Autohome Inc.

Ladies and gentlemen, thank you for standing by for Alder Homes before the quarter and the full year 2020 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to introduce your host, Anita Chen, Alder Homes IR Director, Ms. Chen, you may begin.

Thank you, operator. Hello, everyone, and welcome to Auto Home's first quarter and full year 2020 earnings conference call. Earlier today, Auto Home distributed its earnings press release, and you may find a copy on the company's website at www.autohome.com.cn. On today's call, we have Chairman and CEO, Mr. Chen Hong, Co-President Mr. Haifeng Shao, Co-President Mr. Jingyu Zhang, and CFO Mr. James Zou. After the prepared remarks, Mr. Long, Mr. Shao, Mr. Zhang, and Mr. Zou will be available to answer your questions. Before we begin, please note that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public findings with the Securities and Exchange Commission. Alderholm does not undertake any obligation to update any forward-looking statements, except as required under applicable law. The early press release in this call also includes discussion of current and audited non-GAAP financial measures. Our press release contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and is available on AutoHomes IR website. As a reminder, this conference is being recorded. In addition, a live and archived webcast of this earnings conference call will also be available on AutoHomes IR website

I will now turn the call over to Old Home Chairman and CEO, Mr. Long.

Thank you, Anita. Hello, everyone, and thank you for joining us today.

Before I begin to discuss the results, I would like to express my sincere gratitude to the former Chairman, Mr. Mo Min, for his outstanding contributions in the past few years.

Before we start discussing our results, on behalf of everyone at Auto Home, I would like to express my sincerest gratitude to Mr. Ming Liu, our previous chairman, for his extraordinary contributions over the past several years. I would also like to take this opportunity to thank... shareholders for your continued support and I look forward to working closely with you as we move ahead. I'm very honored to be joining AutoHome and to be working with such a talented and passionate team. It is by far the most well-known automobile media brand in China, serving the largest number of automobile user communities in the industry. Even further, this company has a healthy business model, solid fundamentals, and always stands at the forefront of innovation in the digital automotive industry. I'm also very encouraged by Auto Home's strategic initiatives in the new car and used car area, which I believe will be a huge benefit to our long-term development.

I have served Ping'an Transport for more than 20 years. Ping'an Transport is one of the largest public transport centers in China. I have a comprehensive understanding of the automotive industry. In addition, I have accumulated the actual experience of online and offline integration of the Internet and antifreeze and antifreeze. In addition to the existing business foundation of Car Home, looking forward to the future, I am very confident that I can work with Car Home

Prior to joining Auto Home, I served in various roles at the Ping An Property and Cassidy Insurance Company for over 20 years. Ping An Property and Cassidy is one of the leading automotive-related insurance providers in China, and I, therefore, through my time there, gained a comprehensive understanding of the automotive industry. In addition, my experience with Lufax Holding and Ant Group gives me tremendous practice exposure to the integration of online and offline business models, which will be invaluable for me at Auto Home. In summary, looking ahead, I'm confident that with my experience and what Auto Home has already established, we can take Auto Home to the next level of success.

在我们CFO周军先生提供更多业务细节之前,我先来总结一下我们在2020年的主要财务表现和战略业务情况。 Before our CFO Jim provides more details of our business, let me delve into high-level key financials and provide some color on some of our strategic business. 全年总营收86.6亿元人民币 The same growth rate of 2.8% surpassed the performance of the new car market again. The new business income of the whole year achieved 34.4% of the same growth rate, and the income ratio reached 23.2%. Among them, the data product income continues to maintain a strong growth trend. The same growth rate reached 70%, and the net profit continued to increase.

Total revenues for the year reached RMB 8.66 billion, an increase of 2.8% year-over-year. Once again, outperforming the new car market in China. During the year, revenue from our online marketplace and others' revenue increased by 34.4% year-over-year. and contributed to 23.2% of total revenues. Notably, data products delivered robust year-over-year growth at 70%. Adjusted net income for the year continued to expand and increase by 6.2% year-over-year.

