Quhuo Limited

Ladies and gentlemen, welcome to Chihuahua's first quarter 2021 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. I'd like to turn the conference over to your host for today's conference call, Anna Sun, Investor Relations Director of Qi Huo. Please go ahead.

Thank you. Thank you, operator. Hello, everyone. Welcome to Qi Huo first quarter 2021 earnings conference call. The company's results were released earlier today and are available on our RIA website. On the call today are Leslie Yu, Chairman and CEO, co-founder Barry Ba, and our CFO Sandra Ji. Lastly, we will review business operation and company highlights, followed by Sandra, who will discuss financials and guidance. They will both be available to answer your question during the Q&A session that follows. Before we begin, I would like to remind you that this call may contain forward-looking statements made under the Safe Harbor Provision of Private Security Legislation form, Act of 1995. Such statements are based on the management current expectation and current market and operating condition and related to the events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond a company's control, which may cause the company's actual results, performance, and achievements. to differ materially from those in the forward-looking statements. Further information regarding this and other risks, uncertainties, and factors include in the company's filing with the U.S. Securities and Exchange Commission. The company doesn't take any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under law. With that, I will now turn the call over to our Chairman and CEO, Mr. Leslie Yu. Please go ahead.

Thank you, Ania, and thank you all for joining our first quarter 2021 earnings conference call. We are pleased to deliver strong growth momentum in Q1, with revenues increased by 116% year-over-year to RMB $846 million. Given by solid performance across all business segments, the solid results reflected the prosperous, dynamic, and healthy flexible workforce market and our leading position in the Chinese gig economy. For 2021, offering a multi-scenario deployment has been at the forefront of our initiatives to scale the business, and we have made good progress to offer workers a diversified range of open jobs. Thousands of job seekers can now find more suitable career opportunities in our platform and earn higher incomes. Now, let me walk you through our key business performance in Q1. First, let's look at our biggest revenue contributor, the on-demand food delivery business. As life returns to normalcy with fewer restrictions and the economy recovers from COVID-19, we continue to witness the ongoing evolution of consumer behaviors in China. The on-demand food delivery service has become not only a necessity during work days, but also a high-quality source of fresh and healthy food for family gatherings. This was especially evident for this year's Spring Festival. Demand for food delivery increased year-over-year compared with the same period in previous years, as people were encouraged to stay in place for the popular holiday. We viewed this unprecedented strong demand as a test for the resilience of our large delivery network, as well as a terrific opportunity to sustain our leading position and expand market share. On one hand, we stepped up our efforts to stabilize existing rider teams to ensure sufficient capacity to fulfill incoming orders, while we actively launched more recruiting programs to hire additional riders. We provided extra benefits to both existing and new riders to increase our effectiveness. As a result, we outperformed the industry and enjoyed stronger raw order volume growth during this Spring Festival period compared with previous years. For children overall, the number of average monthly delivery orders was 35.9 million, up 113% year-over-year. On the cost side, due to seasonal volatility in labor costs and increased spending on benefits and an expanded team of riders, we reported a loss for this quarter. We view this as a short-term phenomenon and remain fully confident in our strategic direction to reinforce and grow our workforce. We believe we have a real opportunity window to take advantage of our growing reputation. and expand our resources to capture demand as it grows. This will give us a competitive edge down the road as we become the employer of choice for a growing number of blue collar and migrant workers seeking better job opportunities in cities. Going into Q2, as more migrant workers returned to the labor market and eased labor shortages, we have seen the supplier demand balance return to normal level. We believe this will normalize our cost structure and improve our profitability in Q2 and the rest of 2021. Next, I would like to give you an update on our housekeeping solutions. In Q1, revenues from housekeeping and accommodation solutions increased 51 times year over year. After completing our investment in LaiLai, a leading on-demand workforce platform that specializes in housekeeping solutions for hotels and B&Bs in China, we were able to quickly integrate LaiLai into our platform and ramp up our service capacity. Together, we currently serve a number of large-scale international hotel chains and thousands of B&Bs nationwide. We are optimistic this business has strong growth potential going forward. Our mobility businesses, which includes shield bike and ride-sitting solutions, continued their strong recovery in the first quarter. Revenues increased by 455% year-over-year. In Q1, we added three more cities for our mobility services, and strong synergies have been created as our robust technology platform can support our multiple business similarities. Now I want to go over the progress of a strategic initiative called multi-scenario deployment. Our goal is to increase jobs diversity and work opportunities and provide flexibility to help workers find the best jobs for their existing and evolving skill sets in order to increase their incomes. Currently, our metrics for frontline management networks for labor management and operations has enabled us to largely utilize our labor force on the multi-scenarios. We believe this will help us scale and expand our entire network over time. As of the end of March 2021, we provided services to 1066 business circles across 122 cities nationwide, among which there were 48 cities where we provided two or more type of services, compared with only eight cities of multi-scenario deployment a year ago. Offering multi-scenario services can significantly improve the efficiency of our operation and the entire gig economy industry. Many of the service scenarios, such as on-demand food delivery and ride selling, have apparent peaks and troughs in usage every day. resulting in a kind of great waste of human resources and fixed assets put in place. Our platform empowers workers to engage in different jobs at different time periods, leveraging diverse vocational skills, training, and daily management. In this way, we can achieve better use of resources, improve efficiency, and save costs. According to our statistics as of Q1 2021, the number of registered workers on our platform reached nearly 240,000, compared with 98,000 a year ago. The cumulative number of workers who engaged in two or more types of jobs on our platform has reached 15,500, increasing by about 4,000 from the end of 2020. The rapid development of our multi-scenario services has also made the gender mix more balanced. Thanks to our rapid expansion in the housekeeping business recently, the proportion of female workers registered on our platform has been close to 10% in Q1, more than doubled from a year ago. In addition, the quick expansion of our platform and the decreasing turnover rate of workers also resulted in an increase in the average compensation of our workers. In Q1 2021, riders with an average monthly income of at least RMB 5,000 accounted for 46% of total group, compared with 33% a year ago. In summary, Our strategic priority for 2021 is to rapidly scale up our platform. With the continuous diversification of services and the growing workforce on our platform, we believe we will play an increasingly important role in China's gig economy and capture more market share going forward. This concludes my prepared remarks. I will now turn the call over to our CFO, Sandra, who will discuss our financial results for the quarter.