Full Truck Alliance - Q4 2025

Transcript

Operator (participant)

Ladies and gentlemen, good day, and welcome to Full Truck Alliance's fourth quarter and fiscal year 2025 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.

Mao Mao (Head of Investor Relations)

Thank you, operator. Please note that today's discussion will contain forward-looking statements relating to the company's future performance, which are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company's control and could cause actual results to differ materially from those mentioned in today's press release and discussion. A general discussion of the risk factors that could affect FTA's business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purpose only.

For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. Joining us today on the call from FTA's senior management are Mr. Hui Zhang, our Founder, Chairman, and CEO, and Mr. Simon Chong Cai, our Chief Financing and Investment Officer. We will open the call to questions following brief opening remarks from Mr. Zhang. As a reminder, this conference is being recorded. In addition, a webcast replay of this call will be available on FTA's investor relations website at ir.fulltruckalliance.com. I will now turn the call over to our Founder, Chairman, and CEO, Mr. Zhang. Please go ahead, sir.

Hui Zhang (Founder, Chairman, and CEO)

[Foreign language]

Speaker 11

Hello, everyone. Thank you for joining us today for our fourth quarter and fiscal year 2025 earnings conference call. In the fourth quarter of 2025, amid a complex market environment, we continued to energize our ecosystem by elevating user experience and strengthening protection mechanisms for both shippers and truckers, driving solid business growth across the board. Total fulfilled orders reached 63.9 million for the quarter, representing a year-over-year increase of 12.3%. Full year total fulfilled orders reached 236 million, up 19.8% year-over-year. Notably, full year orders fulfilled for cold-chain logistics grew by nearly 30% year-over-year.

Hui Zhang (Founder, Chairman, and CEO)

[Foreign language]

Speaker 11

In terms of operational performance, key metrics across all business lines improved steadily in the fourth quarter. On the shipper side, our targeted user acquisition strategy and refined membership system gained momentum. Average monthly active shippers reached 3.28 million in the fourth quarter and 3.14 million for the full year 2025, marking year-over-year increases of 11.6% and 18.6% respectively, demonstrating parallel improvement in both shipper base and user thickness. For trucker users, we continue to optimize the trucker credit rating system and protection mechanisms, maintaining the 12-month rolling active trucker base at a high level, and the next-month retention rate for truckers who responded to orders above 85%, further strengthening the overall reliability and quality of our truckers network.

Our AI-powered heavy truck feed, delivered by Giga.AI, is now operating commercially in the express delivery and fast freight sectors. We also piloted AI assistant capabilities for shippers to further enhance fulfillment efficiency during the quarter. Moving forward, we will continue to accelerate the integration of AI technologies and applications across our connections and the fulfillment processes.

Hui Zhang (Founder, Chairman, and CEO)

财务方面，集团持续优化经营效率，提升盈利能力。2026年全年的总营收突破了CNY 124.9亿元，年同比增长11.1%。同时收入结构进一步优化，全年交易服务收入达到了CNY 53.2亿元，年同比增幅达到了38.2%。盈利方面，全年净利润达到CNY 44.6亿元，年同比增长42.8%。非美国通用会计准则下，全年调整后的净利润是CNY 47.9亿元，年同比增长19.3%。盈利质量和规模效应进一步凸显。

Speaker 11

Now turning to our financial performance. We remained focused on enhancing operating efficiency to strengthen profitability. Net revenues reached CNY 12.49 billion for full year 2023, up 11.1% year-over-year. Furthermore, our revenue mix continued to improve with transaction service revenues of CNY 5.32 billion for the full year, growing by 38.2% year-over-year. On the bottom line, we achieved a net income of CNY 4.46 billion for the full year, up 42.8% year-over-year. On a non-GAAP basis, adjusted net income reached CNY 4.79 billion for the full year, up 19.3% year-over-year, underscoring our high quality profitability and increasing economies of scale.

