Quhuo Limited

Good day and welcome to the CWO Limited 23 H2 and Full Year Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Qishu Wang. Please go ahead.

Thank you, Operator. Hello, everyone. Welcome to Qishu's second half and full year of 2023's Earnings Conference Call. The company's results were released earlier today and are available on our AR website. On the call today are Leslie Yu, Chairman and CEO, CFO Berriba, Lastly, they'll review business operations and the 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 like to remind you that this call may contain forward-looking statements made under the safe harbor provisions of the Private Security Legislation Reform Act of 1995. The statements are based on management's current expectations and current market and operation conditions and relating to the events that involve known or unknown risks 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 these and other risks, uncertainties, and effects It's 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, 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, Qishu, and thank you for joining our second half of the four-year of 2023 earnings conference call. In 2023, we watched the total revenue of RMB 8.7 billion, with a gross profit of RMB 166.6 million. The adjusted net income reached RMB 5.5 million, representing a remarkable growth of 64.7 compared to the four-year of 2022. The company achieved positive results in various key financial indicators, such as net income and income share of ordinary shares, marking a historical achievement. Thanks to the strategy of improved profitability after increasing revenues implemented by the company starting in 2021, we have achieved outstanding performance with positive EBITDA in four consecutive financial reporting periods. Additionally, in 2023, we successfully identified the dual engines driving the second growth curve of our company's business, namely the use of vehicle export business and subclass services, leading to a significant improvement in the company's profitability. In terms of vehicle export solution in the full year of 2023, we successfully exported approximately 1,900 used vehicles from China to countries and regions like Jordan, generating a revenue of RMB 154 million for the company. Within a short span of seven months, with an investment of RMB 30 million in working capital, we achieved an average monthly revenue of RMB 22 million. The high cash turnover rate and the shortened payment cycle in the international trade Arena confirmed the sustainability and the replicability of this business. The used vehicle export business was initiated with the official launch of Qiho International in February 2023, and it went live in May 2023. Since then, Qiho has set its insights on the international market, entering a new phase of global development. Looking back at the achievements of Chico International, several factors have contributed to its success. Firstly, the global overseas market has a strong demand for new energy vehicles, providing favorable conditions for the export of such vehicles. Secondly, China's dominant position in the global market for new energy vehicles has led to rapid growth in the used vehicle installing industry. Chinese customs data shows that there were 69,000 used vehicle exported from China in 2022, and the total exceeded 160,000 in 2023. Market projections indicate that the volume of Chinese used vehicle export is expected to reach 400,000 vehicles by 2025. Lastly, and most importantly, Qiho possesses unique advantage that differentiates us from other used vehicle traders. On the technological and operational front, Qiho's mobility solutions management team has deep expertise in the ride-hailing sector for over five years. They also have more than two decades of experience and resources in the vehicle trading industry. which has provided them with a profound understanding of the used vehicle export market and ecosystem. Additionally, Chihuahua has accumulated over 10 years of professional capabilities in large-scale operations and technology. In terms of vehicle sourcing, Chihuahua has partnered with multiple automobile brands and expanded our reach to medium and large-scale auto manufacturers, dealerships, and the used vehicle market. through our existing ride-hailing business since the first half of 2023, establishing a national-wide vehicle sourcing network. In terms of vehicle refurbishment, Qihua has accumulated a wealth of vehicle maintenance and repair resources through our previous ride-hailing operations. We have also established a unique network of vehicle refurbishment resources through self-construction and partnerships. Furthermore, at the sales channel level, Schumer currently has close cooperation with 58 overseas distributors worldwide, providing stable sales channels and new opportunities for market expansion. All these factors together build Schumer's competitive advantage in the global used vehicle chain market. signaling vast business prospects and tremendous development potential. Another important engine for second-growth growth is the empowerment of SaaS-plus service, primarily focused on housekeeping and accommodation solutions nowadays. Starting from the first half of 2023, the company began piloting the transition to the SaaS-plus service empowerment model. in the housekeeping services after successfully validating our self-operated