs of a broad base of consumers, and we expect ASP to remain stable going forward.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
On the wholesale side, we sold 885 units in the fourth quarter, representing a 15% sequential decline and a 31% year-over-year decline. Wholesale revenue for the quarter was RMB 25.5 million. Combining retail and wholesale operations, total revenue for the fourth quarter was RMB 597 million, representing a 20% sequential increase and a 45% year-over-year increase.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Our gross margin for the fourth quarter was 7%, remaining stable compared to the previous quarter and improving by 2.2 percentage points from 4.8% in the same period last year. Over the past two quarters, we have maintained the gross margin at a relatively stable level. Looking ahead with a recovering market environment and increasing penetration of value-added services, we see meaningful upside potential for further gross margin expansion.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
While delivering strong revenue and volume growth, we continued to implement strict cost and expense control. As a result, we achieved positive adjusted EBITDA for the first time in the fourth quarter, compared to an adjusted EBITDA loss of RMB 43.8 million in the same period last year.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Turning to our full-year 2024 results, retail transaction volume totaled 21,773 units, representing a 134% year-over-year growth. Full-year retail revenue was RMB 1.592 billion, up 56% year-over-year. Total revenue reached RMB 1.814 billion, an increase of 30% year-over-year. Our full-year adjusted EBITDA loss narrowed significantly to RMB 80.8 million, an improvement of RMB 96.3 million compared to 2023, representing a year-over-year improvement of nearly 54%. We have disclosed additional details regarding our full-year financial performance in our recently published fourth quarter and annual results, so I will not repeat all the figures here.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
In addition, in March 2025, we completed a $27.8 million financing agreement with our investors, of which $19 million have already been funded. This significantly strengthened our cash position, ensuring that we have sufficient liquidity to support our business development needs throughout 2025. Following a prudent assessment of our funding plan and operational outlook, our auditor concluded that our financial resources are adequate to support operations for at least the next 12 months and beyond. Accordingly, the substantial doubt about going concern disclosure has been removed from our audit opinion.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Turning to our outlook for the first quarter of 2025. While the first quarter is traditionally a seasonally soft period for the used car industry due to Chinese New Year holiday, we expect retail transaction volume to be between 7,400 and 7,500 units, representing more than 140% year-over-year growth. This will mark our fourth consecutive quarter of year-over-year retail volume growth exceeding 100%. Total revenue for the first quarter is expected to be between RMB 490 million and RMB 500 million.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Lastly, to reiterate DK's earlier comments on our full-year outlook, in 2025 we plan to open 2-4 new superstores. With the continued ramp-up of our existing two locations and the launch of new stores, we are confident in maintaining over 100% year-over-year retail volume growth for the full year and achieving positive full-year adjusted EBITDA.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
That concludes our prepared remarks for today. Operator, we are now ready to take questions.
Operator (participant)
Thank you, Jack. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you wish to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Again, if you would like to ask a question, please press star and then one now. The first question that we have comes from Fei Dai of TF Securities. Please go ahead.
Fei Dai (Analyst)
[Foreign language]
Jack Wang (Head of Investor Relations)
[Foreign language]
Fei Dai (Analyst)
[Foreign language]
Over the past year, the company's cash balance has remained relatively low. However, we noticed that in your fourth quarter results, your auditor removed their substantial doubt regarding your ability to continue as a going concern. Could you please update us on the current cash position and whether it is sufficient to support future business development, including the investment in new superstores? Thank you.
John Lin (CFO)
[Foreign language]
[Foreign language]
Jack Wang (Head of Investor Relations)
Hi, this is John, and I'll take this question. Over the past year, we prioritized allocating our capital to expanding inventory levels, which resulted in maintaining a relatively low cash balance. As our inventory expanded, our sales volume grew rapidly, our profitability improved, and investor confidence in Uxin strengthened significantly. This led to further investment to support our business expansion. Based on the term sheet we signed in 2024, we entered into a formal financing agreement with investors in March 2025 for an aggregate amount of $27.8 million. Of this amount, $19 million has already been funded, with the remainder in the process of being delivered. As a result, our current cash position has improved significantly compared to the end of last year.
Following a careful review of our operational plans and funding arrangements, our auditor concluded that our financial position is sufficient to support future operations and no longer expressed substantial doubt regarding our ability to continue as a going concern.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Now, regarding new superstore investments, the capital expenditures will be phased. Aside from the initial setup costs for reconditioning facilities, vehicle purchases, and operating expenses are gradually deployed as inventory scales. In addition to using our own cash, we also leverage other funding sources. For example, local governments provide direct investment support for our operations in certain cities such as Wuhan and Zhengzhou. Furthermore, we utilize inventory financing services from banks and financial institutions to reduce our own capital commitments for vehicle purchases. Overall, the amount and pace of our capital deployment for new superstores are highly manageable and under control.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
To summarize my answer, our financial position is steadily progressing on a solid trajectory with disciplined cash management and strong investor support. Our current cash reserves are sufficient to fund the growth of our existing superstores and the rollout of new superstores throughout 2025.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
That's our answer to your first question.
