Smart Share Global Limited

Q1 2022 Earnings Conference Call

6/15/2022

spk_0: hello and thank you for standing by for energy monsters two thousand and twenty two for the quarter earnings conference call at this time all better since i the listen only mood after management's prepared remarks there will be a question and answer session today's conference is being recorded if you have any objections you may disconnect at the time and the like to turn the meeting over to your hosts for today's kinds of gold director of investor relations henson she's think you please go ahead
spk_1: they do welcome to our two thousand and twenty two first quarter earnings conference call join me on the call today are marked high energy monster chairman and chief executive officer and the reaction chief financial officer for today the general manager will discuss business updates operation highlights and financial perform and for the first quarter of two thousand and forty two before we continue i referred you to are safe harbor thing and ernie has released which reply to call as we will make forward looking statements about that call includes discussion of thirty nine gap financial measures please refer to our earnings release which contains a reconciliation of mine kept measures to most directly from pebble gap measures finally feel that unless otherwise stated our figures mentioned during the topic how are in our and be we now i to turn call their to our chairman and chief executive officer marseilles for the business and operation
spk_2: think you and today and one welcome to our twenty twenty two first quarter earnings call
spk_1: the first quarter of twenty twenty two has been for challenging water for energy monster
spk_2: in light of the continuous outbreak of colder regions such as schengen beijing kinsey hum job and hundred throughout the quarter and especially due to the significantly worse than expected outbreaks in shanghai starting mid march which radio you towards our region other regions for example the operate in changing in january resulted in a sixty seven percent decline in revenues within the city
spk_3: doing the fifteen days period after the initial case
spk_2: hum jos generate outbreak resulted in a fifty eight percent decline singed and a march fifty one percent chung twins march or break eighty six percent and an outbreak in shanghai starting mid march resulted in a seventy percent decline in march the frequency in size of the colbert outbreaks in the first quarter of twenty twenty two is increasing compared to twenty twenty one these covet outbreaks resulted in the significant decline in offline foot traffic as people are more likely to stay at home and apply locations are forced closed due to locked on measures the outbreaks or resulting in a general decline in offline you the foot traffic across the board negative late impacting almost all brains within of offline presence
spk_3: these outbreaks continue to adversely affect the foot traffic to offline p wife in both regions of outbreak and surrounding regions swell
spk_2: which in return results in lower foot traffic keep your eyes were all cabinets are placed
spk_3: during the first quarter of this year
spk_2: same store revenue decreased by approximately thirty five percent year over year as a result of the general decrease of which have it despite the impact we continue to stay long term oriented and folks on laying the groundwork for expanding our mckee leadership we continue to make strife expanding our poi network which reached eight hundred existing one thousand as of the end of the first quarter of twenty twenty two
spk_3: increasing by over twenty percent year over year with the increase in coverage i was service becomes available to more customers across china cumulative you if you this reached two hundred nine nine million as of the end of the first quarter
spk_2: implying the acquisition of twelve million new rest is registered users and increasing by over twenty five percent year over year we also continue to reduce both fixed and available incentive feet to better mitigate against fluctuations in revenue without you from call the outbreaks notably incentive fees as a percentage of revenue for new signings continue to trend down i'm in light of diminishing competition
spk_3: no incentive fees and decrease in usage of fixed infant fees will eventually help as low our blended incentive the race and decrease the impact of exterior events such as call the outbreaks on our operation
spk_2: while we continue to be impacted by colbert we remain confident in the long term development of the market the general demand about service remains unchanged as regions coming out of covert impact quickly recovered within one to two months off containing
spk_3: that's why we continue to uphold a long term perspective in terms of out core strategies
spk_4: during cold it
spk_3: we will continue increasing our poi network coverage through both our direct and network partner models
spk_2: as well as launching innovative ways for the two models to work together to further expand our market presence
spk_3: we also continue to innovate to increase our market leading efficiency programs such as our power bank optimization program and the launch of of new generation of cabinets will unlock i'll asked efficiency villages we are confident that are innovative initiatives were further help us both cement i'll competitive advantage and capture the growth of china's mobile device charges service industry
spk_2: now let me walk you through our core strategies in coverage and efficiency
spk_3: first is the coverage of i was so this
