Uxin Limited

And welcome to the Yuxin 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 on 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, Sal.

Thank you, Operator, and hello, everyone. Welcome to the Asian's Earnings Conference call for the fourth quarter and full year ended December 31st, 2024. On the call with me today, we have DK, our founder and CEO, and Zhang Lin, our CFO. DK will review business operations and company highlights, followed by Zhang, who will discuss financials and guidance. They will both be available to answer your 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. And now with that, I will turn the call over to our CEO, DK. Please go ahead, sir.

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.

Although China's macroeconomic environment is full of challenges in 2024, in most of the year, new cars continue to hit the second-hand car market. The second-hand car industry in China continues to grow. 2024 was a challenging year for the modern Chinese economy.

marked by ongoing macroeconomic headwinds and an 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 6.5% year over year, outpacing the 4.5% 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 stipulate vehicle turnover, that in turn stabilized and revived the market demand.

We are also very proud that in the past year, Youxin's ultra-large-market business has achieved a transversal growth, and it has also strengthened our confidence in the development of the existing business model.

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,

Yuxin's used car retail business delivered a 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% in year-over-quarter growth for three consecutive quarters. And for the full year, retail transaction volume reached nearly 22,000 units, representing a year-over-year increase of more than 130%. This remarkable growth was underpinned by enhanced operational execution across our business. We scaled our inventory levels in a disciplined manner, ending the year with stock 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.

Secondly, while maintaining a fast-growing scale, Youxin has achieved the highest brand reputation and customer reputation in the second-hand car industry in the area where the market is located. In the past few years of market operation, we have continued to collect real customer feedback, optimize the after-sales service system, and improve the response speed and service quality of the after-sales customer service. In the fourth quarter of 2024, our NPS reached 65, which was an average of about 60 last year, and the highest level of the industry was maintained and a new level was improved.

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 continue to upgrade and invest in digitized engines, fully utilizing data to build the core capabilities of intelligent driving in various business segments. Recently, we have also begun to integrate into the big model and integrate with business management. At the same time, we continue 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 reconditioning, and customer acquisition. The use of digital technologies is enabling greater stabilization and scalability across our platform, laying a solid foundation for the large-scale replication and extension of our SuperStore model.

Finally, it is worth mentioning that our financial situation is getting healthier and successfully achieved the goal of EBITDA profit after the adjustment of the company's single quarter in the fourth quarter of 2024. With the increase in sales, we are gradually showing an advantage in the scale of business costs. The profit level has also increased from 4.8% in the fourth quarter of last year to 7% in the fourth quarter of this year. With the continuous expansion of the new market and the continued growth of business scale, we are full of confidence in achieving greater profit in the future.

And 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 we are starting to achieve meaningful economies of scale, our gross margin has improved from 4.8% in the fourth quarter of 2023 to 7% in the same period of 2024. With additional superstores 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 superstore model, executing a disciplined regional expansion strategy to further scale our operations and drive profitability.

First, continue to release the capacity of existing stores and increase the market share rate in the city where the store is located. Currently, the capacity of two stores in Xi'an and Hefei has not reached 50%. In 2025, we will continue to steadily increase the storage size of existing stores

First, we aim to unlock additional capacity at our existing superstores and increase our market share in their respective cities. Currently, both our Xi'an and Hefei superstores 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 water cycles to support sustainable in retail volume.

Second, realize the opening of two to four new supermarkets in the area, and improve the online and offline coordination of the large supermarket network. We previously announced a cooperation agreement between the local government of Youxin and the two cities of Wuhan and Zhengzhou to achieve the landing of the supermarket. Wuhan and Zhengzhou, both cities, have more than 12 million people, and 5 million vehicles. It is an ideal area to expand the second-hand car market. Wuhan's market has invested in the market in February 2025. Zhengzhou's market will open in the second half of 2025. The selection and landing of other cities is also actively pushing for the expansion of the new market in the next few years.

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 basis of over 5 million units, representing highly ideal markets for expansion. Our Wuhan Superstore began trial operations in February of 2025, and our Zhengzhou Superstore 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 first full-year positive adjusted EBITDA.

As we pursue the expansion, we remain committed to maintaining the long-term health of our financial position.

As we pursue the expansion, we remain committed to maintaining the long-term health of our financial position. Now China's car ownership has surpassed 350 million vehicles.

As an increasing number of these vehicles enter the secondary market, the Trillium R&B used car sector is expected to maintain strong work momentum over the next 5 to 10 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, Yusheng is well positioned to lead this transformation. Through our modernized retail experience professional vehicle reconditioning 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. John, please.