Hui Zhang (Founder, Chairman, and CEO)

展望未来，满帮将持续提升货车双端的用户体验，不断推进AI与物流全链路的深度融合，为行业创造更大的价值，为股东和用户带来长期回报。

Speaker 11

Looking ahead, Full Truck Alliance will consistently elevate user experience for both shippers and truckers, and fully integrate AI across the logistics value chain, creating greater value for the industry while delivering long-term returns to shareholders and users. Thank you all once again. That concludes our opening remarks. We would now like to open the call to Q&A. Operator please go ahead.

Operator (participant)

Thank you. If you would like to ask a question, please press star then one on your telephone keypad. If you would like to remove yourself from queue, please press star then two. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Today's first question comes from Ronald Keung with Goldman Sachs. Please go ahead.

Ronald Keung (Managing Director)

谢谢龚李总给我这个发问的机会。那想问一下呢，我们回顾这个2025年的话，公司这个业务也经历了比较多的这个外部挑战，还有这个战略的调整嘛。那展望这个2026年，我们应该能分享一下我们这个整体的一个战略规划吗？那让我翻译一下。Thank you, management, for taking my question. Looking back at 2025, then the company faced a number of external challenges and also made several strategic adjustments. As we look into 2026, what can you share your overall strategic priority? Thank you.

Hui Zhang (Founder, Chairman, and CEO)

二零二五年是外部环境充满挑战的一年，也是我们主动求变的一年。这一年我们的生态治理全面推动，运营效率持续提升，用户结构和收入质量得到进一步优化和改善。我们在无人驾驶和海外市场等新业务领域的布局也平稳地展开。这一年我们把更多的精力投入到用户体验，回归到以用户为根的初心，致力打造一个让货主和司机真正信任的平台。这些投入也许在短期内无法用精准量化它的回报，但是长期来看，用户的生态和谐才是我们行稳致远的根基，也是AI无法完全取代的生态价值。

Speaker 11

2025 was a year marked by both external challenges and proactive transformation for our business. During the year, we made significant progress in strengthening platform governance, improving operational efficiency, and further optimizing our user structure and monetization quality. At the same time, we steadily advanced our strategic initiatives in areas such as autonomous driving and overseas markets. Throughout the year, we focused on enhancing the user experience and returning to our core principle of being truly user-centric. Our goal is to build a platform that both shippers and truckers can trust. While some of these investments may not yield immediate measurable returns, we firmly believe that fostering a healthy, balanced user ecosystem will serve as the foundation for our long-term sustainable growth. That kind of ecosystem value is something I think we can't replace.

Hui Zhang (Founder, Chairman, and CEO)

进入二零二六年，我们的各项工作将朝着高质量增长和智能化升级的目标来推动。具体来说，主要包含三个方面。第一，把增长重心从规模优先转向质量和规模并重。规模依然重要，但是为了长远健康的发展，我们要构建用户和平台共生共荣的关系，达到一个更高的生态标准，使得交易更规范，运费有保障，用户更满意。随着第一阶段生态治理的完成，平台上的绝大部分虚假账户和低质量订单已经基本清新，平台进入了更健康的增长轨道。这让我们有条件也有底气在履约质量上做得更扎实。在此基础上，我们也将持续完善双端用户信用和评价机制，例如通过货主信积分和司机行为分体系，逐步建立更加完善的双向评价机制，从源头规范用户行为，约束不规范的交易，同时激励优质用户，推动货主履约效率与司机收益，实现更加良性的循环。

Speaker 11

As we move into 2026, we will focus on advancing high quality growth and intelligence transformation across three areas. First, we are shifting our focus from scale-driven growth to a model that balances both scale and quality. While scale remains important for long term sustainable development, our priority is to foster a mutually beneficial relationship between users and the platform. We are raising ecosystem standards to ensure more compliant and standardized transactions, greater protection for freight payment and higher user satisfaction. With the first phase of our ecosystem governance initiatives now largely complete, most fake accounts and low quality orders have been cleared from the platform. As a result, the platform is operating on a much healthier footing, giving us the confidence to further strengthen fulfillment quality and support more sustainable growth going forward. Building on this foundation, we are also continuing to improve the credit rating mechanisms for both shippers and truckers. For example, through systems such as shipper rating scores and trucker behavior scores, we are gradually establishing a more robust two-sided evaluation framework. This helps regulate user behavior at the source, curb non-compliant transactions, while also incentivizing high quality users, ultimately creating a more virtuous cycle between shipper fulfillment efficiency and trucker earnings.