The value of the industry continues to shift to the online market. The family of cars plays an advantage of platform, three-dimensional layout of data products, helps to improve the development, marketing and sales services of the car main factory and the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and sales services of the marketing and

As is well documented, China's auto industry was heavily hit by the COVID-19 pandemic in early 2020, yet began to gradually recover during the year. During the year, the sector saw a significant increase in demand for digital transformation. along with the continuous value migration from offline to online across the industry. As a leading platform, we further leveraged our strengths and established a comprehensive matrix of data products and solutions, ranging from R&D, sales, and marketing to after sales. This has demonstrated our ability to empower the digital development of automakers and dealers throughout the value chain. With this proven ability, we once again were able to outperform the market with steady growth, even with China's total new passenger vehicle sales falling 6% during 2020.

Through the strong support of the online platform of Qisezijia, we can fully connect users, main factories and retailers, and improve the trading efficiency of both buyers and sellers. Through trading business and financial business, we can not only improve our service capability in the second-hand car industry, although the sales volume of the second-hand car industry in 2020 has dropped, but the whole-year trading platform of TianTianPaiChi is still growing at the same level.

In regards to our used car business, our adult investment in TTP car marks an important milestone for auto homes development in this area. Auto home, in combination with TTP, has become a leading player in China's used car market. Fostered by AutoHome's strong online platform, TTP is able to expand access to a wider upstream supply of used car while facilitating connections among users, automakers, and dealers, customers to improve transaction efficiency. Leveraging the transaction business, we are able to further develop our auto financing operations and expand our service capability. Despite the decline in China's used car transaction in 2020, the transaction volume of TTP Steel achieved year-over-year growth. As the used car market in China further develops, we believe that our used car platform will be readily equipped to capture market share and be another contributor to our overall growth.

Looking back at 2020, 70 companies supported the main factory and salesmen, Looking back at 2020, we have rolled out a set of favorable practices in order to do our part in supporting our automakers and dealers' partners.

During this unprecedented difficult COVID-19 period, as we move ahead, we will continue to work closely and serve these partners by leveraging our extensive industry know-how while adding more value in their digital transformation.

下面请CFO周军先生为大家介绍更多的业务细节以及我们四季度和2020年

With that, I will now turn the call over to our CFO, Jun, for more business details and a closer look at our fourth quarter and full year 2020 financial results, as well as the business outlook for the first quarter of 2021. Thank you, Chen.

