Uxin Limited

Greetings and welcome to the Yushin fourth quarter and full year 2024 earnings conference call. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero in your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jack Wang. Please go ahead, sir. I would now like to turn the conference over to your host, Mr. Jack Wang. Please go ahead, sir.

Thank you, operator. Hello, everyone. Welcome to Yushin's earnings conference call for the fourth quarter and full year ended December 31, 2024. On the call with me today, we have DK, our founder and CEO, and Jiang Lin, our CFO. DK will review business operations and company highlights, followed by Jiang, who will discuss financials and guidance. They will both be available to answer questions during the Q&A session that follows. And before we proceed, I would like to remind you that this call may contain forward-looking statements, which are inherently subject to risks and uncertainties that may cause actual results to differ from our current expectations. For detailed discussions of the risks and uncertainties, please refer to our filings with the SEC. Now with that, I will turn the call over to our CEO, DK. Please go ahead,

sir. Thank you, Mr. Jack Wang. Hello, everyone. Thank you for your long-term support and attention. I am very happy to meet you again through the phone conference. In order to communicate with domestic and foreign investors, I will share the business progress of the past year in the form of Chinese and English, and our thoughts and expectations for the future.

Good day, everyone, and thank you for your continued interest and support. It's a pleasure to welcome you on our earnings call today. And to better communicate with our domestic and international investors, I will be discussing our performance over the last year, as well as providing insights into our prospects in both Chinese and English.

The new car is a very expensive car, and it continues to hit the second-hand market. The Chinese second-hand car industry continues to grow in size. In 2024, China's second-hand car trading volume is 1,960 million units, which is .5% higher than the growth of the new car, and .5% higher than the growth of the new car. The policy has also received support from various sources. Since September, local governments have started to introduce a car-changing subsidy policy. The car-changing subsidy speed up the second-hand car market.

2024 was a challenging year for the modern Chinese economy, marked by ongoing macroeconomic headwinds and intense price war in the new car segment that weighed on the used car market. And despite these pressures, China's used car industry continued its upward trajectory. During 2024, China's used car annual transaction volume reached 19.6 million units, up .5% year over year, outpacing the .5% growth rate of the new car market during the same period. Policy tailwinds have also played a supportive role. Beginning in September, a number of local governments introduced trade-in subsidy programs, which helped stimulate vehicle turnover that in turn stabilized and revived market demand. We are especially proud of the strong performance of our superstore's operations in 2024. This success further validates the scalability and replicability of our superstore, of our business model. In the sessions that follow, I will outline four key milestones that reflect our progress. First, fueled by our industry-leading product and service capabilities, U-Sien's used car retail business delivered growth that significantly outperformed the broader market. In 2024, our retail transaction volume rose from approximately 3,100 units in the first quarter to 8,500 units in the fourth quarter, achieving over 30% a year of -over-quarter growth for three consecutive quarters. And for the full year, retail transaction volume reached nearly 22,000 units, representing a -over-year increase of more than 130%. This remarkable growth was undertaken by enhanced operational execution across our business. We scaled our inventory levels in a disciplined manner, and in the year we stocked roughly three times higher than at the start of 2024. At the same time, we maintained an efficient inventory turnover cycle of approximately 30 days, which supported sustained sales growth.

Second, while maintaining a rapid growth scale, U-Sien achieved the highest brand reputation and customer reputation in the second-hand car industry in the retail area. In the past few years of retail operations, we have continued to collect real customer feedback, optimize the customer service system, and improve customer service response speed and service quality. In the fourth quarter of 2024, our NPS reached 65, and the average was around 60 last year, which raised the highest level of the industry.

Second, as we scaled our operations, we also continued to strengthen brand equity and customer loyalty in the core markets where our superstores operate. We actively collected and analyzed customer feedback to refine our after-sales service processes, improving response times, and elevating service quality. As a result, our net promoter score reached 65 in the fourth quarter, up from an average of 60 in the prior year, further reinforcing our position as a trusted leader in China's used car retail landscape.