spk_2: we continue to expand the coverage of our service through a combination of out direct operation and next will partner models
spk_3: oh poi coverage in our user base continues to increase despite the heck wings set forth by call that operates
spk_2: in terms of direct operation model lbd personnel continue to spearhead our coverage expansion primarily a higher to tie accusative doing call it the expansion rate of our poi has significantly decreased compared to that of a normalized period as the decline of line traffic to be wise make a large number of potential penalized inadequate for coverage in terms of a probability requirement while this has resulted in a decrease in potato poi sick for our coverage during the period of colbert impact but it also resulted in a general reduction incentive few weights for new signings after the outbreak is contained the potential poi por is restored was offline traffic within the region is normalized because our incentive system allies the interest of all bd with that of the company we continue to maintain a healthy and efficient increase in poi coverage even doing period of colbert the outbreak on the other side of the coverage expansion is our network partner model
spk_3: through a series of marketing campaigns and implementation of the new channels upon acquisition such as telemarketing an online acquisition tailored to attract high quality network pinus energy monster
spk_2: we continue to rapidly increase of network pundit found as the end of the first quarter of twenty twenty two we have a network of over one thousand and three hundred network partners spending across china
spk_3: oh network partner count if up by over a hundred eighty percent year over year and fifty percent quarter over quarter as we accelerate our pace for attracting high quality network partners
spk_2: these natural upon us generally have previous experience working with t wise within a given region
spk_5: such month the such such making them highly efficient partners for the expansion of our service network
spk_2: the number of eyes operated under the network pollen model as a result increased from thirty eight percent as of the end of the fourth quarter last year two thirty eight point nine percent as and of the first quarter this year we also launched a series of innovative initiatives that leverages the advantage of direct operation and network pot models
spk_5: initiatives such as the opening of or region
spk_6: to both models
spk_2: and leverage in our direct opposition team to attract new network partners allow us to extract higher level of synergy between or to phone models
spk_3: i would direct operation model which have extensive coverage across china
spk_2: can now leverage it's presence to not only identifying new poi partners but potential network punished as well at the same time i'll get or partners are able to work alongside our direct model a all regions to increase coverage
spk_3: he reaches that were previously exclusive for direct model allowing us to better leveraging our upon us unique vantage
spk_2: because both our models hit the market in terms of much as you would leave additional synergy between the two were help us to extend our market leadership more directly more flexibly and more efficiently we also continue make storm progress expanding okay coverage notably during the quarter we signed major brands such as pizza hut been crumble and shop on car any car continuous expansion old cave means an important component of expansion of our coverage as case generally have higher level of foot traffic
spk_4: while the impact of call it it does so to a lesser extent compared to a smaller breasts
spk_2: this makes k strategically important as they are impacted less during the period of colbert and has higher levels of potential during the period of normalized for traffic
spk_3: i'll keep my allergy is to target the top k eighth within each poi settlement such as chain store
spk_2: shopping mall transportation hub in the movie theaters
spk_3: by utilizing a top down approach we are able to make more efficiently on board smaller brands given now experience is working with the larger was our abilities to customize also this that better fit into the p was experience and to provide high quality support also serve as if key different ages a energy monsters their loot added to case when compared to l p s
spk_2: going forward we believe we will be able to leverage our existing strength in the k a settlement step celebrate our penetration into or types of k a suit out china in terms of competitive environment throughout lothian this year we are seeing a general decline in competition under the direct model is our appears within the industry continue to significantly scaled down there direct operation personnel in combination with the
spk_3: albert outbreaks and it's more significant impact of our peers we see a lighter competitive environment for p wife across all segments and regions this decrease in new signing incentive v eight ended a reduction in usage of fixed infant fees for new findings will help us better navigate ourselves during the period of covert impact next is our initiatives on the operational efficiency front
spk_2: efficiency has always been a crew crucial part of energy amongst us operating philosophy and a key to fish asia that set us apart from our kids within the industry
spk_3: the cost of impact of colbert on our top line we have to continuously optimize our fixed costs and expenses improved efficiency greatly help us with use the efficiency of the fixed costs and expenses which in turn lowers the proportion of fixed costs and expenses as a percentage of revenue
