Quhuo Limited

Good day and welcome to the TUHO 25H1 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 phone 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 Qi Xu Wang. Please go ahead.

Thank you, operator. Hello, everyone. Welcome to QIU's first half year of 2025 earnings conference call. The conference results were released earlier today and are available on our AI website. On this call today are Leslie Yu, Chairman and CEO, and CFO Barry Babb. 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 like to remind you that this call may contain forward-looking statements that tend to describe the provisions of the Private Security Policy Reform Act of 1995. Such statements are based on management's current expectations and current market and operating conditions 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, or achievements to differ materially from those in the forward-looking segments. Further information regarding these and other risks, uncertainties, and factors is included in the company's findings with the U.S. Security 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 the law. With that, I will now turn the call over to our Chairman and CEO, Mr. Leslie Yun. Please go ahead.

Thank you, Qishu, and thank you all for joining our 2075 First Half Earnings Conference Call. In the first half of 2025, China's local service industry experienced significant structural shifts, with intense market competition becoming the new normal. Against this backdrop, Q4 has adhered to a clear dual-track strategy. First, optimizing the structure of our core business to pursue quality growth. And second, accelerating the development of second core business to strengthen the group's earnings foundation. I will now share our operating performance and the strategic progress over the first six months of 2025, along these two dimensions. And also look ahead to Qi Huo's future vision. For the first half of 2025, Chihuahua achieved total revenue of RMB 1.13 billion. Let me begin with our core business, the on-demand delivery solutions. During the first half of 2025, particularly in the second quarter, the domestic food delivery market saw significant changes in the competitive landscape. These changes were mainly reflected in two areas. First, the delivery was part of the cost burden to service providers. To respond to rapid order fluctuation and safeguard service quality, we made targeted investments in workforce management and operations. Second, structural adjustments by major upstream customers reshaped the competitive landscape. Leveraging our long-standing service capabilities and reputation, We took on new business share, while integrating and launching these new size added short-term costs. Beginning in May this year, we observed signs of increased market share, which we believe will lay a solid foundation for scalable profitability. Although these measures placed pressure on short-term profitability, we believe the company's overall financials remained sound. At the same time, we proactively closed a number of underperforming sites and concentrated resources on higher return areas in order to further strengthen our overall network health. These initiatives reflect both our confidence in and commitment to the long-term value of on-demand security business. We believe that as the integration period ends and operating efficiency improves, The scale benefits and the profit potential of the business may become more evident in the second half of 2025. While consolidating our core business, our second core business, housekeeping and accommodation solutions and vehicle export solutions are now contributing meaningful profitability. In the first half of 2025, our housekeeping and accommodation segment reported strong growth, with revenue up 70.8% year-over-year, and growth profit up 63.4% year-over-year, becoming an important driver in optimizing Shifu's profit structure. This performance was primarily driven by our two business units, First, Chengdu Homestay achieved 83.6 revenue growth and 319.8 growth profit growth, with growth margin rising to 65.2%. We believe this strong performance reflects an applicable operating model and effective marketing. Our self-developed mini program, Northway Loadout, allows users to browse and search for home selection, communicate with hosts, and complete reservations and payments in one seamless process. This closed-loop system greatly improves the booking experience, making it faster, more transparent, and more reliable for both guests and hosts, while also enhancing operational efficiency. Based on this material system, Chengdu plans to open their platform to more home sale ventures in China, providing standardized management tools and marketing support, and transitioning from a property management service provider to a platform operator. Second, Lennart's accommodation business recorded a 63.6 year-over-year increase in revenue. primarily supported by its new cooperation with Baker, a leading housing transaction and service platform in China. This cooperation extends beyond traditional CUNY, with LanLan providing a more comprehensive property service solution for the properties listed on Baker's platform. Covering property preparation and maintenance, ongoing household services and tailored offerings, In service delivery, LiDAR has translated years of localized service experience and technological advantage into practice. By leveraging its proprietary digital dispatch system, it integrates cleaning, repair, and other service orders into a unified scheduling platform, supporting efficient management and high-quality fulfillment. This cooperation already