To start, let me go through some of our key businesses first. In December 2020, the number of average DAUs who accessed our mobile website, primary app, and mini apps grew further to 42.1 million, representing an increase of 14.4% compared to that of last year. On the content front, we continue to make progress in enhancing the user experience by providing expanded content offering and optimizing useful tools. For example, We're encouraged to see the light version of the auto home application has started to gain recognition in lower tier cities with the market appeal to a younger demographic. In addition, we also optimized our car selection tours, including the purchase price check function and customized car purchase reports created by Oscar Ball, our AI-empowered smart tour. both of which support users during decision-making process and improves the car buying experiences. During the year, we also delivered 15 total road trip activities, helping auto brands attract users. In 2020, the cumulative GMV for the road trip businesses has grew to about five times that of 2019. In terms of data products, In 2020, a total of 45 automakers were engaged with our data products and the total number of programs for intelligent new car launch and intelligent marketing solutions more than doubled as compared to the year of 2019. As for data products dealers, in the fourth quarter of 2020, over 17,000 dealers purchased our data products. For auto financing business, our total GMV for consumer loans increased by 20% on a year-over-year basis in 2020. Now, I will walk you through the key financials for the fourth quarter of 2020. Please note that as with prior course, I will reference RMB only in my discussion today unless otherwise stated. Now, net revenues for the fourth quarter were RMB 2.48 billion a 6.6% higher than the corresponding period of the year before. For a detailed breakdown, media services revenue were $1.03 billion, lead generation services revenue were $847 million, and online marketplaces and others revenue increased by 35.5% on a year-over-year basis to $607 million, primarily driven by the growth of our data Now moving to costs, cost of revenues was 268 million compared to 265 million in Q4 of 2019. Growth margin remained stable at 89% in the fourth quarter. Turning to operating expenses, sales and marketing expenses in the fourth quarter were 871 million compared to 735 million in Q4 of 2019. P&D expenses were $397 million compared to $300 million in Q4 of 2019. Finally, G&A expenses were $71 million compared to $60 million in the fourth quarter of 2019. Overall, we delivered an operating profit of $947 million for the fourth quarter compared to $1.1 billion in the corresponding period of the year before. Now, adjusted net income attributed to Auto Home Inc. was $1.19 billion for the fourth quarter, compared to $1.15 billion in the corresponding period of 2019. Non-GAAP basic and diluted earnings per share or per PDS for the fourth quarter were RMB 9.95 and RMB 9.91, respectively. compared to RMB 9.67 and RMB 9.62, respectively, in the corresponding period of 2019. Now, let me turn to a short summary of our 2020 full-year results. We continue to drive growth in total revenues, which increased by 2.8% year-over-year to $8.66 billion. Media services revenue were $3.46 billion. Lead generation services revenue was $3.2 billion, and online marketplace and others revenue increased by 34.4% year-over-year to $2 billion, primarily attributable to the increased contribution from our data product service line. In addition, we delivered an adjusted net income of $3.62 billion, representing a 6.2% year-over-year growth. As of December 31, 2020, our balance sheet remained very strong with cash, cash equivalents, and short-term investments of $14.63 billion, and we generated operating cash flow of $3.33 billion in 2020. I'm very pleased to announce that our board of directors have approved a cash dividend of approximately US dollar 87 cents per ADS, or US dollar $0.2175 per ordinary shares after reflecting the proposed 441 share split. Following this dividend payment, we still have ample capital resources to invest in our businesses and further strengthen our relationship post position going forward. Let me now address our first quarter 2021 outlook. which reflects our current and the preliminary view on the market operating conditions and may be subject to changes. At this point, we expect to generate net revenues in the range of RMB 1.81 billion to RMB 1.84 billion. The revenue guidance includes approximately RMB 100 million impact from consolidation of TTP Inc. for the first quarter of 2021, which was acquired in the end of December 2020, and the operating results of which will be fully included in the company's consolidated financial statement for the fourth quarter of 2021. In conclusion, as mentioned earlier, But important to reiterate, despite the challenging automobile sales environment, our efforts throughout 2020 to develop new initiatives enabled us to achieve another solid year. Data products continue to lead our overall growth, driven by high data product adoptions. In addition, the expanded adjusted income also reflected our enhanced operating efficiency. Looking ahead, we'll continue to invest strategically in our ecosystem. to remain at the forefront of innovation in the digital automotive space while maintaining a disciplined cost structure in our core business. With that, we are ready to take your questions. Operator, please open the line for Q&A.

Thank you. So ladies and gentlemen, if you have any questions, please press 01 on your telephone keypad. To cancel, please press 02. Please be also reminded to ask only one question at a time. The first question is from Ali Wong at Morgan Stanley. Please go ahead.

