Quhuo Limited

Good day, ladies and gentlemen. Welcome to Chihua's fourth quarter and first year 2020 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. And I'd like to turn the conference over to your host for today's conference call, Annison, Investor Relations Director of Chihuahua. Please go ahead.

Thank you. Thank you, operator. Hello, everyone. Welcome to Chihuahua Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. The company's results were released earlier today, and we are available on our IR website. On the call today are Leslie Yu, Chairman and CEO, co-founder Barry Ba, and CFO Sandra Lastly, we will review business operation and company highlights, followed by Sandra Zee, who will discuss financials and guidance. They will be both available to answer your questions during the Q&A session afterwards. Before we begin, I would like to remind you this call may contain forward-looking statements made under the Safe Harbor Prohibition of Private Security Legislation Act of 1995. Such statements are based on management's current expectations and the current market and operation and related to the events that involve known or unknown risks and certainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company actual results, performance, or achievements to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties, and factors is included in the company's filing with U.S. Securities and Exchange Commission. The company doesn't undertake any obligation to update any forward-looking statements as a result of new information, future remains or otherwise, except as required under law. With that, I will now turn the call over to our Chairman and CEO, Mr. Lesley Yu, Please go ahead.

Thank you, Annie, and thank you all for joining our fourth quarter and fiscal year 2020 earnings conference call. We are pleased to deliver solid performance across all business sectors in the first four years since we went public in July 2020. We experienced an extremely difficult year due to the impact of COVID-19, which disrupted life and the global economy. Its impact on the business of our partners actively influenced our operations. Having said that, I'm proud that we overcame many obstacles and saw our encouraging improvement in financial performance, thanks to our team's work and the management system of Shufo+. For the full year of 2020, our revenues increased by 25% year-over-year to RMB 2.6 billion, Although the year was extremely challenging, we managed to deliver solid growth. Our adjusted net income increased by 48% year-over-year to RMB 76 million, and adjusted EBITDA increased by 44% year-over-year to RMB 134 million. We believe that such improvement in our profitability reflects our capability in efficiency enhancement under the management of large-scale economy. In 2020, we encountered multiple challenges. The combined impact of COVID-19 and related containment measures had an adverse impact across various business segments. As the economy slowed down, domestic travel and daily activities were reduced. and many people preferred to stay home for safety reasons, all of which have dramatically affected the mobility and hotel business. In addition, travel restrictions made it tougher to recruit riders for our delivery service, and a subsequent labor shortage drove up overall labor costs. However, leveraging our strong operational capabilities and industry-leading tech-powered management system, we have taken this challenge as an opportunity to further increase the gap with our peers and solidify our leading position in the workforce operations sector. Here, I will highlight some of the measures we took to navigate through the tough market environment. Firstly, we managed to maintain our revenue growth through enlarged business scope and coverage, such as fresh food delivery, food box project with Meituan and SDLE, and through cooperating with new customers, such as Hello, Shellbike, and McDonald's, and through extending to new service sectors by acquisition, such as acquiring Lai Lai and Cheng Tu. Secondly, we kept investing our R&D to refine chipboard-class management systems to improve our operational efficiency and restructuring our workflow and reduce manly management efforts. At the same time, we kept investing in our people through our online training system and on-ground hand-to-hand practice. We have developed an extensive management network consisting of about 1,000 experienced front-end managers. who are expert in the workforce management and possess service operating capabilities to promptly adjust to changing market dynamics. Thanks to them, we are able to achieve lower operating management cost 5.05% year over year, even in such difficult situation of COVID-19. Thirdly, in front of the hardness of labor shortage, we'll continuously upgrade our internal online leverage system based on our established large labor pool. And this helps us to maintain strong recruitment capabilities without significantly increasing acquisition costs during the pandemic. At the same time, our workers found it easy to seek growing job opportunities in our platform across our various solutions, which effectively increased the labor thickness and reduced the cost. 2020 was a truly challenging year, but it was also filled with opportunities to scale our business. We adjusted the challenges head-on and adapted our strategies to diversify into more service offerings and made solid progress across targeted and new segments. Our call-on-demand food delivery business maintained its leading position in the sector with about a 25% year-over-year increase in the number of average monthly delivery orders in 2020. revenues from the on-demand food delivery solutions increased by 30% year-over-year. During the year, we rolled out our grocery and fresh food delivery business and contributed 50 million RMB for a new revenue in 2020. We are confident of scaling up the business with an accelerated growth rate in 2021. For mobility sector, operation with HALO and DB and achieved 45% revenue growth year-over-year, further solidify our presence in the mobility service sector. In 2021, we will extend our mobility service to retail and consuming customers. For the housekeeping solution business, we made a significant progress in 2020. We entered into investment agreement to acquire a majority state in Lai Lai, which is specializing housekeeping solutions for hotels and B&B. In October 2020, during the fourth quarter, we also invested in Chengdu, a leading home state service provider in China. We believe that this investment will accelerate our pace and allow us to establish a solid foothold in housekeeping solution sector. To date, our service covers over 1,000 hotels, 2,700 B&Bs nationwide. Leveraging synergies with Leila and Chengchu will affect our housekeeping solutions to make a meaningful contribution to both our revenue and margin in 2021. In 2020, we have further adapted our diversified solutions strategy and made strategic investment to scale up certain business sectors. We believe that COVID-19 has profoundly and permanently changed the lifestyle of Chinese customers and consumers, which will benefit the on-demand workforce business and shared economy markets. With the adverse impact of the pandemic gradually subsiding, we expect to deliver better performance with the execution of our proven strategy in 2020. Leveraging our large-scale workforce pool and extensive on-the-ground infrastructure, we will further invest in employment exchange and professional training service to provide front-to-end career service for Chinese workforce. We believe we are well-positioned to capture more growth opportunities ahead and deliver sustainable long-term growth for our shareholders. This concludes my prepared remarks. I will now turn the call over to our CFO, Sandra, who will discuss our key financial results for the quarter and fiscal year.