covers Chengdu, Beijing, Shanghai, Ningbo, and Sinan, and is expected to expand to Shenzhen, Guangzhou, and other cities. We believe it may generate a scalable and sustainable revenue growth for LILI. LILI's ability to deliver standardized high-quality property services provides a solid foundation for new initiatives. Building on this, we also participated in the Better Life No. 1 Fund Trust Plan, initiated by China Foreign Economy and Trade Trust. Phase 1 and Phase 2 of this plan, total IRB 60 million, are designed to enhance the quality and rental value of intractable properties through standardized renovation and long-term asset management, ultimately generating stable returns for investors. Within this project, LaiLai is responsible for upgrading property quality and providing ongoing property management services, ensuring continuous value creation and compliant operations. Meanwhile, Chi Huo, in his role as a strategic partner, works alongside the Trust Fund to design the pathway from operating assets to data assets, and ultimately to financial assets. and jointly manage and share in the return. Through this cooperation, we have put into practice the four pathways from business operations to financial value. Leverage the standardized renovation and service capabilities built by Lailai as solid operating assets. rely on the real and variable data assets continuously accumulated through operations for risk pricing and asset management, and ultimately achieve asset financialization through trust cooperation, completing a critical upgrade to financial assets. This process not only broadens the Chihuahua's business boundaries, but also provides new directions for the integration of industry and finance. These advances in the housekeeping and accommodation segments not only provide financial return, but also support our business model initiatives, provide opportunities for longer-term growth for Chihuahua. Our third major growth driver comes from international business. In the first half of 2025, used car exports achieved 17.8% growth profit growth, with growth margin improving from 4.2% to 7.0%. We believe this reflects the continued optimization and upgrading of our business model. We currently operate with two models in Kerala. The first is traditional sales model, under which vehicles are sold upon export with a cash cycle of about three to four months, with a gross margin typically at around 7%. The second is a technological empowerment and resources cooperation model, which we believe to carry greater potential. Here, we leverage our accumulated technology, operations, and management expertise from domestic-wide failing sectors and package-based solutions for overseas partners to jointly operate vehicles and share with long-term higher-margined cars. This model offers significantly higher profitability and a unique economics. with a payback period of roughly 24 months, which means revenue growth may be realized more gradually, but on a stronger foundation. Our cooperation in Azerbaijan with Ford Auto and Ford provides an example of this model. By employing our SaaS platform and management expertise, We are helping partners shift from one-time vehicle sales to a recurring service-based model. Till now, hundreds of vehicles have been under management, with a project-level margin of 43%, well above the pure tiered model. The success of this pilot has already led partners to place multiple follow-on orders. Validating this replicability, and long-term profit potential. Looking ahead, we plan to draw on the asset financialization experience gained in the accommodation segment to address cash cycle challenges in this model, enabling broader expenses into new markets. Joining our international business to evolve from linear growth based on vehicle sales to a higher quality development model of maintaining scale through sales and creating profit through operations. We believe this approach building a global automotive ecosystem through technology empowerment and management expertise will raise our earnings ceiling and establish more durable competitive advantage. To conclude, in the first half of 2025, despite pressures in the on-demand delivery business, we maintained resistance in our core business and made progress in our second core business. We believe these results reflect both the soundness of our strategy and the strength of our execution. Looking forward, we plan to remain focused on our dual-check strategy of optimizing cooperation and cultivating new growth. On our core business side, we recently entered into a cooperation with JD Jingdong Pickaway to provide delivery services in some cities. We believe this not only demonstrates recognition of our cooperation facilities, but may also potentially add incremental volume under the new competitive landscape in on-demand delivery. On the new initiative side, our supply chain empowerment partnership with New World has been progressing steadily. Since May this year, it has generated approximately RMB 14.4 million in revenue. and is expected to contribute approximately RMB 60 million for the full year. We view this as an early milestone in our transition from a fulfillment service provider to a supply chain enabler, which may create new opportunities to capture additional value from our delivery network. We plan to continue focusing on our operational efficiency and refining our business models, while seeking key market opportunities in order to deliver more sustainable long-term returns for our investors. This concludes my remarks. I will now turn the call over to our CFO, who will provide a detailed overview of our financial performance.