spk_2: although the efficiency of our direct operation and will partner t remains maki leading we continue to identify ways to increase their efficiency through measures such as back and toward improvement and a model innovation our business development as nails coverage of lies continue to increase as we implement measures to unlock the efficiency potential to better system and improve slp in the first quarter
spk_3: i will be these coverage or poi per person has increased thirty three percent year over year
spk_5: making a significant increase in terms of efficiency
spk_3: the implementation of innovative models such as the leveraging of our direct operation team to attract more network pontius the further a lock our efficiency potential as our business development personal can have more avenues to contribute growth
spk_2: we also continue to make a choice improving our effort efficiency through our power bank optimization program and the launch of are newer generation of cabinet to see it we continue to implement l powell been optimization program during the quarter which provide to us the most efficient amount of power bet that should be in the given cabinet based on the historical matrix additionally we are also in the final testing face of our new generation of power and cabinets featuring i was designed external form factors and internal
spk_3: layout while this new cabinets where have similar durability and features the were have a significant lower tax these huge happiness were also significantly enhance our ability to acquire more high quality network punish as it reduces the payback period for alps
spk_7: atlantis and unlocked their growth potential
spk_2: would leave our continue his pursuit of efficiency hoping terms of employees and asset will significantly distinguish and months of position within the industry and unlocked the valley for all of our stakeholders as a long run in conclusion we continue to face challenges from cold it in the first quarter of twenty twenty two and a will face even more challenges in the second quarter given the largest scale outbreaks stemming from shanghai and beijing start to a mid march shanghai's foot traffic was nearly halted due to the citywide lockdown imposed by the government
spk_3: as a result from mid march to make our revenue in shanghai decreased by an average of ninety three percent beijing is similar but to a lesser extent from late april to me a revenue in beijing decreed by an average of seventy four percent while these outbreaks are challenging they're shocked term in nature starting june they recovery train has been clear for example in shanghai in the first week of june average revenue recovered to twenty seven percent compared to the same period last year compared to the seven percent of revenue from mit march to me despite ongoing outbreaks in beijing in other regions we are seeing time of time that demand for service remains unchanged and the region's impact i outbreaks quickly recovered to normalize levels in due time
spk_4: of all call outbreaks can not and will not be predictable
spk_2: and that's why we have to focus on the fundamentals of the company so that we can to navigate our south during the period of lower foot traffic and capture the growth of industry during the period of life for traffic we will continue to expand our coverage from a direct and network partner models
spk_3: extending our t white coverage across all cities
spk_5: poi tight and brains
spk_2: we were also continue to introduce innovative ways for our direct operation and network partner model to leverage their respective advantage to achieve higher levels of synergy between the two models we were relentlessly pursue a higher efficiency holding tons of our fleet and assets
spk_3: going forward we believe our efforts in coverage expansion and efficiency improvements will serve strong competitive advantage that sex and advanced apart from the industry tears and allow us to effectively capture the long term secular growth
spk_2: of china smaller device charging service industry thank you very much are now turn to court over to my we're seeing our chief financial officer for the financial highlights
spk_8: thank you my now let me walk through the financial aid effort a out you're going to beat health for the fourth quarter of with other time to kill their meals or a hundred and thirty thousand one one million replay then here are thirteen percent year over year decrease ram yards from all baudelaire charging business what town hall point one percent to seven hundred and seventeen point seven maybe
spk_9: come here for lady and one of four percent of our total their meals for the quarter
spk_8: the decrease was primarily are to be able to the entire of calling my here during the fourth quarter of two that and twenty two revenues from poor banks out what down forty eight point three percent your year to top one my million and the campaign for one point eight percent of our total revenue for the quarter that degrade was primarily attribute both to the impact of calling my pin in the fourth quarter of two thousand two
spk_10: the to