Hui Zhang (Founder, Chairman, and CEO)

第二，从信息撮合平台向AI驱动的智能化基础设施平台升级。我们多年积累了海量的真实交易数据，也有高频的用户入口，这是非常重要的基础。接下来我们要把这项优势充分转化为AI能力，在撮合效率、信用体系、动态定价等关键环节持续深化应用，使满帮的价值不仅体现在信息链条上，更加体现在对整个交易过程的智能化升级上面。

Speaker 11

Second, we are evolving from an information matching platform into an AI-driven intelligent infrastructure. Over the years, we have accumulated a large volume of authentic transaction data and built a highly active user base, which together provided a strong foundation for this transformation. Going forward, we will further leverage these strengths to advance and integrate our AI capabilities across key areas, including matching efficiency, credit assessment, and dynamic pricing. In doing so, we aim to extend our platform's value beyond simply connecting supply and demand and enabling a more intelligent and efficient transaction process.

Hui Zhang (Founder, Chairman, and CEO)

第三，在主业稳健增长的基础上，逐步布局新的增长曲线。我们对成熟业务的盈利能力保持信心。在此基础上，公司正在有节奏地推进海外和自动驾驶等方向的探索和布局，希望为未来的三到五年的发展提前储备新的增长动力。

Speaker 11

While maintaining steady growth in our core business, we are laying the groundwork for additional growth drivers. We remain confident in the profitability of our mature business. Building on this foundation, we are advancing initiatives in areas such as overseas expansion and autonomous driving in a disciplined manner to support our growth over the next three to five years. Thank you.

Ronald Keung (Managing Director)

谢谢。

Operator (participant)

Thank you. Our next question today comes from Eddy Wang at Morgan Stanley. Please go ahead.

Eddy Wang (Executive Director)

张晖总，Simon总，Mao Mao，Emma，感谢接受我的提问。那我这边两条问题是关于AI的。第一个就是目前AI技术发展迅速，这AI agent这新事物的出现会对我们这个货运匹配平台产生什么样的影响？然后我们会如何防御来自AI agent对传统平台模式的颠覆？然后第二个问题是AI目前在公司的应用情况是怎么样的？四季度主要的进展是怎么样的？以及2026年我们对这方面有什么规划？好，我自己翻译一下。Thank you management for taking my question. I have two questions related to AI. The first one is that the AI technology is advancing rapidly, and the rise of AI agent is gaining significant attention. How might this trend affect freight matching platforms such as FTA? How do you plan to respond to the potential disruption that AI agents could bring to the traditional platform model? The second question is, can management share how AI is being applied across the company? What's the key developments in the fourth quarter? What is your plans for the 2026? Xie xie.

Simon Cai (Chief Financing and Investment Officer)

Thank you, Eddie. This is Simon here. I'll take over, well, from now onwards. There has been a lot of discussion around the AI topic recently, and we have been closely monitoring and evaluating its implications. Let me start with our first question. We see AI not as a threat to our business, but as a tool to enhance our capabilities. For the road freight industry in which FTA operates, the emergence of AI tools can significantly lower the barriers for shippers to find available carrier capacity, reduce manual costs in the matching process, and improve both matching accuracy and fulfillment rates. These changes will meaningfully improve efficiency across the entire industry. We believe this transformation will create significant opportunities for us to capture additional market shares, as transactions migrate from highly fragmented offline markets, including ad hoc and relationship-based trucking networks onto our platform.

