This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk03: Good morning and good evening, ladies and gentlemen. Thank you for standing by for Tuan Che Limited's third 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. Now I will turn the call over to your speaker host today, Ms. Cynthia Tan, IR Director of the company. Please go ahead, ma'am.
spk01: Hello, everyone, and welcome to Tantra Third Quarter 2021 Earnings Conference Call. We released our earnings results earlier today, and it is now available on our IR website as well as our newswire services. Before we continue, please note that discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks and uncertainties is included in our earnings release and our registration statement filed with the SEC. Poncho does not assume any obligation to update any forward-looking statements, except as required by law. Today, you'll hear from Mr. Wei Wen, the company's Chief Executive Officer, who will provide an overview of our growth strategies and business developments. to be followed by Mr. Chen Xiyu, the company's deputy chief financial officer, who will provide additional details on the company's financial results and discuss the financial outlook. Following management's prepared remarks, we'll open up the call to questions. With that said, I would now like to turn the call over to our CEO, Mr. Wei Wen.
spk00: Please go ahead, sir. Thank you, Xinxia. Hello, everyone. Thank you for joining us today on our third quarter 2021 earnings call. In this quarter, were preserved against a challenging macro environment with COVID-19 flare-ups and a global chip supply shortage that constrains order production, while our revenue contracted by 38.9% year-over-year to 61.1 million IMB, primarily due to cancellation of a number of our offline order shows in response to pandemic conditions. We forged ahead with our online initiatives, streamlined our cost base, and narrowed our net loss attributable to the company's shareholders by 10.7% year-over-year to 36.8 million RMB. Before we discuss our third quarter results in more detail, let's first talk about our strategic plan to expand our business into EV manufacturing, catering to the rising consumer demand of electric vehicles. Leveraging our existing platform, we are establishing a new EV business line including a design, R&D, and manufacturing team. While holding open discussions with potential strategic partners, we will announce the progress of major business transactions, if any, in a timely manner. China is the largest NEV market in the world, with sales reaching over 1.3 million in 2020, representing close to 44% of all NEVs sold globally. In 2021, NEV retail sales and attrition in China rose to 14.8% throughout the year and 22.6% in December from 5.8% in the year 2020, according to the China Passenger Car Association. In 2022, NEV sales in China are virtually expected to reach 5.5 million, growing at a cargo of and 6%, much faster than the overall passenger vehicle market, supported by the expedited establishment of EV infrastructure and technological advancements that have lowered vehicle costs, as well as improved interactive smart features, while government regulation and the industry standards on environmental protection and emission continue to be favorable. Many of the emerging N-eV OEMs are building a direct sales network so they can interact first-hand with their users to shape their purchase experience and efficiently receive feedback on our user needs and preference to continuously enhance their products and services. In this context, we believe we are well positioned to capitalize on consumers' rising demand for EVs given our tremendous customer base. and the depth and breadth of our customer insights. We have cumulatively served over 30 million customers and facilitated more than 1.4 million automobile sales transactions with GME of approximately 200 billion RMB, where our integrated automotive marketplace. Furthermore, we have extensive sales operations covering 125 cities as of September 30, 2021. To enable the success of our EV manufacturing, we will harness our leading auto sales capabilities and the sales network spanning from first-tier cities to provincial countries nationwide. Through seamlessly integrating our existing platform with the top-tier electric vehicle design, R&D and the manufacturing team were building an in-depth cooperation with potential strategic partners. We are confident this strategic expansion will drive significant synergistic value and ensure we secure an important stake in the EV revolution. Now, let me provide third quarter highlights from our business segments. First, we further enhanced our solid leadership position in offline marketing service by creating new retail consumption scenarios through innovative platform and strategic cooperation with partners. Due to resurging COVID-19 cases and the industry-wide chip shortages that affected the production schedule of many OEMs, The number of auto shows we organized were reduced to 65 across 55 cities, compared to 152 auto shows in 107 cities in the third quarter of 2020. These shows generated net revenues of 33.1 million RMB. representing a 59.9% year-over-year decrease. Looking ahead, we will continue to enhance our offline marketing services by leveraging our powerful data analysis capabilities and continuing to strengthen our collaboration with strategic partners. diversify our retail events and scenarios with more creative marketing solutions. We will also conduct further in-depth studies to identify in granular detail areas with relatively higher potential IOI and fine-tune our offline presence and the mix of offline and online marketing services accordingly. Next, let's move on to our growth initiatives in virtual dealership and online marketing services. During the third quarter of 2021, we extended our online marketing services penetration by providing best-in-class user management, online training, and event management services to OEMs and dealers. These improvements led to a 72.6% year-over-year increase in net revenues for virtual dealership and online marketing services. Going forward, we will further build on our existing business as an integrated automotive marketplace while leveraging our innovative foundation to expand into EV manufacturing. Following our announcement on January 5, 2022, to expand our strategic focus to EV manufacturing, we continued open discussions with potential strategic partners and are on track to identify candidates with highly complementary strengths that will allow the creation of substantial synergistic value. We are optimistic that China's oil market undergoes structural changes toward a smarter and more energy-efficient mobility solutions, our innovative business model, massive customer base, strong customer insights, and our leading auto sales network, coupled with the top-tier design R&D and manufacturing teams we are building, as well as the in-depth cooperation with potential strategic partners will unlock significant value and lay a solid foundation for success. Now I will turn the call over to Chen Xi, our Deputy CFO, for a closer look at our financial performance in the third quarter.