Hello, Mr. Wong, Ms. Zhou, and all the management staff. Good evening. Thank you for accepting my question. My question is more related to EQ guidance. I see that the entire guidance now gives about 17% to 19% of UVA growth. In addition to the consolidation of daily parking, there is also an increase in low-teens. I would like to ask, at this time, we all know that the entire OEM has begun to do a full-year budget. Does our guidance reflect that this year's OEM has given a full-year budget for the entire car advertisement, because the entire car market is improving? Thank you for taking my question. My question is about the guidance for the first quarter. So your guidance actually implies around 17% to 19% UVA growth. If stripping out the consolidation of TTP card, we still have a low TIN growth for the first quarter revenue. So we know that the OEM is starting to do the annual budget around Chinese New Year. So just wonder if you have some initial color from OEM in terms of the budget this year, which is a little bit better than expected. Or it is because that we have very strong growth momentum of data product especially given that in the force called data products, growth is over 80% year-over-year. Thank you.

Okay, I would like to answer this question from the market and the main market. If there are any questions, Chairman Zhou can answer them. First, Thank you for the question. I would like to take this question first, then Mr. Jun may have some add-on opinions. So first of all, let me comment on the market.

According to the Association, that in 2021, the total sales in the auto market would grow between 7% to 9%.

Yes, the budget of the main market must follow the sales. I think this is a driving force in the budget. On the other hand, if we compare 2021 to 2020, there will be more new cars. As you know, for the automakers, their budget usually would grow together with their sales. So they are coordinated. So that's why we foresee they would have a higher budget if the sales would be growing. And also compare with 2020, we see

we will see new models will be released to the market. Because in 2020, due to the negative impact of the COVID-19, there are some delays of the new car models, and some would choose to launch online. So we would foresee there will be new car launching business in 2020, 2021.

The first thing we are now judging is the impact of this field. The second is how much of an impact it has. We are still in the process of research. So in general, the specific value, including the specific impact on the main field, we are in the process of research. Thank you.

And also, there are some notes of positive news, because in 2021, we do see some outbreak of the epidemic in some of the local regions. But I have to say that, firstly, this is only local and regional. And secondly, as to how much that would affect the automakers, we are still under some estimation and investigation and survey. So that's why it's still too early to make any further prediction. Thank you.

Just to add to Mr. Shao's comment, we'll see. Actually, our traditional businesses will turn back into positive territory. But at least in the first half, our primary growth drivers are still going to be our data business and use card businesses. Thank you, Eddie. That's our answer.

Operator.

Thank you. Next question is from Miranda Chung at Bank of America Securities. Please go ahead.

Thank you. Good evening, everyone. Thank you for accepting my question. I also wish you a happy new year. My question is about our second-hand car business. Could you explain to us in more detail that after we acquired TintinPay, How will it integrate with the current business of Zhijia? What kind of business is the second-hand car business for Zhijia now? What kind of business plan is it? Then, can you share some operating data that is taken every day? For example, the exchange rate, the market debt rate, and their trend. And then I just want to ask, in terms of financial performance, after taking the daily table, 我们要怎么样去判断就是它对自家权益的这个收入和利润率的一个潜在的一个影响。 那我很快翻译一下,谢谢。 My question is about the used car business. Can management elaborate more about how you will integrate the TTP with your existing business, and what's your new business plan for your overall used car business? And also, it would be helpful if you can share with us TTP's operating matrix such as transaction volume, market share, and their trends? And lastly, can you comment on how the consolidation of TTP could potentially impact the revenue and profitability in 2021? Thanks.

This question, me and Chairman Zhou, we will answer this question together. My focus is on this. The second-hand car of Zhijia has a lot of business planning and integration. First of all, this time we call it Fenggu Tianlianpai. In fact, it will continue the direction of our second-hand car strategy. The strategy of Zhijia's second-hand car business is actually a green asset platform. Uh, to help car manufacturers to digitalize transport, to open up the industrial chain, to realize the full chain of C2B and B2C, and then to establish the largest second-hand car line-up in the country. So this time, we are going to take a look at the strategy of Zhijia's second-hand car. In fact, the most important thing is to supplement the strategy of Zhijia's second-hand car, which is called the trading environment. That is, it is from C1, Thank you for the question. I would like to join Mr. Zhou to answer this question, especially related to the integration and planning of the used car platform business.