In our view, AI presents more opportunities than challenges for our platform. For AI models to deliver meaningful results in the highly non-standardized freight matching market, they must rely on large volumes of authentic, high frequency, closed loop transaction data. This includes data such as quotes, completed transactions, cancellations, fulfillment records, dispute resolutions, credit behaviors, and verified logistics address database. These data sets are the result of many years of operational experience and data accumulation on our platform. Let's take pricing as example first. In long-haul freight market, competitive real-time freight rates are not publicly available. The effective transaction price for each route and time period is influenced by multiple factors, including capacity, availability, backhaul demand, trucker preferences, and delivery time requirements. These dynamic pricing signals can only be formed and validated within the real transaction network.

On our platform, truckers must complete real name registration and facial verification before logging into our app and accessing shipment information. Negotiations between shippers and truckers are conducted through our in-app messaging tools and protected communication channels. While external AI tools, if there's any, lack the basic data set to perform accurate pricing. Second, in the long-haul freight matching business, where fulfillment standards are high and operational processes are complex, transactions involving far more than simply matching information. The capability to execute this is critical. While external AI tools may help a shipper quickly obtain a price quote or even contact several truckers automatically, moving a shipment from posting to final delivery requires much more than pricing.

Effective fulfillment depends on robust platform services and dispatch capabilities, including understanding which truckers are reliable on specific routes, their likelihood of cancellation, how trucking capacity fluctuates during different time periods, and maintaining a complete operational system from order placement to settlement to protect the interests of both shippers and truckers. In addition, long-haul freight operations frequently involve exceptions and non-standard situations. These may include specific vehicle requirements, trucks equipped with lift gates or refrigeration units, last-minute delivery address changes, adjustments to cargo volume, highway closure, and damage disputes after delivery. Handling these situations requires well-established platform rules to determine responsibilities, extensive historical data to assess reliability, and a responsive dispatch network capable of quickly arranging alternatives when disruptions occur. These are not capabilities that a standalone generative AI model can deliver on its own.

They are built on years of operational experience and data accumulation and are precisely where our core competitive advantage lies. In addition, our platform connects a large number of shippers and truckers, and through years of operation, has formed a stable transaction network and credit system. Truckers and shippers not only rely on the platform to obtain orders and capacity, but also depend on the platform for credit evaluation, fulfillment protection, dispute resolution and dispute resolution mechanisms. This long-term accumulation of trust and ecosystem relationships is something that a standalone AI agent application would find difficult to replicate. Given these structural characteristics, we believe that as AI technology continues to mature, our competitive advantages will become even more pronounced. The reason is very straightforward.

The more capable AI becomes, the more it depends on real transaction data and the stronger the resulting network effects. We're actively integrating AI capabilities across multiple aspects of our platform, including matching, dispatching, pricing, risk management, and customer service. As matching becomes more efficient, fulfillment becomes more reliable and exception handling becomes faster and more effective, both truckers and shippers will naturally prefer to transact on our platform. This, in turn, leads to continued data accumulation and ongoing model improvement, which further strengthens our network effects and the moat around our platform. Overall, we are very optimistic about the industry transformation and the opportunities brought by the AI era, and we are fully prepared to embrace the opportunities and challenges that come with this technological shift. For us, AI represents a capability upgrade rather than a disruption to our business model.

We will leverage AI capabilities to capture the broader industry opportunities it creates, making our platform more efficient and improving the user experience for both shippers and truckers. At the same time, these capabilities will further strengthen our network effects, thereby reinforcing our long-term competitive advantage in the road freight market. To address your second question, on our plan for AI for 2026, as I discussed earlier, on our view on AI, let me walk through the progress we made over the past quarter and our plan onwards. During the fourth quarter, our AI initiatives progressed from the experimental phase to broader deployment.