spk02: Thank you, Mr. Wen. Hello, everyone. Thank you for joining us. Our third quarter results were in line with our expectations, given the weakening auto market and the impact from the pandemic. with net revenues of 61.1 million RMB. To navigate the challenges in the third quarter, we remained squarely focused on cost management, cutting out net loss attributable to the company's shareholders to 36.8 million RMB from 41.2 million RMB in the same period last year. We are excited our decision to enter the EV manufacturing and are ready to chart a new path forward while continuing to pursue innovation and positioning the company to capitalize on future consumer demand. Next, I would like to work through our third quarter 2021 financial results. Before I start, please note that all numbers stated in my following remarks are in RMB. unless otherwise noted. Our total revenues in the third quarter were 61.1 million RMB, decreasing by 38.9% from 100 million RMB in the same period last year. This was a result of 59.3% year-over-year decrease in revenues generated from offline marketing services. As we progressively resume our offline auto shows, Offline marketing services revenue generated from these auto shows decreased by 59.9% to 33.1 million RMB from 82.6 million RMB in the third quarter of 2020. Revenues from special promotion events in the third quarter of 2021, 1.3 million RMB compared with 2 million RMB in third quarter of 2020. Revenues from our virtual dealership services, online marketing services, and others increased by 72.6% to 26.6 million RMB during the quarter compared with 15.4 million RMB in the third quarter of 2020, primarily due to the continuous expansion of our collaboration with WeBank. Our gross profit in the third quarter decreased by 35.1% to 46.8 million RMB from 72.1 million RMB in the third quarter of 2020. Gross margin was 76.6% in the third quarter of 2021 compared with 72.1% in the same period last year, primarily due to the change in revenue mix. In the third quarter, Selling and marketing expenses decreased by 34.6% to 59.9 million RMB from 91.6 million RMB in the third quarter of 2020. The year-over-year decrease was primarily due to the decrease in promotion expenses and staff compensation expenses as a result of decreased volume of offline events. G&A expenses increased. increased to 17 million RMB from 15.9 million RMB in the third quarter of 2020 and 14.4 million RMB in the second quarter of 2021. Research and development expenses were 9.2 million RMB compared with 7.1 million RMB in the third quarter of 2020 and 8.8 million RMB in the second quarter of 2021. Primarily due to higher staff compensation expenses, for research and development personnel. Our loss from continuing operations was 39.3 million RMB in the third quarter, lower compared with 42.6 million RMB in the same period last year, and higher compared with 9.3 million RMB in the second quarter of 2021. Excluding the effect of share-based compensations, adjusted net loss attributable to the company's shareholders was 34.4 million RMB in the third quarter compared with 38.3 million RMB in the same period last year. Adjusted basic diluted net loss per ordinary share was both 0.11 RMB in the third quarter compared with 0.13 RMB in the same period last year. Adjusted EBITDA was a loss of 33.5 million RMB in the third quarter compared with a loss of 37 million RMB in the same period last year. Now turning to our balance sheet. At the end of September 2021, we have cash and cash equivalents and restricted cash of 134.3 million RMB. For further details regarding our 2021 third financial results, please refer to our earnings press release. In the fourth quarter of 2021, we expect our net revenues to be between approximately 17 million RMB representing a year-over-year decrease of approximately 57.8% to 51.7%. This is primarily attributable to the estimated decline in the expected number of offline events to be held in the fourth quarter of 2021, including auto shows and special promotion events. Due to the COVID-19 pandemic, as well as the impact of global microchip supply shortage, on the auto industry. This forecast reflects the company's current and preliminary views on the market and operational conditions, as well as the influence of the COVID-19 pandemic, all of which are subject to change. This concludes our prepared remarks for today. Operator, we are now ready to take questions. Thank you.
spk03: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If any time your question has been addressed and you would like to withdraw your question, please press star then 2. For the benefit of all participants on today's call, If you wish to ask your question to management in Chinese, please immediately repeat your question in English. At this time, we will pause momentarily to assemble our roster. As there are no further questions now, I'd like to turn the call back over to the company for closing remarks.
spk01: Thank you once again for joining us today. If you have any questions, please feel free to contact us.
spk03: This concludes this conference call. You may now disconnect your line. Thank you.
Disclaimer