Quhuo Limited

Thank you for standing by, and welcome to the Kuiwo Limited 22H2 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to management. Please go ahead.

Thank you, operator. Hello, everyone. Welcome to Q4's second half and full year of 2022's earnings conference call. The company's results were released earlier today and are available on our IR website. On the call today are Chairman and CEO Leslie Yu, CFO Barry Ba. Leslie will review business operations and company highlights, followed by Barry, who will discuss financials and guidance. They will be available to answer your questions in the Q&A session that follows. Before we begin, I would have to remind you that this call may concern forward the statements made under the safe harbor provisions of the Private Security Legislation Form Act of 1995. Such statements are based on management's current expectations and current market and operating conditions and relate 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, 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 filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information for future events or otherwise. except as required and allowed. With that, I will now turn the call over to our Chairman and CEO, Mr. Leslie Yu. Please go ahead.

Thank you, Xishu, and thank you all for joining our second half and full year of 2022 Earnings Conference Call. In 2021, we proposed a strategy to improve profitability after increasing revenues. We achieved this goal with four-year revenue growth of 56% in 2021, followed by profit growth of 43.9% in 2022. Since the execution of this strategy at the beginning of 2021, we have made several initiatives to expand revenue, which was mentioned in the 2021 annual report. To be more specific, in terms of the on-demand delivery solutions, we increased the number of delivery orders we fulfilled by expansion into new geographic markets in 2021. In the mobility service solutions, we enlarged the customer base and the service scope of shared bike maintenance solutions and commenced the freight service solutions in July 2021. In the housekeeping and accommodation solutions, we started the in-depth operation of Chengdu and acquired Lai Lai to expand our solutions offering of hotels and B&Bs to enlarge the customer base of our housekeeping solutions. Those initiatives have maintained a stable income scale and achieved substantial increase in profits in 2022, despite the impact of the COVID-19 on localized life service. With four-year revenue of RMB $3,820.4 million and the gross profit of RMB $252.7 million in 2022, Qi Huo achieved a gross margin of 6.6%, higher than the 4.4% in 2021. And we achieved a historical turnaround in several figures, including operating income, adjusted EBITDA, adjusted net income, This result shows the effectiveness of the company's strategy to improve profitability after increasing revenues, and the trustworthiness of the company's team to implement the strategy. We believe that the company's business model is sustainable and it has a very short payback period, with an average payback period of about 12 months. Next, let's move on to the service categories offered by Chihuahua. We provide two categories of services on the gig economy platform. The first one is order fulfillment services for platforms, which mainly involves on-demand delivery solutions and mobility service solutions. Most of our clients in order fulfillment service platforms are well-known consumption service platforms, such as Meituan, ED, ELE, as well as some large chain catering enterprises, such as KFC, McDonald's, Legend Coffee, and so on. In this service, we provide standardized service products to our customers through executing lean management operations and charge a service fee for each order fulfilled. The revenue generated from this part is RMB 3.474 billion in 2022, and the gross margin increases to 6.6% in 2022 from 4.1% in 2021. The second one entails our housekeeping and accommodation services provided under our SAS service model. Our sustainability encompasses the Qiho Plus platform itself and the service team dedicated to maintaining the upkeep of the platform, including customer service and technology support, with which we focus on empowering small and medium-sized localized live service providers and helping them expand revenue and improve efficiency. This mainly serves housekeeping and accommodation partners in the second half of 2022. The primary source of revenue for such service products is the commission collected from the partners based on the GMV charges through our platform. We have always believed that technology plays a huge role in business growth, efficiency improvement, and partner empowerment. So we are committed to using our experience and management capabilities accumulated over the past 10 years in the field of local live services to develop SaaS services that can empower local live service providers based on the power of technology. Through SaaS service, we can connect the brand of Qiho and the business resources on Qiho local live platform to small and medium-sized localized live service providers. optimize their operational efficiency and compliance, and help these service providers reduce operational risks while increasing profits. Currently, this technology platform is capable of empowering various verticals, such as laundry, hotel, B&B, and all jobs in catering and housekeeping. Relying on the SaaS system, Qiho will help these service providers to integrate online traffic and business resources from multiple platforms. Based on the core management and operational capabilities accumulated over the years, as well as multi-channel brand building, Qiho has extended its operational strategy from urban BNP operations to more BNP operations. achieving successful cases of light investment and detailed operation, and empowering more than 8,000 customers. The chart model trained by AI, which has received a lot of attention recently, will be tentatively integrated into the business by Qigong in the near future. For example, we can use AI to increase efficiency, training, and communicating with workers, We can also use AI technology in our B&B business, where operators can use it to assist online information maintenance of B&B hotels, intelligent check-in and self-checkout of travelers. Looking ahead to 2023, we believe Chihuahua's existing business will continue to grow. During the past three years, the COVID-19 has been influencing the global economy. China companies whose main business is on-demand delivery, mobility service, housekeeping, accommodation have been affected seriously. With the full end of epidemic control and social restriction completely lifted, on-demand delivery, mobility, and housekeeping and accommodation services are expected to make a rapid rebound in 2023. In 2023, Qihuo will embark on new expansions and we have officially launched Qi Huo's international business in February 2023. Qi Huo International will take full advantage of China's cost differences in both industry and internet, manufacturing capabilities in new energy vehicles, and mature internet technology and operation expertise to export industry plus internet products and services to overseas partners. We aim to empower overseas partners with operational capability and technology of mobility services, such as online ride-sailing and on-demand delivery, along with the export of Chinese electronic vehicles and mopeds. This strategy has achieved initial results, generating revenue from others. Chihuahua is expected to give foreplay to its core competitive advantages in the industry with its existing technical and business capabilities and help our partners make considerable progress in overseas markets. We are confident that Chihuahua's global business will bring a new growth curve to the company. This concludes my statement, and I will turn the call over to our Chief Financial Officer, who will discuss our financial results for the year 2022. Thank you.