model. After six months of market validation, the company's housekeeping and accommodation solutions began a comprehensive transition towards a SaaS-plus empowered model, starting in the second half of 2023. This shift allows other small and medium-sized live service providers to utilize Chihuahua's material operations and service products to better meet customer needs. This transformation of the business model drove rapid growth in the GMV of the housekeeping and accommodation solutions in 2023, reaching IMB 514 million, a 53% increase compared to 2022. Furthermore, thanks to the successful implementation of SaaS service empowerment, the profitability of the business segment significantly improved. The gross profit increased by 48.7% year-on-year, and the gross profit margin rose from 13.4% to 26.4% in housekeeping and accommodation solutions sector. What's even more pleasing is that the empowerment of subclass service has also led to significant cost decrease. So overall operating cost of housekeeping and accommodation solutions decreased by 35.5%, with a remarkable decrease in the operation cost of the hotel services, showcasing significant cost reduction effects. Throughout the year 2023, through the innovative empowerment of SaaS cloud service, we not only significantly enhanced the capabilities of local service provider, but also deeply integrated SaaS system into our business operations, achieving significant transformation results. This strategy effectively reduced the cost of the entire supply chain, improved operation efficiency, and brought significant economic benefits to the company. Overall, Q4's revenue is primarily from three types, platform fulfillment service, SaaS class service, and international trade and technology service. Platform fulfillment service is the earliest business segment that Q4 ventured into, and it serves as the cornerstone of the company. It mainly involves on-demand delivery and mobility service solutions and generates revenue through service fee for order fulfillment. This segment is an important component of the company's revenue as it has been steadily developing. In 2023, the revenue from fulfillment services reached RMB 3.5 billion. SaaS Plus service, as mentioned earlier, is one of the engines for the second growth curve, focusing primarily on housekeeping and accommodation services. It generates revenues through charging for flexible employment platform services. The great achievements made by SaaS Plus service in 2023 have given us the confidence to establish extensive cooperation with more new customers. and expanded sub-sub-service into more business areas. Currently, we are in discussion with leading medical institutions, long-term rental platforms, and senior living apartments in China intending to enter the medical and elderly care industries. International chain revenue is another engine for the second growth curve. Derived from mobility solutions, especially in the used vehicle export business. Facing various pinpoints in the international trade of used vehicles, such as authentic of transactions, transparency of processes, guarantee of vehicle qualities, and inadequate after-sales services, Qiho International will launch a unique used vehicle export training platform called CarNut. This platform aims to create a triple-win marketing environment for car manufacturers, dealers, and consumers while providing one-stop solutions to challenges related to the quality of used vehicle products, sales channels, and after-sales services. Recently, there has been a push in China for a new round of large-scale equipment renewal and consumer goods trading programs, which will result in more used vehicles entering the market. This aligns with the growing demand for used vehicles in overseas markets. Leveraging the advantages of Canucks trading platform and high-quality services, she was able to seize this business opportunity consolidate our leading position in the international trade of used vehicles, and explore greater market potential for used vehicles in China. So far, Chihuahua's three major service models have jointly constructed an integrated and diversified commercial landscape. With the cornerstone sector being the fulfillment services, which serve as a stabilizing force for the company's revenue and profits. Meanwhile, SaaS-class service and international trade serve as vital drives for the company's proactive business expansion, leading to higher opportunities for overall business growth. They also seek to diversify the company's income streams and enhance its profitability. thereby opening up significant growth potential for the company. In conclusion, whether through the transformation of the SaaS plus business or Qubo international expansion efforts, Qubo has brought about new opportunities in the employment market. In the future, we will also extend our mature on-demand delivery service to overseas markets. Through partnership with local on-demand service platforms, we aim to further develop global delivery services, providing more choices and opportunities for workers, both domestically and abroad. This initiative will contribute to promoting employment growth, enhancing global market flexibility, and further driving sustainable social economic development. I concluded my prepared remarks here, and now I will transfer the call to our CFO Barry to provide further insights into our financial situation.