Fei Dai (Analyst)
[Foreign language]
The company's stock price has experienced a notable increase over the past year. Could management share your views on the current stock performance? Thank you.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
I will take this question as well. First, we appreciate your interest in our stock performance. We believe that the increase in our share price reflects, to a certain extent, investors' growing interest in China's used car industry, their recognition of Uxin's business model, and their confidence in Uxin's future growth prospects.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
As you know, China is the world's largest automobile market, with over 350 million vehicles in operation. The used car sector represents a trillion RMB opportunity. Compared to developed markets, where the ratio of used car to new car transactions is approximately 3 to 1, China's ratio stands at just 0.6 to 1, indicating more than four times the potential growth opportunity. Uxin is currently the only US-listed company exclusively focused on used car retail in China. We believe that as long as investors are paying attention to China's used car sector, Uxin will naturally be a key focus.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
The second among used car retailers in China, our large-scale superstore model is truly differentiated. By combining a modern retail experience, advanced vehicle reconditioning capabilities, and a highly digitized management system, we are reshaping the traditional used car business. Our model has been strongly endorsed by customers, as reflected in our industry-leading net promoter score. Our Xi'an and Hefei superstores have already become leading destinations for used car purchases in their respective regions.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Third, we expect our business to sustain high growth over the coming years. In 2025, we plan to open two to four new superstores, and we're actively advancing the development of additional sites in other regions. As each superstore matures operationally, we expect to remain on a trajectory of strong and accelerating growth for the foreseeable future.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Our ultimate goal is to create long-term value for our shareholders. At this stage, we are fully focused on executing our business strategy and delivering operational excellence. At the same time, we're committed to keeping investors informed about our business progress in a timely manner. We sincerely appreciate your continued attention and support.
John Lin (CFO)
[Foreign language]
Jack Wang (Head of Investor Relations)
That is our answer to your question.
Fei Dai (Analyst)
[Foreign language]
Operator (participant)
Thank you. At this stage, there are no further questions on the conference call. I will now hand over to Jack for any pre-written questions.
Jack Wang (Head of Investor Relations)
Oh, we actually have another question from Gary Dvorchak with Water Tower Research, who has sent over his questions beforehand. We will take this opportunity to answer that as well. His question is, given the recent trade tensions between China and the U.S., how does management view the outlook for China's used car market in 2025? Are there going to be any major challenges anticipated?
[Foreign language]
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
This is DK, and I will answer this question. While trade tensions between China and the U.S. may have some impact on the new car industry, we believe there will be minimal direct impact on China's used car market. Our business is primarily domestic, operating within China's internal circulation economy, and at this time, we have not observed any direct effects.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
Overall, we remain relatively optimistic about the outlook for China's used car market in 2025. In response to escalating trade frictions, the Chinese government has introduced multiple measures to stimulate domestic demand. These include expanding the trade-in subsidy program, with total subsidies across sectors such as automotive and home appliances doubling to RMB 300 billion in 2025. The Ministry of Commerce has also reiterated its support for the used car industry, announcing initiatives to reform auto circulation consumption and promote efficient used car transactions in the broader automotive aftermarket. As more replacement activity occurs, the supply of high-quality used vehicles is expected to increase, further accelerating transaction volumes.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
On the other hand, if trade tensions persist and broader economic winds materialize, we believe more consumers will shift to focus more on value for money, leading to increased demand for used vehicles.
Kun Dai (Founder and CEO)
[Foreign language]
Jack Wang (Head of Investor Relations)
For Uxin, with the ongoing ramp-up of our existing superstores and the launch of new locations, we expect to maintain over 100% growth in our retail sales volume in the coming year. Regardless of external market fluctuations, we believe that our growth trajectory will continue to significantly outpace that of the industry average in the years ahead. We will also continue to monitor market dynamics closely and adjust our strategies as needed to ensure our sustainable long-term development. That is our answer to the question. Yeah, that is our answer to the question. Operator, we can move on.
Operator (participant)
Thank you. At this stage, there are no further questions on the conference call. Would you like to make any closing comments?
Jack Wang (Head of Investor Relations)
Yeah, thank you all for joining today's call and for your continued support in Uxin. We look forward to speaking to you again soon in the future.
Kun Dai (Founder and CEO)
Thank you, everyone.
Operator (participant)
Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.