At the same time, we continued to upgrade and invest in digital engines, and fully used data to build the core capabilities of each business link's smart driving. In recent years, we have also begun to introduce large models to combine with business management, improving the efficiency of pricing, preparation, and customer service. The use of digital technology has made business management more standardized and more complex, and has opened the foundation for the expansion of the large-scale copy and paste of the supermarket model.

At the same time, we continued to strengthen our digital capabilities, leveraging data to build intelligent, technology-driven decision-making across every aspect of our operations. Recently, we began integrating large language models into our business processes to further enhance efficiency in areas such as pricing, vehicle recombination, and customer acquisition. The use of digital technologies is enabling greater standardization and scalability across our platform, laying a solid foundation for the large-scale replication and expansion of our supermarket model.

Lastly,

our financial position continues to strengthen. In the fourth quarter of 2024, we delivered a positive adjusted EBITDA for the first time on a quarterly basis. As our sales volume grows and our sales volume increases, we are also looking to increase our sales volume to the fourth quarter of 2024. In the fourth quarter of 2024, we are starting to achieve meaningful economies of scale. Our gross margin has improved from .8% in the fourth quarter of 2023 to 7% in the same period of 2024. With additional super stores coming online and our business scale expanding, we are confident in our ability to deliver sustainable and growing profitability in the quarters and years ahead. Looking ahead to 2025, we will continue to build on the foundation of our large-scale super store model, executing a disciplined, regional expansion strategy to further scale our operations and drive profitability.

First,

we aim to unlock additional capacity at our existing super stores and increase our market share in their respective cities. Currently, both our CN and Hefei super stores are operating at less than 50% of their full capacity. In 2025, we plan to continue ramping up inventory at these locations while maintaining efficient thermal wear cycles to support sustainable growth in retail volume.

We are also looking to build on the foundation of our new super stores and expand our sales volume to the

fourth quarter of 2024. Second, we plan to open between two to four new super stores in key regional markets while strengthening our integrated online-offline retail ecosystem. As previously disclosed, Yuxin has entered into partnerships with the local governments in Wuhan and Zhengzhou to establish new super store operations. Both cities have populations exceeding 12 million and vehicle ownership bases of over 5 million units, representing highly ideal markets for expansion. Third, our Wuhan super store began trial operations in February of 2025, and our Zhengzhou super store is on track to open in the second half of the year. In parallel, we are actively identifying and preparing additional locations to support new store launches in the coming years.

Third,

for our full-year operational targets in 2025, we aim to achieve another year of over 100% growth in retail transaction volume and to deliver our new super store operations to the world. Today,

China's car ownership volume is over 3.5 billion units. As more and more vehicles enter the retail market, the second-hand car, this -billion-level race, will maintain a rapid growth trend in the next five to ten years. The Chinese car market is on its way to a new stage of brandization, professionalization, and digitalization. As the leading company in the Chinese car industry, Yuxin will continue to lead the car industry through advanced modern retail experiences, professional car manufacturing capabilities, and efficient digital operating systems. We will do our best to provide the best car products and services for our customers, and to bring long-term returns to all shareholders who have experienced the storm together with the company.

Now China's car ownership has surpassed 350 million vehicles. As an increasing number of these vehicles enter the secondary market, the trillion-dollar used car sector is expected to maintain strong growth momentum over the next five to ten years. The sector is evolving towards a new phase of growth defined by brand-oriented, large-scale, and standardized development. As a pioneer and leader in China's used car industry, Yuxin is well positioned to lead this transformation. Through our modernized retail experience, professional vehicle recombinant capabilities, and a highly efficient data-driven operating model, we are setting new benchmarks for the sector's advancement. We remain fully committed to delivering the best used car products and services to our customers, and to generate long-term value for our shareholders, many of whom have supported us through every phase of our journey.

That's all for today. Next, our CFO John will show you the financial situation.