spk_8: all around the was what op twenty five one five percent year over year to three point four million and the calm paid for their or point nine percent of our total revenue that includes was primarily attributable to the ink with youth earth advertisement efficiency and the new business initiative pulse of ram new would have to plan for present your years to a hundred and twenty seventh one say flailing for the fourth quarter of two thousand twenty two the ingrid of cause of romney of was primarily due to the you quit in operation of go without he is included in these bush asian carp both for faith was dying fifteen points that present your year to six hundred oh my point five million for the fourth quarter of with other to the to the decrease was primarily due to the decree a brammo due to that degrades is amnio from mobile device charging disease operating expenses for the fourth quarter of two hundred twenty two or sell hundred or eight point eight million at one point five percent year over year is coding sherbet the compensation non gaap operating expenses war than a hundred or two point one million reprieve than here a year over year into
spk_9: with of one point seven percent
spk_8: research and development is lesson for the fourth quarter of two thousand twenty two one hundred thirty seven point one million op thirty one point two percent year over year the ingrid what the primarily due to the increase in put the mail related expenses south and a marty offensive for the fourth quarter of the than twenty two was six hundred and fifty nine point seven many down there a point three percent a year year that the equivalent primarily due to the is the with his entry fees and the is then he'll leave paid to the location partner journal and other knew the truth here is method or twenty seven point four million in the fourth quarter of two thousand twenty two or three point one percent error year that included was primary due to the engrossed in professional fluid and the of his rental expensive lavrov operation was like the nine point three million and operating margin before the fourth quarter of two hundred twenty two was negative thirteen point five percent compared to two point eight percent in the central la the year like love was like keep the point for many in the fourth quarter of two said anthony to right man for the fourth quarter of two that and twenty two was negative thirteenth one one percent not that led law which is cool it's cool of shared their accommodation expensive was eighty nine point seven minutes in the fourth quarter of two on the to lead to compare the unknown dark net income of twenty three point too many in the same period last year as of march thirty one two thousand and twenty two that company had a cash and cash equivalents is strictly the cash and sore thumb investment of two point eight billion cash flow generated from operations for the fourth quarter of two thousand and twenty two was one hundred and sixty point nine million capital expenditures for the fourth quarter of this year or one hundred and ten point seven million and the gym author grandly power to generate his the defender and to succeed near me to six hundred and ninety minutes of revenue for the second quarter of two the other twenty two please know that if full cause of his life and that he loved her grand and the palais millville all the industry and the it's operations which is subject to change thank you for listening we are now ready for your crutches operator
spk_0: thank you the question and answer session of at this conference call will start in the moment we would take one question at the time from each color if you have more than one question please request to join the question que again after your first question has been addressed two also acosta now please press dar one known your telephone keypad to withdraw your requires please press the pound or husky once again to stall one for questions our first question comes from the line of charlie chan from china renaissance please ask a question
spk_11: oh thanks month's rent for to get my custom of i have a quarter regarding your a business model so as elaborate a bit more on this energy that you mention the during your prepared remarks between the the rats and the network on a model of the family or company have any preference between the two me models during cold it are going forward and you
spk_3: thanks charlie on our would take this question
spk_2: i was the network expansion has always been driven by both direct and the metal partner models historically out direct operation model generally folks on the higher tier cities where our network panama do folks on the lower ones
spk_12: for our direct model
spk_2: who were not generate very decent plot a quantum me in of electricity we generally select only one model for each region or city based on that it to you in the past few quarters we have also launched a number of tests regions that wrong on both models results are very encouraging utilizing both models have superior growth rate oh direct model team is able to penetrate into relatively large appeal eyes while our network partners can leverage their existing relationship to extend our poi network combined with tomatoes work in cohesion to help and the monster extend his college network which in turn help us increase our markets you both have been successful tests in pilot regions we are having the thought to open all occasions that we haven't to both models in order to leverage the advantage of both models or first time
spk_5: we believe our network partners unique relationship with will help us for the penetrate into existing regions and also help us move into newer ones
spk_2: in addition to the adoption of the both models in all regions we have launched a new program that singer guys the two models by giving our direct operation keep the ability to identify and attract network partners to our platform