After we controlled the shares of our TTP, we actually continued our auto homes use cost strategy. To summarize, that is light asset model and make it as a platform. We use double clouds to serve our customers. We also want to connect the full value chain, and we want to create a closed loop of the C to B and B to C, So we are dedicated to bring this platform as the biggest used car online transactional platform. And in this regard, we have brought the most critical part, which is the transactional part, to this whole loop.

The second aspect is that TianTianPanel is currently the largest in the C2P market in terms of trading volume. And in terms of

You know, for the TTP, in terms of the transactional volume in the C to B model, it is already the biggest in China. And under 2020, when the whole market was not so good, but TTP is uncontradictory, it's growing its business.

Our next step is to join the Ping'an Bank and Tianjin Bank. We want to have a chemical reaction in our business. We want to help CE to sell better cars. We also want to help business owners to store better.

Our next step would be joining hands together with Ping An Bank and Ping An PNC. We want to bring, you know, chemical reactions together with and we would help the CE to sell cars better and also help makers to do better inventory. And in this way, we can create more value.

To add on what Mr. Sheldon said, TDP also narrowed its loss last year, despite actually a declining used car market. And I think they are expected to break even sometime in the second half of this year. And they will have a minor impact on our bottom line. And the contributions to our top line are definitely positive. And also, you know, I think all used car online platforms have seen a declining sales volume and revenue last year in China, except for TTP. So if we are not sort of misunderstanding, then, you know, I think they are already the largest, you know, online transaction platform in Chinese used car market last year. Thank you. That's our answer.

Our next question is from Thomas Chong at Jefferies. Please go ahead.

Thank you. Thank you. Thank you for answering my question. I'm here to ask a question on behalf of Thomas. Then I would like to ask, what is the strategy of data products this year? And I would also like to ask if the management can comment on the growth of the entire car industry in online advertising. Because now there may be some regions where there is a recurrence of the epidemic. So thank you, management, for taking my questions. This is Mavis asking on behalf of Thomas. And so I'm not sure if you can comment about our data product strategy in 2021. And also, can you comment about the online advertising outlook this year on the back of the recent outbreak of COVID? Thank you.

Let me answer this question. First of all, in 2020, the revenue of our entire data product increased by 70%. From the number of customers, we have increased from 45 to 36 in 2019, which has increased by 9 customers. At the same time, in terms of digital marketing, smart listing and smart marketing have doubled in 2019. Thank you. I would like to take the data product question. If you look at 2020, our year-on-year data product growth is 70%, and we actually had 45 clients.

In 2019, this number is only 36. So which means we have nine new customers in 2020. In terms of intelligent new car launch and intelligent marketing solution, we doubled. And also for the offering to the dealers, we already had business relations with more than 17,000 dealers.

Regarding the 21-year data product strategy, currently, for our existing products, whether it is OEM or Dealer, these data products will continue to increase our market share and share. The second point is that for our new system, our smart products will gradually move towards the sales end to promote new products. Now, tell me about 2021. We already have some new products, and we would already continue to serve the OEMs and the dealers, and we are also going to further expand our market share.

And in terms of the intelligent series of products, we are going to have more on the sales side new offerings. And also for the smart solutions, we will have more R&D side solutions. So in this way, we are going to add a new product in 2021.

R&D, there is another important thing, which is to promote our entire strategic promotion of the industrial Internet.

And in 2021, we are also going to launch the industrial internet network, and we are going to build a whole comprehensive business model out of that.

Thank you. The 2021 epidemic is different from the 2020 epidemic. Currently, we can see that the country has adopted a grid-based prevention measure. Therefore, it only has an impact on one or two regions. I think this is an impact on the sales of one or two regions. I think this is one of the most typical characteristics. If we look at the headings of the main airport, I think it may still be the same as my last question. The first one is that during the epidemic, it should be said that the offline advertising business will turn online. The second is to gather the media at the top. I don't think this trend will change. At the same time, it is the sum of advertising that follows the sales. This is also not changed.