Thank you, DK. Hello, everyone. I am very happy to share with you the financial situation

of our company today. And our financial performance. We delivered another quarter of strong results in the fourth quarter of 2024. Retail transaction volume reached 8,554 units, representing a 42% increase quarter over quarter and a 178% increase year over year, significantly up-forming the overall China used car market, which recorded a -over-year growth rate of approximately 10% during the same period. This marks the third consecutive quarter in which our retail volume has grown by more than 100% year over year.

This is a good example of the impact of the decline in car prices on the level of revenue. Our current car inventory meets the needs of most consumers. The average price of a single car is at a relatively reasonable level. The sales price is expected to remain stable.

We expect lower ASP for retail vehicles decreased from 104,000 RMB in the same quarter last year to 65,000 RMB this quarter, primarily due to the broader shift in vehicle mix. However, the substantial increase in sales volume more than offset the impact of lower ASP on overall revenue. Our current inventory is well positioned to meet the needs of a broad base of consumers, and we expect ASP to remain stable going forward.

In terms of car wholesale, the wholesale sales of four seasons are 885 units, with a 15% decrease in the return ratio and a 31% decrease in the same ratio. The total income of wholesale is 25.5 million yuan. The total income of retail and wholesale is 5.97 billion RMB, with a 20% increase in the return ratio and a 45% increase in the same ratio. On

the wholesale side, we sold 885 units in the fourth quarter, representing a 15% sequential decline and a 31% -over-year decline. Wholesale revenue for the quarter was 25.5 million RMB. Combining retail and wholesale operations, total revenue for the fourth quarter was 597 million RMB, representing a 20% sequential increase and a 45% -over-year increase.

With the return of the market economy and the increase in service productivity, we expect a higher profit margin.

As we continue to increase the value added services, we see a meaningful upside potential for further gross margin expansion.

We have also continuously increased the value added services, and we have also continuously increased the value added services. This is the first time EBITDA has been converted after the adjustment. Last year, the EBITDA loss was 43.8 million RMB.

While delivering strong revenue and volume growth, we continued to implement strict cost and expense control. As a result, we achieved positive adjusted EBITDA for the first time in the fourth quarter, compared to an adjusted EBITDA loss of 43.8 million RMB in the same period last year.

The total revenue for the quarter was 21,777, and the same amount of revenue increased by 134%. The retail revenue for the whole year was 15.92 million RMB, and the same amount of revenue increased by 56%. The total revenue was 18.14 million RMB, and the same amount of revenue increased by 30%. The EBITDA loss after the adjustment was 80.8 million RMB, which was 9,630 million RMB, and the same amount of revenue decreased by 54%. Regarding the specific data for the whole year, we have disclosed detailed information in the report and the annual report. I will not go into detail here.

The total revenue for the quarter was 16.8 million RMB, and the same amount of revenue increased by 14.8 million RMB, and the same amount of revenue increased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million RMB, and the same amount of revenue decreased by 14.8 million recently published fourth quarter and annual results. So I will not repeat all the figures here. In addition, in March 2025, we completed a $27.8 million financing agreement with our investors, of which $19 million have already been funded. In addition, in March 2025, we completed a $27.8 million financing agreement with our investors, of which $19 million have already been funded. This significantly strengthened our cash position, ensuring that we have sufficient liquidity to support our business development needs throughout 2025. So following a prudent assessment of our funding plan and operational outlook, our auditor concluded that our financial resources are adequate to support operations for at least the next 12 months and beyond. And accordingly, the substantial doubt about going concerned disclosure has been removed from our audit opinion.

Regarding

the performance outlook for the first quarter of 2025, While the first quarter is traditionally a systemally soft period for the used car industry due to Chinese New Year holiday, we expect retail transaction volume to be between 7,400 and 7,500 units, representing more than 140% -over-year growth. This will mark our fourth consecutive quarter of -over-year retail volume growth exceeding 100%. Total revenue for the first quarter is expected to be between 490 million RMB and 500 million RMB.

Lastly,

to reiterate DK's earlier comments on our full-year outlook, in 2025, we plan to open 2-4 new super stores. With the continued ramp-up of our existing two locations and the launch of new stores, we are confident in maintaining over 100% -over-year retail volume growth for the full year and achieving positive full-year adjusted EBITDA. That concludes our prepared remarks for today. Operator, we are now ready to take questions.