We're currently building an AI agent framework that covers key scenarios across our platform, including shippers, dispatch operations and customer service, gradually embedding AI capabilities throughout the entire transaction workflow. Starting with the user side, our focus on shippers is simplified shipping, shipment posting and automated dispatch. In the fourth quarter, we launched an AI-empowered assistant that enables shippers to submit shipping requests through a simple voice input via a floating entry point in the app. The AI can then handle the entire workflow, including freight listing, trucker screening, price negotiation and order matching, significantly streamlining what previously required multiple manual steps. This capability is particularly beneficial for direct shippers as it lowers the barriers to posting shipments and improves shipping efficiency, helping the platform better attract and retain SME shippers.

This solution also supports WeCom-based shipment posting as well as API integration, delivering meaningful efficiency improvements for enterprise customers that require system integration. Our pilot results so far demonstrate the effectiveness of our AI-powered dispatch system. First, AI-driven dispatch has attracted a large number of valid trucker bids, reflecting that more accurate matching is increasing truckers' willingness to accept orders. Second, the vast majority of completed transactions are now processed entirely through automated workflows, and the need for manual intervention continues to decline. Compared to traditional freight listing, AI-driven dispatch is delivering superior outcomes in both transaction efficiency and fulfillment rates. In short, the AI assistant is helping shippers reduce the time required to find truckers, helping truckers improve order pickup efficiency, and enhancing overall matching quality across the platform.

Internally, AI has been integrated into our customer service operations, significantly improving response times and processing efficiency, while also enhancing overall service stability. Looking ahead to 2026, AI will continue to serve as a core technology foundation for improving efficiency and enhancing user experience across FTA platform. As our models continue to evolve and data advantages deepen, we expect AI to unlock additional value in areas such as matching efficiency and operational cost optimization, becoming an increasingly important driver of our medium to long-term growth. Thank you.

Eddy Wang (Executive Director)

Thank you.

Operator (participant)

Thank you. Our next question comes from Brian Gong at Citi. Please go ahead.

Brian Gong (Internet and Media Research)

[Foreign language] I will translate myself. Thanks, management, for taking my question. With respect to the capital allocation, how does management prioritize among investment in core business growth, new initiatives and shareholder returns? Thank you.

Simon Cai (Chief Financing and Investment Officer)

Thank you, Brian. Our approach to capital allocation is guided by a very clear principle, and that is to delivering sustainable returns to shareholders while maintaining healthy growth in our core business. We remain firmly committed to this objective and committed to creating long-term value for our shareholders. In 2025, we continue to deliver our commitment to returning share value to shareholders through both dividends and share repurchases. Over the course of the year, we distributed approximately $200 million in cash dividends under our semi-annual dividend policy. In addition, we continue to implement our share repurchase program to further optimize our capital structure.

Since the beginning of 2025, we have repurchased approximately $52.4 million worth of our shares, demonstrating management's confidence in the company's long-term value. In addition, in January 2026, we announced a medium to long-term shareholder return plan. For 2026, we plan to return approximately $400 million to shareholders. Today we also announced a dividend of approximately $87.5 million for the first quarter. To support these shareholder return commitments, we must continue to strengthen our core business while identifying new growth drivers to sustain strong cash generation. As you know, long-term freight matching remains our primary source of cash flow and profitability and forms the foundation for our long-term competitive advantage.

Looking ahead, we will continue to invest in user acquisition, technology upgrades, product innovations, and ecosystem development to support a steady and sustainable growth of our core business. With respect to strategic investments in new initiatives, including overseas expansion and autonomous driving, we emphasize a disciplined approach characterized by controlled pacing, manageable cash outflows, and measurable milestones. We will not pursue high risk as a heavy extension. Instead, we will advance these initiatives in a measured manner with evaluation of expected returns and progress at each stage. These investments are intended to build long-term growth capacity and further strengthen our competitive moat rather than pursuing short-term scale. Overall, we believe that the core business growth, investment in new initiatives and shareholder returns are not mutually exclusive objectives.

