Quhuo Limited

Good day, ladies and gentlemen. Welcome to QHAL's second quarter 2021 earnings conference call. At this time, all participants 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 would now like to turn the conference over to your host for today's conference call, Mr. Eric Yun. Please go ahead.

Thank you, operator. Hello, everyone. Welcome to Chihuahua's second quarter 2021 earnings conference call. The company's results were released earlier today and are available on our IR website. On the call today are Leslie Yu, Chairman and CEO, co-founder Barry Barr, and CFO Sandra Chee. Lastly, we will review business operations and company highlights, followed by Sandra, who will discuss financials and guidance. So they will be available to answer your questions in the Q&A session that follows. So before we begin, I would like to remind you that this call will contain forelooking statements made under the safe harbor provisions of the private securities litigation reform act of 1995. Such statements are based on management's current expectations and current market and operating conditions and are 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 the company's control, which may cause the company's actual results, performance, and achievements to differ materially from those in the further statements. Further information regarding these and other risks and certainties and factors is included in the company's findings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forelooking statement 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, sir. Thank you, Eric, and thank you for joining our second quarter 2021 earnings conference call. We are pleased to report another strong quarter as total revenue grew by 81% year-over-year and almost reached the milestone of RMB $1 billion. Thanks to strong demand for our services and our large network of workforce across the country, Lastly, our main business lines, on-demand deliveries, mobility services, and housekeeping solutions cover the needs of people's daily necessities and saw robust growth momentum in the second quarter. In addition, our growth profit margin quickly rebounded from the prior quarter as labor costs normalized to standard level. As a result, we achieved adjusted net income of RMB 10 million, a significant improvement from the first quarter. These results reflect the economy of scale of our business model and the strong execution of our multi-scenario deployment strategy. Now let me walk you through our key business performance in Q2. First, let's look at our biggest revenue contributor, the on-demand delivery business. As the COVID-19 pandemic remained largely under control in Q2 nationwide, albeit with some small-scale resurgence in a few regions, people's lives will generally return to normal. Taking advantage of the solid demand for on-demand delivery services, our revenues maintained healthy growth and reached IMB 942 million in Q2, up 74% year-over-year. The trend we see in the current market is that premium delivery providers like Qiho are taking market share from cloud-sourced providers. This has given us a window of opportunity to aggressively expand our presence in existing markets and penetrate new ones. In the second quarter of 2021, we provided services in 1,205 business circles across 139 cities nationwide, compared with 950 business circles across 75 cities in the same period in 2020. For Q2, the overall number of average monthly delivery orders were 45 million, up 85% year-over-year. On the cost side, if you recall from our last earnings call, we observed that labor shortages were mitigated after more migrant workers returned to cities after Chinese New Year holiday, and it helped to strike a balance in demand and supply levels. Our growth margin significantly improved in Q2 on a sequential basis. Next, I would like to give you an update on our housekeeping solutions. In Q2, revenues sustained its rapid growth momentum, increasing 67% sequentially to RMB 22 million. We continued to expand our service capability to meet growing demand. In June, the number of housekeeping orders from hotels increased by 120% from a quarter ago, and the number of rooms of B&Bs that were served by us increased by 250% from a quarter ago. In addition to traditional housekeeping services, we began to provide more value-added services to strengthen our relationship with B&B operator clients. We launched our proprietary housekeeping SaaS solution, Xu Chen Dan Property Management System, or PMS, to connect homestay operators with multi-marketing channels and room rental platforms. As a central hub, PMS gives both BNB operators and housekeeping managers an easier way to check orders and listings, in addition to very user-friendly data visualization tools and real-time information. Upon receiving these new service orders from the system, PMS managers can send workers to serve our clients immediately. Our mobility business, which includes shared bike and ride-hailing solutions, also delivered solid performance. Revenues increased by 337% year-over-year and 50% quarter-over-quarter to RMB 26 million. In the second quarter, the number of orders for our mobility business grew approximately 60% from prior quarter. Now I want to give you some updates about the progress of our multi-scenario deployment initiative. We aim to offer the workers on our platform better flexibility in terms of job selection by matching their skill set better and increasing their income with more job opportunities. At the same time, offering multi-scenario services can enable us to achieve optimal use of resources and improve efficiency and save on costs. According to our statistics as of Q2 2021, the cumulative number of workers engaged in two or more job types on our platform reached 17,700, an additional 2,000 compared with the prior quarter. In the meantime, we continued to strengthen our mandatory occupational and safety training for riders, which has also led to increased income for our premium riders. In Q2 2021, riders with an average monthly income of at least RMB 5,000 accounted for 54% of the total group, compared with 45% a quarter ago. We are also constantly exploring new business models and potential revenue streams. In July, Qiubo reached a strategic cooperation agreement with GeMei2 technology, a leading smart community IoT cloud platform. We have been working together to launch a brand that targets services catering to the direct-to-home housekeeping market. Through deepened cooperation with property management companies, workers on QCOT platform can directly provide various housekeeping services for millions of households, thereby extending our service capabilities to individual families instead of only servicing enterprise clients. These strategic developments are in line with our multi-scenario deployment strategy. At present, this cooperation has been launched in Tianjin, Changsha and Shenzhen. In conclusion, we are strongly motivated by the trend of growth opportunities ahead of us. As we regularly scale our platform to meet growing demand in various service areas, we remain fully committed to delivering long-term value and profitable growth for our shareholders. This concludes my prepared remarks. I will now turn the call over to our C4 session. We'll discuss our financial results for the second quarter.