Thank you, Sol. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then 2 if you wish to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Again, if you would like to ask a question, please press star and then 1 now. The first question that we have comes from Fei Dai of TF Securities. Please go ahead.

Hello, I'm a speaker. Can you hear me?

Yes, no problem. Okay.

The company's cash balance has remained relatively low. However, we noticed that in your first quarter results, your auditor removed their substantial doubt regarding your ability to continue as a growing concern. Could you please update us on the current cash position and whether it is sufficient to support future business development, including the investment in new super stores? Thank you.

Okay, I will answer this question. In the past year, we have invested as much as possible in the improvement of the stock market. Our capital balance has indeed been at a relatively low level in the fourth quarter. As the stock market increases, the company's sales also grows rapidly. Our profit level also improves. Investors are becoming more and more confident in the company and are supporting the company further. Investors support the expansion and development of the company's business. According to the term sheet that we signed in 2024, we have officially signed a $278 million financing agreement with investors in March 2025. The transaction of the $19 million in the transaction has been completed. The subsequent transaction is also in normal progress. The company's current cash level is actually significantly improved last year. Therefore, the auditors have also reviewed the company's future management plan and various company capital arrangements. They believe that the company's capital can support future business development. Therefore, the company's future management plan has also been reviewed this year. The company's future management plan has also been reviewed this

year. Our sales volume grew rapidly. Our profitability improved and the investor confidence in using strengthened significantly. This led to further investment to support our business expansion. Based on the term sheet we signed in 2024, we entered into a formal financing agreement with investors in March 2025 for an aggregate amount of $27.8 million. Of this amount, $19 million has already been funded with the remainder in the process of being delivered. As a result, our current cash position has improved significantly compared to the end of last year. Following a careful review of our operational plans and funding arrangements, our auditors concluded that our financial position is sufficient to support future operations and no longer expressed substantial thoughts regarding our ability to continue as a going concern.

Regarding our new sales site, our capital investment is invested in a certain rhythm. At the initial stage, we have to invest in equipment for the preparation of the factory. The capital for the car and operation will gradually increase as the scale of the inventory increases. In addition to using free capital, we will also use other funds to supplement. For example, local governments will directly invest to support our local business. Wuhan and Zhengzhou are in this mode. Both cities are in this mode. In addition, we also use bank and financial institutions to store and deposit funds to reduce the use of free capital. Overall, the scale and rhythm of the use of a new free capital is highly controllable.

Now regarding new superstore investments, the capital expenditures will be phased. Aside from the initial setup costs for reconditioning facilities, vehicle purchases and operating expenses are gradually deployed as inventory scales. In addition to using our own cash, we also leverage other funding sources. For example, local governments provide direct investment support for our operations in certain cities such as Wuhan and Zhengzhou. Furthermore, we utilize inventory financing services from banks and the financial institutions to reduce our own capital commitments for vehicle purchases. Overall, the amount and pace of our capital deployment for new superstores are highly manageable and under control. So to summarize my answer, our financial position is steadily progressing on a solid trajectory with disciplined cash management and strong investor support. Our current cash reserves are sufficient to fund the growth of our existing superstores and the rollout of new superstores throughout 2025. That's our answer to your first question.

Thank you. My second question is, the company's stock price has experienced a notable increase over the past year. Could management share your views on the current stock performance? Thank you.

Okay, I'll answer this question. First of all, thank you for your attention to the company's stock price. I think the growth of the stock price has somewhat reflected the investors' attention to the second-hand car industry, the recognition of the U-Shin business model, and the confidence in the future development of U-Shin.

I will take this question as well. First, we appreciate your interest in our stock performance. We believe that the increase in our share price reflects to a certain extent investors' growing interest in China's used car industry, their recognition of U-Shin's business model, and their confidence in U-Shin's future growth prospects.