We will strive to maintain a dynamic balance between growth and shareholder returns while preserving strategic flexibility. Thank you.

Operator (participant)

Thank you. Our next question today comes from Thomas Chong at Jefferies. Please go ahead.

Thomas Chong (Regional Head of Internet and Media)

[Foreign language] Good evening. Thanks, management, for taking my question. We have seen the fulfilled orders grow by 12.3% year-on-year in Q4, and the growth rate is slowing down. Was this mainly driven by the ecosystem governance initiatives? How long do we expect this impact to last? What is our outlook for order volume in 2026? Thank you.

Simon Cai (Chief Financing and Investment Officer)

Thank you, Thomas. That's a very good question. Let me first clarify the reasons behind the slowdown in order volume growth during the fourth quarter. The slowdown was primarily driven by the ecosystem governance initiatives we proactively implemented on platform rather than any significant change in underlying freight demand. This round of ecosystem governance primarily focused on three areas. First, we addressed misclassified carpooling orders where full truckload shipments were posted as less-than-truckload orders, which can compromise transportation safety and fulfillment experience. Second, we strengthened real name verification requirements for both truckers and shippers, which resulted in the removal of a number of fake or non-compliant accounts. Thirdly, we implemented systematic measures to curb freight reselling and other irregular transaction activities.

These issues had accumulated over time, and were beginning to affect the platform. Therefore, we believe it was both necessary and timely to address them through a full governance effort. These governance measures primarily affected low-quality orders with limited monetization potential. During the initial phase of the governance initiatives, some of the misclassified carpooling orders have shifted back to the full load product, full truckload product, while others have temporarily moved to offline channels. We view this as a normal structural adjustment. From a revenue perspective, these orders historically contributed only a small portion of the platform's revenue. In fact, transaction service revenue, as you can see, still grew by nearly 30% year-over-year in the fourth quarter, which clearly demonstrates that the ecosystem governance has not affected the platform's core monetization capability.

Based on the results achieved so far, the governance initiatives have delivered meaningful improvements. For example, the resale and trading of trucker accounts on third-party platforms have been nearly eliminated, and the trucker vehicle verification rate is now close to 100%. In addition, freight reselling activities in January decreased significantly compared with the end of third quarter, and customer complaints, complaint rates have continued to decline. At the same time, trucker engagement has remained stable with the rolling twelve-month active trucker base maintaining at high level and the next month's retention rate for truckers responding to orders exceeding 85%. The principal measures under this round of governance have been largely completed, and the main impacts have been fully reflected. Real name verification has been fully implemented. Freight reselling is now managed under a normalized framework and misclassified carpooling orders have been structurally addressed through product rules.

As we move to 2026, our focus will shift from targeted governance campaigns to continuous optimization. We will leverage credit scoring and algorithmic model to safeguard the long-term health of the ecosystem and placing greater emphasis on balancing growth pace and operational quality. In the near term, we do not expect to carry out another large scale governance campaign. Based on our operating data so far, into the year in 2026, sequential order growth has already shown clear signs of recovery. Looking ahead to the full year as the impact of governance initiatives continue to diminish, the share of direct shippers continue to increase and matching efficiency further improves, we remain cautiously optimistic about steady order growth on our platform in 2026. Thank you.

Operator (participant)

Thank you. Our next question comes from Ritchie Sun at HSBC. Please go ahead.

Ritchie Sun (Director of Internet research)

[Foreign language] Thank you management for taking my questions. My first question is about the fulfillment rate. How did the fulfillment rate perform in fourth quarter, and what is the outlook for this metric? Secondly, in terms of the commission revenue growth, it is nearly at 30% year-on-year growth in fourth quarter despite slower order growth. What were the key drivers behind this, and what is the outlook for this metric going forward? Thank you.