Now, I want to take your second question. In terms of 2021, there are some bouncing back of the COVID-19 in some of the regions, but I think the situation is totally different from 2020 because in 2021, there is only one or two regions which have the outbreak, which is local and regional. And also the state government already took greed style anti-epidemic measures to control the epidemic. So we only see one or two regions the sales may go down. Now talking about the OEM budgeting, actually during the epidemic, a lot of expenditure would be transformed from offline to online. And the second trend is that a lot of purchase would be concentrated on the top players, especially the leading players. That's also a trend. And the third trend is the total expenditure on the budget would always go with the sales. If the sales grow, then the budget will also grow. Now, let me summarize. The 2021 epidemic only occurred in some of the local regions. And this only affected OEM sales in some of the local regions. And as for how would that impact the overall online budget of advertising of the OEMs, it's still too early to make any conclusion.

Thank you.

Operator?

Our next question is from Yiping Zhao. Please go ahead.

Thank you for accepting my question. I have two questions. The first question is about the price of TiantianPai. I want to ask what the future growth expectations of TiantianPai are, including the main driving force of its growth. The second question is about new energy vehicles. We see that new energy vehicles are constantly on the market. Thanks for taking my questions. I have two questions here. The first question is related to the TTP consolidation. So can management share the growth expectation of TTP for next maybe two, three years and the key growth driver behind it? And my second question is about the new nuclear energy cars, because we see a lot of new OEMs appear in the market. And what will be the impact on auto home business operations? Thank you.

Hi, Brenda. I will take your first half of your question, and then Ms. will address your second half of your question. So I think TTP's growth driver will be several. The primary driver will be the growing used car market in China, which we think will be growing much faster than the new car market. And now they are, as I mentioned, the largest online transaction platform already, not only the auction platform in China. And we're hoping that with the help from us, by providing them with seller leads, buyer leads, and financing from Ping An Financing, let's say, and insurance, they will be able to grow not only their online C2B and B2B auction, but will be able to provide a lot of value-adding services to sellers and buyers of used cars, and also dealers and other players in the value chain. We have seen that the sort of integration system going on in the past two years quite smoothly. And we hope that we'll see a winner-take-all sort of scenario, you know, in the online use-class sector for TTP, and together with us.

Okay, let me answer the question of the new members. First of all, Zhijia and I are currently The current state of our cooperation is very good. The good reason is that we have already made the layout in the market of Xinlingyuan. From content to channel, to the cooperation model with Xinlingyuan,

I would like to take your second question related to the renewable energy car. Actually, we have very good collaboration with those new players in the renewable car business. We are an early bird in this sector because we had a lot of planning In terms of content and the channels and the business models, we actually adopted very innovative models, very different from our collaboration with the traditional OEM.

Choosing a better electric car is the core of our model. At the same time, we also provide a comprehensive service plan for new car manufacturers. Finally, I would like to talk about this. From the current income contribution, the sales of new cars account for about 5% of the market.

Now talking about our collaboration with the EV car OEMs, our perspective is from the two seaside users. We are helping them to select the most suitable EV car for them. And we also provide comprehensive solution, one-stop solution, and a full process solution to the EV car OEMs. If you look at the total EV car sales in terms of the Chinese car market, it only accounts for 5% out of the total car sales. In auto home, our EV business already exceeds 5% of our revenue.

Okay, next question, please.

Our next question is from Brian Gong at Citigroup. Please go ahead.