First of all, China has the world's first .5-liter engine. The second-hand car market is already a 100 million RMB level track. Compared to developed countries, the exchange rate of new cars and second-hand cars is 1 to 3, while China is only 1 to 0.6. China's second-hand car market still has a growth of 4 times more than before. U-Shin is the only company that is currently focused on second-hand car sales. I believe that if investors are concerned about the second-hand car industry in China, they will definitely pay attention to U-Shin.

Compared to developed markets where the ratio of used car to new car transactions is approximately 3 to 1, China's ratio stands at just 0.6 to 1, indicating more than 4 times the potential growth opportunity. U-Shin is currently the only U.S. listed company exclusively focused on used car retail in China. We believe that as long as investors are paying attention to China's used car sector, U-Shin will naturally be a key focus. The second amount of used car retailers in China, our larger-scale superstore model, is truly differentiated. By combining a modern retail experience and advanced vehicle reconditioning capabilities and a highly digitized management system, we are reshaping the traditional used car business. Our model has been strongly endorsed by customers as reflected in our industry-leading promoter score. Our Xi'an and Hefei superstores have already become leading destinations for used car purchases in their respective regions.

Third, our business will continue to grow in the coming years. We are expecting to open up 2-4 new retail stores in 2025, while many new retail stores are also being introduced. As each retail store becomes more mature, our business is expected to be in a high-speed development track

in the coming years. Third, we expect our business to sustain high growth over the coming years. In 2025, we plan to open 2-4 new superstores, and we are actively advancing the development of additional sites in other regions. As each superstore matures operationally, we expect to remain on a trajectory of strong and accelerating growth for the foreseeable future.

Our ultimate goal is to create long-term value for our shareholders. At this stage, we are expecting to be able to continue to focus on the business development and to do our best to make the business a success. At the same time, we will also be able to make the business a success. We hope that everyone will continue to pay attention to our business performance. Thank you. This is my answer. Thank

you.

At this stage, there are no further questions on the conference call. I will now hand over to Jack for any pre-written questions.

We actually have another question from Gary Dvorechak with What is Our Research, who has sent over his questions beforehand. So we'll take this opportunity to answer that as well. His question is, given the recent trade tensions between China and the U.S., how does management view the outlook for China's yeast car market in 2025? Will it face any major challenges? Okay,

thank you for your question. This is Dicky,

and I will answer this question. While trade tensions between China and the U.S. may have some impact on the new car industry, we believe there will be minimal direct impact on China's yeast car market. Our business is primarily domestic, operating within China's internal circulation economy, and at this time we have not observed any direct effects.

Overall, we

remain relatively optimistic about the outlook for China's yeast car market in 2025. In response to escalating trade frictions, the Chinese government has introduced multiple measures to stimulate domestic demand. These include expanding the trade-in subsidy program with total subsidies across sectors such as automotive and home appliances, doubling to $300 million in R&D in 2025. The Ministry of Commerce has also reiterated its support for the yeast car industry, announcing initiatives to reform auto circulation consumption and promote efficient yeast car transactions and broader automotive aftermarket. As more replacement activity occurs, the supply of high-quality used vehicles is expected to increase further accelerating transaction

volumes.

On the other hand, if trade tensions persist, the Chinese government has introduced a new measure to stimulate domestic demand. As the demand for new cars and water economic winds materialize, we believe more consumers will shift to focus more on value for money, leading to increased demand for used vehicles. For using with the ongoing ramp-up of our existing super stores and the launch of new locations, we expect to maintain over 100% growth in our retail sales volume in the coming year. Regardless of external market fluctuations, we believe that our growth trajectory will continue to significantly outpace that of the industry average in the years ahead. We will also continue to monitor market dynamics closely and adjust our strategies as needed to ensure that our company is, to ensure our sustainable long-term development. And that's all we're on. Yeah, that's that's that's all we're answering to the question. Operator, we can we can move on.

Thank you, sir. At this stage, there are no further questions on the conference call. Would you like to make any closing comments?

Thank you. Thank you all for joining today's call and for your continued support in using. We look forward to speaking to you again soon in the future.

Thank you, everyone.

Thank you. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.