And with that, I'd like to turn the call over to our CFO to walk you through the financial results. John, please go ahead.

Okay. Thank you, DK. Hello, everyone. I'm very happy to have the opportunity to share with you the financial situation of the company today.

Thank you, DK, and hello, everyone. I will now share an update on our financial performance.

In the fourth quarter of 2024, we again achieved a strong performance growth. Our sales volume in the quarter was 8,554 units, with a 42% growth rate. In the same period of last year, we had a 178% growth rate. In the same period of the fourth quarter, we had a 10% growth rate in the entire Chinese second-hand car market. 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 outperforming the overall China used car market, which recorded a year-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. 本季度的零售收入总额为5.53亿人民币。

25% increase in return and 73% increase in share. The average sales price of retail vehicles was 10.4 million yuan in the same period last year, down to 6.5 million yuan in this quarter. The increase in sales greatly reduced the impact of the decline in the price of vehicles on the income level. Our current vehicle storage satisfies the needs of most consumers. The average price of a single car is already at a relatively reasonable level.

Total retail revenue for the quarter was 553 million RMB, up 25% sequentially and 73% year-over-year. Our average selling price, or 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.

On the wholesale side, we sold 885 units in the fourth quarter, representing a 15% sequential decline and a 31% year-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% year-over-year increase. 本季度的毛利率是7%,较上个季度持平,较去年同期的4.8%增长了2.2个百分点。

Our gross margin for the fourth quarter was 7%, remaining stable compared to the previous quarter and improving by 2.2 percentage points from 4.8% in the same period last year.

Over the past two quarters, we have maintained the gross margin at a relatively stable level. Looking ahead with a recovering market environment and increasing penetration of value-added services, we see meaningful upside potential for further gross margin expansion.

While our performance has improved significantly, we also maintain strict cost-benefit management. This quarter, after the adjustment of EBITDA for the first time,

那去年同期是亏损4380万元人民币。 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 first quarter, compared to an adjusted EBITDA loss of 43.8 million RMB in the same period last year.

Regarding the performance of the whole year in 2024, the retail sales of the whole year in 2024 were 21,777 units, which increased by 134%. The retail revenue of the whole year was 15.92 billion RMB, which increased by 56%. The total revenue was 18.14 billion RMB, which increased by 30%. The loss of EBITDA after the adjustment was 8080 million RMB. In terms of last year's net loss, 96.3 million RMB, which is nearly 54% of the net loss. Regarding the specific data of the whole year, we have disclosed detailed information in the just-released quarter and the annual report. I will not go into detail here.

Turning to our full-year 2024 results, retail transaction volume totaled 21,773 units, representing a 134% year-over-year growth. Full-year retail revenue increased was 1.592 billion RMB, up 56% year over year. Total revenue reached 1.814 billion RMB, an increase of 30% year over year. Our full-year adjusted EBITDA loss narrowed significantly to 80.8 million RMB, an improvement of 96.3 million RMB compared to 2023, representing a year-over-year improvement of nearly 54%. We have disclosed additional details regarding our full-year financial performance in our recently published fourth quarter and annual results, so I will not repeat all the figures here.

In addition, in March 2025, we completed an investment agreement of $27.8 million with investors, of which $19 million has been paid off. Our cash reserve has been greatly improved, which can meet the company's business development needs this year. After careful evaluation, the auditor also said that the company's financial situation for the next year and longer will also meet the needs of the business. The audit report removed the important doubts about continuous business.

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 concern disclosure has been removed from our audit opinion.

Turning to our 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% year-over-year growth. This will mark our fourth consecutive quarter of year-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.

我也再次重复一下DK刚才关于全年的业绩展望。 2025年,我们计划有24个新卖场投入运营。 随着现有两个卖场产能的持续释放和新卖场逐步落地, 我们非常有信心在2025年全年保持超过100%的零售销量增速, 并实现全年经调整EBITDA的盈利。

And lastly, to reiterate DK's earlier comments on our full-year outlook, in 2025, we plan to open two to four new superstores. With the continued run-up of our existing two locations and the launch of new stores, we are confident in maintaining over 100% year-over-year retail volume growth for the full year and achieving positive full-year adjusted EBITDA.

And 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 two 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 one now. The first question that we have comes from Fei Dai of TF Securities. Please go ahead.

Hello. Over the past year, the company's cash balance has remained relatively low. However, we noticed that in your fourth quarter results, your auditor removed their substantial dollar regarding your ability to continue as a going concert. 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 superstores? Thank you.