Simon Cai (Chief Financing and Investment Officer)

Thank you, Ritchie, for your question on fulfillment rate. In the fourth quarter, the overall fulfillment rate reached 42.7%, representing a year-over-year increase of more than five percentage points, and it also set a new record. Notably, the average fulfillment rate for the mid and low frequency direct shippers approached 65%. This is a key metric we monitor closely and as this segment represents a higher quality source of freight demand. Several factors drove the improvements in the fulfillment rate. First, we implemented systematic optimization to our cancellation policy. Historically, arbitrary cancellations by both truckers and shippers weighed heavily on fulfillment rate. In the fourth quarter, we introduced two key measures. We increased the cost of unjustified cancellations by imposing behavioral restrictions on users with frequent cancellations.

We also upgraded our credit scoring system. The evaluation framework shifted from a primary focus on transaction frequency to a more holistic assessment of behavior quality with greater emphasis on fulfillment rates, user ratings, and complaint rates. These adjustments are designed to encourage more consistent and responsible transaction behavior among both truckers and shippers. Secondly, the continued improvement in our user mix also contributed to the higher fulfillment rate. In the fourth quarter, fulfillment orders from direct shippers accounted for 55% of total fulfilled orders, up from the previous quarter. Direct shippers generally have higher expectation for fulfillment reliability and a stronger commitment to execute. The increase in their share directly supported the improvement in the platform's overall fulfillment performance. Thirdly, ongoing product enhancements also contributed to the improvement.

In the fourth quarter, we continued to iterate on the new freight zone and introduced a secondary confirmation step for shipment posting, which improved fulfillment rates for newly listed shipments. At the same time, upgrade to our matching algorithm and more refined operations significantly accelerated truckers' response times, supporting a steady increase in transaction conversion rates. Looking ahead, as our credit scoring system continues to improve, the base of direct shippers expand and low-quality freight listings are further phased out, we expect fulfillment performance to maintain a steady upward trend. This will not only enhance the user experience, but also support further monetization of the platform. Regarding your second question on commission revenue growth. In the fourth quarter, transaction service revenue reached approximately CNY 1.49 billion.

That's a year-over-year increase of around 28%. Despite the moderation in order volume growth. Revenue maintained a relatively strong growth momentum, primarily driven by two factors. The first driver was the continued increase in commission penetration. In the fourth quarter, commission penetration rate reached 88.6%, up roughly 6 percentage points year-over-year. The number of cities covered by the commission model reached 273, effectively achieving nationwide coverage across major freight markets. This improvement reflects the platform's continued progress in identifying high quality freight demand, ensuring fulfillment reliability, and enhancing matching efficiency, enabling the commission model to be applied to a broader range of orders. The second driver was the improvement in monetization per order. In Q4, average monetization per order reached CNY 26.3.

This reflects the effectiveness of our refined tiered operating strategy. By offering differentiated services tailored to different shipper segments, we improved monetization efficiency and overall profitability while safeguarding the interests of truckers. Looking ahead, we remain confident in the continued growth of our transaction service revenue. There's room to further optimize both commission penetration and monetization per order. At the same time, continued enhancement of our trucker membership program will help ensure a stable supply of high-quality transportation capacity and further strengthening the foundation for transaction service revenue growth. Going forward, we will continue to refine our commission structure and operational strategies without compromising user experience to support more stable and sustainable long-term growth in this particular revenue stream. Thank you.

Ritchie Sun (Director of Internet research)

Thank you very much.

Operator (participant)

Thank you. Our next question comes from Wenjie Zhang with CICC. Please go ahead.

Wenjie Zhang (VP)

[Foreign language] I'll translate for myself. Thank you, management, for taking my question. My question is about credit solution business within value-added services. I wonder what's the latest progress of this business.

Simon Cai (Chief Financing and Investment Officer)

Thank you. In the fourth quarter, amid an evolving regulatory environment, we continued to advance our credit solutions with a focus on compliance, risk management and business model transformation, and maintain a steady pace of development. As of the end of the fourth quarter, we completed the transition to interest rates of 26% or below for both existing and newly issued loans, reflecting our proactive alignment with regulatory guidance and commitment to compliance. While this adjustment created some short-term pressure on revenue, we believe it will support a more robust and sustainable financial services framework over the long term and lay a stronger foundation for our future growth. In terms of asset quality, our overall risk exposure remains manageable.