spk_3: i would you let operation model which spans across china can now leverage it's presence to not only i did you buy new pew watch on us but also the potential network partners because both all models leave the market in terms of much as you would leave additional synergy between the two will help us more rapidly and more flexible lead to extend our market leadership
spk_2: and at the same time more closely aligning the interest between all direct and that upon the models
spk_5: think you on question
spk_0: thanks year or next question comes from vicky way from city group please ask a question
spk_13: if i'm in management thanks for taking my question so when management provide some color on the monthly performance in the second quarter and by merchants categories does management notice any recovery chance of the from merchant the say such as catering said those and other spots thank you
spk_2: sure thanks for your question on the general environment has been challenging due to continuous impact of cold it on our operation of in first and second quarter of twenty twenty two doctors say that the second quarter so far by and of me is even worse compared to the first quarter or most notably the outbreak in shanghai
spk_5: kids are headquartered in shanghai
spk_2: i'm in a march starting much was more significant than all previous expectation on during the first quarter of twenty twenty two on since dollar avenue decreased by approximately thirty five percent year over year is a result of these outbreaks due to on the general in decrease of foot traffic the quarter various clusters of covert outbreaks primarily originated from shanghai rate has a significant impact starting in mid march shanghai's with traffic was nearly completely hot it almost none due to the city wide lockdown imposed by the government a revenue in shanghai is i just mentioned decreased on by ninety three percent are from march to the end of may in terms of the company or what you the we were down approximately thirty seven percent the april in the twenty nine percent in may as these were it was a general surge in colbert cases across china
spk_3: started in june but recovery trend has been clear
spk_2: actually encourage across all regions are impacted by the shanghai led up right in the first seven days of june we see shanghai's average revenue recovered up to twenty seven percent no as it is still is you're covering the revenue or do anything period of time if we compare other regions that do not have active colbert cases are recovering at a similar trend
spk_3: in terms of pure categories the impact of colbert generally more negatively impacts tourists driven such as transportation hubs hospitality and tourist attractions entertainment revenues are frequently required to due to the government regulation if poverty is were being
spk_14: region so they are down year over year as well
spk_5: while the poi eyes that i just mention typically
spk_3: a more impacted by colbert outbreaks the general recovery trend is more region driven as a as opposed to pure white hat to them
spk_14: regions that have been able to contain
spk_5: outbreaks recover across poi types as lockdown or pointing restrictions are removed
spk_3: going forward are confident that the impact of call it will eventually diminish as containment is achieved a all regions thank you
spk_0: thank you are next costing tens from iran come from gonna say please go ahead
spk_15: becky i mars area and as and i'm asked that i can you give us more insight on their competitive environment in the first half of this year and out of the anticipate he incentive fee rate going forward a into the second up
spk_8: excerpt stokes i don't your coaches and in terms of their conduct competitive element throughout two thousand and twenty one and the into the literally to we as the a general decline in computation and or that direct model as appears with in the industry continue to significantly go down there direct ablation now we randomly operate the largest and most each period team and as a direct model live in the industry this thread moto team was it shouldn't instrumental in helping off achieve a record market share in greece and and their the initial call it a break in first half of two hundred twenty two oh leave our is that she appeared scouting doubt they are directly operation team we remain love how fathers and that have mccann our do mode of came at a similar style it and it's station of the recovery of call it in terms of the you simply of the raid the decrease in an alligator and had benefited off as a new findings generally have a decree it is a deal add up a deluge of ram of compared to our blended rate dismiss that oriented fees read are going down as a percentage of revenue also we are more widely adopted the usage of liable or you plenty of leave avenue saying rather have fixed or you entry fee well of the don't know why the gather the under you and you'll see rate for the future ah the grand chan for new thing and a decrease the utilization of a fix these are pulled a few for our financial going forward and go for your collection
spk_0: where i think you we are now approaching the end up the conference call i would now turn to call ever to energy months to see fo my reesing so closing remarks
spk_8: i once again thank you for doing today please don't hesitate to contact us if you have any for their actions thank you for your a cookie me as the paw and the we look forward to speaking with you in the coming that thank you
spk_0: well thank you for your participation in today's conference this concludes the presentation you may now disconnect day
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This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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