Our capital balance has always been at a relatively low level in the fourth quarter. As the stock size increases, the company's sales are also growing rapidly. Our profit level is also constantly improving. Investors are also becoming more and more confident in the company, and they are also further supporting the company, investing in supporting the expansion and development of the company's business. Based on the term sheet we signed in 2024, in March 2025, we and our investors have officially signed a $2,780 million financing agreement. The $1,900 million in the agreement has been completed. The rest of the agreement is also in normal progress. Hi.

Hi, this is John, and I'll take this question. Over the past year, we prioritized allocating our capital to expanding inventory levels, which resulted in maintaining a relatively low cash balance. As our inventory expanded, our sales volume grew rapidly, our profitability improved, and our 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 US dollars. 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 auditor concluded that our financial position is sufficient to support future operations and no longer expressed substantial doubt regarding our ability to continue as a going concern. 关于我们的新卖场,我们的资金投入是分节奏投入的。

In the initial stage, there will be equipment investment. The capital and operating funds will gradually increase with the growth of the storage scale. In addition to using free funds, we will also use other funds to supplement. For example, the local government will directly invest to support our local business. Wuhan and Zhengzhou are in this mode. These two cities are in this mode. Now regarding new superstore investments, the capital expenditures will be faced.

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. 总体而言,我们的财务状况是正在向长期的健康的方向发展。

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 super stores and the rollout of new super stores throughout 2025.

这是我对这个问题的回答,谢谢。 That's our answer to your first question.

对当前股价表现的评价。 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.

OK,这个问题还是由我来回答。 首先非常感谢您对公司股价的关注。 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 Yuxin's business model, and their confidence in Yuxin's future growth prospects.

First of all, China has the world's first 3.5 billion car ownership. The second-hand car market is already a 10 billion RMB level track. Compared to developed countries, the trade ratio of new cars and second-hand cars is 1 to 3, while China is only 1 to 0.6. China's world's largest automobile market with over 450 million vehicles in operation.

the used car sector represents a trillion RMB opportunity. 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 four times the potential growth opportunity. Yuxin 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, Yuxin will naturally be a key focus.

Second, in China's second-hand car retail companies, our super-large-sale business model is unique. We use new retail experiences The second among used car retailers in China, our large-scale superstore model is truly differentiated.

By combining a modern retail experience, 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 net promoter score. Our Xi'an and Hefei superstores have already become leading destinations for used car purchases in their respective regions. Third, we expect our business to sustain high growth over the coming years. In 2025, we plan to open two to four new superstores, and we're 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 fully focused on educating, sorry, executing our business strategy and delivering operational excellence. At the same time, we're committed to keeping investors informed about our business progress in a timely manner. We sincerely appreciate your continued attention and support.

Okay, this is my answer, thank you.

And that's our answer to your question.

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 Dvorak 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 used car market in 2025? Are there going to be any major challenges anticipated? Let's take this opportunity to answer a question from Gary D. Borchak, a former member of the Water Tower Research Institute. His question is, considering the recent trade friction between China and the United States, I would like to ask Mr. Wang, what are your expectations of the Chinese second-hand car market in 2025? Will there be any major challenges? Please answer the question, Mr. DK.

Okay, thank you for the question. The trade friction between China and the United States will have a certain impact on the new car industry. For China's second-hand car industry, because the second-hand car industry is mainly in China, it is a complete inner loop. At present, we have not seen a direct impact. In general, we still have a relatively optimistic attitude towards the future of the Chinese second-hand car market in 2025.

This is DK 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 used 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.

In order to deal with the escalation of the conflict between China and the United States, the Chinese government has adopted a number of measures to stimulate domestic demand and expand the supply and demand policy that has been changed. In 2025, the supply and demand will double to 3 trillion RMB, covering a number of fields of car electricity. The business department also specifically expressed support for the second-hand car industry, and will organize the development of car traffic consumption reform. Promote second-hand car high-efficiency traffic, develop the car aftermarket, and save the car to change the acceleration. The supply and demand of second-hand car high-quality cars will increase, and the flow will also accelerate.

Overall, we remain relatively optimistic about the outlook for China's used 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 billion RMB in 2025. The Ministry of Commerce has also reiterated its support for the used car industry, announcing initiatives to reform auto circulation consumption and promote efficient used car transactions in the 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 trip tensions persist and broader economic winds materialize, we believe more consumers will shift to focus more on value for money, leading to increased demand for used vehicles. For Yuxin, with the ongoing run-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, to ensure our sustainable long-term development. And that's our answer to the question. Yeah, that's our answer to the question. Operator, we can move on.

Thank you. So 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 then concludes today's conference. Thank you for joining us. You may now disconnect your lines.