Since mid last year, regulatory changes across the credit industry have led to fluctuations in credit risk, and our credit business has also been affected. In the fourth quarter, the 90-day delinquency ratio reached 2.9%. In response, we proactively tightened our risk management measures by raising credit approval thresholds for both new and existing users and implementing earlier interventions through model optimization and a more tiered risk control framework. As a result, our outstanding loan balance remains at a healthy level and the overall risk exposure is well contained. Looking ahead, while some volatility may persist in the coming months, we expect asset quality to gradually improve with the overall NPL ratio stabilizing and beginning to decline in the second half of this year.

In terms of our business model, we are proactively transitioning toward a more asset-light approach. We have established partnerships with multiple banks and financial institutions and are increasingly originating loans through guarantee-backed and facilitation models. This approach allows us to significantly reduce the use of our own capital while maintaining service coverage and improving capital efficiency and better managing risk exposure. As a result, we are building a more balanced and sustainable risk-return profile for our credit business. Overall, we will continue to prioritize compliance, maintain disciplined risk management, and support our core business through our credit operations. Going forward, we will balance growth and risk while further improving asset quality and expanding penetrations across operational scenarios.

This will help ensure that our credit solutions business develops in a more sustainable manner as the regulatory environment continues to evolve. Thank you.

Wenjie Zhang (VP)

Thank you, management.

Operator (participant)

Thank you. Our next question comes from Yuan Liao with CITIC. Please go ahead.

Yuan Liao (Analyst)

[Foreign language] I'll transfer myself. Thanks, management, for taking my questions. Could management share with us what progress have you made in your overseas business so far? What are the plans for your SEA expansion and your strategic priorities for 2026? Is there any timeline for your monetization of your overseas business? Thank you.

Simon Cai (Chief Financing and Investment Officer)

Thank you. Our overseas business is an important part of our mid- to long-term growth. We're building our international operations under the QMove brand, and we are currently in the model validation and capability replication stage. In terms of our market selection logic, the emerging markets we're targeting share key traits. Large road freight volumes, low level of digitalization, highly fragmented truckers and shipper base, large information gaps and high reliance on traditional broker models. This is very much like China over a decade ago. And much like China over a decade ago when we first started our business. This makes our domestic experience and capabilities highly transferable, allowing us to replicate our model in those markets with minimal learning curves.

We are pursuing an asset-light and localized approach, advancing investments gradually as we validate the business model and team capabilities, leveraging our technology and operational know-how to drive platform rollouts. QMove is already integrating a fragmented local trucking capacity in select markets and steadily building user network on both the trucker and shipper side. The priority for 2026 remains deepening our presence in existing markets while expanding to new ones in a disciplined manner. We will first focus on boosting network density and user engagement in established countries, while gradually advancing city expansions in markets that are operationally ready and steadily broadening the platform's reach. We maintain a pragmatic and flexible attitude toward regarding the pace of the monetization. Emerging market digital freight platforms typically progress through user acquisition, network formation, and efficiency improvement before reaching stable commercialization.

With timing varying by market, our priority is to grow the platform network and expand our user base, sustainably rather than, you know, simply pursue early monetization at the expense of long-term growth. In summary, we remain confident in the long-term growth potential of these emerging markets, whose digital transformation is expected to follow a path very similar to China's road logistics industry. We'll continue expanding overseas in a disciplined, steady manner and gradually move toward commercialization as the operating model matures. Thank you.

Operator (participant)

Thank you. That concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

Mao Mao (Head of Investor Relations)

Thank you once again for joining us today. If you have any further questions, please feel free to contact FTA directly or reach out to TPG. Our contact information for IR in both China and the U.S. can be found in today's press release. Have a great day.