谢谢管理层接受我的提问 那首先恭喜非常好的业绩 尤其是这个Data Products这块 20年增长还是很强速 尤其是主机厂这边的增速很快 那就想问一下 就是因为我们20年Data Products的 这个基数变得更大了 我们怎么去看20年这一块的增长 还有就是我们今年会不会 这块推出一些新的产品 Thanks management for taking my question. Congratulations on the solid results, especially for data products. So, given our penetration on OEM side further increase and our base further enlarge, may I know what's management view on the growth rate for data products for 2021 and also any new data products this year? I remember management mentioned that the SaaS segment for OEM and dealers is going to be like over 20 billion RMB in 2025 and may I know if we have any internal targets or plan to, you know, what market share for all of them to take in 2025. Thank you.

Hello, let me explain the entire plan for the digital product in 2021. First of all, in terms of digital marketing, we will continue to increase the market share of the product by relying on our current digital product advantages. Secondly, new products are not subject to digital marketing. The main purpose is to seize the budget of our entire digitalization and the budget of the main factory research institute. This will be an investment in quantity. In this way, it will basically make our entire layout clearer, and it will pave the way for our digitalization strategy for the next few years.

Thank you for the question. Actually, talking about the data product, in addition to the intelligent marketing solutions, we are going to further enhance the market share, and we are also going to launch a new product to cover the non-marketing solutions part, especially on the digitalization part and also the R&D, the research side of the OEMs. So that will be the incremental new part of our business, And that would have helped us to establish a very good blueprint for the next few years. And we do want to grab more market share from the digitalization process.

OK. To answer your second part of your question, I think even though you have seen a very high growth in 2020 in our data products, But the overall market is big, as you mentioned. And then a lot more, you know, let's say car models for us to help them to do intelligent new car launch or intelligent marketing. And then, you know, we're going to roll out, you know, more services to dealers as well in this year. So we believe, you know, in the midterm, mid to long term, you know, the overall The only ceiling to our growth in that sector is probably our ambition. And that's our answer to you. Thank you. Operator.

Our next question is from Richie Sun at HSBC. Please go ahead.

Thank you for accepting my question. I have two questions. The first question is about the user growth strategy. In fact, we saw that the growth of DAU in the fourth quarter has returned to a good growth level. I want to ask what strategy the user growth has for the next year. For example, will there be more other promotions? Thank you, management, for taking my questions. I'll translate it myself. So first question is about the user growth strategy. So we see 4Q has a strong user growth, teens level growth again. So I wonder what about the sales and marketing spending to drive the user growth in 2021? What would be the strategy and area to spend? And the second question is about the negotiation of the lead generation floating price model with the dealers. So what is the latest update on that? Thank you.

Okay. The first one is about the user growth strategy. In 2021, I think our DAU will continue to grow. The most important strategy for growth is these points. The first one is called marketization. The second one is youth. The third one is entering the downstream market. I think these are our three user growth strategies. What do you think?

Thank you for the question. Now talking about our DAU, actually in 2021, we would expect our DAU to continue to grow. We would have three features to summarize our DAU growth. Firstly, more video-based. Secondly, younger generation. And thirdly, more granular level at the lower tier cities and the lower tier markets. Now, talking about the lead generation product pricing, actually in our last quarter report, we already said 30% of the OEMs and the dealers already accepted the floating pricing model. 那我们今年实际上一个方面,我们是把接受了浮动价格的主机厂跟加商,我们给他们提供更好的服务。

And also this year, we have two strategies. Firstly, for those dealers who already accepted the floating pricing model, we are going to offer them better service.

And also, we are going to offer roast dealers more incremental leads and incremental services. And secondly, we are going to expand the coverage of this pricing model. So we are going to offer more business opportunities for those dealers who have not signed agreement with us. We are going to offer them more choices, and we are going to offer more deluxe services for them. And also for those who already accepted the floating pricing model dealers, We are going to offer them better services and more incremental services.

Thank you. There are no further questions at this time. I will turn the conference back to management for closing comments.

Thank you very much for joining us today. We appreciate your support and we look forward to updating you on our next quarter's conference call in a few months' time. In the meantime, please feel free to get in touch with us if you have any further questions or comments. Thank you.